Perhaps they won’t, but they can so it must be taken into account irrespective of what one may think.
Prices… prices… prices… is that all you’ve been thinking?
I’m talking purely talking about monetary inflation irrespective of prices.
I’m not saying that monetary inflation is creating price inflation which is hurting the feel of the game for EVE players.
What I am saying is that due to the over-inflation in isk supply(faucets) as compared to isk destruction (sinks) the isk creators (bounty grinding players) are being given a feeling of having less of an impact on the EVE economy than they would be if isk supply/destruction was equalized.
What would make you feel more effective, being a drop of water in a large reservoir, or being a drop of water in a small narrow stream?
Most would feel more effective in the small narrow stream as they would have a greater effect on the stream than they would in a large reservoir. A large reservoir may have a very small outflow compared to a possibly much greater inflow. The large reservoir gives a feeling of very slowly flowing or perhaps even being stagnant. A small narrow stream can have an equal inflow and outflow. The stream gives a feeling of a relatively fast flow.
The drop has a greater impact on a small equalized stream than a large reservoir.
Right now EVE feels like the large reservoir when it could just as easily be a small, fast moving, equalized stream. Right now EVE feels slow or stagnant when it could feel fast and alive. (Of course I’m talking of those who create EVE’s isk not pvp players)
The OP specifically phrases it as “inflation in the ISK supply”.
A “general” increase in prices is relative. What is general to me is not necessarily general to you.
A “general” fall in the purchasing [power] of money is dependent on what we tend to buy. It is also informed by WHY we buy it. If you buy bread because you’re hungry but I buy bread because I want to make money, then if the price of bread rises, you eat less but I only make less money, or, I may even make MORE money from higher priced bread. And if that were so, I might want higher prices while you might want lower prices and I might view rising prices as “healthy” and you might view rising prices as “unhealthy”.
First off, simply having a growing money supply does NOT imply that there has to be inflation let alone excessive inflation. If the real economy is growing at say 3% and the money supply growing at 3% then inflation is likely to be zero. If in the real economy grows at say 4% while the money supply grows at 3% there would be modest deflation.
Given that the money supply has actually declined for 2 straight months we might actually want to consider increasing the growth rate of ISK.
Also, the notion that CCP can manage both sinks and sources of ISK so that the ISK supply growth rate is zero presumes a degree of information and planning that not even CCP has.
You’d probably be very well served to read Hayek’s “The Use of Knowledge in Society.” Your grasp of economics is like that of modern economists, that the economy is an engine that can be “fine tuned” like any other machine when in fact it is more like an ecosystem and when you try to control one part, the other parts react in ways that you cannot foresee and they end up causing additional problems and issues.
Inflation, which is a monetary phenomenon, show up in…wait for it…prices. So yeah, we should be looking at prices.
What does this even mean? It sounds like a load of nonsense to me. Nobody sits around worrying about their effect on the economy? When you go to work do you worry about your effect on the economy? What kind of collectivist clap trap is this?
No, it is the most irrelevant thing I have read on the forums in a long, long time.
Who cares. I do not care why you buy something, nor should you care why I buy something. That is why prices are so important in terms of conveying information. When the price of a good goes up that tells you to economize on that good. You do not need to know why, simply that it is, relatively speaking, more scarce and you should economize. Prices allow for people to make decisions throughout the entire economy without having to have detailed information about each good/service they are buying.
The entire issue of why I buy X is and should be irrelevant to you. That my purchase of X will have an impact on the price is all you need. People want to look at why people buy, but that kind of information is going to be largely useless. How many transactions do you think take place both in the IRL economy and in game for say a month? I’m going to say a trillion or more for both. How can you even hope to grasp that information and use it in a meaningful way? The effect of those transactions on prices however will tell you all that you need.
That’s quite different to the entire market though which is what inflation and money supply are about.
Forecasts like you are talking about are based more on supply & demand predictions.
Inflation (short hand for “price inflation”) is an economic phenomenon first and foremost. Monetary inflation can occur irrespective of price inflation. Even though it’s general consensus that monetary inflation has a causal link to price inflation the means to measuring that link are still debated in modern economic theory. It’s not a direct link. You can still have inflation of the money supply without seeing any inflation of prices.
