f13.net

Submission by Koboshi (http://www.f13.net/index2.php?subaction=showfull&id=1127125588&archive=&start_from=&ucat=1&).

The crafted gun vs the droped gun argument isn' t necesarely true. If for example the crafted gun is slightly better for its requirements compared to droped guns of equal quality, then that slight advantage means more market power. I don't think crafted items selling for more than the material to vendor is a good way to go either since it discourages interaction with the player market by crafters. Leting NPC prices scale with the inflation doesn't really work in most MMORPGs which I've played, since there's so little stuff actually bought from NPCs, especialy in end game where the largest portion of the economy is runing.

WoW has one sollution which is working fairly good, they have a very hefty repair bill. Money doesn't come all that easy once you reach 60 because of this. The economy is probably inflating to some extent, but it isn't that noticeable yet.

The best mechanic imo would be an optional money sink which regulates the inflation. For example lets say our game has a mechanic where you pay a fairly large sum of cash to a blacksmith which then improves an item. Every try has a chance of failure, everytime you suceed this chance of failure increases. This mechanic would stabilize the market since if the market is trying to inflate, then people will get their hands on money for "cheap" blacksmithing. Empire building ala Shadowbane is another money sink which could work fairly well. If there's enormous ammounts of cash in the system a lot of stuff will be built, and most likely a lot of it destroyed as well.

Umm, that was all interesting and stuff but MMO economies have been studied ad nauseum since, well, at least UO and probably longer if you include MUDs (but the Web was just dawning back then so it was harder to find research about that sort of thing). I still vaguely remember that UO presentation discussing Origin's failed attempt at a "closed economy" (was that Raph's presentation?).

If you are interested in this stuff, you can search the Web and find lots of articles and papers on this sort of stuff. Here's an 107 page one as a starter:

Dynamics of massive multiagent economies: Simulation and analysis of inherent problems (http://www.sal.hut.fi/Publications/pdf-files/TSPI04.pdf)

Edit: changed wording

Surely it's still fair game to write about if no-one has got it right yet ?

Certainly but I didn't see anything new in Koboshi's analysis of the problem.

Two words: EVE Online.

Damn straight! I mean seriously Trippy I agree with your nihilism to some extent, this current model of MMOGs is doomed and to harp on it is only to kick a dieing guy in the crotch.  I mean that's basically the crux of my argument.  However, although that particular evolutionary branch of MMOGs might be doomed to extinction, until a viable competitor to that form arises it will never be replaced.

What is my suggestion for an alternative form?  An MMOG designed to have a functioning economy. I know it seems as simple as I tried to make clear in my article and yet it is seemingly beyond the comprehension of many, including our very own Sairon.

Sairon, I am sorry, but you are exactly the case I speak of.  NO, adding just one more patch won't magically make that lead balloon they call the flow through economic model float.

So, for this economy to work out, who's going to be poor?

--GF

I couldn’t say, but there will be poor. There are two points I have to make on this topic.

One, MMOGs are by nature competitive, if for no other reason than you will compare yourself to other players in it. as long as you understand that then you must concede that there will always be losers in MMOGs in fact if you really want to be honest there is only one winner, the rest of the world is full of poorer people. The point I am trying to make with this article is that developers need to stop trying to tell those who are poor that they aren’t by flooding them with money.  Rather I want to encourage designers to face the real flaws and fix them. For example, figure out a way to make the game fun enough that the poor don’t mind being poor. (see: Puzzle Pirates, I could spend my life as a jobbing peon and still be content with the game.)

Two, if you still don’t want to play ‘cause you can't stand not being the most powerful cock in the world then play single player games. Think of single player games like a good prostitute. They'll stroke your ego and tell you that you’re the best they have ever had. They’re ready to go when you are and will get out of your life when you don’t want to play with them. MMOGs on the other hand are more like the bar scene.  It’s all too common to get cock blocked when someone who spends hours on their body wants the same thing as you. And sometimes you need a wingman to get what you want.

Bzzt, wrong answer.  Both the crafter AND the hero are causing inflation, because both are creating wealth.  They do so through time.  Killing creatures takes time, as does crafting.  Sometimes it may also take money (wear and tear on swords, shovels, whatever), but money = time.  In terms of economics, it's just a matter of who is more efficient at their business.  Which class has a better model for return on investment?

Can you please expand upon this?

Koboshi, outstanding read, even if it has been written about before.  Only flaw I see is that there are limits to resources in RL as opposed to in MMORPG's.  This has obvious impacts on the issue also. 

True, but you are side stepping the issue. The comparison I was making through analogy was between miners and crafters. The miner is collecting objects of value and selling them, the crafter is creating value by taking an object and increasing its value. The value added to the object by the player is made up of A) the value of the work required to gain the product, B) the market value of the finished product and C) the COST of the input resources. It’s basically only the third value that differs, B is by definition the same and I will say for the sake of argument that A is also equal.  For the miner C is tools + upkeep. Here is where you side stepped, for the crafter the formula is tools + input. But input is mined product.

Which means all of this logical argument is moot because a crafted product requires mining AND crafting work, mining AND crafting cost. So when the formula is compared again the miner's costs negate each other leaving miners with 0 as their relative cost. Or to put it another way

We've seen this dynamic before, Mythic and SWG come immediately to mind.  Basically the answer is no, there is no market power resulting from the slight advantage.  Remember you're comparing something that is "free" versus something that will cost a premium if it is at all attractive.  Additionally there are materials costs that the crafter needs to recover.

The end result is that only a few guild crafters do well and everyone else finds another game to play.

Personally I'd rather see almost no drops that are finished usable product, at least for weps/armor.  I'd rather see drops that are components with some "products" that cannot be directly used, only recycled into components.

All that is needed is reverse auction support and there is no more burden for the adventurer/crafter to get what is needed.  Crafters would truly be separated into master merchants versus master artisans.

Did you play the same SWG I did?  In the SWG I played, even a slight advantage was generally worth an extra 100k credits to the hardcore types.  (I know this because I played a weaponsmith.)

Both the miner and hero harvest value; the crafter increases value by adding utility.


There aren't many games where hunting mobs has zero cost (Edit: Note that time = cost).  Equipment wears down, potions get used, bandaids are applied.  Sometimes heros die, either to mobs or PK.  All of these things introduce cost and risk.  It might be that for a given game, the ROI for being a hero is greater than being a crafter.  That is usually augmented by having crafting carry less risk and is something like the difference between an investment in blue chips vs junk bonds, but the degree of difference depends on the game config.  In some games (or for specific skills), crafting may have a superior ROI and less risk, which is highly problematic.

But assume the hero has better ROI and more risk; the crafters are still not dismissed, because they help create a baseline for supply precisely because of the risk involved with hero work; fewer people take that road due to risk, which reduces supply, which drives up cost.  Crafters can more easily create supply even with worse ROI.

Sure and a few times I was one of those people who sought WS like you out.  But these are the very high-end weps you are talking about correct?  Not low or mid-level items.  Same problem with DAOC - tedious not-fun crafting with no real market unless one is maxed out or a guild supplier.  This really is my point - drops were perceived as "free" and craftables did not rise to premium (let alone) epic specs.  Adventurers tend to see gold as a brag ranking, not something to trade for stuff.

Crafting should be viable at all levels - a level 1 should have no problem earning copper selling items consumed by adventurers of all levels.

I actually was able to make a little money during my WS grind by selling cheap grenades, which were handy for would-be commandos grinding combat exp (this is before the CU so I'm sure that market is gone now).  For the most part, though, yeah, you just had to grind to master first and foremost, because there was almost nothing to do before master.

(edit) So craftables WERE worthwhile in SWG, and were almost always enough of an advantage over drops that people would buy them, BUT the only ones who could make craftables that didn't completely suck were people who'd already hit master in the profession.

God, thinking about it just makes my blood boil all over again.

I agree - crafting/merchanting is my preferred playstyle and I don't like this anymore than the adventurers.

There is almost never the true time value to an item - what little there is focuses solely on resource gathering.  This is where we segue into on- versus offline mechanics.  I should not be able to run out tens of highly-valuable items in mere seconds.  And definitely not to skill up.  Skilling should be a long offline project.  Artisanship should also have on and offline characteristics.

Roac, you once again missed the point so I will make it totally clear with a bar graph

|
| Mining costs
|
| Mining costs + Crafting costs
|
----------------------------------------
               Cost

Whatever hardships a miner must endure for their resource is of no consequence because the crafter must mine as well as craft and so pays the costs innate to both professions.

The problem in this case is, as the others have discussed, with comparing miners (hunters, heroes, or even actual miners) to crafters.  This happens when a hunter can retrieve a weapon from a corpse that is comparable to one which a crafter produces, which is created by first either mining product or purchasing another’s mined product, and taking that product and creating another product from it.



Now, to regain some semblance of topic I will point out that this entire example was simply meant to point out that the "gold" flow through model includes more then the gold that monsters drop, it includes anything they drop.  The point is that despite the fact that too many say that the economic model is good enough there are consequences to acceptance.  Until the players, like the communists in the example I gave, realize that they are really getting fucked by the economy they aren’t going to complain. I look at this like AIDS or cancer; people don't die of AIDS, they die of the flu or the cold. It doesn’t matter if they got the flu shot or if they took Nyquil they are still going to die because they aren’t treating the cause they are treating the symptoms. Players must be told what this disease is and what steps they must take to cure it otherwise they will keep asking for the patches thinking that’s all they need. 

“I’m sorry MMOGs you have a bad economy.  No, no, it’s nothing you did, it’s genetic.  The bad news is its fatal, the good news is now that we know about it you don’t have to pass it on to the next generation.”

I'm not really proficient with economics, but one of the things I hear brought up whenever someone in WoW mentions "Gold Farmers" over the general chat is the insistance that inflation isn't always bad.  If crafters decide to charge 1000g per stack of Ore X, then either the market will support them or it won't.  If inflation gets so bad that few people can afford their stuff, they'll have to pull their prices down.  But if most people can afford their stuff just fine, then what's the problem?

For example, in WoW, I have a herbalist who makes WAY more now in the auction house selling stacks of herbs than he did at launch, presumably because of inflation (lots of high level players want to power their alts through the alchemy profession and don't mind dropping some gold on my crappy mid-level herbs to speed up that process).  I generally take that cash and use it to pay my bills, which are not affected by inflation (training costs, weapon upkeep, et cetera).  Now, if I was buying  herbs, yeah, I can see the rising prices bugging me... but if they bug me too much, I could go out and pick my own.  So, from where I'm sitting, inflation is helping me more than it's hurting, and I can keep it that way as long as I don't buy too heavily from the auction house.

So, I guess what I'm wondering is: why is inflation such a big problem with MMO economies?  What kind of negative effects does it have on the players?

The only concern I've ever taken seriously is the difficulty introducing future subs into the game.  It is a barrier to entry to bring new folks into a crashed economy as much as it is a retention mechanism for older subs who can't let go.  UO comes to mind, hence why OSI was correct from a business POV to begin selling jumpstarted characters, etc.

I maintain though that with sane drop rates and plentiful gold sinks that incent players rather than penalize them, no MMOG economy can ever be that oppressively crashed.  Dupe/exploits do far more to damage economies than anything else.  Players need incentives to burn items and cash, something that fights the inertia of using gold as a brag metric.

It's a pointless graph, because you assume that the cost of "mining" mobs is identical to the cost of mining raw material (say, iron for swords).  Beyond that, you've just argued against your statement:  "to the hero, there is no cost."  That statement is absurdly false.

The mere point that there are multiple methods of introducing wealth means that whether A or B is more expensive is determined by config - but neither one is free.  Simple UO-ish example; you can get a sword by either mining iron (harvest) then forging it (craft), or killing a certain mob ('harvesting' mobs).  Based on that statement alone, you have no idea which is more efficient.  It says nothing about how uncommon the mob drops are, how uncommon the mobs are, how uncommon iron deposits are, how difficult the mining process is, how difficult the crafting process is, or how tough the mobs are to kill.  One could be absurdly simple over the other.  Even if the crafter has to harvest + craft, both steps could be by far easier and/or more easily reproduced (volume) to killing a mob.


Another bad analogy.  Not about communism, but the blanket statement that inflation is a bad thing.  It's not, and even basic macroeconomics tells you that at its core, inflation is a "tax on having money".  Meaning, it encourages people to invest.  It's only a good thing, that is, at low levels; too high it's extremely disruptive to economies, as is deflation. 

You might try to make a pitch for an open economy with 0 inflation, but you'll never see it in an MMOG for one reason - people want to hoarde wealth.  They want to get rich, but doing that means taking money out of the economy and putting it in their house, bank, etc.  You can't just code away banks because again, people want to hearde wealth.  Don't remove such a basic feature that customers want.  Nor can you go with a closed economy - it's just not going to work, and far, far too easy to break.  If it's open, you're almost certain to wind up with inflation just because there is *any* sort of hoarding.  The trick is trying to govern it. 

Faction grind (for Kingsblood at least).

Good serious question. So, here goes my attempt at an adequate answer...

The three main problems with inflation:

  The first one, which I covered in the article, is that inflation makes it hard to recognize the true value of the currency. If you started out selling your product for 100 and you’re now selling it for 1000 how much of that is value and how much is inflation? Are you selling it for more or less than you used to? If someone offers to sell you a sword for 100,000 is that a good price or a total rip-off? When people can’t answer these questions the usual supply and demand economics you spoke of can't work correctly because a balanced market is one where everyone knows what everything is worth.

  The second one is that when a new character enters a game they are asked to take the same quests you did when you started. They will be rewarded for the quests with the same amount of money as you were, but when you were paid that money a while ago it was worth more than it is now because of inflation, which means that the new guy is really getting paid less than you did for the same job.  Or to put it another way, let’s say he got paid 100 for the first quest he just finished (I got no idea if this is reasonable in this case but its an example so just go with me on this). If he was playing at the same time as you he could afford the herbs you sell but with that same 100 today he isn’t even close to being able to afford them.

  The third one is that the game has some hard coded values, in the form of NPC shops, money sinks, NPCs that give quests, and monsters that drop loot.  When inflation changes the value of money it also changes the prices and rewards of these systems. In this case it’s a problem of NOT having inflation. How to put this… it’s the same problem as a flat tax. The wealthy pay a smaller percentage of their money to the money drains whereas you pay much more of your income relative to them. It keeps the poor down and makes the rich, richer. This means essentially that the carefully measured balance the game devs worked on before releasing the game is meaningless, as was the real world time and money spent on that part of production.

Every player is negatively effected by one or more of these problems as such it seems to me to be an important issue to address.

Roac, the communist tale is about the failure of the One More Patch mentality, not inflation.  I was pointing out that OMPing leads not to a solution to the problem, but to the obfuscation of it.  When this situation arises people search for the cause of their problems and since the true cause is hidden they rally around snake oil peddlers, flashy politicians, and cult religious figures. (Read: dupers, game devs, and Uberguilds.)

Furthermore I have not suggested that inflation can be stopped, nor that it should be. If that is what it seems I regret it.  However inflation is destructive in its current form and it is a failure of developers and players alike to acknowledge that it is. It’s like crabs in a pot of water with the temperature being slowly increased. Each one just keeps trying to climb on the others to find the coolest part of the pot to sit in, absolutely ignorant of the fact that they all should be trying to climb out of the damn pot. I want to change the focus of discussions from what a reasonable KPH is with buffs from various skill trees, to what inflation percentage is acceptable in a growing economy.

There are pitfalls to a closed system, but are they really unworkable?

I guess the main problem is item hording, and dealing with it. Players don't like decay, but you can't have players just grabbing up a bunch of stuff and storing it away, thereby substracting out the amount of free floating value in the economy. New players coming into the game is a not a big problem, as you can just inject some money into the economy. Old players leaving isn't a huge problem either I don't think.

The problem in games is that given enough time you can create an infinite amount of wealth, and the amount of time that "enough time" is is relatively short. You can just kill rabbits all day every day and collect their skins and you are creating wealth. Now rabbit skins are worth 1/10th what they were before. In real life you run out of rabbits, at least temporarily.

This isnt' so much a result of inflation, but more a result of rising demand.

Overall, inflation sucks. In real life, salaries are adjusted for this. In a game, nothing is done; those orcs are always on the same loot table, and the amount of stuff within the open market is not going to change their loot tables.

That's nice, except I wasn't talking about the One More Patch mentallity, but about inflation.  Your allusion to "getting fucked" was the result of inflation stealing from players.  That was why I started my paragraph to your quote with "not about communism". 

Not that the communism analogy was that hot either, because even capitalist nations (say, like the US) are also always tweaking the economy.  Point of fact, it *needs* constant tweaking in order to meet the needs of a changing environment.  In that respect I don't see devs tweaking with a game, or politicians tweaking with an economy to be all that different in principle.


That's fine.  The issue with inflation isn't that you tried to pose, let alone answer, the question of "what inflation percentage is acceptable" - you flat out said that ANY inflation is bad, and that it leads to players "really getting fucked".  Yes, inflation is destructive in some games in its current form, but not for the reasons that you mention.  Any inflation is taking away from existing wealth, but that's not always a bad thing - the issue is what higher inflation does to an economy, but it's not a question you ever addressed.

Nor did you attempt to address any issues that you might face upon release, when the economy is out and out empty, sans whatever gold a lv 1 char gets.  You really have no hope but to induce massive inflation, since as soon as you've killed your first mob you have potentially inflated the economy by an infinite amount (with that first mob containing all the wealth in the world).  But you don't really notice a collapsing economy, do you?  There are socialistic elements in MMOG economy in terms of NPC shopkeepers; by maintaining an infinite supply of certain products, they do actually attain the communist ideals you described.  While problematic IRL, they are not so much in a MMOG because things really can be free.  It removes some wealth from players, but then again, that's the general goal of socialism anyhow.  In the context of MMOGs, they serve to help stabalize the economies of these games by forcing a baseline for trade and helping to simulate a much larger economy than really exists. 

