Not good.

If SL population(the ones spending USD to buy L$) is increasing as fast as L$ stock in the world, L$ buyers' total L$ buy request amount should be same as L$ sellers' total L sell request amount. At least the difference between these two team shouldnt increase everyday. Even a little increasing at this difference could be acceptable. But there is a big gap and increasing alot everyday:
(GMT)
Time>-----------------------Lindex L$ stock over the rate 250L$/usd-----Lowest L$ exc. rate
march-08: 15:00(GMT)------------------26676598------------------------------------279
march-09: 16:29(GMT)------------------27171853------------------------------------279
march-10: 13:22(GMT)------------------27578312------------------------------------280
march-13: 14.05(GMT)------------------27975892------------------------------------280
march-14: 17:49(GMT)------------------28286899------------------------------------282
march-15: 17:28(GMT)------------------27808106------------------------------------ 281
march-16: 16:42(GMT)------------------28256826------------------------------------282
march-17: 15:21(GMT)------------------28234515------------------------------------281
march-19: 15:09(GMT)------------------30064421------------------------------------282
march-20: 14:41(GMT)------------------32049378------------------------------------286

This is really not good. 32 million L$ waiting to sell for less than 250L$/usd. And this amount increased 5.372.780 in lesss than 12 days. This is not the total sell request, this is only the difference between sellers and buyers. this means like some people wanted to sell 35-40 million in 12 days and 5.3 million couldnt be sold. This means 15% of L$ sell requests are not selling. And to sell this amount people are lowering the exchange rate. And this 15% is increasing everyday, over 5 million in 12 days-> over 12 million in a month. This 12 million is totally extra in the market. No resident can stop or force this devaluation(SELL FOR LOWER/HIGHER calls are meaningless.). This can be explained only by mismanagement of the economy. LL has the power which no goverment has. They should be easily managing the economy.


It is clear that there are two ways
1-> LL will be included in the market, like a federal reserve bank. actually this choice brings BIG risks.And must be managed VERY carefully.
2-> LL will choose to not be included in the market, then LL must calculate their monthly L$ income from SL(L$ land auctions, texture uploads, etc) and L$ outcome to SL(stipend base, awards etc) carefullly and they must lower monthly outcome-income difference by 12 millionL$, in one way or another.

lowering L$100 weekly from 10000 primary accounts' weekly stipend can lower this difference by 4 millionL$,but i know lowering primary residents' weekly wage cant be done.i am not sure if it helps to increase "upload texture" price to L$20. I dont have the data (i wish to have)which LL has.

What if they dont care about L$ devaluation?
-> devaluation always brings enflation, high prices, less buyers.
-> Traffic bonus and stippend base will be meaningless(stipend base defenders will notice then while defending high stipend bases, they were actually killing the stipend base.At current rate, L$500 stipend worths US$1.66, At 250L$/usd L$430 worths same)
-> After a time people wont buy auction sims for $1000(i know it is going like 1100-2000 in these days,but high enflation will kill land profit.)
-> with lots of other results business in SL wont be a real business for lots of people. And SL will loose what makes it unique.


BUT
LL has a tendency, they usually wait till they see really BIG results at a situation like this. To solve abuse reports, this can be helpfull, to solve bug reports, this can be helpfull, to take care of tousands of residents' requests, this can be helpfull. But in economy, once they start to see results, it will be unstopable.

Yes i sound like "sky is falling" but 12 million difference between sellers and buyers per month is a bad number.

Good Luck to all business owners.
--
Sorry for my bad english.

You can add the (many) millions L$ kept ingame by ppl that wish to sell it but wait for "nicer day".

A modest proposition : forbid to sell L$ for more (less?) than 2 point over the "Today max".
It will remove the annoying abuse of sellers stupidity/lemingness/whatever/...

At this rate, I believe I may start upping my L$ prices to compensate for inflation.

These artificial constraints aren't good for anyone. How will you feel about having to wait 6 months to cash out a month's worth of tier because the "market" is rigged to insist that you set a certain price? That would be a disastar!!

The reason WHY pricing is sliding so predictably like this, is (in a very simplified nutshell) that prices are seeking a point where there's enough liquidity for everyone who wishes to sell. Instead of trying to rig the market and putting yourself in a position where you can't sell ANY L$ at all because you're in line behind BILLIONS, a better idea would be to enjoy the slide to a price of around L$361 per $1.00 USD.

As the price slowly slides, be sure to slowly increase in-world prices at the same ratio. The sky is not falling, and everything will be fine even at or above 361. We must not cry out for the market to be rigged more than it ALREADY is to maintain some hypothetical price which is way out of whack with value. It is critical NOT TO PANIC, but rather to ADAPT, as times change.

