Why not simply freeze the value of the Linden?

Perhaps this is a foolish question , and I admit my knowledge of Economics is on par with my understanding of Japanese (which is to say very little), but why does not Linden Labs declare that the L$ trades at 250L$ = 1US$, and freeze it there. Since they are the ultimate arbiter of this function, they do have the power to do so. Yes, if people wanted to conduct private trades at other values, that is certainly up to them, but if the Lindex were fixed at that rate, there would be little incentive to do so.

I have read the various articles on the SL economy. I have understood them, I think, but I still don't see why this solution should not be viable. It would certainly end the economic uncertainty we face now.

If someone could give a sort of "SL Economics for Dummies" explanation, I would greatly appreciate it. Thank you!

There is a long and short answer to this. I won't really go into the long answer, which basically goes down the road of "we want free markets". Pegging the Linden to a certain value has its own set of long-term problems.

Short answer: Linden Lab operates in the United States. In the US, well most countries in fact, if you specify to the public that you have a good that you will freely exchange for dollars, you then have to take that on as a liability on your companies balance sheet. We don't want to state the full value of the linden's as a liability, because we don't believe it is.

Ultimately, we believe that the "long" answer is the one that is in the best interest of our residences. If we believe that wasn't true, I'm sure we could come up with a way to deal with the short answer.