Some calculations using econonomic statistics

Sources for Apr/06: 59,277,885 L$
Sinks for Apr/06: 17,785,205 L$
This means around new L$ 41'492'685 (sources-sinks) for Apr/06 - which equales to rougly 139k USD.

New money supply will probaly grow at around 4% per month. However as dwell is now gone, you can substract around 4m L$ source from the April figure.

Est. new money supply for May/06: (59,277,885-17,785,205-4,865,302)*1.04=
L$ 38'092'478

And so on (lastmonth*1.04):

June L$ 39'616'177
July L$ 41'200'825
August L$ 42'848'858
September L$ 44'562'812
October L$ 46'345'324
November L$ 48'199'137
December L$ 50'127'103

This means, around new L$ 329'744'110 (sum of expected money supply for May-December minus actual may money supply) for the SL economy.

As has been pointed out before, apparently to no effect, the absolute money supply is meaningless without scaling it to the size of the population. No one cares that there's more money in California than in Vermont.

Taking the number logged on in the last sixty days as a measure of the population size, here is an estimate of the percapita money supply at two points in time.

1 May : L$6232
14 May : L$6067

There has been a 3% drop in the percapita money supply in the last two weeks.

I assume the money supply grows by 4% because the players number do aswell (rough estimation however I may be wrong).
As of this, the per capita money supply wouldnt change.

Here is the calculation:
Growth rate 4%

Month New L$ supply / Users / Money Supply per capita per month

May L$ 38'092'478 108972 L$ 349.56
June L$ 39'616'177 113331 L$ 349.56
and so on...

Looks like someone is listening to what i've been saying for the last 6 months after all!

Then why has the L$ dropped 25%? Your model can't explain that.

Perhaps it was never really worth that in the first place, and it's only now that people are beginning to realise.

If LL want an open market, they have to deal with where it goes. If they really want their imaginary L$250/$1 then they have to force changes on us, and risk losing a lot of people in the process.

Lewis

Quite possible. Though I would have hoped that as more people become involved in SL, the value would increase.

And putting a cat in a box won't explain quantum physics, but it's a good start .

That's another way of saying, as more consumers enter the market you expect an increased demand to drive valuation of the L$. You're forgetting though that as new people join the game, the number of content developers grows, possibly even faster than the addition of consumers, causing a supply side flood and potentially leading to devaluation of the L$.

Direct intent on behalf of some parties, laziness and contempt on the part of others, a basic lack of understanding of how the market works on the part of almost all sellers, and a general desire by yet others still to drive panic and firesale style sell-outs for their own amusement/profit/other.

As sudden market collapses prove, there is a *huge* disconnect between what people think, and the real 'fundamentals' of any economy.

Markets sustain worthless highs for the same reason Ponzi schemes continue to rob people of their money, generation after generation.

People will:

a) simply not think in macroeconomic terms in a meaningful way
b) often have more hope than brains

Both phenomena work just fine for us all... until the system gets soooo far beyond the breaking point that the default is catastrophic.


In a very twisted way, I think that seeing the $L roll off in value gently is one of the greatest affirmations that we *have* some sanity at play in our economy.

I think the cat is dead shall we look?

I think maybe all of these changes in the Lindex will happen gradually and slowly sometime by September and October. Dwell will be removed and the percapita money supply will continue to drop. Eventually the panic sellers will have emptied their Lindens completely. Sooner or later the Lindex will have to settle on a price that is its true worth. It is definitely not 360L to 1 dollar. Is it 300 to 1?
It would be nice if we could see some panic buying, but that never happens. Perhaps that is the reason why the Lindex keeps going up also. Not enough big buyers out there. We have sellers posting 500,000 Lindens at a time, but does anyone buy 500,000 Lindens at a time?

I don't know about big buyers but am amazed at how small some of the buys are. If you continuelly hit F5 you see 1000 Linden buys and occasionally 500 Linden buys. If people are using credit cards for these buys, I don't know what it costs LL but I know what it costs the 500 Linden buyer. They just spent $1.97 for $1.67 worth of currency. That is an 18% commision.

18% commision, no wonder why there is issues. Shouldn't be a straight 3.5% like it says on the page?
What about people that buy Lindens when they use the dollars loaded up in their account? It doesn't cost LL anything for that, then it should be 0% to buy Lindens.

The 3.5% is on the sell side. On the buy side it is a straight $0.30 charge so if you buy $100.00 worth you pay only 0.3% comission. So when you sell you can offer any size lots and the total cost is still 3.5% but when you buy the cost is a function of the size of the purchase. Given that fact it makes you wonder why the big money holders don't spread out there sell orders over a range of rates such as L$309/1USD, L$308/1USD, L$307/1USD,L$306/1USD, and L$305/1USD instead of 500K Lindens all offered at L$309/1USD.

Don't look, it might kill the cat!

http://en.wikipedia.org/wiki/Schrodinger's_cat for those that missed the reference, it's a lot more educational than reading pseudoeconomic threads on the forums.