All in all it isn't a bad article.  You made a few comments that are off the wall though, and I've no idea why you are trying to defend them (killing mobs is at no cost to the player?  When did hunting mobs never take *any* time or material?).

Why is inflation even a bad thing in a MMOG? Is it only because latecomers to the game have a harder time catching up? Is that even true? I re-started on a new EQ1 server more than a year after release and I had no problems finding gear at reasonable prices.

Yes.  As demand for product rises, supply remains constant, and this drives prices through the roof.  It would in effect force a massive economic depression, where nearly everyone is poverty stricken.  As soon as you say "you can just inject some money into the economy" as a counter to this situation, you no longer have a closed system.

I think a point that some people may forget is that MMOGs are not very large economies.  That is, you only have a few thousand or ten thousand agents in the system, and never more than a few hundred or couple thousand active at any given point in time.  Adding NPC vendors helps mitigate this somewhat, but still doesn't avoid the problem, namely that a system this small is somewhat unstable.  The average wealth of one person represents the 1/10,000th of the entire economy (assuming 10k users on this fictional shard) - the equivalent to a small city, if the game were scaled to the US.  It only takes around 40-50 players to represent a city somewhere around the size of greater New Orleans.  On a world scale, 100 people represents more people than most countries (factoid - the top 4 countries have ~half the world's population).  This is just to try and put things in perspective when considering how to make an MMOG economy stable.  They can't take much disruption without spinning off course.

As a result of the inherit instability of MMOG economies, socialistic elements have found a place.  Namely, devs almost always introduce NPC shopkeepers, whose primary benefit to the economy is to help flatline problems.  Normally they will buy just about anything, and sell basic supplies.  In general they represent the "feel" of a much larger economy than actually exists, since a very large economy would not be noticably impacted by local trends, since its size allows it to absorb small problems.  It's protection against too much supply or demand; they will buy at a minimum price, ensuring that nothing drops below a certain value, and sell basic required goods at a maximum price to ensure demand doesn't outstrip supply.  The general intent is that players (either heros or crafters) can compete within the margins of NPC shopkeepers, or in rare or high end markets.  For example, devs don't normally stock shopkeers with Holy Avengers or Vorpal Swords. 

It's possible to get an idea what might happen to a market without these NPCs in place.  Just look at most games, and the higher end goods available.  When I was selling magic weapons in UO (years ago now), each tier of magic item was almost exponentially higher than the one above it (tier 1/2 about worthless, tier 3 around $1k, 4 around $10k, and tier 5 $100k++).  Each tier was far from ten times harder to get.  The supply of each level did drop off but not that much; it was demand that was rising.  Here, the best pressure to help keep demand down is that you could be entirely looted if you died, which limited how many people wanted to take $100k or million dollar items into combat.  There were no NPC sources of these items, so no market control on how high prices could go.

In contrast, there were caps on how high the price for iron ingots could go.  While iron could be harvested either from smelting loot drops or mining ore, you could also just buy ingots from vendors.  It was unrealistic to sell iron for 12 gold per ingot, since even pricy NPC vendors could underbid that.  While $100k worth of ingots could represent a great deal of work, getting a single vanquishing (tier 5) weapon did not represent an equivalent time investment; but it did require significant skill, experience, and character development.  On the other end of the spectrum, selling $100k worth of tier 1 weapons would be a near impossible endeavor, both because of the difficulty in getting the sheer volume of items needed, and finding anyone willing to purchase them (you would probably do better to smelt them and sell their ingots...).

All in all, I think the goal of eliminating inflation in MMOGs is about impossible, not because it is outside the scope of possibility, but because it is a very difficult problem set in an unstable environment, and frankly not worth the effort of trying to fix.  The UO economy, after all, is still here despite being a very old economy for MMOGs, and having gone through dramatic changes.  Is it more important to make a realistic economy, or add better quests and dungeons?  If you demand an improvement, it must by neccessity come at the expense of something else.  What is that something else?

What I do think is that devs could pay a little more attention to the issue.  Not to fix it, because I really do think it is for practical purposes unfixable, but in order to make the market more interesting for the players.  I don't think that many players want to turn into amateur economists, but I do think they want to see a world that is more dynamic.  For example, I would like to see different ways in which the very rich in a game get to save their money.  I don't much care for an infinite bank vault where players can store more gold than Ft. Knox; I would like to see something more like older banks, which charged YOU to keep money.  Keeping money safe is a service.  The amount charged can be small, or even tiered; don't kick in at all until you have a million, and even then only at 0.1% / mo.  There will be *some* point at which players can no longer practically keep money in the bank, because they can't make more than the cost.

That's not terribly fun, so give players something else to do with it.  Give avenues to invest it; in city governments, city shops or guilds, etc.  If these investments are successful, they pay dividends, with their success being dependant upon people using the facilities, growth, availability of resources.  All of those things could in turn be affected by players - resource lines could be disrupted, players could be chased away from some cities, etc.  The safety net of NPCs with base resources always available still exists, but anyone wanting more specialty equipment (most everyone) will look to participate in these sub-games.

In Medieval times, people could buy nobility titles; have the same thing here, except that it is a recurring cost.  Allow the purchase of positions within the city that might grant certain privledges.  Nearly everything decays, has maintenance cost, or gets used up - this encourages crafting / hunting.  Think up more complex chains of money flow; instead of housing maintenance just going away, deposit it into a city treasury.  PCs with titles might have some small authority to manage (not withdraw) that money, or a fraction thereof - say, focus on increased guards, city beautification, or whatever else.  Those resources in turn flow somewhere else; paying for new city buildings requires resources, which requires flow to another city.  Resource lines may be hijacked, either by players or NPCs.  If NPCs, players may now have the opportunity to ransack or camps to ... liberate that money.  Or they may assist the NPCs and receive a cut, as well as help strangle a city.

This isn't exactly a closed system, since I don't see normal spawns ever going away.  I do like the notion that if you kill rabbits all day, all you get are pelts (no gold, no swords, no magic rings) - but there might be a real demand for the pelts.  Of course, it might be in another city, so you can either travel there yourself, or just sell them on the local market for cheaper and let caravans trade them.  Or the market may be flooded, in which case you fall back on the baseline NPC prices.  But it is /more closed/, and more tied into other aspects of the game.

Want emergent behavior?  You have to have something like that.

AC2


I'm a huge fan of this approach - goldsinks should rarely be coercive but rather be incentives that do not imbalance PvP combat.  Hence why I'd absolutely detest any game that charges me to store my money for example.  Instead let me buy a safe from an NPC wandering tinker who is a semi-rare spawn.  That sort of thing.

I do too, but what I was trying to do here was to come at the problem with both a carrot and stick, and only use the stick for high end (aim for something like the top 5-10% wealthiest players, for example).  For the vast majority of the population, there would be no mandatory charge, but they can opt-in to the carrot if they like.  The few people who would be pressured would still just be pressured, and not forced - and they would have multiple options to work with.

I would not like any option that corners players.  For example, banks can only have X gold, and there's nothing to do with your x+1th gold, but give it to newbs, since that devalues the currency. 

One of the problem with applying real world economic theory to virtual MMOG worlds is not so much that there is inflation or a closed system, it's that the world of MMOG's is a truly primitive one. While fantasy MMOG's try to emulate a feudal Medievel society and sci-fi MMOG's do other sorts of things, they truly are Neanderthal, binary systems with only two roles. Hunter/Gatherer and Nurturer/Producer. The players are cavemen, dragging dead varmints back to the cave so the cavewomen can skin it, toss some varmint steaks on the spit and feed everyone. Not quite sure where the mutal exchange of virtual fluids occurs, but it's probably somewhere with 40-year old virgins who smell like cheese and dress up their avatars in female night elf flesh.

There is no variety of roles the player can have within the world. You can either gather resources for crafters, hunt and kill varmints for food or gold to fuel future hunting expeditions, or you can take the resources gathered (either by yourself or another hunter/gatherer) and turn those resources into something which fuels future hunting expeditions or are useless trinkets meant to remove money from the economy. What else is there? The only game which has even come close to providing some other form of profession is Shadowbane, in the form of a military career defending the homeland. At least in PVP worlds, there are options beyond those two, but they mainly consist of either being a militiaman or an outlaw.

Crafting has the problem of being not fun for the majority of people. It also has the problem mentioned earlier of being not much good to most people in the economy unless the crafter is of master level. Of course, that's also contributed to by the linear level treadmill, which also makes the hunter/gatherer superfluous unless he is of master level as well.

In short, in order to even bother with trying to simulate a real economy, players have to have more to do than just be hunter/gatherers or nurturer/producers. What's the point of trying to craft a deep, dynamic and functioning economy when the players are given the choices of Cro-Magnon man?

How is that any different than the real world today?  How many of us on this board for example actually extract resources from the ground, the only real economic creator of wealth?  The number of farmers in relation to overall population is also quite small.  Miners, etc.  Most of us are simply doing nothing than pushing bits of stuff around or taking care of the people who do the pushing.

I'm not arguing your point that MOGs are overly simplified - these are games after all and not virtual worlds.  Just trying to get a feel for how you'd expand it.

RL roles are categorized fairly broadly as well; agriculture, industry, service.  You don't really have the first or last in an MMOG, so you're just left with industry; industry is (a) harvest resources or (b) add utility to resources.  I don't think agriculture would add much to the game anyway, since it is just, in effect, "create resources". 

More interesting I think is the third category; the type of services you can add.  It doesn't make much sense to have a "writer" or "painter" service, although I suppose Second Life has done a bit on the second.  More appropriate would be people willing to take missions, and I've discussed possible ideas on how to have player-generated missions.  If cities need resources, to extend my discussion above, that could spawn quests within the city for players to take.  Some of the cost of getting resources could serve as a reward to players willing to take the quests.  Assassinations or bounties could be other services as well.

But yeah, if you just look at things categorically like that, you're not left with much.  You could just lump all of MMOGs into... well, the MMOG category.  Or all strategy games, etc.  Doesn't mean that the actual impliementation of any category can be interesting - or not.

FFXI is a good example of inflation. Apparently it has a lot of both farmers and bots now. It's very difficult to buy good equipment unless you spend inordinate amounts of time farming yourself.

Asheron's Call 1 (in 2000) was an example of hyper-inflation, to such an extent that money (pyreals) became worthless for trading.  The player economy shifted to barter, either specific items for each other (Pre-patch GSA for a Mattty Robe), or new forms of 'money' arose:  motes, shards, and sturdy iron keys (SIKs).   Those items COULD be turned in for real value (a weapon, armor, random chance at weapons/armor), but mostly they just changed hands.

The difference was that cash was too easy to get, and nothing much to spend it on, while the new items were hard to get (all fairly rare drops on less common mobs), were wanted for themselves directly, and then later a medium for trade.

So in a way, the economy 'worked', without any intervention by developers directly, of course indirectly they introduced those items for other reasons later in the game, but they were not designed as a cash replacement.

Roac had a bit of it. The service industry. None of the MMOG's that I know of really have any mechanics in place for service contracts, in which one player can perform a service for another player. Sure, you can do it, but it's really almost a meta attachment to the existing games. There is no binding contract on the part of the players that the game generates. I mean, if other players are really content, why don't the games support that sort of thing? Why can't I hire someone to harvest skins for me in WoW, with a trade window type contract that both agree to? Why can't players provide quests for other players? Oh right, the whole "people would exploit it to level up too easily" thing. Which just points out again how fucking retarded level-based systems are for games that attempt any sort of "worldliness."

Horizons had a 'consignment' system that was vaguely similar to this, where you could basically agree to pay X if a certain good was available.

In terms of WoW, the idea was to let the auctionhouse handle any kind of labor arrangement.

But in WoW, services do exist.  Go check out the business of Enchanters, lockpicks, alchemists, and blacksmiths.  I think those services should have more impact on the economy, but I'd rather see guildhouse instances, guild merchants, and guild relations implemented before service contracts.  Not that I expect to see either.

I tried the ‘I'm ok, your ok’ crap but I can’t let some of this shit go!
ALL inflation IS bad. As is all deflation. Don't post yet damn it you haven’t finished reading! The only increase or decrease in money that is good is those which relate to the increase and decrease of wealth. When a guy makes a sword out of an ingot of metal that person has created something of more value. This increase is a factor which goes into calculating the value of all things in the economy. It is an increase in the wealth in the economy. Multiply that by a couple hundred other value creation acts and subtract the value lost when objects are lost or destroyed and you have the total change of the value of the economy. Let’s say that more was made than lost then there is more value with the same money supply. The money has been deflated (a dollar is worth more than it used to) so to keep things even the overall money supply should be increased to keep the money at the same value (so a buck will buy you the same thing today as it did yesterday). Now to be absolutely clear this means more money, not inflation! However in the real world when people think they have more money, which is to say they think the money increase is a function of wealth not inflation, they will invest more and cause economic growth. But this argument for loose inflation control doesn’t work in current MMOGs. Why? Because MMOGs don’t have real economies, they have a cardboard cutout of what a real one should look like.

There is no external stabilizing macro economy. When you sell something to a vender the vender destroys the object then magically creates money out of nowhere and gives it to you. Ill use an example similar to yours, as it is quite useful, to demonstrate the problem with this. Let’s say that a shard is a city in an economy which expands beyond into a grander countrywide economy.

 Problem one: technological advancement. Let’s say in this city that some player has been cranking out bronze swords and has been selling them to make a living. A few months have passed and the crafters have been getting better and better and now produce not only iron but steel swords. The production of these higher quality products has become common place so much so that one may now buy an iron sword for what it used to cost to buy a bronze one. Now instead of upsetting their routine by buying new tools, new equipment, making new supplier contacts, and learning new techniques, the bronze sword producer decides that they can get by just selling their swords to the shopkeepers. Question, why the hell is this shopkeeper buying, not only one sword for this price, but a constant and large supply of these swords? Well the shopkeeper could be caravanning the swords to another city and selling them there... right? Wrong! The sword is just as out of date in that city as it is in this one.  If this doesn’t get across replace the swords with vacuum tubes vs. transistors, no one needs vacuum tubes in a transistor economy! Let me say this I know full well that there is a transition period between technologies and that less technologically advanced cultures will still be in the market for these products.  The problem is that the other city doesn’t exist! There are no market forces acting to reinforce this behavior, there is no one telling the shopkeeper when they don’t want anymore bronze swords.

Problem two: the trade deficit. So we have this one city which is now dealing with large inflation rates. The neighboring cities and states which are trade partners with the city should also be suffering from this inflation. Caravans regularly arrive with tons of cargo which they dump on the market. What’s so bad about cheap cargo? Massive unemployment, none of the citizens in the outlying cities can afford to compete with the central city. Now in a real economy this would mean that there are lots of willing workers just begging for new jobs as well as rich central city citizens who would have lots of money to spend on new business ventures. But central doesn’t spread the wealth (they can’t, the other cities don’t exist). eventually the trade partners do one of two things either they shut down trade with central to save jobs from being taken by central or they just keep waiting for central to bring investments until finally the outlying towns starve to death and atrophy. Either way the shopkeepers stop coming around and central is forced to become a self sustained economy. Simply put NPC shop keeps aren’t simulations of external economies if they were they wouldn’t exist.
 
But perhaps you're not talking about simulation of a natural economy; instead you're talking about subsidies. So what are the NPC shopkeepers subsidizing? Player happiness. They are paying players extra money so that they will be happy and wont leave. The problem is this happiness is bought with other players’ money (see the beginning of the article for full explanation). Every time a happiness subsidy is used the economy is forcibly changed. Like taking your finger and pushing down on one end of a balance scale, the balance will be disturbed for a while, but it will go back to normal eventually. That is unless you keep disturbing the natural balance, just as the players do by using the subsidy over and over again. In this case the laws of supply and demand, as well as all the other economic laws, don’t work. The economy is broken. This is only made all the more true by the fact that it is such a small group of actors in this economy and that much more unstable. Besides why are they trying to bribe their players anyway? Answer: the game isn’t fun enough! Bribes won’t fix that.

I also have to say this again Roac, making the gold sinks better just isn’t the answer.  Socialism failed. It will always fail. Man is simply not prepared to cast aside Adam Smith’s ‘invisible hand’ and manage the balance of the market themselves.  This was true when the brightest minds of all of Russia attempted it, why do you expect that a handful of devs will be able to?  No, if you want to have an economy then you need to play by the rules of economics.

I think you're trying too hard to fit real world concepts to a game world.

We're probably not in agreement on what inflation actually is - your definition is only one: Inflation as an indicator of price stability where currency itself is valued.  That doesn't make sense in a game world because Currency Devaluation reflects how external economies value the economy being examined.  Game inflation is always General Inflation, when money is more plentiful than goods.  "Too many dollars chasing too few goods"  One can never have true price stability in the real world simply because supply/demand is not really based on rational factors.

As you pointed out there is a subsidy for the fun factor.  This is non-negotiable - this is a game world that must be entertaining and most player's definition of entertainment is fantasizing they are incredibly wealthy.  Anything else makes the game economy zero-sum and that pisses off customers.  Well unless we're selling the economic equivalent of Shadowbane.

Any game world more than a year old experiences a phenomon when certain items become the real currency because they are truly uncommon or otherwise difficult to obtain.  This is alleged to damage the new customer experience (I mostly disagree) so typically devs approach this with sticks.  This is misguided - basically half the fun is taken out of the equation.  Actually human nature being what it is actually more than half.  We want to create "fun" when we siphon at least as much as when we inject.

Traditionally subsidy ensures more money is injected than siphoned off.  We want to keep the injections going - we have to or we fail to deliver "fun" so let's simply set aside the traditional (misguided) notion injections must stop, be slowed, or be replaced solely by players.  That leads to the question - how do we reduce the supply of money in the game and still sell "fun".

