L$ is dying

Please read them:
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Where is your proof that inflation is happening? The $L has been stable since the last sweeping economic changes.

If anything, we're seeing deflation, as the majority of people in-world are getting less money, on average, then they used to (end of stipend bonuses, many more basic accounts than paid accounts, etc.)

So, in short, this is all hyperbole.

LF

Look at the last week data only, it is enough to see inflation:
250$L/$ to 265$L /$. And u will see in one month what i mean.

Now I don't pretend to be a PhD in economics, but I'm with LF here: what's the backup to your claims?

I haven't seen a detailed breakdown of money supply/sink data, but what we do get is some high-level buckets of economic activity on things like:

Payments: Money paid by a resident to an object, or received from one - vending machines, games, etc.
Object Sales: Direct purchases by residents of in-world objects

If you want to informally look at inflation as how far a L$ goes in world, then one thing you can do is compare 8 week averages for the average payment and object sale in SL. It's not the most granular and accurate of analyses, but we don't have better right now.

8-wk average Period Starting 7/4/04 compared to
---------------------------------- Payments ------ Object Sales
8wk starting 7/4/04 ---------- 271.75 ---------- 147.125
8wk ending 10/30/05 -------- 305.75 ---------- 205.625
Growth ------------------------ 13% ------------- 40%



If you are looking at the historical exchange rate, btw, my understanding was that there were some key things happening in the late summer/fall of 2004 that drove the rate way up... like a shortage of land for example. I wasn't here then... I came in at the beginning of November 2004, but while 2005 has seen some bumps in exchange rate we haven't actually seen anything insane that didn't settle back down.


[LOL Kris -- nice forum icon ]

o rly

That's a six cents value difference. Wake me up when it's a dollar's worth of difference.

Sorry, but I've seen the long-term history of the Linden Dollar. This is small stuff. The $L goes up or down, generally, according to three things, ordered by importance:

1) Land value/supply;
2) Panic by anxious forum posters;
3) Poor Linden economic policy.

Now, seeing as we have the chicken littles giving their predictions, I'll give mine.

When p2p is fully implemented, and the conversion of the telehubs is complete, there will be a rather large upheaval of the land resale market. Supply will outstrip demand in the traditionally high-volume sims, while more quieter sims will see their values increase, perhaps by as much as 15-20%. Generally, however, the average value of land per square meter will decrease, perhaps by as much as a dollar per square meter.

This will put an inflationary pressure on the $L. However, the new money sinks being introduced (most notably the soon-to-be-more-expensive in-world classified system) may stymie the inflationary tendency.

But please don't listen to me, I'm as full of hot air as the next guy. These are all guesses; I'm just your friendly armchair virtual economist.

LF

You cant see now and it is normal because we are at the beginning of first step.
But aftr entering first step thi,ngs will change fast. How do i know this? Why now? What are my reasons to tell these things:
I dont talk looking results i know the reasons of inflation. And i am saying high inflation is coming. Why am i saying this:
My parameters:
1-> 500/week income to all residents. Without producting anything.-> total $L in SL is increasing.
2-> Lands are coming from outside to the world but no $L going to the outside to buy them(auctions)-> products increasing and total $L not decreasing.
3-> Total usd buying is greater than total $L buying. In all economies this decreases the value of local money.(GOM and also IGE will be closed.)
I am not writing these things in panic i ve not much $L or $ in game.
In real world Argentina and Turkey lived same things. IMF worked with both first Argentina, they didnt solve. With Turkey they decided to give value to local money it worked etc... I will not tell all.
I will not write again till i see 500$L/$ rate here.

Probably best.

Bye

"Good Morning, Mr. Phelps. Your mission, should you choose to accept it, is to revitalize a dying virtual economy. As always, in the event you or any of your I.M. Force are caught or killed, Governor Linden will disavow any knowledge of your actions. This prim will self-destruct in five seconds."

(Sorry, the urge to do that was too strong to resist.)

Why is everything always - OMG the sky is falling! There are other reasons this could be happening that make a bit more sense.

First, IGE is displaying their overstocked message and have been for several days.

Second, Anshe is only paying $3.45 or the same as 2.89 on Lindex.

Third, I am assuming that many are cashing their Lindens out, not because the sky is falling.....but as extra holiday spending money.


Just my opinion. Have a great day and buy some Lindens today

Of course, we would expect gross volume numbers to increase. This is due to the recent significant growth in SL membership - up from 50,000 and pushing 90,000 in only a few months. The net incresase on the money supply just based on the increased total Stipend payouts must be tremendous. I would also assume the huge increase in freshly printed $L's would cause some inflation.

