Another inflation thread? Oh yes. This one makes sense, though. :)

I'm so tired arguing/discussing/postulating about the 'race' and subsequent theories and rhetoric that I remember the first thing the Senator I worked for on Capitol Hill told me after a nice 2 hour session on the Senate floor 'Boy they sure do pontificate a lot in there.'



I think that rather than arguing whose model will forcast the best, how about getting a model that is tested and will actually serve the members (the real ghost in this virtual machine).

All I've seen in recent days are people hypothosizing and creating panic, which tends to cause market instability (that theory is proven as seen by the nyse over the years).

With the ability to 'influence' markets in so many more ways than the old fax to copy desk to editor to print (essentially a major facet of what ppl hire pr firms to do), maybe it is time to put down the grinding axes and make a 'group' of many of the people who have posted on this thread and others and get some collective ideas that mesh and can provide an outcome of merit, rather than theoristic supply side economics diced with the a dose of herding cats ideas.

(so many good ideas, good thinkers...shame to see in fighting when basically the goals appear to be the same want)

- Calix

You do not know who will spend how much in the future. Maybe a person starts getting 'addicted' and buying L$'s only after 1 month. Or 2. Or 3. Or 6 months. Or never...

As long as the overall buying power is there, you're positive. If out of 10 basic users, one buys L$'s, but so much that it more than pays for the 9 others, you're fine. And you're better off if you had shut out all 10 of those ppl, even if 9 wouldn't pay.

Not to mention that basic people can add to the social value of SL.

Well, yes, this is exactly the point. In order to keep the value of the L$ up, you have to make sure people are buying L$.

However, SL is not like real life. Nobody needs money to live, and nobody needs to play SL at all. If you want to present new players with the stark choice of shelling out US$ on a regular basis, or not playing SL, you run the risk that a majority will choose the latter. At which point you can start the sour-grapes arguments about "they'd never contribute anyway", but now you can be sure they'll definately never buy L$.

It has been suggested elsewhere, and I agree, that the majority of L$ buying is to fund land purchases and rental, with only a small amount being spent on content. What makes people buy land? Having houses and running businesses. What makes people run businesses? Being able to get money and have people pay attention to them. What makes them happen? There being people around and them having money to spend. And the stipends help ensure that.

The statistics, Linden Lab published regularily till December do not support this assumption. Land puchases are less than 15% of all transactions in Second Land.

Of course you can assume, that all residents are renting these days. There are no numbers on that. But flying around a bit will show you fast, that a huge majority of all residents, who use land, still owns it.

That's total transactions in all of Second Life, though. Do LL have a statistic of what percentage of L$ bought on LindeX is spent on land?

Okay, I understand that people will leave. The problem is that people never make businesses money unless they get them US$. Every $L is eventually going to stop at someone that wants US$ compensation for the money they have earned in Second Life. The amount of $L they have gathered, or the amount of goods they have sold is irrelevant to how much money they will make when looked at in isolation. They have a certain amount of $L compared to everyone else that has earned $L and now want compensation for their work. You take all those people's $L divide them among the US$ people need to fund their purchases, and you get the amount of money each person makes. If I sell a million shirts for $L100 a peice, but no one needs extra $L to purchase anything, than I have made 0US$. The closer you get to a system, where every purchase has a relative US$ that goes to the pool of $L being sold, the closer that US$ value gets to what the item was actually worth. The only way the economy can give the $L holders the US$ value of their $L is if the amount of $L fees Linden Labs charges balances out the stipends. We can have a stipend, but it needs to be balanced out by the fees.

Stipends do not increase the number of $L available to the public at the same rate as the population grows. If all they had was an initial balance, they could remove all $L fees which makes it easier for companies to start out without upload fees, and could generate US$ for Linden Labs for the advertisement fees. The economy would purely be based off of the value of what resident's provided to get their $L. As it is now, we have these stipends that increase the number of $L available exponentially to the population gowth. Population changes the amount of $L put into the system every week. If the money sinks don't keep up, then content will eventually get closer and closer to that US$0 value. I understand that there are people that put that value on the content, but why would content creators mind people leaving who want their content for free. Economically, a person putting a value of US$0 to a product is not someone the business should be concerned with unless there is a way to make them value the product. Giving them everything they want for free does not make them value the product. From what we see in Second Life, it makes them feel entitled to have the product for free.

If all we needed to worry about is how much $L people could get from selling things, then we might as well just make people type in the amount of $L they want in their balnce, so they can have anything they want. Otherwise, it doesn't matter if someone that isn't going to pay for things leaves or not from a business stand point.