Goldsinks.  Otherwise we're just pushing the money around which leads to artificial scarcity and also damages the "fun" account.  The goal is to put in as many goldsinks as possible that also "subsidize" player happiness by reversing the injection.  Basically "fun" is created by money's flow into and out of the system.

You're chasing price stability in what will always be an environment that is too volatile to promise it.  In fact as a game publisher this is exactly the last thing I want.  Price stability can only happen with subscription stability.  That's irrational from the business perspective of game publishers.

Anyway I think the discussion is more constructive if we examine "fun" ways to siphon gold without damaging "fun" created in other parts of the entertainment service.  Don't tell me about fees and taxes - tell me about distinctive but purely cosmetic items, ways to advertise my services/sword, etc.

Edited to add:  Again to loop in the business perspective of the game publishers, you might want to read up on Monetary Theory (http://en.wikipedia.org/wiki/Inflation#Monetary_Theory) and its basic assumption that mild inflation is good since it indicates an economy growing at a sustainable rate.  It's the most applicable to game worlds, with the devs basically serving the role of Government, and dovetails nicely with the game publishers' need to increase subs.

Devs just need to carefully plan drop templates (counter example: UO message in a bottle), attempt to thoroughly identify and remove duped items, and spend at least as much (if not more) of their time designing cool interesting goldsinks as they do new expansions that inject more into the same general economy.  This would mirror the actions of a Rational Government as proposed by Monetary Theory.

Read it. 

Given that a little inflation exists in the real world, I'm not certain that removing inflation from an economic model is a good design practice.  Even if you don't like it, it serves a purpose of keeping the economy functioning.

Also, inflation in the game world has an interesting side effect on game balance.  Inflation helps people recognize when an item is under or overpowered.  Granted, its not the best way to do this, but it works in theory.

For example: A Mob drops too much loot for the amount of work required to slay it.  People begin slaying that mob in greater and greater numbers.  Eventually, a server admin should note the unusual concentration of players around the mob, and fixes the problem by moving the loot gained into an appropriate range.  The player-driven economy suffers temporary inflation while the invisible hand steps in.



Backing up an assumption ("the shopkeeper could be caravanning the swords to another city and selling them there") with an unknown ("The sword is just as out of date in that city as it is in this one") doesn't make a very convincing argument.  People will buy what they can get, regardless of technology.  If all they can get are bronze swords, they will buy bronze swords.  Maybe that merchant is selling back what you loot to monsters, who knows?

Also, how do you know the other city doesn't exist?  Just because you've never seen it doesn't mean it isn't there.  Game worlds are notorious for doing that with expansions and sequels.

I agree with you but I think you’re looking at this the wrong way; a functioning economy and a better job system require each other. That said there need to be more varieties of tools. I mean if all you can buy is a sword all you can be is a hunter. It doesn’t matter how many times you tweak it there will always be a best killing tool and all the rest. Just as there are the best killing tool makers and everyone else. But if you let players make a plow you’ll get farmers to harvest with them. if you let players make contracts you'll get police to enforce them. You make cars you'll get mechanics to tweak them. But as long as all there is swords and sword makers it is going to be a binary system.

Just for clarification could you explain a bit more how you want currency to enter and how it leaves the system? I understand that you don't like gold poping up from every corpse which you kill, however there's still currency geting created infinetly from crafting if I understand it correct. If we scale gold reward from quests and NPC prices it seems like they cancel out each other and doesn't really have much effect. NPC vendors doesn't really take that much currency out of the system in most games I've played, since the end game where 90% of the economy is, there's nobody buying anything from them. It seems to me that the system would still inflate.

Also, I still think an optional money sink would stabilize the system when it reaches a certain point. For example in my blacksmith example people would destroy their money for equipment upgrade once the economy has inflated to the point where it's the most cost effective character development option.

No, stop catering to the uberguilds.

Backing up an assumption ("If all they [those who purchase the sword from the shopkeeper(?)] can get are bronze swords, they will buy bronze swords.") with an unknown ("Maybe that merchant is selling back what you loot to monsters, who knows?") doesn't make a very convincing argument.  If the shopkeepers were turning around and selling to monsters that would be great, except where are the monsters getting the money for the transactions?

I made myself quite clear that variables which affected technological dissemination were possible. However, NPCs don’t currently account for or simulate these variables, so you can’t argue that they might be.


When I say that the other city doesn’t exist I mean that there is no hard drive full of data on the assets of the other town. There isn't anything recording what the city can produce, how fast, what it needs, or when. Also if, say, the town can't export medicine because its using it all because the monsters in that area are kicking their ass, I cant go to that town and drive down demand for medicine by defending it.  It just doesn’t exist.

But perhaps I am wrong, perhaps the games do make these calculations and comparisons. If they do I invite any of our board’s members who have worked on such a project to explain how the NPCs do work. I would be very interested to know.

Alan Greenspan would beat you to death with an ugly stick, if he were strong enough to pick it up.  Yes, I did read all of your post before responding.  Be glad Alan didn't.


Tell that to China.  At present, their economy is growing quite nicely.  Granted they have swapped out some socialistic elements for capitalistic ones, but really that's the same thing we're talking about here - or mixing socialistic ones with capital.  Either way, no one has yet advocated a pure socialistic or capitalistic market for MMOGs.  Or you can try to tell that to UO, which although has had high inflation, has also had a functioning economy since the game came up.  Don't tell me it can't work when I can point to examples where it is.  I would agree that the economy would probably have been better off with less inflation, but it was far from collapse.

You're going on and on about trade defecit, inflation, etc - and you're forgetting that MMOGs aren't a fully functioning economy, they're a damn simulation of one.  Far as sims go, they (mostly) work fairly well.  There are cracks, there are problems, but I can still log in and play the damn game.  My character doesn't starve, and I don't have to enter into voluntary slavery because I can't afford my own gear.  That's what happens IRL when you have hyperinflation, but you haven't seen that in games.  Why?  Because the market receives some stabalization from NPCs, controlled drops, etc.  You're right in that there is no outside greater economy; it's simulated, which is what helps keep the whole damn thing afloat to begin with.  Unlike a real economy, a MMOG economy really can create wealth from nothing - the bread really can be free.  And if you really want to know the rub of it, a pure socialistic economy is EASY to do in a MMOG.  You (the player) are subsidized by the government to do whatever hero stuff you do, and the burden of effort is placed on the NPC citizenry whom you don't have to worry about.  It's the capitalistic aspects of gaming that's hard to work out.

The value of money/cash is created by a perceived exchange rate of goods and services for said currency. The MMOG's we are discussing have skipped a step in the process of creating a currency, that of the barter stage where certain goods become more valuable than other goods, in the case of most fantasy MMOG's, the rare metal gold. What creates the value of gold in an MMOG? It isn't the world's civilizations because a human gold piece in WoW is worth the same as an Orc gold piece. The value for the item is set by the invisible hand of the developers, instead of the march of history. Thus, MMOG economies with this as the basis will always be artificial.

Now if you were to start a game with no gold, with NPC's that barter for goods they need in a sort of ecosystem of supply and demand, and then eventually allow the various communities in the game that spring up to set their own unit of currency based on what they are trading with each other, THEN you can possibly have an actual economic system with little developer interference, and without artificiality.

But you won't have many people playing it, because building civilizations is hard.

Why in the hell would a dev/pub want to front the time and money to build that?  Like they're going to drag some doctoral economist in, to build this realistic capitalistic NPC world-market, so that what - the few thousand people in one city can have a "real" market that doesn't vary all that much from the one they have already?

Give it a rest, you're talking about whether anyone would want bronze swords.  Scrap, maybe?  As if the entirely fictional world of orc hunting, and the few thousand swords that are generated as a result, are going to appreciably affect a worldwide market for bronze?  At what point does FUN enter the discussion?  At what point do I, as a player, care whether the NASDAQ is being run on my game server (edit:) as a background process?

They put ebay on the game server. And I am sure significant portion of players will like NASDAQ on the server also.  I enjoy the commodities markets in GW and PP, saves me from having to dicker with same numbnut over the price of parchment. Auctions work better for rare items and Stock markets work better for common items.

Ninth verse same as the first
A little bit louder and a little bit worse

In the real world inflation means good economy because it means investment is occurring. Money is coming out of banks and being circulated. The circulated money drives prices higher because stores see people can afford higher prices. Rich stores mean goods producers raise prices. With all the high prices workers demand higher pay and round and round they go until eventually the price bumps stop sloshing around and settle. Econ 101. But here’s the problem, in the game there are no investment banks, instead there are devs who chose who gets rewarded for each job and in what amount.  The problem is, as I have said before, this is fucking socialism and socialism doesn’t fucking work!

And you know what? I feel completely comfortable comparing real economics to "virtual economics" because like the laws of gravity and thermodynamics, economic laws are just that, laws. If you don’t want to play by them then there is no economy and things like supply and demand are just figments of your imagination. The truth is that the economies in these games ARE emergent. When people realize that their gold pieces aren’t worth the hard drive space it’s written on, they switch and create their own monetary system. A real economic system without the devs being asked to do anything. Why can’t the devs just let that happen in the first place?

To be clear I am not in favor of a totally free market. The bank idea from earlier is great!  Although instead of a money decay why not model the bank on The Fed?  I mean really, The Federal Reserve is arguably the best tool that America has in controlling its inflation rates. Changing the interest rates doesn’t take near as much effort as rewriting the source code for the game every time you want to tweak the economy.

And why, oh God why, don’t you want the devs just do what they were hired to do? Make a game! I don’t want them spending "half if not more" time on the economy I want them to spend all of their time making a game that doesn’t fucking suck! I don’t want more money I want more fun. It doesn’t matter if the bank account says 100 or 100,000,000 as long as I can buy what I need to play the game. If you don’t agree then here, 50 trillion koboshi bucks, will that buy your love?

China isn’t socialist. They're union oriented capitalists.

Sure there are - players themselves are the investors.  They invest in themselves and each other.  When I burn money into the goldsink of craft leveling I am investing in my future ability to spend and buy at greater tiers.  When I join a pickup group we're all investing in ourselves and each other to advance our characters to adventure at greater tiers.

China is still very socialist.  In another ten years that may be less so, but I posit that more democracies will have more socialist features in that future.  People may want to keep "what's theirs" but they also find the like living in stable societies with nominal crime and wind up forking out all over again to regain stability.  Sort of like where the US is starting to lurch towards crazily now.

You're most basic assumption is that socialism cannot work when all evidence is to the contrary.  Pure Socialism?  No.  But I challenge you to identify a pure Capitalist Economy anywhere on this planet.  Next time you see someone using foodstamps, collect unemployment, etc. you'll feel good knowing your home country is not a purely captialist society either.  Maybe you're thinking of Communism.  But even it "worked" until the corruption and power-mongering took precedence over empire building.  Systems rarely fail in and of themselves - people fail.

Anyway while I personally would enjoy a virtual world with a genuine economic simulator I think most people would not.  You're still approaching MMOG economies like an economist rather than as an entertainment provider.  In your last post you throw up your hands and say devs need to "make FUN" but you're not identifying the elements.

Economic theory is a necessary evil but all too often economists trap themselves in very unhuman abstracts, something the economist John Maynard Keynes wryly made fun of when he famously quoted "In the long run, we're all dead."

Not ragging on you - more like egging you on to make feasible entertainment recomendations instead of transcribing quotes from a university econ book... ;)

Yesh, I have to say I actually read most of this thread and most of the PDF that was posted earlier. (OK, skimmed at least)

Where are the concrete suggestions? We all know it doesn't make sense that you can sell an infinite number of items to a vendor. Then again, I don't think that is the problem. The problem is this: Where are those items coming from, and why are people compelled to create them?

You can't compare real life economics to game economics without comparing the rest of real life to the rest of the game. In real life I can't go kill 5000 rabbits because eventually rabbits dry up. Trivial loot code (or what I understand trivial loot code is, no loot for trivial encounters?) does approximate this to at least some extent. In real life catching a single fish can take hours. In real life coal and other natural resources are consumed in quantities equaling how quickly they can be extracted.

Look at someone like a jeweler. Does a real jeweler practice jeweling creating 50 of the same object? In one day? And in real life instead of making 1000 of the same shift you create a machine to do that, or hire illegal immigrant workers.

I think you can break these down into two key areas: Collecting, which is mining, getting loot, etc, and crafting. You either have to make it impossible to do these things at a continuous high rate, or make it not worth the time. Eliminate either the ability or the incentive.

In most games the only way to get good at crafting is a make a bunch of stuff. So of course, people are going to make stuff. Maybe that paradigm should be changed. Maybe the way to skill up in crafting should be to go through an "adventure" of sorts as an apprentice. Or maybe it should be clear to people that the stuff they are making is not worth selling. Like, instead of crafting a pistol, make a low level crafter craft a broken pistol always, and allow them to break it back down and try again. Maybe inject a little actual skill into the equation as well. It could be as simple as letting people color their objects or texture them and try to sell them based on appearance.

In the real world, the Financial word creates money through investing and lending.

If you had kept it simple, your point wouldn't have gotten lost. Your point was:


In MMORPGS, Currency is created out of thing air and taken out of thin air in bad ways that make MMORPG economies work badly.  They work like this because devs copy single player RPGS.


What you forgot was that only economy that really works at all is a frree market economy. Since devs can never duplicate the real world (nor would they want to), MMORPGS will always have fucked up command economies that work poorly.

The end.

Eve has a fantastic economy.  Plenty of goldsinks to take care of farmers  when you actualy lose items/ stations/ ships. Consignment missions allow for player-created content (delivery missions) or bounties can be placed on other players for your 'kill' missions.  The NPC environment adjusts prices according to regional supply/demand (sell 100,000 units of something to a station and the price they'll pay for the  next load goes down.)

In all Eve's got one of the healthiest and most diverse MMO economies i've ever seen. Too bad the game is such a slow-paced boredom fest otherwise.

I haven't read the whole thread yet and probably won't have anything else to add when I have, because I'm not big into watching MMOG economies, but regarding the crafting thing:

I was a crafter in DAoC.  I only ever made money from it by purchasing Diamond or Sapphire Seals to buy armor in Darkness Falls, then salvaging that armor and turning the remains into trinkets, selling those to NPC merchants at a profit.  Outside of that, my crafting ability was strictly for convenience and to help out my friends.  Making a masterpiece was a pain in the ass, and it was generally difficult to try to talk a crafter into doing that.  Often they required exorbitant amounts in pay just to recover costs, let alone turn any profit.  In fact, I likely hurt the economy by taking up the profession with the intent of making masterpieces for myself and friends at cost.  That's less business other crafters will have, meaning less profitability for crafters as a whole, and another drop in the bucket towards making all crafters "guild only".

Outside of that, I did take a few orders, but never for masterpiece equipment- strictly 99% quality stuff (which I had often saved when trying to craft masterpieces, so I could just charge a flat price and have them ready instantly).  By the time Trials of Atlantis came out, of course, 99% quality stuff was completely useless.  I had a vault full of the stuff, couldn't sell it even below cost.

You've summed up exactly why I quit DAOC in disgust.  My preferred playstyle is merchanting.  I simply could not compete against "guild mules" (not trying to be insulting) who viewed crafting as a necessary inconvenience subsidized by friends.  Nor was crafting at that time even much fun - it was the worst kind of crafting implementation I had ever seen in a MOG at that point.  DF was the final straw for me simply because at that point players overwhelmingly preferred "free" drops or there was someone like yourself just being a nice guy and helping friends out.  (I'm not ripping you - given the implementation your approach was more sane than mine)

I finally agreed "this was not the game for me" ( :roll: ) and moved on, never looking back.

Possibly a minor quibble that someone else has pointed out, but we don't know that socialism doesn't fucking work, because it has never been tried on a countrywide scale. China is not a socialist country. North Korea, Vietnam, nope. Soviet Russia? Soviet Russia was not ever a socialist country. I've been reading up on the Revolution of 1917 just this past week, and they never got to the point of actual socialism, instead skipping steps in Marx's planned process of stepping from socialism to a communist state. They never had democratic elections whose results were followed, the Bolsheviks actually ignored the results of the elections that gave the majority of representation to the Mensheviks and the local Soviets. When the Civil War hit in earnest, they suspended pretty much any pretense of socialist democracy, setting up "temporary" emergency dictatorial power in the body of the Communist party, power which was never relinquished. State ownership was later forced onto industries. It may have been called the Union of Soviet Socialist Republics, but it was NEVER socialist. North Korea and China followed the model of the Russian Revolution when setting up their economic systems.

You'd have more success finding working evidence of socialist economic systems in MMOG's than you would in the real world.

Quibble time... ;)  Actually these two activities do not create money, they create productivity and attempt to optimize money's flow points.  It's a quibble since of course money is just crystalized time, but their end result is simply money sloshing from one sink to another.  Money is made by printing presses.  Wealth is made by new materials extracted from the planet and turned into a finished good - everything else is just flow.

If I buy stock for $2 and sell it for $3 someone handed me a real dollar bill that in turn came from somewhere else.  If I buy a book at a garage sale for $2 and sell it on eBay for $3 again that dollar was not created but redirected.  If I borrow $2 from a bank and pay back $3 I'm simply redirecting a dollar to the bank.  In none of these scenarios was a dollar created, merely redirected.

The transaction you describe has nothing to do with money creation.   A very simplel money creation transaction:  General Motors issues 2 Billion dollars in short term 30 day notes..  Everyone who buys this debt has 2 Billion dollars, and GM has 2 Billion dollars are well.  We started with 2 billion, and ended up with 4 Billion.

GM then deposits 2 Billion in their checking account, which their bank prompltly lends out 50% immediatly in mortgages.

GM still has 2 Billion , the Note holders still have 2 billion, and the mortgage borrowers now have 1 billion.

That's 5 Billion from the 2 Billion we started with.

