Yeah, come to the rescue of Ginko so we can have more stories like this:

I am sure the details will vary by location. But I went and looked at what my RL bank tells me about its investment details for a savings account. They tell me the interest rates (which Ginko does), and the company trading address (which you could argue Ginko does as a SL 'company', we know how to get in touch with them in SL), and that the investments it makes are regulated by FISA and other relevant UK laws and standards. Ginko could equally argue that as a savings account it is meeting these disclosure standards - it's living up to the standards of disclosure etc. required of it by SL and LL.

I'm not saying I wouldn't like more data from Ginko, but it's not a right in my analagous RL situation.

I agree that Ginko could be a legal and professional business. There have been businesses in RL which yielded 70% or even more than 100% a year in RL. But I am not sure if any of these business promised their customers returns in that ballpark. All these operations (at least as far as I know) present themselves as high risk investment houses and not as a kind of bank paying a fixed interest rate.

Selling such high yield (and high risk) investments to the average consumer is seen - at least in some countries - as unprofessional conduct of business if not as fraud. Banks have succesfully been made liable for "bad advice" in RL when selling such investments to the "average consumer".

So what Ginko does may be perfectly legal (especially in the context of SL). I still find it questionable how they do it. But this is personal opinion and not proof for anything.

And most of its (or all) has been said (more than once) in this and other threads. It is boring anyway. What I found inspiring in your post were the "side issues": How can we as residents in SL handle such concerns (and I think there are valid reasons for concern) in a civilized way? And how can we protect ourselves against our reputation been ruined by other residents by badmouthing us or our business?

And my concern is, that this is simply not possible without any rules/laws (way beyond the TOS) and a governing body. No, I am not pleading for government to come to SL. Because I don't believe it can come to SL. Government is way too expensive.

Hmm, just by clarify this slight point which might not be clear to everyone.

By selling L$, you're not "removing" money from the SL economy. Rather the contrary! You're circulating money, making the economy more dynamic, and making it grow (since no L$ are really "removed", they just change hands). The SL currency exchanges are quite a good system of putting L$ in circulation again. This is a good thing, since wealth is redistributed that way. The only disadvantage is that it may slightly rise inflation levels (more people with more L$ available beyond the average, due to "buying" L$ instead of working for them).

On the other hand, "hoarding" L$ into a SL account does influence the economy directly. By pulling the L$ away from circulation, the economy drops a bit in dynamics. However, there is a slight side-effect which is not so bad: having less L$ in circulation may stagnate the economy a bit, but it also means a lower inflation rate (less L$ circulating, more value to the available L$).

Thus, both "hoarding L$" and "selling L$ for US$" affect the economy quite directly.

Gwyneth, I say you remove the value from SL economy, not the L$. That is different thing.

Whenever I take resource from one country and invest it into the other country I strengthen economy where I invest and weaken economy from where I take away the resource. When I do this enough, then the currency of the country I take from gets devalue compared to the country I invest in. This is because what I do changes the demand and supply at the currency exchange.

If I collect lotsa money in SL, sell it for US$ and invest in RL economy, then I weaken the SL economy and devalue the L$. Ginko did just that. As long as Ginko take resources from SL and invests in RL it is bad for the SL economy and for the L$.

Having only taken Econ 101, even I know this to be absolute nonsense. In fact, it is so amazingly ill-framed that it cannot neither be true, false, refuted, nor corrected. Sorta like: "there is a thing that if you put it in another thing then it becomes unthingy".

taking a guess here but blaze must be an atheist or surely she would be saying how did sl get some things right a creator missed like no sickness and nothing breaking to question phillip in private is one thing leave an im to publicly lambast him over something NO ONE knows is a ponzi FOR SURE is another

private citizen DOES NOT give nor imply the right to interfere with how a goverment is ran if you want to do that ask for support from others and they will discuss it in the meantime

You are seeing value being removed in this case if Ginko is not what they say they are. The value of the L$ is set by the demand for it by buyers wielding real world currency. This demand is finite, even though it is renewed and also helped by SL's growth.

