RFC: SL Commodities

Where are all those Pro-SL and Pro-LL economic
policy folks trying to backup the the status quo?
Over 1 year ago LL took action to resolve the
Linden Dollar Decline. And where are we now?
With a value even less than it was a year ago...

Net Result? Linden Lab's actions have been
worthless... Its time to give up the Socialist Policy
of Stipend Welfare and begin shifting gears towards
a Pure Capitalist SL. A place where you get NOTHING
from the Linden Government. If you need L$ to buy
something, you either earn it, or you buy from others
trying to sell it.

And its time to create in-game investments such as
Companies with share-ownership traded on an exchange,
bond markets, and last, but not least, prims as a commodity.
Its time to reinvent the Second Life Economy. Time for
some Margaret Thatcher Style Economic Shock Therapy..

Then its time to lower the cost or premium to relfect the loss of a stipend, and reimburse everyone who bought accounts more advance than monthly.

We paid for the stipends, we get them. Quit whining when your absurd ideas ar ebashed down..

I can't tell you how amusing I find it that these so-called capitalists feel the need to tax me 500L a week so that their business ventures can flourish. I mean let's face it - you get rid of my 500L a week stipend and that is no different than a 500L a week tax. It's even more amusing to watch them act like exogenous factors such as the $9.95 a month + tier that I pay have no effect on my status as a welfare recipient in this "closed" economy when it is the decline of the Linden versus one such outside factor (the US Dollar) that makes them run around crying to all that will hear.

The welfare argument is so specious I'm certain that deep in your hearts you can't possibly believe it either. But yeah, lose the stipend and charge to the moon to rez a prim and you'll fix the supply side of the equation. Sadly you'll also kill the demand side because a very large number of people will be out of here and then the Linden won't be worth the paper it's printed on...

For everyone that comes to SL looking to make a living, good luck. If you do, great. Look at it as winning some money on the lottery. Second Life is many things but it is not a real world, it is not a real economy and Linden Labs is not a government much less a central bank. As a for profit corporation, Linden Lab's only goal and responsibility is maximizing shareholder value. Unless you work for them and own a piece of LL, you're not a shareholder. If your goals and theirs happen to align, great. When they don't and you come out of the short end, please don't be surprised.

You are correct, LL is no Central Bank and never will be
with their reform policies that only end up worse than if
they did nothing. Maybe LL needs to take a few pointers
from Alan Greenspan.


“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.”
-Alan Greenspan


“The more flexible an economy, the greater its ability to self-correct in response to inevitable, often unanticipated, disturbances and thus to contain the size and consequences of cyclical imbalances.”
-Alan Greenspan


“History has demonstrated that implicit in any removal of power from central planners and broadening of market mechanisms is a more general spread of rights to individuals,”
-Alan Greenspan


"It has been my experience that competency in mathematics, both in numerical manipulations and in understanding its conceptual foundations, enhances a person's ability to handle the more ambiguous and qualitative relationships that dominate our day-to-day financial decision-making"
-Alan Greenspan


"The world of antitrust is reminiscent of Alice's Wonderland: everything seemingly is, yet apparently isn't, simultaneously. It is a world in which competition is lauded as the basic axiom and guiding principle, yet "too much" competition is condemned as "cutthroat." It is a world in which actions designed to limit competition are branded as criminal when taken by businessmen, yet praised as "enlightened" when initiated by the government. It is a world in which the law is so vague that businessmen have no way of knowing whether specific actions will be declared illegal until they hear the judge's verdict after the fact."
-Alan Greenspan

Of course - the gold standard - the cure for all of SL's ills! Let's make sure every linden issued by LL is backed up by bars of gold. Of course since the linden isn't an actual currency I guess the gold doesn't have to be real either. Tell you what - I'll rez some prims and slap some gold textures on them and I'll do a build of Fort Knox. Not only will SL be on the gold standard, a few more of those pesky lindens will be out of circulation when I pay to upload the texture.

Since only the most irony deficient person could miss the humor in comparing the Greenspan quote on "the world of antitrust" to your "free market" proposals that are about as un-free market as possible, I can only assume all this is just an elaborate piece of performance art. Congrats - really well done. I've been highly entertained.

