Please stop the nonsense about inflation

In looking at the MER for August and looking specifically at the money supply I think CCP needs to sit down and very seriously think about what is going on with the money supply.

image

All the early gains in the money supply for 2019 have been more than wiped out.

Now some (economic know nothings) might think this is good. It isn’t. Having a money supply contract sharply can lead to deflation. Deflation is bad because it can lead to a collapse in consumption spending which in turn leads to a collapse of the economy.

Yes…the real world:

During the Great Depression this was the primary problem. In the U.S. the central bank let the money supply collapse during the start of a recession. This lead to substantial deflation which caused people to hoard cash. The reason is holding cash now has a positive return. So any and all consumption spending that could be put off was. This means firms suddenly saw a lack of buyers and eventually started firing workers and even shutting down. Even in 2008/2009 there was considerable concern about deflation as a result of foolish moves by the Federal Reserve during the early days of the recession. At that time the Fed was still worried about inflation and was contracting the money supply. Even when they’d give money to banks after problems became apparent they’d “sterilize” it first (take an equivalent amount out of the money supply first so the net change was zero).

Now some might be tempted to say, “But the real world doesn’t apply to the game!”

Okay fine, then STFU about an increasing money supply and inflation because you dipshits are making the same goddamn argument. You are looking at real world events and data and history and extrapolating to the game.

We can also see this effect graphically,

And look at the price indices. In particular the CPI has been pretty goddamn flat since 2000-f–king-12.

The evidence has been sitting in front of everyone’s face yet there is strange and cult like fascination on inflation.

12 Likes

This is only true if you have an increasing population and decreasing money supply though. Which the increasing population is almost always true in the real world.

You also don’t get isk leaving the economy in the same way in the real world, someone dying doesn’t just delete their cash. And those people leaving is the main cause of the drop in money supply.

In short I think you are simplifying out a few key differences here that mean seeing a mild decrease in money supply is actually healthy while an increase while the player base shrinks could be a sign of excessive increase on a per capita basis. CPI was starting to move at a decent pace the couple of months before invasion and has a noticeable hill there.

Knowing you do this sort of stuff for a living I am interested in seeing you go into further depth on the points I’ve raised though.

9 Likes

In August more ISK was sunk out of the game than created. And a decreasing population also means a shrinking economy as well. GDP, crudely put is productivity*people.

It has certainly exacerbated the decline and some of it might be bots which is not bad at all. Still, this is something to be worried about…not inflation. In the CPI in game inflation has not been an issue for years…literally.

Yes, it was, but still below it’s 2012 mark by the looks of it. It suggested a possible need to to limit the growth of the money supply, but not shrink it.

To be honest, I think what we are seeing with the ISK supply is causing CCP to reverse course on the blackout. They don’t want to tank the in game economy.

2 Likes

Some folks sure do get into this game. srs bzns and all…

I was like that and more the first couple years after I discovered new eden. Nowadays, over a decade after my initial steps in NE, I try not to take it all so seriously.

If you’ll pardon me, I have lazors that need firin.

5 Likes

Mining or the other kind? Just curious…I like both. And guns and missiles and rails and blasters too.


Do note “Active ISK delta” that means banned accounts and ISK removal by GM intervention (from RMT-related accounts and bot beneficiaries). So the natural deflation is miniscule (0.5%) and its way better than having 10% inflation/month.

It also was a month of increased sales taxes and fees and heavily decreased ratting in NS because of blackout:

so the game’s economy hasnt stabilized/adapted to those changes yet. Imo, there is (was, as CCP decided to lift blackout) nothing to worry about…

1 Like

If deflation is large enough the adaption is really, really bad. See 2008/2009 or the 1930s. A little bit of deflation or inflation is fine…too much, not good.

The conflag / scorch / aurora variety. I also don’t have anything against the digging type, but there’s just something about zapping things and the smell of molten tritanium.

2 Likes

the fact is - there was not much deflation last month to raise an alarm… and i do think that 10% inflation in previous months (if we remove GM intervention numbers) was, as you said, too much to warrant some drastical changes (raised taxes).

You don’t want to wait when the money supply is collapsing back below where it was 9 months ago. The level of deflation would be bad and the cure is inflation…lots of it. Don’t do the see-saw if you don’t have too.

1 Like

A Cash Printer only helps the printer keeper and his close colleagues.

Everyone else pays for it with inflation, unreasonable resource allocation, economic stagnation and a economy crash.

The Global Economies that keep tapping their economies with printed money without gold standard, are rewarding irresponsibility. Making everyone pay for the irresponsibility of some.

Sooner or later the bill comes. And those who are alive will have to pay its price.
The more we inflate the debt, the more we will suffer to pay it.

All very similar to a magic trick.

3 Likes

There is a ton of research showing that having the money supply grow as the real economy grows is actually a good thing…it keeps deflation from occurring.

Only if there is inflation and if it is “small” and isn’t volatile then people can plan for it. It isn’t an issue.

Yet these very same economies have fairly stable inflation rates…something is not matching your narrative.

1 Like

Your finance wizardry seems next level…im just a chump but how would the economy look if during those same time frames you mentioned there was an influenza or a black plague or a black out that wiped large percentages off the map at once?

It was pretty bad. Labor became scarce so wages were going up, but governments/rulers tried to stop it but that didn’t work to well as local lords and such would get around the wage limits with in-kind payments (here is your 8 schillings…and a bag of potatoes and a pig). Production took a major hit so prices tended to go up as well. So did supply chains, to the extent that they existed, which would cause local price spikes as well. The reactions were alot like today (with anti-price gouging laws) in that it was like setting the price to suppliers to zero and to buyers to infinity–i.e. you went without. The higher prices for labor spurred labor saving innovations where the long term effect would be to increase production. One could even argue the plague was a significant factor in ending serfdom.

1 Like

So the everything you said was interesting, however when do i get a minimum wage in Eve where im garunteed to get x isk for every hour i play so that i can keep up with said inflation without having to multibox 50 acounts in null. Yes mining and other materials will go up with inflation but static isk faucets, missions blue loot etc, dont.

2 Likes

So I was scrolling through the General forum, looking for other stuff, and I noticed no threads/posts about inflation.

Scrolled further. None.

Scrolled further. Zero. Zip. Nada.

One 6-month old thread about Plex prices, which has gone up and down and up again, and has nothing to do with whatever Pech is talking about.

Who are are all these “economic know-nothings” Pech is talking about, and where is this weird “cult like fascination on inflation” occurring?

It is a common belief/argument in many threads. They pop up periodically where people propose ways to reduce the creation if ISK because of inflation. Might want to try a more exhaustive search method.

Example

Example 2

Example 3

1 Like

The amount of BS…

The deflation is only an issue because it has an impact on LOANS IRL. because those are indexed on the inflation.
In Eve you have no way to make a real bank with its own money, so inflation/deflation is just nothing.

IRL a little inflation is good because it encourages investment while still providing the stability to make small profit worth it.
In the game we don’t care.

4 Likes

So something like 5 mentions of the word inflation, across 3 threads (2 of them months old, 1 closed) and almost 4,000 posts. And the only one actually arguing about it is you.

Well damn, good thing you were there to stamp out that fire for us!

6 Likes

I’ll always support your posts, but try to engage in the topic at hand

(hint, he quotes smith free market as the ideologue, but he has a good skin and writes solid arguments/
Just let him unleash his Adam Smith quotes on you)

With no context

Aaaand probably nothing to back it up other than arguing for the sake of it (which is a legit life choice)

As you were