EDIT: For a more coherent and newbie friendly explanation try http://www.recipeland.com/encyclopaedia/index.php/Money-creation_primer

You're talking about earning, not creating, money.  The very link you cite explains why your scenario is at best incomplete and more accurately just wrong.  Go back and read your own article.  GM does not create money - the government does and does it using printing presses to document a tax credit.  In fact this is one of federal government's purposes - creating money.  By the way your article is wrong but then it's an oversimplification off a cooking site which probably explains it.

Key phrase:  Base Money (http://wfhummel.cnchost.com/monetarybase.html)

Why doesn't your scenario create money?  It earned existing money which simply flowed from the coupon buyers to the issuers.  Interest paid back comes out of GM's revenue.  Interest from the mortgages came out of homeowner salaries.  All that money flowed from a bunch of small streams into GM's goldfish pond.  Nothing just appeared out of thin air.  It takes a printing press to do that.

Exception? I might convince you to take stock instead.  But hey even then when you exercise your options someone simply diverted existing money to give you.  So while *you* felt like money popped out of thin air it actually simply flowed from an existing pool.

If I convince you to lend me ten bucks where did your ten spot come from? Sure *I* feel like ten bucks came out of thin air.  But I bet your bank account didn't.  You definitely won't once your S.O. finds out you took it out of her purse.  If I pay you back $12 did those two extra bucks pop out of thin air?  No, they came out of my paycheck.  Which came from people buying overpriced candles/wicker with money their employer in turn extracted from someone else.

It's debatable if the government truly creates money... in fact it appears that money may really be created by that bogeyman which koboshi is certain is evil: inflation.  Here's a teaser quote...

 

The problem in MMORPGs that the original writeup was getting at is that in MMORPGs wealth creation is very easy.

Imagine if the US government was obligated to give you $10 for every twig and rock you turned in. Hello inflation! In a system like that, $10 becomes meaningless. A loaf of bread would cost thousands of dollars.

Wow. I weep for our school system. I'm so glad I don't teach economics anymore.....


Some more Primers for you
http://www.prosperityuk.com/prosperity/articles/howbcm.html
http://money.howstuffworks.com/bank1.htm

It's good to see that Schild has managed to keep the quality posters here....

Whats funny is that in older MMOG's the rate of inflation is far outpaced by the rate of depreciation of goods.

The top end uber item at launch can usually be had by any rat-hunting newbie within the first couple of expansions.

Ok smartass - if you can drag yourself away from the cooking and gee-whiz consumer info sites maybe we can get to real theory and not the crap kids have to unlearn when they get to econ 3xx.

When those business bonds are paid back where does the cash come from?  Which part of thin air did we see it appear from.  If money is really being *created* why the hell does a run on the bank crash the system?  Because that 10% onhand/90% credit is a fiction.  As soon as people want to see real money (bank run) the system crashes.  So pretty clearly we didn't create jack and shit.  Otherwise why the hell does the government have to step in covering those defaults - *because nothing backs up that 90% except the fed*.  That's not a money supply - it's a shared hallucination we all agree to pretend exists so we can enjoy a modern economy instead of carrying bags of gold coins.

If you'd have bothered to read the link I posted you'd know - you keep focusing on the forward facing actions of businesses, not the commercial banks themselves.  Business credit does not create money, it simply provides a sink.  What creates money is the commercial bank going back to the Fed.  It's backward facing to the government.  Not forward facing to their customers.  And that article makes it very clear - commercial banks (not fucking GM) work the machine to extract money from the government.  When that supply is too tight, when that machine can't work, that's when we see Weimer Germany style hyper inflation when the presses work overtime.

Instead of insulting handwaving and directing us to recipeland maybe you could, you know, address the issue.

Actually don't bother - it's not germane to game worlds at all.
 :sad_panda:

The money that was created is removed from the system.  Then it gets lent out again, starting the whole process all over again.

It crashes because, as you pointed out, the money is created out of thin air. 


The government steps in to save the economy.  That's a large part of why goverment exists.  Paper money is also part of the "shared hallucinatio"  Just ask any German who was around at the end of WWII. To a lesser extent, so were the gold coins. 

I'm no economist. I don't pretend to be even on the Interweb.

The value of money is guaranteed by the issuer of said money. That value is based upon something, which at one time was the supposed value of gold (or, the gold standard, which is no longer in effect). In its most base terms, the value of something is based on what someone will give you for said item, or the barter system. Money is issued by a government, therefore the government creates money, but to do so, it must back that newly-created money with something of value, which I suppose these days is the interest it pays on government bonds? I really don't know.

But in MMOG terms, that money IS created out of thin air, and has a set value in the NPC economy. But there are really 2 economies in MMOG's, one is the NPC economy, which is usually static, and the player economy, which is extremely dynamic. While a gold piece might buy you the same amount from an NPC at launch as it does 2 years later, it won't buy you the same items from another player or from the player-based markets. NPC items are generally worthless soon after release, starting from a certain value and going down as mob-dropped and crafted items build the player market, while player-based items fluctuate in value depending on perception and supply, or supply and demand. The natural tendency for player-based items is to inflate in price to a certain peak, and then gradually deflate, never to inflate again. Neither of these is even close to the dynamism of real-life economies.

But should they? I think Koboshi is trying to argue that a dynamic economy SHOULD be in MMOG's, but I'm not sure I agree. I would agree only if, as others have said, this makes the game more fun. If it just adds frustration, or is only fun for the minority of people that like economic simulators, I'm not sure its value is all that great.

Not anymore.  US paper money is backed by nothing but the word of the government.  It only has any value because people believe it has value.  This is partly why the Secret Service get VERY FUCKING SERIOUS to any sort of counterfeit.  If people believed that the market was flooded with counterfeit money, it would destroy the economy.  Currency used to be backed by the gold standard, but this was done away with almost a century ago.

And yes, slog is right, investment/lending practices do create money out of thin air - it allows $1 to be multiplied several times, which dramatically increases the US economic strength.  Things can happen in the market which destroy much of this invented money - such as corporate collapse - but the US economy is diversified and large enough to sustain the collapse of a company such as Enron.

To recapture this for the MMOG games; it is utterly pointless to recreate this for a game.  The economy is far, far too small to be practical.  You can add things like the bottomless NPC vendors to try and simulate a larger, more stable market; but koboshi is already railing against that as the problem, but it is to miss the point.  You can't create an ecomomy the size of a country in a population of thousands or tens of thousands, which spends the vast majority of its time not participating in the market (ie, offline).  Nor can you recreate all the investment opportunities available IRL which is largely what creates the economy we have.  Nor is it practical to try and recreate the Federal Reserve, or something akin to it, which devs would be forced to maintain.

The best you could do is, as I said, create a NASDAQ-world-econ sim that runs entirely in the background (ie, players cannot affect it) - which is as I said before, would be an entire waste of an endeavor, since the end result would be just about identical to what you see now; NPC vendors who buy stuff endlessly, because a few thousand people cannot affect a national or world market.  Far as those few thousand people are concerned, money *is* created out of thin air, and you can't tell one whit of difference if that sim were running in the background or not.

You are blatantly ignoring that the mortgage borrowers also have -1 billion (plus interest) because of the debt.

Otherwise, person A and B could keep lending one amount of money to each other over and over again until the amount of money approached infinity. And if there's infinite amouints of money, how much does a bread cost? There aren't an infinite number of items to buy with that (fictious) infinite money.

Take a class on book balancing someday. Or even algebra.

Summary: If the Note holders give 1 billion cash away as a loan to someone, they do have 1 billion less cash.

Haemish, you are spot-on; the NPCs stableize one segment of the market, while the rest is left to run in a capitalistic state.  As players have noticed, this market is extremely sensitive to changes in the market.  Why?  Small size, limited diversification, etc.

Look at say, UO housing.  Prior to creation of new housing areas, housing was a closed market.  Regardless of how many more people entered the market, the number of available housing lots was fixed.  As the economy grew, the prices of houses grew as well.  Both the supply of money and demand for houses increased, which drove the cost of housing sky high.  Even after rules were imposed that put a hard limit to the number of houses that could be owned on an account, even the smallest house cost many times more than the deed itself.  Castles, of which there could only ever possibly be a couple dozen on a server at any point, were obscenely expensive as a result of their highly limited supply.  Another example from UO are tier 5 armor or weapons, and how they relate to other tiers (my experience with this is pre and just post UO:R); the cost for higher level weapons increases beyond just the supply of weapons, because the demand outstrips supply at higher levels. 

The main problem with inflation in a game are that (1) the market for items that cannot be crafted or bought tends to rise much more quickly than the general market, and (2) the NPC market might disrupt the harvest/crafting market if they do not scale with supply/demand.  The first issue often creates an advantage for people who would attempt to monopolize the market.  For example, housing issues in UO led to massive contests when houses collapsed for the strict purpose of, in RL terms, flipping.  High level equipment drops leads to guilds attempting to force out anyone else from using that zone.  By controlling in whole or in part the supply, these groups are able to drive prices up for their benefit.  Since MMOGs are compeditive by nature, this gives a compeditive edge to the controlling guild first, and those able to afford their goods second.  Everyone else is a second class or worse citizen.

The second issue can result in the elimination of certain activities.  For example, if pelts are for sale at a vendor for mere pennies and are a neccessary resource for some aspect of game life, there is little point in going out and hunting animals for skin.  However, if pelts are an extremely important resource and they are for sale by NPCs at extremely high prices, there may be a shortage of the product if they are not easily obtained.  Further, if the NPCs will buy pelts at fairly high prices but they are otherwise useless, pelting may become profitable over other more enjoyable aspects of the game.  Again due to the compeditive nature of MMOGs, players may become forced to deciding between having fun, or being compeditive.

So really, MMOGs are stuck with a hard choice.  On the face of it, it's a "damned if you do, damned if you don't" with respect to how to address the market.  Since the vast majority of people do not care too much for playing EconSim, there is little benefit in designing a extremely realistic game economy.  The purpose of a game economy serves entirely to be fun to the player; realism takes a very distant second billing.  If it makes sense for NPCs to buy pelts at a certain price, knowing that they have absolutely no use to players, so be it.  Just pretend you are clothing naked eskimos, who in turn sell ice for drinks that you never actually buy, because being forced to eat/drink/shit in a realistic fashion would not be that enjoyable in a game.

Money is created due to interest.  If I lend you money for a house, that loan is an asset I have.  That loan has value; I can sell it (and banks do).  You are holding the money that was lent, and that also has value.  Both the lent money and the loan are tangible assets that have value, and are greater than the actual dollar value of the loan.  Should you default on your loan, my asset suddenly vanishes, and money is destroyed.  That creates risk, which is why there are precautions built into any loan.  For example, you would have to put something up as collateral (house, car, etc) or else the interest rates will be extremely high (credit card).  For signature loans (nothing is put up - such as credit cards), banks don't trust you, which is why the dollar value is small and interest rate high.  Should you default, your credit will be damaged which hurts future potential loans.  That, the Fed, and other checks help ensure that it is very difficult to steal from the system, and that loans are normally only granted when there is reasonable certainty that the created money will not go poof.  When it does, someone is the loser; and the banks try very hard to ensure that it is NOT THEM. 

Which is why you cannot just loan to each other and create infinite money; the loans would be worthless because they would not be backed by a bank.  My housing mortage (owned by the bank) has value because it is backed by my house deed, my name (credit history), and the bank.  Just like the $5 in my wallet only has value because it is backed by the US Government (and which is why currency of some governments is worthless).  The infinite loans between you and your friend would not be backed by anything of value, and so create nothing of value.


Take a class on econ.

For the example, yes I did ignore it for the purpose of simplicity.  In the real word, the morgtage borrowers take the 1 Billion, and buy houses with it.  The people who buy the houses now have 1 Billion in cash, which they then deposit in their bank acocounts,  the banks then take that 1 billion and lend it out and so on....

When you deposit your money in the bank, most of it is lent out by the bank to someone else.  that's the whole key to the concept.

Finally, I have a degree in economics, I've taught Micro Economics at the collegiate level, and currently work as an analyst for Fidelity Investements.

How about you?

As mentioned above, the value of money is guaranteed by no one.  In fact, the words on your money "This note is legal for a debts, public and private" is a lie because Congress never passed the laws backing this up.

Money has value as a method of exchange only because of it's preceived value by others.  Even the gold standard was a joke, as there were more notes than there was gold to back it up. 

How does this relate to MMORPGS?  It's impossible to create a real world economy in a MMORPG game becuase the real world economy is just too complex.

Wrong. There are real world economies in MMOGs. That point has been conceded by others many times. But you and Roac seem to have a problem with one piece of this point of view. You believe that an economy of only a few thousand can not constitute a working economy. That’s not how it works. If any two or more people trade with each other they constitute an economy. That economy follows the same rules as any worldwide economy would. As Roac is fond of pointing out, that small of an economy is very unstable. However it is not unstable in any different fashion than the real world economy is. The problem I want everyone to understand, the problem I sought to bring to the forefront of discussion with this article, is that pretending that we aren’t dealing with a "real" economy leads to participants in this economy acting against their own best interest. If ol' Smith didn’t teach us anything else he taught us that an economy works because, and only if, everyone involved acts in their own best interest.

Ok Haemish I got a whole slew of problems with this.

To start with what would make the games more fun? I think we could agree, for starts, that they could work on gameplay and stories. So the only question is which will leave them more time to do this, an economic model that requires devs rewriting hundreds of thousands of lines of code to repair unbalanced pricing every month, or an economic model where they are required only to monitor the inflation rates, the progress of monopolies and the worlds supply and demand curves to ensure that has the recourses that it should. Me? I believe they should do the later. It requires less paperwork as they must only deal with a hundred or so numbers directly, instead of trying to repair those numbers tangentially by altering the thousands of lines of code players use to change those numbers.

The other problem I have with this is your belief that you need to have anything to do with the economic system. I mean seriously you could worry about the national policy which governs relationships between your country and the member nations of foreign oil concerns every time you get to the pumps, but my guess is you don’t really do that. Instead you search for the cheapest gas in your area and that’s all. You don’t volunteer for government work so that you may be stationed in some state department office where you are responsible for the negotiation of foreign policy, and yet someone will, and has. Your life goes on as before with one exception. IF you felt the call to service, if national politics began to disrupt your life so drastically that you needed to be part of the solution, you could, and what’s more if you did you would have an effect, be it negligible or definitive. And isn’t that the point of these games, to effect the world? Whether it is to change the pecking order of guilds, to change the opinions of other players, whatever the affect, the point is to interact. You spoke of the possibility of frustrating the players further; well I for one am much more frustrated by the fact that no matter what in game action I take prices will only get worse. I am frustrated by the fact that if I chose to be a crafter I will almost never be useful to the other players unless I sell myself to some Uberguild. I am frustrated by the fact that no mater what in game action I take monopolists will rule. I am frustrated by the fact that despite the fact that I love MMOGs I can’t bring myself to play any of the major ones because they are all doomed to become slums, where the grand intentions of the devs lay strewn about in archaic code fragments like the pillars of some long lost acropolis.


I am almost ashamed to say this but my article is not supposed to reach that far. I just want people to realize there is a problem so that I’m not the only one thinking about possible solutions. I want you as readers to file this under your complaints list, not to add to your already jaded natures, but to actually get you to ask the questions yourself. And next time some dev comes round to defend their new game design you demand they have an economic model that doesn’t spell disaster.

Edit: It's easier to read with spaces!

It sounds to me like what you are arguing against is the basic nature of man to be a complete shitheel whenever possible. That's pretty much where every economic and governing system breaks down. Man is just wired to be a cockmunch.

How are the devs of current MMOG's going in and changing thousands of lines of code each month to change prices? Do you mean changing the efficacy of certain weapons in response to game balance which tangenitally changes the prices? Or actually changing prices? MMOG item prices are set by the perceptive efficiency of the item in question, altered somewhat by the rarity of said item. Other than with dupes and clearly out of whack overpowered items, I don't see the devs really impacting the prices of items constantly. They might vary the spawn rate, but again, that'll be because of game balance issues and not inflationary markets.

I'm just confused as to what you think devs tinkering with prices or inflation rates in MMOG's will accomplish. In a system based on capitalism, monopolies WILL rule, because profit follows the road of efficiency. Uberguilds will always be more effecient at tasks like this, because that's what they do. It would take a significantly active hand on the part of the devs to control uberguild monopolies that are built off of organizational efficiency (as opposed to exploitation of bugs).

I started to type a whole bunch of stuff, but I'll just leave it with this.

Ebay and IGE and the like are the outgrowth of Market failure in MMORPG economies.  You will know you have a working economy in a MMORPG when no "Real world" market forms.



enjoy

This means all of nothing. Hell, look at PhD students; They get the degree not neccessarily because they are the most intelligent, but because they can put up with the most crap (or in the case of business degrees, suck up the most). Also, there are such things as Dumb Professors.

I think a few people are confusing the creation of currency with the creation of wealth. These are not the same thing. People lending out money, collecting interest, etc etc....

THEY ARE NOT CREATING MORE CURRENCY!

They are simply producing more wealth for themselves. Just because GM issues bonds, or a bank sells a mortgage, or whatever....This does not mean there is suddenly more cash in circulation. Everything that has been listed as a way of producing more currency, save for the Fed issuing more notes, is wrong. Those are simply examples of wealth changing hands, regardless of how you word it. For instance:


No, everyone who buys the debt is owed money. This is not the same thing as actually having the money. You can't use those notes to buy a soda from the corner store.


No, only GM has $2b. The lenders are only owed $2b.


Goddamnit, no. GM was given $2b cash by lenders, and deposited this in the bank. The bank lends out half of this to home buyers. To clean up the math:

Lenders are owed $2b by GM. GM is owed $2b by the bank. The bank is owed $1b from mortgages. Lets not even get into interest, as again, that is not Creating money. It is simply accumulating more weath, which is paid to a lender as a fee for them taking on the risk of lending money to someone.