When Ginko sells L$, it pulls US$ value out of the system because it "uses up" that RL buyer, taking their US$ money and crossing their buy order off the list. That same buyer might buy more later, but the fact remains that their "demand for L$" has been used. So let's say you lend someone an X-amount of L$, which they then cash out. When you receive the L$ back and want to convert it into US$ again, you need to hope that the demand for L$ has been rejuvinated.

Now if Ginko bought L$ with US$ to cover withdrawals, then you might see some balance in this equation. However, I have been told that Ginko does not buy L$ to cover withdrawals, but rather they wait until enough new deposits come in to cover.

If this is true (if it's not, then please someone post the actual policies... and this buying behavior is actually something LL could confirm or deny), then Ginko never contributes to the demand side, and that's a problem.

Then it really starts to look like a ponzi scheme.

Customers see their ginko account total go up, but these L$ aren't actually in their Second Life accounts, and so this amount is potentially meaningless. By selling the L$, your currency chits now belong to someone else. You have to hope that when you withdraw your money, ginko either has earned enough L$ to cover, or buys with US$ enough currency to cover. If you are always only getting your withdrawal from someone else's deposit, then the whole system is in trouble because you are simply transferring your vulnerability to the next person.


To sum up:
When a clothing designer sells currency, they are taking US$ value out in exchange for the time and design work they put into the SL economy. I.E. a clothing maker invests services effort and product, and removes money. [this may be obvious but I'll put it here just in case...]

A bank or investment service, on the other hand, withdraws money out of the system and then should put it back in. They provides value by taking your money, investing it wisely, and then bringing some of the profits back to you. They deserve to take a piece of the profit for the value they provide as investment managers, but what's coming out is US$ monetary value and what SHOULD come back in is US$ monetary value.

If Ginko is never re-patriating their RL profits, i.e. if they are never taking their RL earnings and reinvesting it into SL, then they are sucking value out of the system and creating a dangerous house of cards.

then stop doing it to them if you dont like it build a better virtual universe

Uhh... Philip isn't a creator. He runs a company. Nothing wrong with arguing with Philip or Linden Labs in public (as blaze repeatedly demonstrates ).

Now, just on general principles, Ginko certainly appears to be a con job of some sort (remember the old adage: "if it sounds too good to be true, it probably is". Whether the current "hands off" policy on LL's part is the best one is a different question, since they do take steps to keep the SL economy at least somewhat stable. However, I suspect we'll have to wait and see what happens over the long term.

But real or virtual, there are always people who are happy to take your money and "invest" it, as long as you never actually want to see it again.

his plan SOMETHING was revealed and it was ignored if more was revealed would that be as well ? ive noticed that in the forums when something is said we dont like often its simply ignored

This is exactly what I been trying to explain. Thanks, Forseti

If Ginko is honest, then what they do weakens SL economy and the L$ now, but once they made profits and bring them back it would reverse it again. This means after our stipends been cut recently, when the big Ginko profits come back to SL as one nice shower of gold, then King Philip could suddenly raise the stipend again.

As you know, I am not that optimistic. I rather fear that money will never fully come back. Then indeed the SL economy just took damage and with it the L$ and the economy's ability to fund us higher stipends

We buy US$ when we need to. Which means rarely. It's simply pointless to buy more L$ when deposits just keep growing at the rate they do. We bought back L$ during GOM's colapse. We bought back L$ during the new continent craze. We bought back L$ a few others times as well. But mostly, based on past experience, we preffer to wait for new deposits than to waste money on exchange fees (and spreads). It's pure common sense.

GinkoTec and Ginko Financial are separate entities.

Well, I think there is really not more we can reasonably demand from Ginko at this time!

1. We know how they started their operation.
2. We know how they managed so far to grow their customer base.
3. We know how they're expanding their operations through Ginkotec — and for all who have missed their private islands, take a good look at them, if you like "clean futuristic cities", those are the places to go and live in.

Yeah, I mean, what kind of nutjobs would propose that it is a "reasonable demand" to expect someone who has by his own admission cashed out his 'investors' money into ~$60,000 to

1) Actually document and share where that money disappeared to.
2) Share his real name and location to provide his 'investors' with some sort of recourse should he cut and run with their money.

