How much does the exchange rate depend on land supply?

Now, I know virtually nothing about the economy, other than the exchange rate isn't what it used to be. I was just wondering what would happen if the Lindens stopped releasing land for a week or two? Or longer even.

I'm not sure if this is even do-able due to the system of selling mainland sims whole.

Just my enquiring mind

The long term L$ exchange rate depend on how much L$ are created vs how many L$ are remove from economy. Land does not create or remove L$.

But it does add to the amount for sale on the Lindex.

It also adds to the demand. (Or so it would seem.) Buyers need Linden to buy, then sellers need to sell some portion on the Lindex to create U$ profit. (OTOH, the buyer then needs to sell $L to pay tier, or at least he has the choice to.)

Yes it does.
Over-supply of land also drives the price of land down, which affects demand (ie people need less L$ to purchase).

edit: by no means suggesting it's not easily trumped by inflationary effects.

The only way more land could make the $Linden go down if land holders / sellers cash out large existing holdings of $Lindens to $US to cover tier or pay out for initial purchase of sims in $US.

Would not the number that would be interesting (and likely to decrease the $Linden in the future) in this case be the amount of $Linden held by existing large players who will want to realise $US?

Here's a potential effect, I think:

- when land is put on the market, the demand for L$ rises: the rate decreases (see February LindeX data)
- once the land is all sold and tier day approaches for the land barons, the L$ show back up on the exchanges and the rate rises (see March data)

Also, when LL introduced the LindeX exchange, they thought that making it easier for new residents to buy the L$ would make the rate decrease (=more value for L$). Unfortunately this also means more people find it easier to sell their L$, which completely compensates it.

So if stipends are cut, all sinks are removed and we only see new players coming and none disappear then the rate of the L$ would remain the same till eternity? Even if all those new players would like to get L$ to buy stuff?

If you believe your own statement your answer should be yes as the scenario would have it that you have no creation or removal. Off course in reality the answer is no.

The long term L$ exchange rate depends on how much L$ are put up for sale vs how many L$ are wanted. Creation and removal do indeed influence the supply and demand but there are a lot of other factors that come into play too.