Business owners response to LL selling L$

Well here we are with another TOS change in the game. It is days like this where we all realize once again that SL just might be a game after all. As the owner and creator of VGI which is now a RL LLC, I have battled with the changing economics in SL for over 2 years now. Yes I have been here a while. Sometimes I think LL does stuff like this just to have a laugh at how we respond to it all on the forums here.

Anyways, let get to my points. Linden Labs, you all need to be more specific with your plans on making changes to the economy instead of raising mass panic among the SL residents from suspicion of LL destroying the entire economy. You talk about eliminating stipends, you eliminated developer incentive, you eliminated dwell payments, you took down GOM by opening the Lindex. As paying customers of SL, and the realization that SL is indeed a virtual country with a semi-real economic system, we need you there at LL to stop playing games with us, and write out precise plans of action, and exactly how your plans will be implemented. How will the lindex operate? What price will you sell L$ for? will you open a bank? Will you stop residents from selling L$ at whatever price they feel like?

LL taking over the selling of the L$ might just be a good thing! If you all over there are just buying L$ from the residents, and then turning around and selling it back both at a reasonable price of maybe L$250/1US$ as you all kept saying you wanted the L$ to be valued at, I would be all for it! Don't just promise us a stable economy, show us your plans to get there! Who knows more about the workings of SL in game? You all there at LL, or us the players who spend hours every day building, creating, socializing, buying. Talk to us, and share your plans with us. sure you created SL, but the more you try to act like a god, or treat us all like children, the less customers you are going to maintain here.

Like I said, if you come on this forum and tell me exactly what the plans are for LL to sell money, we all might be just a little more open to your ideas and plans then you just giving us a vague description of what your plans are. I plan to be here in SL for a while, and I am constantly changing my business strategies to keep my buisiness in business with all of the economic changes that happen almost monthly.

You know what the biggest game in SL is? It is called beat the economy. What made you money yesterday may not be there today, or tomorrow. Please stop scarring the residents here and offer us solutions instead of mass panic and outrage.

One last message to all of the residents out there in SL. Sometimes we do just have to see SL as a game, and play it. It is challenging, and ongoing. The monsters here to defeat are the business monsters of LL. Plan for changing economic variables, and create a contingency plan for your business so that like VGI, you can just flow with the market, and keep yourself and your business afloat. Don't be too quick to judge LL on what is about to happen. Just plan for the worst, prepare to change your business model at the drop of a hat, and buckle up for the most exciting and challenging business game ever created. Oh yea, welcome to the corporate world SL residents.

It would be STUPID for Linden Lab to purchase YOUR L$ for USD when they can just print their own L$ instead! Get real! JUST SAY NO TO COMPETING WITH LINDEN LAB TO SELL YOUR CURRENCY! Tell [email]philip@lindenlab.com[/email] EXACTLY what you think of this idea!

Even if that happend and that would be veerry bad there are other outlets to getting rid of your L$ like ebay, and SLEX

I am not sure wtf LL is thinking here.

This is very bad news for SL.

If the intention of LL is to create a SL federal reserve and try to peg the the exchange rate at 250 to 1 this would be a very good thing for the merchants of SL. It would take less than 1 million USD to do that and they could buy all Lindens offered above certain 'set' price over a period of time and slowly lower the rate of the of the 'set' price to bring the rate to within their target. The profit potential for LL is sigificient, if they buy 100 million Linden over say six months at an average price of 275 to 1 they only need $363,636 USD. The potential value of that 100 million would be $400,000 USD and they would have stabalized the currency market.

They are talking about SELLING linden, NOT buying linden.

Indeed! JUST SAY NO to Philip!

I am disturbed enough to have sent Phillip an e-mail, something I have never done before. The text is below.

Also, you do realize that your talking about market manipulation by LL, for the express purpose of profit.

I'm sorry but if LL doesn't become profitable they will go bankrupt and if another company doesn't come in to buy SL, it ceases to exist. Either LL becomes profitable or we all could be out of business.

Your confusing the situation.

Make no mistake... we all want LL to be profitable.

But is it your contention that LL should then become profitable by printing money out of the blue, and selling said printed lindens for a profit in order to become profitable?

I assure you there is not quicker way to have SL cease to exist, than the implementation of this practice.

It does make you wonder what they're on.

There are a long string of IFs that, if they're all ticked, might mean this can work.

But a statement what, three weeks ago saying "We're worried about the decline in the value of the L$ so we're stopping dwell" is sending one message. Saying we're now going to print more money when we feel like it in what way is that a good plan if the former statement was true in all parts?

It seems to work on only one level: We're going to stop giving money away for you to spend in world, and we're going to make more US$ for us by charging you for it!

It will, however, VERY quickly stablise the exchange rate I suspect. If they sell at US$1=L$250 the Lindex will settle to $249/250 very fast as every higher offer will never sell if there's a significant amount of money released this way. It's still LL competing with the residents again though. OK, we know that in a few months time most folks won't remember it being any different, but gee thanks Phil - give us another reason to question your sanity and your support for in world businesses of all size - especially in an update week when a lot of the preview testers are saying it's not ready yet!

I'm not understanding this Eloise.