Hyperinflation can occur when there is a crisis of confidence, the market (any market) can boom and bust beyond the fundamentals.

Crowds can be irrational, and I can't imagine the SL crowd is any different.

I agree with Hiro and Shaun.

I recently made a spreadsheet with all my products and rentals so that I can plug in an exchange rate and it will tell me what my prices have to be on each item to break even and to make a proffit. I will then go around once a month and raise the prices (probably only a few lindens per item) to cover the impact of the devaluing L$. As my prices would seem to gradually increase rather than jump up huge ammounts I would expect to not see a huge drop in my business.

I'm not in this to make tons of money - but paying my teir would be nice - especially for those who rent from me because it's cheaper to rent than have one's own little plot that they pay through the nose for (on a $USD or $L per prim comparison) if a person goes it on their own.

I don't panic, my business don't care of the L$ value

One thing that SL has going for it is that the system naturally resists inflation just because it's hard for people to update their prices at all of the vendors. Since the material cost of each copy is 0 (all costs are development and support costs), there isn't a whole lot of pressure to increase prices either. It's not like torus prims suddenly double in price because one of the factories down in Malasia caught fire and burned the whole village down.

It's only the people who are paying for tier via sales from their store that have to worry, and the changes thus far have been slow enough that I don't think they're feeling the pressure yet.

One way to stabliize Kaz's prediction, is simply to post the land data You / Linden has. Amount of land available, prices, number of new starts / sales of newbie land, auction land, average prices for M / PG, and where, and amount of land currently on the market.

You have no checks and balances in play, only a lot of land / sim sale speculation without real time information.

Best of luck on the coming market crash.

Its becoming painfully obvious one must.

Our prices won't raise. Perhaps that undercut of L$ price will see a raise in our sales when others all inflate...

Why raising your price ?
If you sell land, or rent land, ok. Your business cost real US$.

But... if you sell... let's sell a waterproof plywood cube.
The production cost of the cube is 0L$, the value of the L$ can be *whatever*, 0L$ is still 0L$ ...

Now if the price of the shop you rent in a mall raise, ok. you can eventually raise your price.

There is no need to raise your price if the product you sell don't cost you a single US$ (and i mean real US$, paid to LL)

ROI If you expect a certain amount of an item to sell and want a certain return on your time investment making the item, your price is ($USD wanted / expected sales) * exchange rate.

Who are you to decide what my time and knowledge are worth? I'm sure I'm not the only person who's shocked to learn that both are devoid of value.

What about time, effort, download costs, and the rising cost of land rental to sell one's goods?

The prim may cost me $0, but torturing and fitting the prims, making sure there is no overlap or texture jumping, making sure the texture works properly on the prim, these can take time. Perhaps I'm also commissioning a script to go in the prim. That will cost me too (or even more in time, if I slog out trying to script it myself). If I paid for the software upon which I make the texture, should I not also calculate in the costs of software? I would in a rl business, so why not sl?

That won't be the case. You'll actually probably find the opposite to be true. People generally equate price with quality, so as everyone else's prices go up, many many people will assume that you have quality-related reasons to compete on price.

This isn't like RL where people will shop around for the best deal. The difference between $0.10 and $0.30 is not worth bothering with. People just want the best of whatever they're buying, and they want it right now.

I've actually had comments on our peieces being well constructed. Considering they are less or equal to the competition.. Not to mention the display models we provide so its not just a picture and they can indeed see the quality. Yes, I think it is the case.

Providing the same quality at lower price = gold mine.

You should see what happens when you charge more.

Supply and demand curves aren't quite that simple.

Considering I build for fun Jon, does it really matter? And Shaun. Its just Linden $..right now I don't even cash out..and with my part of this month I could pay my teir, LL fees and STILL have leftover.

But it's always better to have more L$ than it is to have less L$, isn't it? I mean, don't you even want to win SL?

You'r enot getting me into your inflation scheme..my prices are staying right where they are. there is no way to 'win' SL. its like an open ended LARP.. you participate, you get rewards, there is no songle 'victory' except for the ones you set yourself.

No it doesn't but playing for fun doesn't change supply and demand curves. If you want to say your not raising your prices because you make all you need and you don't care beyond that fine. But playing for fun doesn't change the fact that lower price = gold mine over simplifies supply and demand.

True Jon but it works well enough for me. I actually showed someone how to make, from scratch one of the meditation mats I sell, and how to do his own textures. I'd rather help people enjoy themselves than anything else