Right. But as you've said: "you divide them among the US$ people need to fund their purchases". But that's a variable. If you were assuming that the demand for L$ was always the same, then yes, reducing the supply would be the only way to prevent the exchange rating crashing down. But the demand for L$ is not always the same.

A new person coming into SL can create demand in a number of ways. One way is by actually buying L$ themselves. Another is by making things that inspire other people to buy L$. Another is by getting new people in, who might buy L$. Another is by being the guy or girl you get to look better than by spending L$.



Yes, it does. It means that all the people who do pay for things get to have nicer things than them, and feel superior. Without them, newcomers would feel even more in the gutter than they do now, and would be less encouraged to break out.

If we have a larger population, you can say that we have a larger amount of US$ being spent, but we also have an equally larger amount of US$ being taken out. Every US$ being spent by people on resident content, is ideally taken out by residents who produced that content. If the US$ were sent to Linden Labs or no money was spent at all, then it is a invisible tax being put on the residents for either the monetary benefit of Linden Labs or the sake of population number growth. If people are generating demand for $L in US$, they are the ones in my opinion entitled to the US$ spent on those $L.

Linden Labs has land teir and membership fees to bring them profit. They could even charge US$ fees for the advertising costs paid in $L now if they wanted. $L are useless for them, so why would it not make sense for them to get US$ for what they provide us seperate from $L, and leave $L as the method residents use to get their local currencies for their goods and services. Every $L you get from Linden Labs in stipends is a ticket to getting something from a resident without ever putting US$ into the channels where the person makes money such as the Lindex. The DI is an exception as it gave some of this money back to the residents, and the $L services are an excpetion as they cancel out the effect of the stipend when used, but I'm not sure if these give the value of the stipends back to the residents. You can justify money growth with population growth, because population growth is not a product of residents; it is a product of Linden Labs. Population comes with the need for more money to facilitate the greater amount of transactions. The justification does not come with an exponential need for more money, however. It should come with a linear need for more money, unless you intentionally want people that wait for longer than a month to sell their $Lto be losing money.

Again, even though not everyone sells $L, $L will always eventually end up in the hands of someone who will. The money they earn ideally will pay for the the work they put into Second Life. A stipend gives you money whether you worked to improve anything or not.

The demand for $L to pay for products and services is not what the issue is. That increased demand will lead to an increase supply as the producers of these products and services sell their $L for the US$ that are being put in the Lindex. A greater volume of trade alone, isn't what I'm after. It is only a greater volume of trade, because every extra US$ to buy comes with extra $L for sale when you look at that type of demand increase. What I'm concerned about is the ideal situation where the US$ spent for $L to buy resident things goes back to the residents. If the US$ were sent to Linden Labs or no money was spent at all, then it is a invisible tax being put on the residents for either the monetary benefit of Linden Labs or the sake of population number growth. If people are generating demand for $L in US$, they are the ones in my opinion entitled to the US$ spent on those $L. Linden Labs is entitled to money too, but I don't think it should be tied to the $L in forms such as the stipend.

Linden Labs has land teir, membership fees, and transaction fees to bring them money. They could even charge US$ fees for the advertising costs paid in $L now if they wanted. $L are useless for them, so why would it not make sense for them to get US$ for what they provide us seperate from $L, and leave $L as the method residents use to get their local currencies for their goods and services the residents provide. Every $L you get from Linden Labs in stipends is a ticket to getting something from a resident without ever putting US$ into the channels where the person makes money such as the Lindex. The DI led to some exception as it gave some of this money back to the residents, and the $L services gave some excpetion as it canceled out the effect of the stipend when used, but I'm not sure if these give the value of the stipends back to the residents completely, ecspecially without anything like the DI giving back to the residents. You can justify money growth with population growth, because population growth is not a product of residents; it is a product of Linden Labs. Linden Labs is in a way selling your demand for $L to businesses that pay them premium account fees and teir. Population comes with the need for more money to facilitate the greater amount of transactions. The justification does not come with an exponential need for more money, however. It should come with a linear need for more money, unless you intentionally want people that wait sell their $L to lose money.

Again, even though not everyone sells $L, $L will always eventually end up in the hands of someone who will. The money they earn ideally will pay for the the work they put into Second Life. A stipend gives you money whether you worked to improve anything or not. If someone really wanted you to get money just for you wearing their stuff, they could give some of it away for free to entice future buyers.

They hang around admiring your cool avatar and in general acting as "extras" in SL for the lordly sum of 20c a week.

Where else can you get a posse for 20c a week?