Why you think the Linden Dollar isn't real currency?
Do you understand what Currency even is?

Currency is a "TOOL" used to trade goods and
services. Just because you can't stuff it in your wallet
or see El Presidente Phillip on the L$1000 bill does not
make it invalid. You use the L$ to buy stuff in the
Country of Second Life. A Virtual Country. And to
aquire the Linden Dollar to be used in SL, you need to
exchange your currency for it (ie: US Dollar). And the
current exchange rate is about US$3.57 = L$1000.

And as for the Gold, it can be (eGold). LL doesn't need
to stockpile Bullion in their company foot locker. They
can buy and sell their eGold as they add or subtract
Linden Dollars from the Market place. Or even if they
didn't back the currency with Gold, they could at least
setup a system where Linden Citizens can buy eGold
with their Linden Dollars. Currently the rate is:

In Ounces:
-------------
Gold = US$537.30/oz
L$/Gold = L$150,504 = 1 Gold Troy Ounce

In Grams:
------------
Gold = US$17.27/gram
L$/Gold = L$4,839 = 1 Gold Gram

When I go to an ATM and make a withdrawal, I've never seen the following notice:

You acknowledge that the Second Life service presently includes a component of in-world fictional currency ("Currency" or "Linden Dollars" or "L$". You agree that Linden has the absolute right to manage, regulate, control, modify and/or eliminate such Currency as it sees fit in its sole discretion, and that Linden will have no liability to you based on its exercise of such right.

No one has ever called the US dollar fictional. Only sovereign governments can issue real currency. Just because you can exchange a linden for something doesn't make it one. I can exchange a book with my neighbor for an apple and it doesn't make the book or the apple a currency.

Your eGold proposal just baffles me. Why am I buying something called eGold if there is no gold backing it? And if there is gold, why is LL in the business of selling it?

eGold is Real Gold. Read up on eGold:
Source: http://www.e-gold.com


As for this debate about currency. You claim that only
sovereign governments can issue currency? May I ask, what
would you call airline miles that allow you to purchase a
ticket if you have enough points? Give up? Currency.
How about a coupon to take $50 off the price of WindowsXP?
Another currency example... Wait, lets consult the trusty
dictionary:

cur·ren·cy
1. Money in any form when in actual use as a medium of exchange, especially circulating paper money.



So by DEFINITION, the Linden Dollar is a Currency that
one uses as a medium of exchange. When you want to buy
the plot of land for L$10,000, you are using the linden dollar
as a currency.

And that currency has value which is determined on the LindenX
by what a Buyer will Pay for L$ and/or what a Seller will Sell L$ for.

You might like these eGold Stats: http://www.e-gold.com/stats.html
And this one: http://www.e-gold.com/examiner.html

You are more than welcome to send me some eGold.

Pay Me eGold: http://2327104.e-gold.com/

That $50 coupon off the price of Windows XP is currency? Well why wouldn't the Mobil on the corner take it when I bought gas (and why do those coupons always say in the fine print they have a cash value of 1/100 of a cent). Frequent flier miles are currency? Well I guess I shouldn't be so worried a carrier will go out of business eating all those miles I have with them. You want to argue semantics, knock yourself out. No one is making a killing doing FOREX with coupons.

Well I think it's time to bid this thread adieu. It's just getting silly around here. I look forward to eGold adding the Linden to the other eight major national curriencies it supports.

Maybe you need to read what I wrote, instead of making foolish assumptions. I never said that the SL economic policy is working just fine. Disagreeing with you doesn't mean somebody is agreeing with Linden Labs. You don't have a monopoly on ideas.

I don't see how you can call the decline in the value of the $L MUDflation. The economic factors leading to MUDflation seem very different from a system where the currency is freely convertible. There has been no real in-world inflation, prices have stayed about the same as the value of the currency has declined against the dollar. Not MUDflation at all really.

LL has taken steps to reduce the inflow of new cash into the system. I'm not sure how you can call their modest reforms Socialist, except that you misuse that word so often it is becoming apparent that you aren't really familiar with its meaning.

