L$ down, is it the result of the emerging banking system?

The recent downturn in the value of the L$ led me to thinking a bit more about the money supply. I believe that Ginko and other financial institutions are bringing down the value of the Linden dollar, albeit unintentionally.

Before Ginko, if I had 10k$L but didnt have anything I wanted to buy, I'd keep that money in my SL account, effectively keeping that money away from circulating. With Ginko, instead of keeping that money away from the economy, I deposit say 8k at Ginko with their amazing 100% annual interest rate.

Since Ginko had said that most of their investments are not in SL, that money gets sold at GOM (or elsewhere), and thus will lower the value of the L$. In addition, there are more L$ *in circulation* because whereas the money would once have been kept under the mattress, so to speak, it is now flowing around the economy.

It can be argued that having a stock market provides another avenue for increased liquidity into the economy, thus depressing further the value of the L$.

I'm not an economist (though sometimes I wish I were -- then I'd have better tools for analysis), but seems to me that the SL economy is getting more sophisticated. Has LL's tools for analyzing the stability of the economy gotten more sophisticated too?

I noticed that anything that's under the buy category that's under $3.65 gets bought in a VERY short amount of time, a 400k block was gone in 5 minutes, a 200k block was gone in less than that. Someone really doesn't want the value to go under $3.65!

Not very surprising since the exchange rate hasn't been this low in a very long time (if ever). Anyone who can afford to buy up a lot of cheap L$ and sit on them for a long time could make a tidy sum when the value goes back up to more normal rates. Easy money.

More likely, somebody things 3.65 is a great price.

Buster

wrong on all counts. Ginkos has SOO MUCH L, that they'd KILL GOM if they tried that.

It would be WORSE if they put it on GOM OR Spent inside SL. They probably sell it to IGN, driving thier rates down but driving GOM's UP. IGN seems to only deal in bulk, and they buy themselves (GOM doens't actaully, even though they techincally do).

By finding an efficent and backoutlet to take money OUT of SL, it RAISES the value of the moeny. When you put a linden in the bank, hat's one linden you DIDN'T spend, that's gone into the Real world as USD. that means one less linden for some one to make, which means they need to buy it.

The bank, IF they are doing it smartly, is actaully helping. What's hurting,is 3 thigns.

1. the massive buyign of L. Selling is good, buying is bad, . when you take linden OUT of into GOM the aount goes down in game, price goes up. When someone BUYS it though, and puts it back into the game, the price geos down.

2. Land auctions in USD ONLY. Reaeste is the ecomny anywhere, and by elimiating the linden for real estate, you ahve effectivedone 2 things. 1. linden is getting taken in b Linden labs like it was. 2. You are FORCING the land barons to sell MASSIVE amount sof L tocontnue operations, which is okay, unless IT is BOUGHT, then the price geos WAY DOWN.

3. Its summer time, less newbies, less demand.


And a minor point, specualtors who bought L and threw it into Ginkos to get rich are also hurting he prices because they bought L and put it back in game, HOWEVER, since they are sitting on it, that will reverse itself when the massive "get in on it" spree stops.

I'm not the best ecnomist, but I think Linden SHOULD stabalize at 3.50 on GOM, and probably 4.00 on IGN(not been keeping up with them), and if no one else deos anything else to screw thigns up it sholud do like all other money and SLOWLY go up in value.

Now if the lindens start buyin up L onthe large levels again, theprice will go up on th elower levels.


Now somepeopel are complaining about stipends cuaseing inflation. THAT"S NOT THE PROBLEM. Its the DWELL that is causing the massive inflation of currency as far as issuing goes. Some peole are making 10000L$+ a DAY of dwell, that's more the issue then my piddly 100L a week stipend, even multipled over 5000 peopel, if even 200 of them are getting that kind of dwell it amounts to far more then the stipends.

The Lindens need to

A. Either start paying dewll in Cashola, OR start cuting back on it.

B. Need to start doing somethign to take Linden out of the ecomny. And NOT teleport fees dang it, that's jsut stupid. The people with the MOST won't be paying, and thoosebarely surving will be paying most of it. It's the car manufacures vs. the consumer all over again.

c. Establish a bank themselves, that, since they don't have to make money to pay interest, just takes linden outof the market while its there. No buying o seleing needed.