This is huge increase in a newby poor population also has an effect on spending/transactions. Compared to July 'O4, when the official population figure was around 10,000, per capita spending was approximately $3600/resident/reporting period. At 10/30/05, and using the then published membership number of 80,000, per capita spending had dropped to $1625/resident for that reporting period. I don't have the money supply/sink numbers for the same period, but it has to be huge.

I do know that IGE and Associates are currently holding nearly $38MM Lindens - per the Leaderboard as of today. I can't recall them holding that much in the past. Maybe $20MM or so, but not almost $40MM. I also noted that this number included a net pickup in holdings by IGE of nearly $5MM within the last week. Plus, IGE has not been buying $L for several days.

Other in-game holdings, include, Anshe at around $4.7MM... not an large number for her account. Actually, it is a little low. Other big names are totally gone from the Leader Board. So, I must assume there has been alot of conversion from $L to USD since the P2P / Telehub announcement.

Overall, I tend to agree with Lordfly. The short-term economic indicators and temporary inflationary spike should not be used for any long-term assumptions, up to and including run away inflation and the 'death' of the $L as some have suggested. There have been and always will be swings in all the indicators - particularly when LL announces fundamental changes that have potential significant economic impact. Emphasis on "potential".

But, I do find the per capita spending somewhat worrisome - particularly if it does not start increasing, as the thousands of new members either become premium, long term residents, or opt out of SL in the near future - as the ratios then return to more historical ranges.

Make room LF, for another armchair economist....

I think if you'll find that there is a sudden rash of selling that is causing this.

The sell volume on the market has increased suddenly and dramatically.

This could be caused by (in order of likeliness):

1. Someone(s) cashing out
2. A sudden general lack of confidence in the marketplace
3. People are trying to get some money out of SL to buy FL christmas presents

I believe they are generally short term pressures, though the short term pressures may be a catalyst for other problems.

The economy itself hasn't changed recently, so I don't think it's an economic imbalance issue.

If it is 1) above, I think it could be

a) Ginko falling apart (good sign that people are getting their money, though..)
b) Farmers are cashing out
c) New Linden withdrawl are encouraging people to cash out
d) P2P has pissed people off en masse

This has nothing to do with the thread, but what exactly is an undead arch-angle? Is it like a scary gothic triangle? Or maybe a dark and mysterious quadrangle?

Hmm... perhaps a living archway made of angular items? Such as a garden arch or trellis?

But can it be used Safely on a sex ball ?

Oh I see the smoke rolling now.........

well to be kinda specific, inflation doesn 'happen' till people start raising their prices to compensate... but the recent currency market bump was being 'fed' by someone, essentially they were throwing away chunks of money to try and lower the value of the linden, as of about thursday or friday, it looks like they gave up

Okay, remove basic accounts. Ever thought that some people here are just poor students with barely any money to spare? Ok, we'd have accounts for a month on the trials. Then what do we do?

i second that Shia .. although im not a student i am a single dad with a free account..however does this mean that we aren't stimulating the linden economy??..I think not. I have actively played Sl for a couple months now free the whole time. However.. i have probably spent numerous thousands of linden on new products and Rent(why by when you can rent for in game $L?) that other players have created. And all of that was done by money I won/earned in game. Free accounts right now in SL(which I am guessing is a good percentage) serve as a vehicle to move Linden from player to creator. SL is a FREE economy... if you dont want to pay 10k $L for something find an alternative or knockoff. Inflation is ultimately controlled by the masses.

as far as buying land with RL compared to $L. I dont see where this would cause a problem as long as there was some sort of balance to take L out of the market. Also remember inflation is a regular occurence in any economy. As long as prices for new products adjust with the rate. B/C there is more money in the ecomony then there will be more opportunity to get your hands on it .

And Finally... SL is a child in the world of economies. So changes in its structure stick out like a sore thumb. Nearly doubling the number of players in amatter of months pretty much doubled the flow of currency, right?what other economy could take a 100% increase in population with no economical impact?.. sorry dont have the specific numbers.. Until the population of SL hits a plateau fluxes in the market are bound to happen and be more noticable..especially around holiday seasons. Remember Holidays effects any economy that ppl celebrate it in
*incoherent rambling off*

Later
O

As this is Second Life, it should be "The skybox is falling! The skybox is falling!"


Oooh... All you'd have to do is make it physical...

Dunno - I just figured it was xmas and ppl had more to spend their entertainment dollars on than virutal dirt and dollars this time of year...

...eh but what do I know?

Study?