I thought it was pretty apparent he wasn't too familiar with the meaning of "capitalism" (hint: it does not mean everyone should give you money because you ask them to)

Therefore the 250 figure means nothing - as the buyer and seller have agreed that on what the L$ is worth. Noone has ever said 'this is the correct rate -- its 250' they have suggested they would like to SEE that..

Ultimately its worth what someone will pay for it - and what the 'average' that might be I don't think has even had time to be determined.

Agreed. That 'target' is the crux of many of the discussions here, and as such I've posted a clarification request to Answers.

Wish me luck on an a reply.

I like your explination best, I always wondered why I've got bit of tori and cubes clinging to my clothing when I first log in!

Someone help me out here though, I might be off with this but I figured it was worth a shot calculating.

Lets imagine an Average Joe premium account holder:

Today's average is: L$278.79 / US$1.00

If you pay:
$22.50 Quarterly
-------
3 Months

= $7.50 A Month

Allowed holdings: 512
Total monthly cost: $0.00



According to "Land Fees" an extra 512 sq meters a month would be $5.00 a month.

If a player pays $7.50 a month, and the land "given" to them is worth $5.00 a month:

$7.50 Monthly Payment from Quarterly
-$5.00 Technical cost of land per month
-------
$2.50 Monthy payment that doesn't technically cover land

$2.50 at today's LindeX average of L$278.88 / US$1.00 means that $2.50 is worth L$697.2

A premium member gets about L$2000 a month.

Assuming we could consider this $2.50 going towards paying for $L:

L$2000.0
-L$ 697.2
----------
L$1302.8

L$1302.8 = $4.67

So a premium member paying $22.50 quarterly, who owns no extra land can make about $4.67 a month?
Assuming they bother to take that out of the economy instead of buying a few pairs of shoes...


So the possible $4.67 a month earned for doing nothing doesn't even cover the theoretical $5.00 "you kind of" pay for land? Or I'm completely off on all of this, I'm certainly not any good at math.

Stipends don't seem like welfare at all to me.

Are you a fool Michael? LL's attempts to set a price target
for the value of L$ is Socialism in its purest form. The very
act of the Government trying to direct the economic in a
specific direction screams Socialism. This is very different
than Capitalism, where the Government plays a hands off
role in daily economy. The Linden Labs only purpose should
be to set the parameters of the economy and let it run.
But just like Robin Linden and Co. did last year, they decided
to alter the structure of the economy to achieve a specific
result (ie: US$4=L$1000). That is Socialism my friend...
Plain and Simple. Price Targeting? PuhLez... Let the Free
Market dictate the Price of the L$. Not have the LL Govt
tweek the system everytime the L$ gets to a point they
don't like.

If you are going to tell me that direct intervention by LL
to target a US/L$ exchange rate isn't an attempt to run
a Socialist Economy, then my friend, you need to be schooled.
Your lack of understanding in economics is becoming
apparent that you aren't really familiar with anything
beyond the money in your pocket.



Read Up My Friend:
--
Source: http://en.wikipedia.org/wiki/Socialism#An_economic_system

As in the realm of ideology, there is no single consensus on what it means for a particular economic system to be "socialist". However, all socialists agree that a socialist economy must be run for the benefit of the vast majority of the people rather than for a small aristocratic, plutocratic, or capitalist class. In the mid-nineteenth century, when socialism first arose, many political ideologies of the day were frank in supporting the interests of elite classes. Today, in a world where many countries offer a broader electoral franchise, such open support for the wealthy would be the equivalent of political suicide. Therefore, most ideologies claim to support the greatest good for the greatest number, something that was once advocated only by socialists. Still, even today, socialism stands out by being particularly forthright in advocating what it considers to be direct pursuit of working class interests, even at the expense of what other ideologies consider the legitimate property rights of the wealthy classes.

Another Target Junkie.. High on Utopian Ideals that the
Gov't should arm wrestle the economy into a narrow bottle
that it feels is acceptable. Ignoring Free Market Forces in the
process...

If you don't like it, you can go back to Russia, pinko.