THATwill get the linden UP again.

Thank you for your input.



If they sold L$ on GOM, presumably the person buying the L$ will spend it. If they sold it on IGE, presumably, IGE has to sell the L$ to someone in SL, and that person will spend it also. What's the difference between Ginko spending their L$ on SL, and someone spending the money they bought from Ginko on SL? Either way, there is increased amount of L$ in the system, driving the price ofr hte L$ down.



The money does not go out of the system, it just goes to someone else in SL.



On the contrary, the more people who want to buy L$, the higher the price of the L$ will be.



The lindens have previously mentioned that the L$ auctions were not much of a money sink.



I agree.

Which of the top ten users is Ginko on the leaderboard?

Why does the linden NEED to be up again?

Dwell is the method by which people who entertain gain money. Imagine that someone benefitting from creating a site where people actually want to go. Oh and attaching shops to those sites where people who want to go can spend money on things made by people who want to make stuff.

Shocking. Absoulty shocking. Lets do away with any incentive to entertain so we can have more people creating the same copyright and trademark infringing clothes and spending the paltry $5 linden a day we pay them.

Price stability is important, otherwise you create massive inefficiences in the economy.

If you hold this statement up to a mirror, it would be correct.



I am not an advocate of TP fees, but I do not understand this comment. Wouldn't everyone be paying TP fees, regardless of their wealth?


I understand where you are trying to go with this, but to me it just seems to delay the inevitable. By paying interest LL would be actually putting more $L into the economy, thus devaluing the $L further.

On the Change this Week, Networth, it's GF Ambassador, currently number 4. On the total networth, we are not there simply because we don't need to keep that much money in L$, and a good portion of what we do is spread out in certain business accounts, for the casinos and such. I do think thought that we could never crush GOM. Which we do use.

Inflation is, in my view, a problem. It actually benefits us to a degree, because people are less willing to just leave their cash in their account losing value. I think the absolute best way to take money out of the economy is through land sale fees and perhaps through a new land lease system, which could effectively and fairly charge such fees. Content sale fees are quite simply absolutely impossible. Best case cenario, people would flock to closed merchant systems, where the fees could be avoided entirely. The fact is, land is basicaly the main service LL offers, and it's reasonable that it should be the cornerstone of any and all economic changes. Land sale fees are impossible to avoid (unless you want to take the risk of losing your land/money...), and if small enough would have no great effect on price or profit margins. It would also not dimish the enjoyment of the game. That is my take on it.

I don't know if SL banking is fueling this downturn, but I doubt it. I don't think we are that big yet. In the long term I believe Ginko will be very benefitial to the value of the L$, in the same way that central banks holding foreign debt and currency is benefitial to their own currencies. Also, it might be interesting to consider that people, instead of panicking and selling their L$, have the option of investing them in an attempt to survive this depreciation. I personaly know people that would be selling heavily if not for our services.

Well, when you get their money, you would turn around and sell it on GOM also (unless you invest the money in SL enterprises). The advantage I see is that Ginko would prolly be less likely to panic and make a rash sale on GOM.

Just for a comment, I was surprised to find $L cheap enough to make it worth my money to buy, in contrast to many other games I've played. From the SL website, money is supposed to be scarce, but it doesn't seem as such.

I see a lot of good analysis in this discussion and I'd like to add to it. The economy in most other mmorpgs have some sort of money-sink. Mostly, it's company based merchants and in-game "rent" on dwellings or land. LL makes a lot of real-world cash with the monthly fees tacked on to the land, and I commend them because it probably keeps the basic accounts up. If I were to suggest anything to help the SL economy, it's for them to transition from the monthly real-world fees to an in-game L$ fee or rent. Or maybe just give people the option? I know I'd rather pay in-game fees than spend my hard earned cash. I have to agree with an earlier post about teleport fees. I think they're worthless and only hinder newbies.

Taking money out of the system in this way would effectively give the market some control, and help stablize it. Land would probably be effected, but I lack the insite for that type of analysis.

LL accepting L$ payments for tier fees is one of the proposals up for voting. It's #374

The problem is that it means LL gets less cash. But on the other hand, when looking at the big picture on the L$ slides versus RL $, they are currently making money off the inflation, just like many MMORPG companies do (since they keep selling accounts the same price while the RL value of a new account is sliding continually... see the horrendous inflation in UO, for example), although on a much lower scale.