I’ll try translating it a different way. Due to the excessive increase in the isk supply over the destruction of the isk supply, isk creators (bounty grinding players) are seeing less value for the isk they produce as compared to what could be with isk supply/destruction equalized.
What are you meaning by ‘less value for the isk they produce’? Because if you mean purchasing power then you’re wrong. Prices are the same, purchasing power is the same.
You say it’s not about prices and then waffle on about prices…
Like teckos explains, why people buy things is irrelevant. How much people buy is also irrelevant as long as there are still some left.
All that matters is the price of goods/services. That is the only measure if your purchasing power. The only measure of the value of your isk. That’s why the cpi is a thing. Focusing on one commodity is a useless measure of isk value because the vast majority of us, if not all of us, trade in more than one thing.
No one buys everything in the economy. Different classes of player buy different baskets of goods. For instance, miners buy mining laser crystals, but not tritanium. Manufacturers buy tritanium but not mining laser crystals. If the overall inflation indicator stayed the same but the price of tritanium spiked while the price of mining laser crystals plummeted, miners might see the value of their ISK increase while manufacturers might see the value of their ISK decrease.
Why people buy things is highly relevant, both in the micro and macro economic realm. Manufacturers cannot build (most) things without tritanium, but miners can actually mine with very high efficiency without mining laser crystals. This makes the demand for tritanium inelastic whereas the demand for mining laser crystals is elastic. If the price of tritanium goes up, there must be a sharp reaction from the economy, but not necessarily a sharp reaction in price. It could be that manufacturers just stop producing or produce more efficiently or direct more production capacity or market resources to procuring tritanium. (Think: searching more market regions. Placing more orders. Recruiting more miners. Training reprocessing skills. Deploying an engineering complex, etc.)
Now, I don’t know if ISK faucets and sinks are or should be “equalized”, but I know it is not simply about one number. And even that number looks different depending on where you’re standing.
If one commodity price changes but others dont, it’s not the purchase power of isk that is changing (i.e. it’s not inflation), its the commodity that is changing.
Don’t make Milton Friedman’s ghost cry. You are confusing changes in the price level with inflation. A price can change if the underlying supply or demand changes. This is not inflation. Inflation is due to a increase in the money supply and leads to an increase in the general price level.
Yeah, and this is called price inflation which we are, in general, not really seeing. See, if I go out and make 1 billion ISK next month chances are I am not going to spend the entire 1 billion. As such most of it sits in my wallet. Unlike a modern economy that ISK is not going to go into circulation. With that ISK not in circulation it cannot have much if any effect on prices.
As for things like PvP having a bigger wallet than a smaller wallet translates into a more PvP than less. The relative impact of a loss is smaller with more ISK in my wallet than with less. So more ISK creation means a larger propensity for PvP.
Really not sure where you studied economics or if you did at all, but you’d be better served reading Hayek and Bastiat, and fortunately Bastiat’s stuff is free and the Library of Liberty and FEE you can a number of Hayek’s writings for “free”.
Milton is awesome, but ghosts aren’t real. Inflation is a general increase in prices and fall in the purchasing value of money so I’m not confused about it’s definition nor how to use it. I’m just saying that increases in the general price level of an entire economy can be attributed to monetary inflation, however that can be hard to detect and the link may not be very direct. If we’re talking about PLEX though it’s an obvious indicator of the inflation of the isk supply as it, mostly, has a single purpose of supplying subscription time for players.
I’m familiar with Hayek although I’m not so familiar with Bastiat. At some point I will do some reading on Hayek and Bastiat as time permits. Milton Friedman has been a big influence on me though
“less value for the isk they produce as compared to what could be with isk supply/destruction equalized.”
By that I mean if the isk creation/destruction was equalized there would be less active isk available in the economy and thus an increase in the value of the isk supplied by the isk creators. This would necessitate a decrease in general prices which we would in fact see (more obvious with PLEX).
