SL - The Black Hole Economy

In a virtual world where land can be created as fast as servers can be put up, unlike RL where God's not making anymore, how can any real stabilization occur? The more land that goes up, the more dollars / lindens have to flow into the economy to purchase them, maintain them and develop them.

How can the "invisible hand" have a credible role here because there is no resource of limited quantity and accordingly, no way for true market pressures to equalize between players.

If the amount of land is endless, then isn't the amount of money that can flow in also endless in an economy where like the land, the creator can create new money as fast as it wants to meet its own objectives? Why then wouldn't the profit incentive of the players only continue to push the value of the Linden down as more and more lindens are created, and the costs of items continue to rise?

Only the creator can manage this, but what are the creator's objectives?

The only two that I have heard are profit and community.

Seems that only for so long as new members sign up, and are given stipends so they can play, will any value be transmitted from one player to the other. Once the level of player activity and membership originations begin to decline, what mechanism could be put in place to reduce the number of avaialble lindens? Not offer them for sale, or trade for U.S. Dollars? Then what? If you couldn't trade them for U.S. Dollars, would you continue to play?

No.

But the picture isn't as bleak as you make it out. The basis of any capitalistic economy is mutually beneficial transactions.

I make or have something you want more than you want the money that I'm charging for it. You give me the money, I give you the item, and value is created for both of us.

This value is what "backs" the linden, give it inherent value.

Monetary policy takes a back seat to this underlying value. No amount of inflation controls will control the value of a currency that you can't purchase things you want in. As long as people sell things other people want for Lindens, the linden has value.

The monetary policy can affect what share of that value each Linden represents, but in the the long run that aggregate backing value isn't something that can be controlled or tinkered with easily, other than by destroying or creating new means to provide value (such as a bad update that makes building impossible, or a new build tool that opens up new markets).

As for your concerns about land... Think about this, what would be the effect of an infinite amount of land free to anyone who wanted to pay tier on it, created tomorrow? I think the effect would be far less than you might think.

Sure. But then I've been playing games like this in *text* for 20 years and none of them ever let me trade a really cool text description for US dollars.

Holy shit, a newbie who gets it. This is a day of miracles.

You wouldn't happen also to know who John Galt is, would you?

edit: Given your choice of last name, heh, you may very well know.

Oddly enough, that is pretty much what i hav ebeen saying all along with respect to stipends. The value of the linden is what is aggreed upon in the market, and is not really dependent on the supply, but really on the need of the sellers to move linden. If everyone who put lindens on the market decided that they wanted to seel on for $250 L for $1 US, then the market would be stable. It is when the players undercut, perhaps at a loss, that they price drops. Its a market, and really its a sellers market.

People clam stipends are welfare, but really how many basic accouns are unloading thier $50L on the market for $.20 US? How many premium accouns holders are Dumping thier $500 for $2.00 US on the market? How many people who own businesses in world are recapitalizing their business in world? How many are Selling all their profits each week to make real money?

An SL business basically creates no economic benefit. It is a drain by which profits leave the economy via $USD.

Answer the fundamenal question of , if there is infation, why are in world prices not going up? The declining value of the lindex really is an issue only to those who want to take money out of the system. Sure its capitalism, its ENRON capitalism: the capitalism of looting.

Agreed....in full totally and absolutly.

Please take a look at my own Gold Linden Thread

Regards

Paul

I think alot of the people who are complaining about the stipends are business owners. They are passing the blame on to stipends when in fact they should be blaming themselves. SL has a bunch of business owners who make much more L then they can use or want to use. They have already bought all the goods they wanted and invested all the L they wanted to invest. So as far as they are concerned, all the extra L they make is worthless to them. They take that L and dump it on the Lindex as quick as possible to convert it into USD, a currency that is worth something to them.

A simple rl example would be if you worked at disneyworld and were payed in disney dollars. Would be fine if you didn't mind buying things from disneyworld, but if you didn't want disyney stuff, then those disney dollars would be worthless to you, and you would sell them at the best USD price you can get as fast as possible.

So you have 100s of sl business owners making a bunch of worthless L who are just dumping the L which just makes it worth less and less.

Of course.