We so craaaaaaaaaazy!

From a LL perspective, this is a dead issue. See this, which was posted by Ginsu Linden (today, I think):

/16/c0/72263/1.html

Well, it isn't necessarily dead, it's just between Ginko and it's suppoters and detractors. That thread simply is saying that if things DO go bust, LL isn't getting involved, which is as it should be.

The last time I checked, if I invested my life savings in the stock market and lost it all, God wasn't gonna open the heavens and intervene on my behalf.

Unless, of course, I happened to be Pat Robertson.

P2

I'm not sure who this "God" person is you speak of, but in any case, if you 'invested' your life savings into a ponzi scheme, and lost it all (sort of mandatory with a ponzi scheme), with sufficient evidence there could certainly be an investigation and quite possibly extensive jail time for those involved.

Thank you, Forseti, this was maybe one of the best attempts so far to explain the workings of L$/US$ deals in the terms of two national economies doing business with one another. These principles are nothing new, which does not necessarily mean that they are easy to understand. And I guess not every resident might be aware of the fact, that most dealings between the SL economy and the RL one (the US economy usually) follow the lines of two national economies in RL.What I like here especially is the concise description of the role of a bank in an economy. And please mind, that it gets more interesting, if these banks collect money in one national economy and invest in another. This is quite common in RL, too. And depending on other aspects of the economic situation (trade balances etc.) this can be good or bad for either of those two economies. In the current situation, I would say, it would be more advantageous for the economy of SL if the money collected inworld would be invested inworld again. But that is surely debatable.

One last but maybe important point: Maybe the dangers of Ginko to the SL economy are a little bit exaggerated by some. Even if Ginko should prove to be a scam or should go belly up, the company currently holds 16 Mio. L$ (in cash and in investments). Sounds like much, but is equivalent to not much more than the turnover of the inworld economy of one single day. OK, Ginko is growing - but so is the SL economy

Of course this does not cover Anshe's fears that after a big scam in SL platforms like ours will become watched and regulated much more thoroughly than it is the case now. This might or might not be the case. In the long run, such a regulation is be unavoidable anyway. Some like to insist that SL is a game. Maybe it is. But we are talking about real people and real money here. If all this reaches a certain volume or a certain level of publicity you can bet that government will take a deep interest in virtual worlds!

This is still ridiculous, I fail to see why people are still arguing this!

What Ginko does is hardly harming the game, or even the currency. Even if the L$ aren't technically there, people can still draw them out as required. As far as we're aware no-one has been refused completely to have their funds transferred (though sometimes there is a delay), so the money is still there. If people want to withdraw it and spend it then they can, so no harm is being done!

The only harm being done would be if the money was being destroyed, never to return (ie cannot be withdrawn to buy things). But Ginko quite happily give you your money back if you want it, so where's the damage?

You'd still not get your money back.

Good post pham, and yes I agree with you here. A fraudulent failure of an SL bank or investment service would have more of psychological impact than a hard-core economic impact right now... but how that psychological impact translates into economic ... well, fuzzy issues like that are one of the many reasons why even nobel-prize winning economists are always arguing with each other.

If these types of services (ginko financial and competitors) become more popular, and none of them attempt to re-patriate US$ earned off-world, then it would probably have a negative influence on the exchange rate.... influence rather than "effect", because there are other factors of course.

Pure common sense?

Is it pure common sense to hand over money to other people when

a) You have no idea what they're using it for
b) You have absolutely NO idea who they are
c) You have no resource to get it back


Giving money because people (who you may or may not know) are getting paid interest which they might not even be withdrawing is not common sense at all.

I think more accurately it isn't an issue except between anshechung.com and itself, or an experiment to see if that firm can take down another though baseless accusations on the forums and not receive sanctions for it.

Disclaimer: yes, I happen to be an investor in Ginko simply because anshechung.com brought it to my attention in this smear campaign - however, if Ginko were to abscond with my deposit (which no one has given me any reason to believe that they will) my game will be affected not one iota.