No actual money is being created; it's simply being moved around the economy.

Yes, there are shit heads in online worlds as there are in real life, but even in the most primitive of societies those who are shit heads are forced to face the consequence of their actions. Even if it is just the fear that the guy you just screwed will try to get even. This holds true throughout the world. Government is perhaps most useful at controlling these bad seeds. And yet as you said economic and governmental systems too will fail if the shit heads are the ones in charge. But in the real world if a government collapses another will rise in its stead, so too with an economy. However this is only true if there remains the possibility of revolt. That is a matter of allowing for players to actually attack others, to tear down the establishment, and rebuild it stronger than before. The only answer is accountability, which no MMOG has, because the establishment is the game. The only way around this problem is to relinquish control of the economy and government. Allow the struggle to be between one guild and another and not between players and devs.

That is exactly my point; they don’t have a simple way to change the economy. They only have the ability to change the rules of the system. They can only effect change by nerfing overpowered attacks or items, by changing the spawn rates or placements, by adding new loot to offset older, by adding new professions to accent older, or through the use of the dreaded ban stick.  

But that’s an astronomically difficult problem to undertake. In a chaotic system, which an economy is, small changes can make huge and unexpected differences. You would be hard pressed to find any mathematician worth his diploma that would tell you they could predict the outcome of any one manipulation in such a system. But your right devs don’t really try to manipulate markets this way. Of course whether or not they wanted them to their changes are responsible for the problem of excess inflation.
I should say this I am not against uberguilds, at least not in principle. Hell I am proud to be a member of my uberguild, as I’m sure you, and every other red blooded American is. Because that’s all America is. I also have no problem with monopolies, in principle. The only time either is something to be lamented is when they are cruel to those who must depend on them. Here's where the conversation could veer into antitrust discussions so I will try to redirect it. I ask you to conceder the recent clash between the real world oil trusts and a country who was dependant on them. On the one hand those of the uberguild have fought to forcibly seize the assets of the monopolists or defend from the seizure of their own assets, which allows them the benefit of lower prices. On the other hand members of the monopolists have taken the Uberguilds attacks as a sign of war and have attempted to retaliate, striking at their economic and military power centers as well as their citizens moral. Drama, drama, drama… and no devs had to step in and fix the airplane exploit or permaban the leader of the uberguild. Games should have conflict but players need to solve them, but this can only happen if they have the ability to. The economic system is simply too irrational for players to be able to use to affect their situation. What’s more, they can’t fix it. I’m not asking the devs to fix the economy, I think any game already out is already beyond hope, but they can create a system in future games which will allow for functioning economies.

Edit: P.S. thank you Strazos. thank you.

You are arguing for player justice, only on an economic tract as opposed to (or maybe in conjunction with) a killing tract. Gotcha.

You do know what I think of player justice, right?

I'm not asking for justice, all I want is the ability to control my virtual life. If the world is still going to hell in a hand basket at least then I can kill, or in some other way enact my revenge on, the mother fuckers responsible.

If you mean paper currency then you are correct, no new currency is printed.  However, only 20% of US dollars are actually paper.  The rest is created through the banking system.

maybe if you read this one

http://ingrimayne.saintjoe.edu/econ/Banking/Overview10ma.html

I'm sorry though.  It's really sad that so few people understand the banking system.

Let's simplifiy the example.

2 Million Bank X customers have checking accounts with 200 dollars in each one.  That's a total of 4 Billion on deposit at Bank X. Agreed?  great

Next GM borrows 2 Billion from Bank X.  GM takes the 2 Billion, and deposits the money in a new checking account at Bank X.

How much money do we have on deposit?
Before GM took out the loan, Bank X had 4 billion in checking accounts.  After the loan, they have 6 Billion in Checking accounts.

Any questions?


EDIT: I'm assuming we all agree that checking account balances are currency. 

Um, yes, they owe 6b to people/corps with checking accounts, BUT they also are owned 2b in outstanding loans so the net amount of money the owe is....

4 billion. 

No new money here.

Xilren

Slog, your forgetting what happens if all the people want their money back. If that happens people demand it from the bank, who in turn demands it from GM. Sure in your scenario it’s all a matter of numbers on paper, but when all is said and done there is only the money the people brought to the bank.

IF we include "interest" you must understand what that is. It is what the bank has earned for doing its job, just as you earn when you go to work. It is wealth, not new money. This new wealth is only the relatively small amount paid in interest. If you ask where this new money, in the form of earned wealth, comes from, the answer is the same as it is for your paycheck, and any other pay, it doesn’t come from anywhere.

Let me say that again. IT DOSEN’T COME FROM ANYWHERE. It becomes a deflationary force on all money. More value (or demand) for the same amount of money. Now when this happens the fed gets involved. They either give some of their cash (actual green paper slips) to the bank or they ask the treasury to print some more bills, thereby increasing the money supply.  This ensures that the dollar is worth the same as it used to be, and not depreciated.

Finally, this is not inflation, or deflation, it is the creation of new money.

I'm pretty sure that if everyone wants their money back all at the same time, the economy collapses and we're back in the Stone Age.  No?

No I'm not.  If that happens, our entire economy collapses. (no joke)

I can include interest if you want.  Doenst make a difference though.


I showed this to the people at work and everyone laughed.  I feel bad for you....

Yes.  Picture that stupid fucking Christmas Special accross the country except everyone loses their life savings.

Did I say it was a run on the Fed?   

NO!

Fuck, you get paid for this?

The fed insures all banks so that, should a run on a bank occur, the fed will provide the bank with enough money to cover all debts. That’s what it means to be insured. Hell, that's the whole point of the fed. The fact that they became so powerful is merely a result of their being responsible for this very role.

Yes they do. And they would pay it in US dollars that had just become completely worthless becuase the entire banking system collapsed.  This has actually happened: Argentina in 2001 and Nazi Germany where everyone life savings were wiped out, but they were paid!! the currecny was worthless of course....

18:49] <Grampa_Slog> this is bad
[18:49] <Grampa_Slog> beyond words
[18:52] * sancus has quit IRC (Connection reset by peer)
[18:53] * sancus has joined #hate
[18:53] * ChanServ sets mode: +v sancus
[18:57] * sancus has quit IRC (Connection reset by peer)
[18:57] * Guest9805756 has joined #hate
[18:57] <Rasputin> slog
[18:58] <Rasputin> I have no idea why you're so shocked by what is probably a 15 year old not understanding the Fed
[18:58] <Grampa_Slog> ok


I surrender.  Good luck with your lives.

(http://www.mises.org/images3/wheelbarrow.gif)
(http://www.nrw2000.de/weimar/pics_weimar/20milliarden.jpg)

OK, Germany was blown to bits twice, that's why their money was worthless. And neither country were covering valid withdrawals, they were printing money to pay their bills... kind of like my point about MMOGs really.

^^^^    What Xilren said.


I've never liked economics anyway. I had a Macro professor trying to tell us something like if a company lowers the price of film, they'll sell more cameras. I guess this makes sense, in theory....but really, how many people out there are holding out on buying a camera because of the price of film? Or how about the many people who already own a camera, who are not going to buy a New camera because film is cheaper? Or if we assume that, like consoles, the money is in the film, wouldn't this earn the company less money?

I tried asking questions on this, and other examples. She just ignored me (never had that actually happen before in a class. At least say that you don't know.).

I'm pretty sure she was an idiot, and that her class was worthless. I got a B+ without the final.

LOL I don't blame you.  I took this opportunity to do the research and call some friends.

I owe you an apology and I sincerely do just that.  Thanks for the persistence and taking the time to educate me.

You're too nice, slog would be a decent poster if he wasn't such an aggravating dick.

Heh well regardless when I'm wrong I'm wrong and I don't mind fessing up.  I do it more for me - keeps me true to my values which I can then lord over my lessers. ;)

The physician Hugh Laurie portrays on "House" would be a decent doctor if he wasn't such an aggravating dick.

(http://www.bbcprograms.com/pbs/catalog/blackadder/images/XM03_Blackadder.jpg)

Jeezus Buttfucking Christ, resize it.

I'll translate that.

Jesus christ, make that less funny.

<Signe>Is that Tom Cruise?</Signe>

Epilogue...

(http://william.cottaz.free.fr/Kyle.gif)

Today I learned while it may be possible to create a real economy in an MMORPG, it's probably a bad idea, because the real economy is just a horrifying mass-hallucination which will eventually evaporate and destroy society.  I also learned that a realistic game economy is a bad idea because it's not fun, and no one really gives a shit about it anyway.  Lastly, I learned that some of you are dumb newbs, and that player justice is teh sux, even when it's just about money.

(roll credits)

So, uh, slog?

What happens when GM pays back the loan?

Did they just destroy 2 billion dollars?

Fuck, if investment bankers are thinking like this no wonder the economy's in the shitter.

--GF

TALCOTT PARSONS 4 LIFE, BOYEEEEEE!

EDIT: So what actually happens in this case is that GM pays back slightly more than 2 billion dollars thanks to INTEREST, leaving the bank with 4 bill + interest. Presumably GM is not staffed by incompetent morons and can actually turn 2 billion dollars into more than 2 billion dollars, with all those workers and assembly plants adding value/creating wealth/whatever the hell the exact term is. In theory the amount of wealth GM created is at least equal to the interest it paid back to the bank, and the amount of money in the economy now reflects the amount of wealth in the economy.

I'll leave you to guess how well it _actually_ works.

Exactly - it loses all the fun impact if it's any smaller.  Not my fault the peasants don't have 1920 wideview resolution. ;)   Let them cake!

(http://images.goantiques.com/thumbnails2/IXT3712CG167.jpg)

One of the interesting things I kept running across researching this is the quiet backroom belief that eventually this system will collapse.  Much of it tinfoil hat stuff of course, and I had to wade through a lot of religious anti-usury nonsense as well.  Some of the papers I read were the occasional legislative attempts to more solidly backup the new money created, motivated by the need to dramatically reduce government's costs to finance its own projects.  Not surprisingly some politicians are somewhat honest and don't want the government so heavily influenced by banking.   The concern goes back to the Red Shield family (Rothschilds).  It's a little daunting to follow the history since there is so much tinhattery caught up in the topic but underneath the paranoia is no small kernal of truth.

You didn't read any of the links I provided.

It would seem the attitude here is to stomp down anything that doesn't match the groupthink.  It would appear only one person, Pococurente, actually took the time to read the information provided and learn something.

The entire system relies on the faith that 1) Not everyone will withdraw their deposits/investments at the same time, and 2) everyone believes that their neibhor will accept currency in echange for goods and services.

I'm going to go back and my word and provide one more example.

It's the middle ages(ish), and Slog the Goldsmith sets up for business in the town of Oz.  10 Rich lords all give me big Lumps of gold.  5 of the Lords give Slog 10 ounces of gold to make stuff out of, the other 5 because they know I have a big lockbox that's guarded.

Schild the Wizard of Oz decides he needs some gold for a reagant for a new spell he's creating.  He's flat broke and doenst feel like camping the Bugbear spawn.  He hears that Slog is holding a bunch of gold and gets an idea.

Schild: "Slogeth!!! I have an idea.  If you give me 6 ounces of gold from your vault, I will return it within a week and give you 2 chickens"

Slog: "Chicken?  mmmmmm

Schild: "What say you"

Slog: "ok.  If you welch, I'm sending over my boys to PK your ass though"

Schild goes off and makes his spell:

Slog (to himself); "hmmm, I can make some serious phat lewtz doing this, as long as the Lords don't all want the gold back at once."

slog lends out 30 more ounecs of gold, for a total of 36 ounces out of 50 ounces lent out.

Shild comes back a week later.  "Slog, here is your 6 ounces of gold back and 2 chickens"

Slog "thanks.  fethers"

slog now has 20 ounces of gold in his vault.  He promplty lends out 6 moure ounces to someone else, cause he wants some more chickens....

Lemme give you a quick example.

Let's say I put a hydroelectric dam on a river.

Every day that dam taps the energy of the river to turn it into a usable form of power. And people are willing to pay for that power. In effect, my dam is creating something every day that's _worth_ money.

If I hire people to maintain my dam and the power lines and such, then if I have any kind of business sense at all the laborers are worthy of their wage. Their work on my dam is worth something and their wages reflect that work. Their _time_ is worth money.

Let's say that I go to a bank, and their assessors tell me my dam is worth $2 million. And I tell them I have amazing plans to put up another dam on a different river - but it'll take $3 million to get started, though I'll put up my dam as collateral. They draft up a loan document that has me repaying $4 million over the next four years, or something like that.

If I repay the loan, presumably my dams and all the people working on them have created that extra million bucks worth over the course of four years. Perhaps we've created more. In this case the amount of wealth and the amount of money in the system match. But until I pay back that loan, the bank has paid $3 million for the guarantee of something worth only $2 million.

Simple example with made-up numbers, but it should illustrate the point. People and the things we build are creating new wealth all the time - banks create something to keep score with. It's the difference between duping a million gold pieces and getting a million gold pieces through quest rewards and selling 'vendor trash'.

--GF

You are confusing Wealth with Money Supply.

 In terms of Money supply, the dam company borrows 3 million from the Bank.  That 3 Million isn't the bank's money, it's the depositors money.  Each one of them counts their piece of the 3 million as part of their money.

Money Supply isn't dependent on Assets backing up loans. 

Um.. if everyone ran the banks in the US at once, and all deposits are covered by the US government, it would do the exact same thing. We don't even have to be bombed to hell and back.  All the withdrawls would be 'valid' because, hey, my bankbook says I have $X, so give me my damned $X.

Then everyone would have the now-useless funy-colored paper with the dead guys awful portraits and we could burn them for warmth, because they'd be shit-all for anything else.  There's no 'standard' it's based on other than the good-faith that everyone won't run the banks, and the US government won't collapse so all they can give you is the funny paper.  Yes, it's frightening, but that's how it is.

You came into the thread at an inconvenient time, and I think that's been the cause of all this confusion.

The "real world" is the result of two loosely coupled mechanisms working - people are building the net value of their assets, _and_ banks are creating money, and in the ideal case one keeps pace with the other. In practice banks "lead" value a bit, which leads to more money being in circulation than there is value.

In a MMORPG, money is created every time someone gets gold as a quest reward, picks gold up from a monster/treasure chest, or sells something to a vendor and gets gold in return. (Note that this may vary in some systems - money may be created for all intents and purposes when a monster spawns, if its purse is open to being lifted.) Value is created every time someone crafts or loots an item, with "tapping resource nodes" also being defined as loot. Note that in some cases the value of something is exactly its monetary value when autosold, or at least in constant relation to some monetary value (hey kid, bring me three rat tails and I'll give you a copper). Money is actually destroyed when players buy from vendors (including repair), and value is lost when items are destroyed, discarded, damaged, or sold to vendors. 

The difference between a MMORPG and the real world is that the banking system (in the ideal case) is only going to draft GM a $2 billion line of credit if it anticipates GM can create enough value to repay the interest on $2 billion, but money and value enter and leave a MMORPG in completely arbitrary amounts. (Even more arbitrary if someone starts dupin' rares.)

--GF

Slog, you might get more people to read your links if you weren't trying to be such a condescending douchebag. But hey, that's your schtick, so go with what works I guess.

The economy, like civilization, like law, like authority, are all illusions, perceptions in the minds of the populace. What gives a policeman his authority? The law. What is the law? Words on a piece of paper. He exerts his authority through the use of that gun and its magic bullets, but the gun isn't his authority, the law is. If he shoots that gun at you in an unlawful manner, he can be punished by the legal system who gains its authority over the policeman through the law.

Economies are the same types of fabricated constructs that drag us above the barter system of "I give you chicken, you give me head." I think the biggest flaw in the particular capitalistic system we have today is that creation of wealth that comes from interest. It predicates the entire health of the economy on the ever-expanding growth theory, the idea that the economy must always be growing to be healthy. And the way the economy is set up, that's a true statement. But growth is not constant nor is it in anyway predictable, especially when it is susceptible to the whims of the mob. And we all know the mob is a rutting, easily-led, self-destructive force of nature that shifts its attitudes with the wind. Knowing that the entire foundation of our economic system is the creation of wealth through interest on deposits and loans, and that Islam has declared that paying interest on any sort of loan is evil, is it any wonder capitalist democracy and fundamental Islamism are at such loggerheads? Just to bring politics into the discussion.

I also think part of the problem in our discussion is that we are talking at cross terms. Some of us aren't differentiating between the creation of wealth and the creation of money, which ARE two different things.

I submit to you that based on the things I'm learning from slog's links and this discussion, an MMOG economy is LESS flawed than a real one because there IS a standard value that the currency is based on, and it is a factor which is almost completely controllable by a decent dev team. Sure, in comparison to a "real-life" economy, it's flawed, but only because it doesn't model all the intricacies of the capitalistic system, nor does it handle the sheer numbers that our real-life economy does.

And if the aim of simulating that type of economy is to be able to get even with the shitheels and monopolists and uberasstards, then modeling the real economy is the LAST goddamn thing you want to model. I mean, the Enron/Worldcomm/Tyco/Martha Stewart punishments are an ANOMALY when you talk about economic justice. Can anyone honestly say that Haliburton's executives shouldn't be punished as badly as Bernie Ebbers for all the Iraq-based fuckups they've committed? Other than maybe Triforcer that is. The truth of a capitalistic system is that without controls, profit > everything else, including the lives of people with less money, and the principles of social responsibility.

But two billion of those are balanced by two million in debt, owed transitively GM to bank and bank to savings account holders. Or, seen a different way, only the original checking accounts "own" the 4 billion in actual money. The rest is account balancing - which as anyone who have done books for a company know total 0. Cash is cash, the rest is just playing with numbers.