Shall they pay their employees in in L$ instead of RL$ also? Otherwise, where would they get the RL$ to pay all those fine Linden employees who maintian the systems?

ROFLOL!

Faulty conclusion - the massive inefficiencies is what makes the SL economy tick!

In fact... I would argue that the wealthy people would even be spending MORE
on TP fees, because they would have the extra cash to do so! Like most luxury
items... point-to-point TP is not a "need" in SL... it's a desire.

In fact, I would favor taking out TP all-together! .. even to telehubs.
This would give land/location MUCH more value... just as in First Life
where the convience store makes money not because of their massive
selection or superiour prices... but because of their convient location
to many buyers along natural paths (to and from work, etc)

I'm sure many people would fuss about the loss of TP, but that would also
drive demand for a Wings And Jet-Packs biz.... perhaps also Cubey's
vehicle biz would see increased sales, etc.

Gabrielle

They could compensate for this by putting a higher charge to tier paid with $L.
In effect, you'd be 'allowed' to pay tier with $L, and it would be your choice
of convience to do so... at the higher rate.

I think many would STILL choose to go that route.

Gabrielle

Merwan, auctions are illiquid and would make the economy more efficient.

Of course they shouldn't pay they're employees in L$. But! For most other mmorpg's, they also charge around $15/month per account, discounts it down per the usual bulk payment, which works out well for them. They tend to make make money this way AND also manage to pay their employees in RL$. Basically, what I'm saying here is up the monthly subscriber fees to a competitive level, and lower the overall cost of the game by not charging RL$ fees out the yin-yang for land, switching to a monthly L$ land tax or rent per m2. When the rent or tax is taken, it's gone out of the system completely. That's right, it goes no where. Aside from helping control the price of $L, it'll also help control some of these people/groups who have the RL$ to burn to buy up entire sims out from under newbies and sell it at huge price increases. It'll help drive land prices down in the long run. On top of all that, it'll make it less appealing to keep multiple alts around for the stipend, but then maybe not if it's over all cheaper.

Also, the ability to buy and develop on land must not be enough incentive for people to switch to a premium account, because I've met a ton of people who only have basic accounts. Maybe LL needs to sweeten the pot a little more? It'd be up to them to decide how to do this because they know the limits of the system.

No particular solution is going to be perfect, someone will have their advantage taken away and get butt-hurt, but it's also called leveling the playing field. In addition, I think maybe LL needs to look at some of the other successful mmorpg's for ideas. Each one has it's way of controlling the economics of their game. So why would it not be acceptable to mimic some of the things they do if it'll help things on the grander scale? If they keep throwing money at the game with no way to sink it, then inflation will keep going up and the exchange rate will continue to drop. An overhaul might be in order here.

Ok, I voted.

That's in the real world people(youaren't the only one), in Sl in order to SELL you have totake the money OUT of Sl and put it in deposit with GOM/IGN, which reverses the statement. I understand that's backwords of real wrld exchanges, which is more buyers the better. Becuase of the METHOD OF DELIVERY, its reversed. MAybe a better way to put it is if you are pulling money TO SELL, you are helping, but when you sell you aren't.


Dont' think in flat values for TP fees, think of percentage of income. If I'm living off 100L a week, and I wanna teleport, I can only do it 20 times if there isa $5 L charge. Plus I'm not buying anything else, that would kill poorer people and newer people, AND take down the amount of stuff sold. In essnce you'd be popping theinflation ballon in a nastyand overbaord way that would only great benifit the land barons and other SL aristocrats that get dwell.

The piont of LL doing a bank, even interst paying, is that a lot of people will deposit, get aored and leave. that means their moeny is forfiet, and its out of the system, it would even out at least.

For this reason, if LL implements P2P and charges for it, they have to leave the telehubs in place as another option to those who can not afford it. Then they have a choice of

1. Uusing the current telehubs and spending their 100L on clothes or what ever they choose
2. Blow it on P2P
3. Blow it on P2P and then purchase some Lindens to buy clothes and support the content creators by doing so

I think I should point out something tho. Dwell is absolute peanuts.