How will LL selling at $L250/$1 stablise the market when those potential buyers would be better off buying the $L from the LindeX at the current $L300+/$1?

The market is still driven by supply and demand, afterall. The fact that LL will suddenly be providing linden at $L250/$1 will do nothing to reduce the amount of linden in the world. It will only increase them (if anyone is smart enough to buy them at that rate when they would be otherwise available for $L300+/$1 on the supply vs demand driven LindeX ).

P.S.~ BTW, I have linden that I'm willing to sell at $L250/$1 if you're interested

It does not make economic sense for Linden Labs to sell (and not buy) Linden dollars unless and until there is a dire shortage of Linden dollars.

However, it would make sense for Linden Labs to become a market maker and both buy and sell Linden dollars at a fixed price. They would make their money on transactions fees. This way the Linden dollars could be used to buy real-world goods via some sort of bank card, the way currency from "that other game" can be used.

Now I've got to go read everything that was said so I can see what they are really proposing, because I just don't think they would be silly enough to flood the market with freshly printed Lindens.

This place is getting kinda stressful. Kind of like real life. sigh.

No that is not my contention, I was just hoping the the policy could be used to stabalize the Linden around some firm exchange rate and a federal reserve type banking system that bought Lindens when the Exchange rate went too high and sold them when the rate went too low could do that.

If the set price were 250 to 1 then the SL fed would buy Lindens when the rate went say over 255 to 1 and would sell Lindens when the rate went below 245 to 1. That way the exchange rate could be maintained between 245 to 1 and 255 to 1 and people would feel secure in holding Lindens instead of selling them as fast as they acquired them because the USD is so much more stable.

I agree this would be nice.

But did they mention anything about about buying linden here anywhere?

Would you be so kind as to provide that link for me.

I must have missed it.

Would you be interested in holding all your excess Lindens for now if you can sell them all at between $L260/$1 and $L240/$1? I don't know if this is what LL is planning I just hope they do.

There are business people who do hold large amounts of Lindens waiting for a more favorable exchange rate.

Like I said in the past, King Phillip is no economist...

Sure is fun watching the panic stricken sell their L$...
Black Monday has arrived.. Every day my words are
backed up by market action. Too bad the nitwits fail to
accept my advice..

Seems to me the proposed solutions are far more complicated then they need be. L$ come from two broad sources, US$ and "bonus" such as the stipend.

So long as the lindens coming into the game from non US$ exceeds the lindens exiting the game, the value of L$ will continue to fall. As that happens, the land owners will have to charge more L$ to pay tier, unless they pay US$ directly. Its only a matter of time. Of course, as inflation makes its way across SL, the effects of the free L$ will be reduced, assuming no changes are made on payments.

As much as everybody likes the free $L, they hurt the SL economy overall. Removing the free $L may be unpopular, but it's probably the only way to correct the problems.

I fully agree with you. Everyone instantly sells off thier L$ at the lowest possible price in a frenzy to get the last bit of worth from their L$ before the "floor" falls out from underneath. You know what this reminds me of? the huge stock market crash way back in the day when everyone in a mass panic pulled all their money out of stocks, and out of the banks, and sent the economy into a depression as banks all over had to close, and all the stocks plummeted.
are we ready for a depression in SL? I'm just sitting back and not selling a dime of L$ until it all stabelizes.

ReserveBank,
Did you see the 500 to 1 trade? It wasn't there at 2AM but was already executed at 6:30 AM. I would be interested to know how many Linden were offered and when. I can change my sleep habits if people are willing to give away money.

I sure agree (is that the right American idiom RBD)

Buying up a bunch of securities to fix the exchange rate isn't just about making a profit. It is about stabilizing the economy. Right now the value of the linden is highly volitile. Short of banning out-of-game transfers of the linden (I'm not entirely opposed), the best idea is to peg the linden at a fixed rate by buying-up a reserve of lindens with which they can control the money supply.

Of course that might cause serious balance of payment problems in the future. But in the mean time, I think that LL should limit currency speculation in the LinEx (as they are), shut-down all non-Linden Labs exchanges, build up a reserve, and stabilize the exchange rate.

We have enough trouble as it is, with inflation and the lack of a capital market. We don't need a fluctuating Linden as well.

If the Linden Dollar is Pegged at a fixed USD price, who is going
to open their wallet and shell out the USDs for L$ to keep the price
pegged?

I doubt LL will do it. And I doubt any SL Joe would put up hundreds of
thousands to peg the L$ to make SLers happy..

Nope, free markets are the best avenue to determine the correct
valuation of the Linden Dollar. If the L$ stinks, blame LL for their
poor economic policies that created this mess.

In the sense that when your liabilities exceed your assets you are bankrupt, LL is bankrupt and has always been.

As LL has liabilities to its equity holders in the tens of millions of dollars and is still not profitable (it's a privately held firm, so we aren't sure, they just act like they aren't) they have been and continue to operate in the red. I would imagine that their most recent and possibly final round of capital came with a stipulation that they the investors see some return or else the well will be dry if they go back. Four years in this industry is a really long time for anticipatory profits to be realized and investors do get antsy eventually.