Yes, the bank pays interest on 6 billion (2+2 bn. real money, 2 bn. "pretend" money) in the savings accounts, but that is financed by the interest paid by GM on the 2 billion they borrowed - this is why banks charge more interest on loans than they pay to saving accounts, and why banks have to lend out most of the real money in saving accounts to make ends meet. Or go the Middle East route and leave out interest entirely.

So, subtract the 2 billion GM debt ("anti-money") from the 4 billion initial savings account (real money) and add the 2 billion real money deposited by GM, for a net total of - drumroll please - 4 billion.

If the original account holders withwraw the whole of the 4 billion, then the bank has to go to GM to get back the 2 billion real money that went there. If GM actually put that money in a savings account then they can simply do so, but in the real world GM would have invested that money (i.e. spent it); then the bank is in deep doo-doo since they cannot pay out more than 2 billion, since they don't have more real money. Then the bank would still owe the account holders 2 billion of the real money the borrowed from them in the first place; The other half of the real money has been spread by GM to others.

Car analogies suck, but anyway: Pretend that instead of 4 billion cash we have two cars. And I park them in your garage, allowing you to lend them out to others. But if that person lends his borrowed car away to a third person, and I come and want both of my cars, you the garage owner have a problem. But if the borrower parks the car in the same garage, you can just "transitively" take the car from the borrower and give it to me.

But all of that has fuck all to do with "infinite supply" MMORPG economies anyway, where all items and money are just numbers in some software. (Which in turn makes Sony's little eBay thing look like a scam since they are free to make their software produce the items that are sold. Fnord.)

Wrong. The value of money is determined by two factors; whether or not people will accept it, and supply and demand. The secret that was discovered about a hundred years ago was that as long as the first was true then the second would be all you needed to determine value. I’ll try to explain this. If everyone in the market has, lets say for the sake of this example, an average of $100 in their bank accounts, some have more and some have less. Prices are going to be about right for a hundred dollar customer; some places will cater to the poorer and some to the richer. This is your run of the mill economy. Now let’s say everyone in this economy takes their money out, then the average cash everyone has on hand is $100. (This is of course sidestepping investment bankers, sorry guys)  The supply of money hasn’t changed the rich are rich, the poor are poor, and the average have about $100 to spend, and prices are still relevant. Or perhaps you could look at it this way, if you have a debit card in your wallet you are, in essence, carrying around all of your money in the same way as if you had withdrawn it all. With all the people walking around with debit cards in their pockets prices remain relatively the same, QED, merely having the money in hand is not enough to devalue it. So the system is based, not on any gold standard, but on the simple mechanics of supply and demand.

Of course this still begs the question can we rely on the money, will anyone accept it as cash. Well, why not? The value of the money is no different than it was before. The dollar is worth the same as it was the day before everyone took their money out of the bank. Furthermore why have a run on the bank? Is it perhaps because the people value the currency in their account?

The cases which he mentioned were of governments who took control of industry and started paying employees themselves. They did this because they wanted to stem the tide of unemployment in their countries. Their logic was that they could pay whatever they wanted to the labor force because they were the ones who made the money. The problem there was that money is only as valuable as the work needed to attain it, just because you add some zeros to a check doesn’t mean your making money. Or to put it another way the value money represents remains constant regardless of how much cash, or numbers representing cash, exist in the market. The real tragedy in both these cases was caused because the error was compounded by hundreds of thousands of workers over months and months. This is the lesson I want everyone to come away from my article with. You can’t pay people what you want them to earn just because you can. Just because you can print money doesn’t mean you can print value. You have to pay them what they earn, otherwise all you are doing is making the money you transact in worthless, and that hurts not only the worker you meant to support but everyone in the economy.

I get what you’re saying, but the people responsible for Enron/Worldcomm/Tyco/Martha Stewart are those who seek to provide structure to the society; the ones who allow tax shelters, the ones who allow no bid government contracts, the ones who hand out subsidies like they didn’t come from anywhere. The very problems I have with MMOGs. You and I agree, that kind of system is not helpful. If you are asking that the devs be the ones who control these entities then you and I may differ on that point, but if you want those oversights then you need to get the devs working on that kind of thing. Now all they are doing for the economy is working their hardest to create a heaven for these types.

Also, a nit pick, don’t let the concept of 'money is power' lead you to believe that the opposite is true. Power is so much more than money. Case in point, if I wanted I could kill the heads of Halliburton, which would cost me the price of a rifle and ammunition. Power > Profit. Although to translate that into the games would require PKing and that’s a different discussion.

Interesting little tidbit I learned recently: Not only are there Western-style banks in the Near East (which charge interest), but there are also native Arabic banks that have "found" ways to circumvent the banking stipulations of the Koran in order to charge interest.

It took the Western world a few centuries to find those same "ways" around the Bible's injunction against usury.  In the meantime they harvested the Jews.

Oh I don't really care one way or the other- like I said, I'm pretty sure that the crafting I did hurt the crafting economy.  But like I said, and like you've said, it wasn't the fault of the people using the system efficiently- it was the fault of the system designers for making that the most efficient way to use the system.  Like I said, I could ONLY make money with my crafter by salvaging/trinketing.  Any other money made was unreliable and usually accidental.  So what's really sad is that the most reliably profitable thing a crafter can do involves buying resources from other players and then dumping those resources into the NPC black hole, creating more money in the community in the process. (I pay 1000 gold to a player to buy Diamond Seals from him, take those seals to an NPC and trade them for armor, salvage the armor for its metal bars, turn those metal bars into metal hinges, sell those metal hinges to an NPC for about 1500 gold.)  The whole process ends with no additional resources for the community- just more money.  Fortunately the seals themselves were protected from inflation, because you could only make so much money from each one and anyone trying to charge crafters more would find no buyers. 

But with lots more money in the community, it took far more money to impact a player's bank roll, and I think what really killed the economy is that Mythic allowed inflation by charging so much for player housing.  So the bar is raised, more money is passed around, more money comes out of thin air, and suddenly a sword you could've bought for a few platinum a year ago is suddenly worth 30 platinum (or would have been, except that that particular sword is now useless and won't sell for 100 gold- but let's just say "a sword of equivalent modern value".)  The process continues to the point that anyone trying to make money from crafting has to spend all their time trinketing to make decent money, and anyone not crafting has to spend hours upon hours trying to collect seals in the hundreds instead of dozens just to get together enough money for a neat new weapon, which means everyone is spending more time trying to make money and less time doing the stuff they want to do, so less fun is being had overall.

Or you just get into an uber guild and skip the whole process, farming for the items with 7 friends and not allowing anyone else to join in your circle because it's just another mouth to feed, so the community eventually fractures into a bunch of minicommunities.  The richest and most successful people never interact with people outside their circle, the social community of the game dies (or becomes vicious and competitive as people argue about spawns and drops rather than working together to achieve a goal) and the people who do regularly interact with people quickly fall into the "have-nots" category as they drop behind the curve either because they don't sequester themselves away to turn bars into hinges, or they don't seal themselves in their guild homes and run off all potential competitors.

Sounds like fun.

Course, I back this up with nothing but what I saw and instinct.

Not knowing how something works is one thing.  Willful, active participation in intellectual depreciation is something else, and equivalent in practice to the Kansas School Board, just with a different topic du jour.  People can either ignore the subject, read for their own benefit, or get laughed at for talking nonsense.  Better a condescending douchebag than a jejune flapping head.

That's the problem with the philosophy of allowing rampant capitalism within a game; it's just PK with moneyclips.  Instead of running you through with a sword and /bow over your corpse, players can rape your wallet by controlling resources or production and forcing you to /bow for the 'privledge' of buying whatever you're selling.  Neither experience is particularly enjoyable for the average consumer, because the average consumer is not a Enron/Worldcomm/etc that can leverage much power - whether IRL or in a MMOG.  Not to mention the sheer impracticality of trying to setup an investment system of any sort in a game.

The article should be mostly tossed out at this point, in terms of consideration of the issues.  The real harm that inflation does to a MMOG economy is nothing like a RL one; the practical effects are that it puts non-controlled items out of reach of most players.  Anything with limited supply rockets in value, because its value is not checked by the forcefully stablized NPC market, or massive supply (ie, the 10,000 craftable foozles needed to gain your next 0.1 skill).  The high end market becomes very, very high end, because the high end players are able to capture the market.

What's so bad about having an exclusive market?  Well, it locks out part of the game to most players, and this IS a bad thing.  When I buy a single player, I can expect to be realistically able to unlock all of the content.  I'll get 90%+ on my own, and any hidden stuff I miss I can discover with guides I find online.  With 10-40 hours of play, I can become the complete hero.  In an MMOG, I can't come close.  If I put in 5-10h per week, for a year, there will still be a fair amount of content that I am entirely shut out from.  It's good that MMOGs always have goals that players should strive for, but not goals that are out of reach because inflation is rising faster than the amount of time I'm able to participate. 

Inflation does *not* damange an MMOG economy by destroying business and causing recession.  My character doesn't need to eat, drink, have a hosue, etc.  Because the nature of the economy is different, the nature of the solution is bound to be different.  There are similarities to a RL market, and knowledge of how RL markets work can be invaluable when trying to design a virtual one, but lines need to be drawn between each set of issues.  Two things that need to be understood;  (1) what are the problems facing a MMOG economy, and (2) what are the tools available that can help combat them?  For each of those items, there are some things from a RL market that are similar, but some that are not.  There - now start to categorize.

Sure, willful ignorance is worse than being a condescending douche. But this is a discussion of somewhat friendly yet heated terms. Being a condescending douche is much more likely to just get people to leave the discussion or ignore your points entirely, meaning no education, learning or real discussion can be had. It's almost exactly like the problems we have with the American political system now, everyone is being a condescending, self-righteous douchebag and neither side is doing the slightest thing to understand the other side's points. We can have a rational discussion without being complete cockmunchers to each other. If we're only half-cockmunchers (head-nibblers?) maybe we can come to some form of consensus on the issues.


You know, that's a good distallation of what's wrong with MMOG's in general, not just in economic terms. The game designs actively strive to make sure that 90% of the player base simply ever hope to access more than say 60% of the content in a reasonable amount of time. And players who can somehow maximize their time/organization are not only able to access all of the content, they are able to restrict other player's access to said content in some form or fashion, whether economically or directly.

To get a little off topic, the essense of that argument is why I am pro PvP despite the whole "it destroys the playerbase" whines of some.  In short, PvP is just another form of competition.  The problem with most PvP systems is that it allows a minority to dominate the way the game is played in order to exclude content to a majority.  It isn't competition for some secondary goal, it's competition to continue to compete, but this is only a result of how the game rules are setup; ID hasn't gone out of business because they include PvP.

Likewise, economics can spur competition or it can kill it.  This is why monopolies and trusts are verboten IRL; they destroy competition, which is the lynchpin of capitalism, even as they are a natural product of it.  The trick as always is to encourage participation, not exclude it.  Systems need to reward winners, but only to a point.  Excessive winning needs to have diminishing returns, or require advance into other areas.  There is already self-feedback in any of these systems, in that people who start to win tend to continue, because they are better enabled to earn skills neccessary to compete.  There needs to be some measure of negative feedback to help brake growth of the top-end winners.  Soon as a small group is able to "win" at your game, it means everyone else lost, and you'll find that you don't have to have PvP for the wolves to eat your sheep.

In real life, one of the things that eventually destroys the winners is the cost of maintaining the spoils of victory. In military terms, the more land you conquer, the less resources you have available to keep conquering because of all the resources necessary to hold your conquered lands. Monopolies in business I believe really only have this problem when there are still competitors to face them. Once they are the only option for a particular product, they have no incentive or need to spend as many resources to maintain their market dominance. I think it takes a lot longer for a monopoly to grow so complacent that a competitor is able to mount any kind of challenge than it does for a conquering army.

MMOG's, on the other hand, have almost no mechanisms built in that make it harder for the winner to keep winning. If anything, it becomes exponentially easier. Item decay helps, but people whine, and since item decay hits everyone, it isn't really much of a help. And of course, those focused on PVE development don't really consider their game a competition.

I'm back for more abuse. 
Ignoring the secret part that was discovered in 1905, sure I'll buy that.
ok,

first, this is not Investment banks, it's regular banks.
second, the whole point of banks is that they take the money out of your accounts, and lend it out to other people, hoping to god that not everyone comes to get it out at the same time.
No, Carrying around a debit card is exactly the same as carrying around a checkbook.  It's still money in a bank that is lent out and the bank is praying to God not everyone cashes it in at the same time.
It sounds like what you are saying is this:  Prentend there is no banking system whatsoever, and eveyone has a single 100 dollar bill in their possession.  At the same time, everone changes in their 100 dollar bill for 5 20 dollar bills.  There is no net change to the system.   
Leading you to say this...  Because there is no bank.   If their was a bank, it would have gone out of business long ago since it had no money to lend out.


I think you are trying to say, "if you double everyone's pay, and just print money to pay everyone, it doesn't mean anything."

It doesn't mean anything if you don't have a banking system. 

I think the problem is that while some people are dealing with absolutes, Slog is dealing with accouting tricks and playing with banking balence sheets.

/shrug

I'm always happy to learn something new - that defines a good day for me.  But this *is* a thread about game economies... ;)

The basic problem is this.  The author of the article assumes there is 1 paper dollar for every dollar in the bank, so everyone can just go to the bank and withdraw their cash.  That's just blatantly untrue, due to how banks works.

It’s an MMOG, you DO walk around with all of your cash on you, there are no banks for people put their money in. Despite what your ego tells you that gets you up every day you go to work, investment bankers are not a necessary part of capitalism. The economic model I was demonstrating was one where a bank is not required in any form. As such, we needn’t worry about the lie that is our 'real world economy' and the inevitable apocalypse that it will cause. In the system defined by the article I do believe we have little to no problems with each others viewpoints, anything regarding our disagreements on how it works 'IRL' we can take to the politics forums.

1) Investment bankers?  What are you talkng about?

2) Without Banks, you will never get beyond a Barter economy, which is why MMORPG economies fail completely.

Banks do have a lot of their money out on loan at any given time. It's how they make _more_ money, right?

In theory the only obstacle to everybody making a run on the bank at once would be logistical - printing enough money to provide everyone with those paper vouchers. But then the bank's got nothing but outstanding debts to collect on and it's not likely to lend out _more_ money to anyone - so in practical terms banks will usually put a cap on how much money you can take out at a time.

In a barter economy, if you work for Farmer Brown and he promises to repay you in corn - after the first time you try to collect in the middle of summer with the corn as high as an elephant's knee, all future agreements from Farmer Brown will include the phrase "WAIT FOR THE HARVEST, ASSTARD". Same principle.

--GF

You are correct, Banks don't lend out all their money, as they need on-hand cash to handle the daily withdrawels.  One of the Feds tools for manageming money is the "Reserve Requirement" or percentage of cash the banks can't lend out.

The point I'm trying to make is that it's silly to compare the money supply in a MMORPG to the real life money supply.  In Real Life, a regulated Free Market economy has numerous checks and balances to keep the money supply inline. 

A MMOPRG has none of these.  It's all fountains and sinks.  Money gets instantly created by farming and gets instantly destroyed by NPC Merchants, etc.  Therefore, it's not even worth trying to make a MMORPG econ look like a real one.

Well I was nodding my head until the last statement.  I don't think anyone is advocating an exact simulation of the real world.  Just something with enough symbolic similarities that we can have some complexity in our entertainment.

Anyway it's a shame because this really is a relevant topic but we can't seem to get past agreeing there is something missing and instead focus on constructive approaches.  Like this maybe. (http://forums.f13.net/index.php?topic=4733.msg120448#msg120448)  I don't need someone to tell me when something is broken especially when the topic of virtual economies has been nosed around since the military-industrial complex's invention of electronic machines.

It was probably new to a lot of people.  Not everybody has been involved with MORPGS for as long as some of us have.  I love a good economics discussion as pertaining to both real-world and online game situations, and anything that stimulates it is good, IMO.  As to the content of the article, it was an interesting read.

(My apologies if I repeat what has already been discussed, as I have not yet read the four pages of discussion.) 

The definition of inflation was a bit off.  Inflation is when the money supply outpaces the supply of goods.  In other words, it's when money supply outpaces economic growth.  Inflation in itself is not inherantly bad; runaway inflation is.  In a healthy economy, money supply is always a bit ahead of the curve, and an annual inflation rate of 3% reveals healthy economic growth.  This is because when people get more money, they generally want to spend it.  A good economy will allow them to get more by spending more (such as spending two gold to get two loaves of bread).  An inflated economy will cause them to spend more to get the same (spending two gold to get one loaf of bread).

[Spit Take]
I agree with you!
Well… at least as far as Pococurante does.
Maybe you don’t, but someone does. Why else would it still be a problem? But I take your point and I agree it’s about time to move on to answers.

I too made a suggestion (http://forums.f13.net/index.php?topic=4733.msg120122#msg120122") in that forum, but my idea was really only half a reaction to his problem. The other half was that in a system like I mentioned in the post the collateral funds could be used as an indicator of money's acceleration within a game. because every gold piece (or whatever) used for collateral is locked by the agreement you know that that money cant be used, and as such the money is out of the system and the other money is more valuable. (Yes Slog, I realize I am gaily tripping back to the very subject of our last disagreement but this is just a suggestion and if it doesn’t work there are always others.) The basic aim would be to lock up money at least for some time which would allow for a slowing of inflation. (The money that is locked away cant increase with inflation so the money acts as a dampener on the acceleration of money not in treaties) The money which is locked in these treaties would be something devs could observe as a function of economic progress in the system they oversee. the system also doesn’t require such interactions so unlike reserve rates IRL, which the lay person might see as the devs just taking their money, players would lock themselves into these agreements and as such would only have themselves to blame.