I agree with you 99%.. What I don't agree with is that
what LL would like to see and what they attempt to do to
achieve that result are at the heart of the issue.

LL wishes to jimmy the economy to get L$250, instead of
just letting it be and allowing the free market to dictate
where the value lies.. They want to CONTROL IT...
More Socialism at work trying to build a Utopia..

Steph, you're a little off there. The fact that you can't pay the Mobile withthe $50 windowsXP cupon is because that is not the *official* currency for trade in the US. It is an internal currency microsoft uses for marketing purposes. Thus, the places you can exchange it are limited.

I think we are wandering off the path here. The issue isn't if the L$ are or aren't currency. The issue isn't if they are or aren't backed by gold. The issue is that there is a situation that's going on with the value of the exchange and most of the population couldn't really care less about it. Not to mention that we don't dig the idea of impacting our enjoyment of SL because people want to make money out of the game.

Why is it most people feel they *need* to make money out of this? Sure, as I've stated before, it's really awsome thing to make real money out of virtual money. *AND* I can understand that many people will feel bad and may want to remedy any situation that could negetively change this. But, is it important enough to start all this hate campaign against all others who just come to "enjoy the show"?

Working in technology for all my life, I have come to understand that "everything is possible". All that's needed is will. I am sure there can be other solutions to the falling value of L$. Why come up with the easiest looking ones and shove it at everyone's face - insulting players in the process? Freeloaders, socialists, pot-smokers, welfare junkies, etc etc etc. WTF are you talking about? No one came and forced LL to do this. This was LL's policy from the start. You (ReBaDi and other pro-opressive-capitalism) can be well sure they know how all of this impacts the economy. They are even assigning someone to work on it full time. Rest assured that they are taking some time working at this precisely because the are looking for creative measures that can help fix the problem with minimum impact to the community.

Why can't you agree with this? What is so important about the inworld economy's health that you feel it's necessary to introduce such a widescale change in both the quality of SL experience and enjoyment for all?

This is a versatile world. There are many different types of communities. There's at least one full blown micro economy state, with roles, governments, taxes and all that. Why don't you take your shot over there - if it's soooooooooooo important? Who knows, you might even be elected president - where you can put your oh-so-awsome economic mind to work and fiddle all those cool ideas and see how they play. You might learn, as an old exotic saying goes, that even though they are both played by strings, one thing are guitars, and whole different things are violins.

Noted. Though I think I have different ideas than you about what makes an economy better. There is a way to get free content to new people, make 100% of the US$ that goes toward the game currency go back to the residents who sell the game currency, create new money that also give US$ back to the residents, pin the game currency to fluctuating around a specific rate through the same method of creating money that gives US$ back to the residents, copy-right products and scripts to stop unintended freebies from flooding the market, and a fee system that mostly charges the businesses within the world while keeping the players free until they buy content money to buy content. I'm not going to discuss details, I'm done with hoping if SL will make its economy more like how I want it.

Noted. Though I think I have different ideas than you about what makes an economy better. There is a way to get free content to new people, make 100% of the US$ that goes toward the game currency go back to the residents who sell the game currency, create new money that also give US$ back to the residents, pin the game currency to fluctuating around a specific rate through the same method of creating money that gives US$ back to the residents, copy-right products and scripts to stop unintended freebies from flooding the market, and a fee system that mostly charges the businesses within the world while keeping the players free until they buy content money to buy content. I'm not going to discuss details. I'm done with making suggestions for SL.

I'm glad that RBD has all the answers, so that there is no reason for any of us to continue reading this thread. He should probably go to Washington and tell Chairman Ben Bernanke of the real Federal Reserve Board that he's a socialist, as are President Bush's other nominees to the FRB. He might be suprised to learn that, as would President Bush, but undoubtedly will be grateful to be schooled by RBD's superior knowledge.

Capitalism! Liberalism! Blah!

All I know if this was ever implemented there better be an offline digital sandbox otherwise I probably quit. Imagine all of the scripters with their numerous prototypes and experiments. My r&d budget would make me bankrupt or I probably have to drastically cut corners and distribute a less tested inferior product.