It's an interesting approach - I'm not sure that an Al Gore lockbox would be looked upon fondly by most large guilds.  But keep the money in flow somehow, force opportunity costs to be figured in, overlay a minigame that is actually the overarching strategic distinction between guilds - that gives a semblance of motion and action.  But then I'm just rationalizing the strawman I floated in that other thread. :-)  I'm exactly the kind of person who would revel in that sort of playstyle while the other officers of the guild would be freed up to just plan the evening's tactics.

Fundamentally my strawman is a glorified sink that represents an investment in the guild's ability to compete.  I honestly think the real solution is putting in more sinks than fountains, rewarding the player for playing the various sink minigames rather then pissing them off with equipment repairs etc.  Emphasizes the carrots.

Freezing the supply is just punitive enough I'll bet five dollars against two dead flies most guilds would spend their creativity trying to get around it.  It's a stick and it's cool to show off ways to subvert it.

Ehu...pardon my english, im from sweden, the almost working socialist county...

Fiat money: money without no intrinsic value. Value is instead established by a government decree, a fiat..)
which is the opposit to
Commodity money: which have an intrisic value, often Gold!

MMORPG money is always of the later kind, which IS a problem since only about half of the game (all npcs) have actually seen the govenmental decree that it actually have value..=)

Usually we try to assign two or three different kinda "costs" to society from inflation. The two foremost are the "shoeleather cost", since we wear out our soles when we have to grab more money in the bank more often, and "menu cost", since resturants have to print new menus when prices change. The third one is related to taxation, being that it hurts a non-indexed taxation system. Then there is the annoying fact that with inflation we cant really say how much the currency is worth. Imagine trying to figure out if a highjumper broke a world record if the lenght of a centimetre (or whatever you use oversea) would variate.
Keep in mind, we are talking about inflation, and NOT hyperinflation, which is another matter.

However, what the OP is talking about as something that would hurt us is "Seigniorage"! Seigniorage is the benefit govenments get by printing money. OP had the base down correctly, by printing more money, they indirect lessen the value of money already out in the society. Inflation can be regarded as a tax on holding money. However, in a mmog the inflation is not a result from a govenment issueing more money, but from players playin.

The issue boils down to the speed that every individual accumulates money at. If you accumulate it faster than someone else, you will gain RELATIVELY more for your time than he will.. Basicly, by earning alot of money fast, you can "tax" his money!

Btw, THAT is the real problem with moneyfarmer.. Not that they farms, but that they are able to "take" your money!


However, its not all bad.. Inflation vill help you pay the costs that arent effected by it, namely everything related to NPC (horsies in WOW par example) purchases.


(in real life, inflation have some benefits too! For example, some inflation is generally wanted by employers, since it facilitates lowering wages at poor times)


I would prolly recommend to do away with money. Players will automatically establish the basis of a working economy (which IS NOT the same as a basic market!). Anyone who ever played diablo will draw parallells to how SoJ were used as currency.

Regulating markets to prevent market failures is ALWAYS bad for the economy. If noone wants to pay Tradeskill Joe for his cannon, that isnt an economical problem, but a problem with the quality of the tradeskills. Trying to ease the balancing with economical restrictions is, at best, a poor clutch.


Why dont MMORPGproducers employ economists?! HIRE ME!..) :-)

I didnt proofread.. I know i misspelled country in the opening paragraph

Unless his cannon is of such fine quality, he charges more for it than the market can bear. Or no one needs the cannon, because there is peace on. His cannon is perfectly acceptable quality, but the market has no demand. I'm not in favor of subsidies myself, but it's a gross oversimplification to say the quality of his tradeskills are the problem.

Ok - i can take the peace.. The cannon might have been a poor choice as an example.. You can safely exchange that for anything you feel is ok in peacetime.. Food perhaps..)

And omg howcan you say that the quality is no problem when the first example you provide states exactly that..).? If noone feel that they have enuff wealth to spend on his uber cannon, its NOT an economical problem, but an itemization one!

Demand is NOT a result of PRICE.
PRICE is a result of demand!

--------

The point i want to make is that a economic system have no impact on gameplay per se (barring market failures induced by producers, like segniorage) . Its there to facilitate the transaction of value between two actors. The whole market (as a market) is simply a human device to provid easy solutions to alot of the issues we would have without it. Start to blame game related issues on it, and you fail to adress the real problems..)

The choice of economic system has a very real impact on MMOGs. It is true that it is not an obvious one, it’s more subtle than that, but it’s hard to rant about subtle. When a development team gets down working on a new MMOG they spend their time split between the many tasks set before them. Tasks that include the development of gameplay, lore, quests, and world design, as well as backend development like graphics and server protocols. When a programmer or designer is working on any of these functions they are spending development time and money. But if those involved with developing these aspects don’t understand the economics involved they are wasting their time.

For example, when a designer makes a quest they must assign an award to it, if that award is devalued by inflation no one will play that quest and that dev has spent development time and money on a worthless addition to the game. Same is true for lore, it doesn’t matter who the king is, was, or could be, because it doesn’t change the price of a sword. Even world design is important to some extent. If there is only one marketplace which is shared throughout the world it will mean that there will be too much competition for the market to employ more that a dozen crafters. That in turn means that any programmers working on crafters are for the most part wasting time and money by spending there effort on something that will only employ a handful of players. Hell, even the use of global chat has an economic effect. On the one hand by shrinking the market the same way a world market does, and furthermore by removing the need for meeting places which reduces or removes the value of housing, security, and transport.

The unfortunate truth is that it is nearly impossible to be laissez faire about economics in games. The only way to would be to remove venders, missions, loot, gold drops, and gold sinks. I am not, nor would I, advocate that.

Or to approach from a different angle, consider what you stated above. “[An economy is] there to facilitate the transaction of value between two actors.” What else is an MMOG? If value transaction isn’t involved it’s either a single player game or a chat client.

MMOGs are economies.

..)

For me there is no "...choice of economical system.." as there is no alternatives available. The fact that a producer spend time working on a quest that rather were made redundant due to what you call inflation is, again,  not an economical problem!

Said producer sealed the fate of the quest at the moment other alternatives were made available with better "risk vs reward" or "hourly wage" or whatever term you wanna use. Economical systems is not a "choice" alá "oh do we want to use economics?", but a direct result from everyday transactions.

An ideal mmorpg "market" for me WOULD be governed in a laissez-faire style. Trying to emulate real life economical and market system has, I feel, proved it self to create more problems than it actually solves!

Provide players with imput (material, items, etc etc) and a fully functioning market system willl establish itself! There is countless of examples you could focus your attention on, rangin from the already mentioned "SoJ as currency" to the fact that players naturally focused their commerce in EQ to NC or GFAY (minimizing transactioncost as you already pointed out).

Of course - this would depend on that there is no npc vendors of any sort in the game..) Ie that its either the players thet tame and sell horsies, shear sheeps and make bandages, and melt ingots to provide you with swords, or that you provide the basic utensils with the real currency as a cost, namely timeconsuming quests..)

Inflation WILL persist as long as the base imput available to all players (TIME!) will yeild different rewards for different actions! Trying to prevent this is fruitless, and time should be better spend on trying to correct the root of the problem, the design of the mmorpg.

:-o what is that? :| what does it mean?  :cry: Why do you keep using it?


  The problem is that the developer should have created an NPC who understood what money was worth (or not made an NPC at all). Your point is a good one, there is a best quest and it will make it unreasonable to take any other quests, but that’s an economics problem too! I'll show you how that problem, and the one I was originally referring to, occurs.

  As it is now, an NPC is programmed to give, say for example, 10 gold pieces for completion of a quest.  Let us also say that the quest was not the most time efficient one. In that case players would go to more efficient quests. At this point if an NPC acted like it should (meaning it acted as if it were aware of the fact that no one was going to help it) the NPC would raise the reward to entice players to come and help them. Also, if everyone was clamoring to do the same quest the NPC in charge of that quest should lower its rates because supply of labor is so high. This means that the peaks and valleys of quest payouts should fluctuate. But let’s go further, as inflation occurs players go to more efficient quests like running to higher ground in a flood. As it rises it will drown even the best quest, when that happens players will claw over each other to get above the rising tide of inflation. At this point much of the gold a player is gaining is not from questing but rather from other players. This vision of a writhing boil of players struggling to float as the living eek out another second of life only by climbing on the drowning bodies of their brethren is what I think of when someone speaks of the endgame. At this point the time and money that the development team put into developing quests has been rendered absolutely worthless.

  The developer should have made it so that the NPCs would act like anyone else would have and raised the pay when labor supply was low and then raised it again when the value of money changed, that they didn't is an economic problem. Although I do agree that it isn’t a problem of economics but rather a problem of the developer's which affects the economy.

  Oh, so there is no choice, but if there was you would chose free market…

  The economical choice is, in which way you should, or shouldn’t, interfere with the economy (socialist vs. free market) and to which ends you should steer the economy (growth vs. employment).

  But that isn’t what I was talking about.  It is impossible to be laissez faire because the developers make the world in which the economy functions. Every decision from where to place the resources and in what quantity to how the game designers drew each different piece of clothing has an effect on the economy.  An economy is fluid; it will take the form of the vessel to which it is confined. Developers may not directly form the economy but they will form its container. By making the game they make the choice of economic system, the problem is that they forget, or ignore, the fact that they are making choices and so the resulting economy fails.


  That’s one possibility but not the only one. Another option is for the NPCs to follow inflation, by raising prices and rewards. Yet another option is for monsters to increase in difficulty relative to the average strength of players. But there is truly a full spectrum of possibilities, not all of which would be so drastic a change as to remove the NPC element completely.

..) is a smile. Like justice, politeness is blind..P


And I still fail to grasp your point. You claim that inflation will render quests useless, which I fully agree with! What I have tried to point out is that inflation it not an economical problem per se, but a game designing one. A "rl" quest market would indeed clear and find an equilibrium where all quests pays the same amount for each time unit spend doing it. Which would be the same as the best possible reward you could get for monsterslaying. A forced system, as they appear today, never clears, and thus some quests are underutilized. I perceive no major difference between questing and grinding gaming-wise. I would say that we agree with eachother.:)

Laissez-faire could, I believe, very well exist in an online game setting. I use the term as it was explained to me, that it's the opposite to regulative actions on the market. Regulative, as an example, would be the subsidy effect a NPC merchant would provide for tradeskill players, and not in the terms that you use it, the "shaping" itself of the background. I still believe it is a poor crutch, as the correct way of correcting the problem would be, I feel, to make tradeskills appealing from the start.


I interpreted your choices in the way that you was of the opinon that you could "pick" the parts of the economy that you liked. A laissez-faire approach is in no way a choice, but an approach. Again, however, I feel that my rather basic understanding of the English language might have perverted my intended meaning.


Btw, from my, rather shaky, recollection of national economics, the correct "other side of the coin" for employment is actually inflation, and not growth..)

  Maybe, if you’re a flounder! :rimshot:
(http://www.studholme.net/scuba/flatfish.jpg)
I’m just messing with you.

  Mostly yes we do agree with each other, but there are still a few sticking points.

  First off the difference between questing and grinding is that to put a monster into a game is a matter of writing half a dozen lines of code whereas when a developer puts a quest into the game someone had to write the scripts for all the dialog, someone had to lay out the dungeon and script the monster attacks, someone had to draw up a loot table and someone had to check it for bugs, for each and every quest. Short answer grinding costs the producer a lot less than questing. Also to grind is rarely regarded as ‘fun’ by the players.

  Secondly, the inflation is an economic problem because if the developers don’t understand the economics of the problem they have no way of knowing how to fix them. That said, you are right it must be the design which is fixed and not the economy per se.
  I used the term Laissez-fair as a bit of a double entendre. The doctrine of Laissez-fair basically states that the economy should be left alone to find its own path to balance, like letting the path of thousands of little tributaries form the shape of a mountain stream. But developers don’t have the luxury of leaving it alone, they're building the mountain. Every decision they make in the game’s construction will alter the course of the economy. Whether the economy will resemble a river, a waterfall, or a lake, depends on the decisions of the developers during production.

  Sure developers should fix trade skills but if that was all that they did they would do nothing to fix the problem of stagnant mechanics in a dynamic economy.  First of all, I don’t advocate a laissez faire approach. I do however certainly advocate more dynamic and freer systems. As such I have no problem in having certain forms of market regulation, be they antitrust (anti-monopoly) systems, some form of contract law (in game lawsuits), or even (heaven forbid) subsidies. The choice is how, to what extent, and in what way, to enact these regulations.  But growth causes inflation and increases jobs, so at least in this day and age growth = inflation.

Alrighty - this is a hot spot for me and I'm going to present my .02 - agree with it or not, some basic facts players tend to overlook remain.

It doesn't really MATTER how much gold is stacked up in an ecomony.  Nope - it doesn't.  Other than bragging rights (which are important to some - but you usually don't know what anyone else has so it's a moot point) that it will cost me more if I have more simply isn't true. What drives up prices are people demanding more - and in a simplistic MMO scenario - every player has the right to say - uhhhh - yeah, good luck with that - you are on crack. The only effect it may have is if folks have too much they don't REFUSE to buy at that price. It's not the economy - it's people themselves that are actually doing it - to themselves.

I've heard this same argument since day one - so far, WoW is the only game I've played where it's actually been visible as a reality instead of simply a perception of the players.

I've had shops in every game I've played but WoW - my prices are set based on cost to produce - and although I played for years - except when source materials changed prices - my prices NEVER changed.

Ok - so players often have this perception - but if you look around, you can find reasonable prices - what's different.

The model where there is one primary source of goods (the AH) in WoW is the problem.  Convienent yes, but there is no private sector checks and balances on it at all - and that model is self-reinforcing.  I look to see what the going price is on the AH - and price, that's a HORRIBLE model to try to keep inflation down - especially when customers perceive they have no other options for obtaining those goods.

Another entire branch of an economic model is missing entirely.  I've often recommended this - especially when I was playing SWG with their focus on resources but I haven't found it in action - till I played Puzzle Pirates.  Why is there no buyers market in these?  That is also a natural break - or sanity check if you will, on prices in the marketplace. Fluctuations happen - but not nearly to the degree they do unchecked.

Yet another way to keep this from happening is by use of NPCs - pricing that sets a benchmark, and NPCs that also RESELL what they've purchased at a markup.
Again, if there is a POTENTIAL to get goods at resonable prices somewhere else - enough people keep looking till they find them that although you can ask anything you want for an item - whether or not you'll actually GET it is an entirely different conversation.

What that leaves us with is lack of goldsinks.  Everyone will eventually be wealthy - that's not necessarily a bad thing - but what makes money lose it's value is NOTHING TO SPEND IT ON.  Goldsinks have to go back out of the world, not just between player's hands. Goldsinks don't have to be tangible either - rich players want luxury items for bragging rights, or just plain fun.

So remember folks - next time you think the price of something is outrageous - JUST DON"T BUY IT.

Sorry, I think that you are wrong. On many lvls.


Demand might drive up price, but we are not talking about demand derived price fluctuations - but about inflation derived from the availability of money. Moderate fluctuations in demand is healthy for an economy. You havent attributed the search time into your calculations. If your clients need to search to find your cheaper goods, that time spend is ALSO a cost, and thus, your prices are higher than you think.

It does MATTER  how much gold is stacked up - since afaik no NPC in any mmog have ever taken the amount of gold circulating into account when setting their prices. Thus inflation affect the game, ie. it was harder to get a horse earlier on in wow than it is today, due to the increased availability of currency in the game.

You changed your prices when raw materials changed price - welcome to inflation, remember that your time is also a raw material.

The AH isnt a "source of goods". It is the players that are the source. The AH market is just that - a market. A market decreases transaction costs (which you can have different opinions about, ie EC tunnel vs Bazaar for interactiveness)

What is a "buyers market"? Im intrigued.


Goldsinks are a poor way to try to solve a market failure. I'd rather see that mobs didnt drop currency.



I interpret (perhaps due to my lacking englishskills) that you dont understand inflation from your last statement. Inflation is a term describing the situation where the amount of currency have risen faster than the total worth of goods in the economy. That means that the "outrageous" price isnt outrageous anymore, since there are so much cash around to pay for it. What pisses ppl off is that there is individuals ( and lately, companies) that spend all their time getting money, which, comparatively, deflates the worth of your time spend doing that..



I know Im bad with teh english.

Hey, you're doing better than some native english speakers I know.

A buyers market is where you post much like the AH - but in reverse.

You put up a deposit - and say you want to buy X amount of Y for Z.

MMOs have one surefired hedge against the worst case scenario of what you are calling inflation - it's called the crafting mule.

People get TOO greedy - you either get it from your guildies - or make it yourself.

Unless the economy is the game, you do not need the economy to mirror the real world.  Not only that, you don't want it to.  The only real economy you need in a game world is someplace players can get stuff and someplace they can use stuff. I started playing UO in 1999, and before I started playing, I read the boards.  Once of the first threads I encountered was how the economy was broken

In a general sense, the economy works if :

Players can get stuff they value for a price they can handle , and players can sell stuff of value for a price they deem fair.
     All the rest of the crap that goes along with a "real economy" is just getting in the way

If you want a nice economy sub game, more power to you.   But it matters little to me if it is as simple as the UO model or more complicated.  But here is what I know.  If monster x gives 500 gold to my buddy, but only gives 200 to me, that seems unfair.   If that happens simply so that the game economy can model the "real" economy, well to me that is just plain stupid

  Fight necroposts with necroposts, that’s what I always say!

  Ok, first up, I can say nothing bad about the proposal for buyers markets; it's just a good idea.

BUT

  You have the right idea but the wrong inflation. The type of inflation which is combated by using a crafting mule is price inflation. In such a case goods in the market, like weapons, armor, and heals, are being sold for not only more than the equilibrium price of the good (econ term meaning the price most people will pay for a good), but it is being sold at a price which is more than the cost of enlisting a guildmate to re-roll as a crafter, train up, gather resources, and produce the good. This is the textbook answer for why a producer can not just charge anything they want, even if they are a monopoly. If price is too high new producers will enter the market and drive down price through competition. So in that regard your right...

  But that’s not the type of inflation which I am warning against. I am concerned with the inflation of capitol (read: gold), in a system where the government (read: dev team) have instituted price ceilings. In this situation prices are set (by a number of factors) lower than the equilibrium price.

  To put it in appropriate terms let’s have an example. Let’s examine three people in a game, a crafter, an NPC shopkeeper, and a buyer. Let’s say that the buyer has 20 gold pieces, and for the sake of argument let’s say that the crafter and the shopkeeper are selling there goods at the same price, cost plus, or 5 gold pieces. It’s a happy productive world just as god and the devs intended... Ok so now let’s say that the value of gold is inflated. This means that the buyer who used to have 20 gold now has 100 gold, but is no richer for it because each piece of gold is worth one fifth of what it used to be. Now we look at the situation again, the shopkeeper still sells the good for 5 gold pieces but the crafter must now account for inflation and so charges 25 gold pieces. The inflation has caused the NPC shopkeeper to essentially lower it’s prices by the inflation rate, this will mean that eventually if inflation is left unchecked the NPC will sell the good for less than the cost of crafting. So as inflation grows it bumps EVERY crafter, even the mules, out of the market.

So let me sum up that last bit for you Read the fucking article! This is the same, "fuck you I’m walking off this cliff just like everyone before me has cause there are a hundred of them and only one of you so they must be right" argument. It’s just ignorant of the facts.

But perhaps I’m being unfair so I will attempt to make my points more clear.

Fact one: It's an economy, stupid!
  An economy exists anywhere two people interact.
  MMOGs have more than two players interacting.
  QED
  An economy exists within an MMOG.

Fact two: you can’t opt out of the economy
  The real world constitutes an economy
  You live in a real world economy
  You don’t give two shits about economics
  You are a participant in and have an effect on the economy
  QED
  Even if you don’t give a fuck about an economy you have an effect on it

Fact three: devs have to give a shit about the economy
  The devs create the world
  The world includes the means of production: resources, tools, and procedures.
  QED
  The devs control the means of production.
  Production in the form of goods supply defines goods price
  The price of all goods define money demand
  Money demand defines value of money
  QED
  The devs control the value of money

Fact four:  players and programmers get screwed in bad economies
  Part one:
    Inflation causes prices to rise for Crafters
    NPCs don’t change prices according to inflation
    One symptom of bad economies is inflation
    QED
    Crafters get priced out of the market in bad economies

  Part two:
    A game’s content is the sum of all programmed encounters (henceforth known as quests) which is the work product of programmers.
    Each quest has tasks and rewards
    Rewards are objects and or gold accrued by completing the task
    Inflation reduces the value of all products including gold
    Value of tasks = difficulty * time * tasks’ content.
    Inflation reduces the cost of swords, armor, and heals, which make the tasks easier and quicker to complete.
    QED
    Inflation reduces the value of all programmers’ work product

  Part three:
    Players who prefer fighting over crafting (henceforth known as fighters) value content
    A game’s content is the sum of all programmed encounters
    Inflation reduces the value of all programmed encounters
    QED
    Bad economies make the game suck for fighters

Conclusion
  If economies, which you interact in, and developers control, fail, they make the game suck for players, be they crafters or fighters, while destroying the value of the work of programmers.

  I’m not sure I can make this much clearer.

Non sequitur.  You already defined economy as interaction, so I can opt out of an economy by refusing to interact.  It would better defined as a system of production, distribution, and consumption; but I can opt out of this as well.  You can opt out of IRL economies as well via subsistence farming, assuming you can get around property tax.


False.  In a pure capitalist environment price is determined, mostly, by supply and demand (ignoring market segmentation, etc) of the product AND money.  Fluctuations in money supply/demand will independently affect price points just as much as product.  The nasty part is that these two variables offer some amount of positive feedback to each other.


No.  Utility is also a function of money.  In MMOGs, other factors affect money utility such as social status and achievement.  That is, wealth is an end unto itself independent of goods/services.  However, the ability to trade money for goods/services significantly affects the demand for money.


Because devs do not control all aspects of utility, both for money and product, they are unable to entirely control the value of money.  What remains is significant, however.


Non sequitur.  For one, just because something bad happens to a player doesn't mean it is necessarily bad for programmers; it may be part of the game (eg, PvP).  Further, you are assuming unlimited supply at NPC vendors, which is not always true.  They sometimes have limited or no supply of a particular craftable.  In fact, it has sometimes happened that a certain craftable has no supply at NPC vendors and a greater demand in the PC community than at NPC vendors, making NPCs irrelevant with respect to a given craftable.  Crafters may get priced out of market, but that's not an absolute.


False, by definition.  Inflation has the opposite effect; prices increase.  Of course, you are here confusing goods and money.  A glut of product in an economy is not, for example, inflation.  If the sum of all products were to increase while the amount of money remained constant, you would actually have deflation due to the increased purchasing power of money. 


A quest does not have value in an economic sense.  Nor can you really try to argue it in, since any perceived value of a quest includes the "difficulty" and "time" variables  you mentioned, which is dependant upon the player doing a quest.  Hence any value gained from doing a quest is indeterminate.  The rewards are reasonably determinate (perhaps randomized, but within set parameters so as to have an average).  Since reward was defined as both money and product, the actual value of a given reward is dependant upon the ratio of money and product, and may serve to deflate.


More non sequitur.  First, it is already demonstrated that the assertion is wrong.  Second, bad economies would have no affect whatsoever on fighters who value encounters on their own merits without need of reward.  The assumption is that fighters seek largely/only wealth.  This is already untrue by your definition of fighter; by desiring fighting over crafting, you have already ascribed at least some of their motivation to something other than money, independent of the means of gathering wealth.  Third, you have already stated that NPCs are immune to inflation, which in themselves create a static economy over products they both buy and sell by virtue of simulating a larger economy.  If supply/demand of a product is framed by an NPC, by definition the economy neither inflates or deflates.


That is very unfortunate.

  Tell the Native Americans that.
Seriously though, the only way to opt out of an online economy is to have no contact with any other player in any way. In which case what the fuck are you paying a subscription for, buy a damn single player game every month with the money and have your lonely fun.
  That’s the nominal value of money not the real value

  But to be clear I am making the assumption that we are discussing a moment in a generic case and in such a case everything is constant relative to the previous moment unless changed by the added variable. If the example were the ejecting a probe from a space shuttle then we would not need to conceder in what direction the subject was going or any other initial conditions because both bodies would have the same initial conditions.
 
  So if supply is the only thing changed the price for any amount demanded is the only thing affected. A) Why the hell are you talking about wealth?
B) Once again as compared to a concurrent control state the only effect on money demand is the change in the price of goods in the market. And to clarify (perhaps not for you) money demand is, in part, affected by the consumers in the market needing money to buy things. So when players need more money to buy the same products they demand (read: want) more money. Read the whole thing before you post.   In my experience NPCs either have something or they don’t. One of the things I am advocating is more reactive NPCs, but until then any craftable product which is sold in a shop with a fixed price will, with inflation, destroy the compaction for said product. Which is why I say fix NPCs or take them out, because in the end there is no way for crafters to compete with price ceilings. But perhaps the conditional should be set: in all cases where NPC shopkeepers exist that sell craftables at a fixed price with infinite supplies. But I didn’t think I needed to say that, as that conditional doesn’t exclude anything from the set. A good catch, through and through. I was making an unstated assumption. I mistakenly used the word inflation instead of saying inflation in conjunction with price ceilings.
  I really don’t understand what your talking about. Difficulty and time are attributes of demand just as they are in any other exchange. If I have to travel 100 miles over unpaved roads to purchase one bag of rice, and only 20 miles on paved streets to purchase another, then my demand will be lower for the one further away than it is for the same one which is closer. Time and difficulty are not only well defined attributes of supply and demand but they are easily translated to the example.
  As for reward it makes no difference from an objective point of view what the hell you get rewarded with. All commodities have a value, be they weapons, armor, or gold, and the sum of all values is the value of the reward.   I know SirBruce, and you sir are no SirBruce!
  If you had read the entire post you would have read   I didn’t say a damn thing about the reward so what the hell are you going on about?!?!   In all honesty, what the hell are you saying?  That’s a nice glass house you’ve got there.

No trade = no participation in the economy.  If the NPCs do not remember inventory, and mobs randomly respawn, you have no effect on an economy if you kill/sell/vendor purchase - which is what you are strongly suggesting when you say that crafting market collapses.


How do you figure it's a requirement that inflation will drive prices beyond any arbitrary value?  Inflation occurs when money outstrips product.  However, both money and product are increasing.  Price inflation often does occur since money is increased due to liquidity of product, but not without end.  This is demonstrable.  Within Shadowbane, runes are a requirement for character advancement; yet their drop within the game was regular, predictable, and very rare.  Despite the continued growth of the overall economy, the price for them leveled out.  Why? 

MMOG money is not fiat money.  It is a product just like any other, just one with a function inherit for making barter easy.  As such, the value of money in a MMOG cannot be devalued to near nothing, because production of new money always has a baseline cost assossiated with it; mob farming.  Excess gold will impact price points, but not without end since sans cheating, all gold remains a function of time just like every other product.


If it's confusing it's probably because your arguments are nested, so you have to trace them back.  The only reason that bad economies would suck for fighters is if the fighters somehow cared largely/only about the reward.  That is, if they didn't care about the economy, a bad one wouldn't matter.  Their main interaction with economy is through rewards, which are a result of content.  They interract with purchasing as well, but you have already defined a price ceiling on product due to NPCs, so that side is moot, as it creates a stable economy.  So, bad economies don't make the game suck for fighters, at least per your argument.

This IS the problem (ok,ok, ONE of the problems..) of MMORPGs today! The fact that the actual money value can be derived down to the fastest way of getting it!
Essentially, you have rendered every other way of getting it useless, since the others ways CAN'T change their rvr (or whatever you prefer to call it, payback-, payout ratio etc) to compensate for it. Couple this with an excessive amount of farming that spot, which devaluates the amount of currence already in the game and possessed by players (via seignorage) and you can see why/how inflation affects a game world.

However, again as we discussed, this is = a designer problem. The real problem isnt that it happens today, but that noone have tried to prevent it happening tomorrow afaik..P

[edit] fix'd some formatting..

Hmm.  I think it is and it isn't.  I mean, because money always has a certain minimum value determined mostly by the optimal effort required to farm it, you don't have to worry about runaway inflation.  On the other hand, it will also virtually require money to be devalued down to this level.  The question becomes then, is there a better way of handling it?  How for example, *could* you setup a fiat economy?  Investment banking doesn't exist in MMOGs, and it would be really complicated to try and set one up so that money filters back through a central bank where supply can be regulated.  Further, you have the additional difficulty of needing a Greenspan-esque individual to judge how to best throttle the economy based on player demand for coin.  This is a tremendous amount of work for a system that works mostly right in its oversimplified, current state.  Are problems with MMOG economies so bad that something like this needs to be introduced in place of other systems - say, guild options, PvP features, etc?  Does it impact fun that much?

There is another problem that is getting lost, I think, because of the use of the word inflation.  Namely, that economies also suffer because of a glut of product on the market which drives price points down.  In effect, everyone becomes a millionaire.  The only things of value are either extremely difficult craftable-only items or ultra rare drops, both of which retain value only due to scarcity.  What becomes broken isn't price points, it's that suddenly "need" vanishes from the economy.  IRL, I need food, a house, a car, etc.  I have to have them for survival, and (mostly) therefore I work.  Once needs are met, I may then continue to work for the purpose of increased luxury.  There is always, ALWAYS a bigger house that I could build.  Not even Gates can have everything. 

This isn't true in an MMOG, because there are limitations on product.  Houses only get so big, there are only so many types of rares to collect, etc.  At some point you do have everything, so the only thing left is to have more of them than anyone else.  And you never really need anything, because your needs are so easily taken care of. Whereas IRL my needs take up a majority of my budget (house, food, car, gas, insurance, day care, elec, etc), only a miniscule amount of my MMOG budget is taken up by needs (weapon, armor, regs, etc).  It's a world where everyone is rich.  To a point maybe this is OK, because it wouldn't be much fun to play a game where you're always impovrished, but bears some considering.

Well ... Should the devs provide players with a monetary system at all, or leave that to the players to establish? Im a sandboxer as far as mmogs go, so for me, that doesnt sound as crazy as it might be...


------

Is a fiat monetary system necessairy? Can there even be one without a governmental backbone keeping it stable? Will barter systems automatically create currency to lower transactional costs?

-----

As K said, economical systems, and markets, tend to happen even if we want them or not - why not let the players run it them selves? Alot of them/us likes that challenge..

What do you mean?  It sounds like "no gold drops".  That reduces an economy to a barter system and would pose difficulty with any sort of NPC vendor due to lack of a base value for products.  How is that an improvement?  Or did I miss what you were getting at?

no that was pretty much what i was going at..

Do we need NPC vendors? Or are they just a crutch? Everything essential from npcs could be made available tru player tradeskills... barter systems would eventually develop some sort of currence of their own I bet.. Instead of the hassle with inflation related problems today - wouldn't this be prefered?

The Stone of Jordan (SOJ) in Diablo online (or was it Diablo 2?  Diablo 2, I think) is very similar to the "develop currency of their own", so I'd say that thinking was correct (although in an odd way, because money existed in D2, it just was worthless for buying anything anyone wanted, so it wasn't useful as a trade arbiter).

Seems easy enough to create a currency, have mobs drop "mana" which is needed in all crafting, and can be combined up (10 lowest combine to 1 next lowest, etc).  I think this might be the money sink (inflation counter) that y'all are looking for - give the base item of trade some utility in and of itself which prevents too much from building up.  Crafted items enter the game at a rate proportional to how money leaves the game.

Sure, it's not exactly like a monetary system (where the money is supposed to be abstracted from goods or services), but so what?  I dont know, I'm tired, maybe this doesn't make as much sense as I think it does.

NPCs are needed because a crutch for dev-generated economies are needed.  If you break your leg, you have a real crutch because you need it.  But I'm getting ahead here - you're talking about two different things.

A barter system just means eliminate the use of gold.  That's not exactly fun - money has importance in society because it is convenient.  It is nothing more or less than the commonly accepted physically represented store for value.  You can pick anything, but because you have something universal, you have something to enable ease of trade.  The problem of inflation or deflation is that it harms this store; you can't easily use your money if it is unreliable as a store.  Still, barter isn't forbidden just because you have coin; but barter is not usually better (more fun) than using gold.  Why?  Well, it's more complicated - which is why people came up with money to start with, and why game trades usually include exchange of gold, not goods.  Otherwise, I'm left with A for trade, need B, and have to find someone in the opposite circumstnace.  With gold, I can sell A, use gold as my store, and purchase B when able.  The two situations do not have to coincide.

As for NPCs, they often form ceiling/floor for the economy, as well as prop up parts of crafting which may either not exist, or be boring.  Without them for example, it may be possible to hyperinflate an economy with duping.  Or disrupt production of certain items enough to harm the overall economy.  NPCs can often become a safety net incase anything goes wrong; no matter what else, you can still buy the essentials.

well... currency in real world solves alot of problems as you said - but alot of those problems arent present in a game world.. (ie storage of goods realated issues, general decay, etc.). Aren't you just applying the standard thinking without considering that RL != Game?

For the rest of your post, everything you say again derivates from the poor design of the game, and not from some magical formulae that gives currency>barter. Don't make tradeskills booring - dont give loopholes for duping - dont make a game where there arent enuff alternatives so that a few can disrupt a whole chain of making - assess supply of material at any given time and change when needed etc... You might need a crutch because you broke your leg, but you also might wanna try to prevent the leg from breaking in the first place...

No because trade is trade, whether RL or game.  If I need to trade, a money based economy is superior to a barter one, for reasons given above.  However, a money economy introduces problems that need dealing with as well (inflation, etc).  Much about RL economies don't apply - for example, investment is non-existant in MMOGs, and there doesn't seem to be much reason to introduce it.  However, basics of economics do apply merely because we are talking about wanting a basic economy.


You can sum that up as "make a game that doesn't suck".  Make tradeskills un-boring?  That's normally the intent, but building fun is hard.  Don't have dupes?  Not going to happen.  Again, it's not like devs decide one day "you know, I think we'll introduce dupe bugs into our game".  Don't let a group of players hijack supply?  That's hard if you want anything to be rare.  Rare anything requires limited supply, which suggests it can be dominated by a coordinated group.

um..

I was merely stating that alot of the reasons why we use currency in RL isnt a factor in a game - different variables gives a different solution.. not that we dont "want" an economy

Barter is "bad" for a massive market MMOG as an economy, because if all you are left with for economy is a barter system, you cut out the soloers. Bartering is social gameplay, and MMOG's have shown that the mass market doesn't want to rely on completely social gameplay. That was one of the failures of Asheron Call 2's no-NPC design; in order to engage in the economic game, you had to find other players.

I'm not saying putting social gameplay in is bad, but like forced grouping, it shuts out a good proportion of mass market customers, especially if there is no alternative. Besides, even with a NPC/money economy, that doesn't preclude those who like barter from doing it. It might be nice in an MMOG to have both a WoW-style auction house and a Live Bazaar area. In the Live area, you have to "hawk" your goods and haggling is de rigeur. You cannot sell your item for more than the last recorded high price on the Auction House, but you can sell it for lower.

Interesting topic.  Are there actually two problems? 1) controlling inflation and income within a game, and 2) deterring farmers.  They're connected obviously, but might be useful to view independently.  Ignoring farmers for a moment, I don't understand why barter isn't useful.  If you limit the available currency (e.g. only certain mobs, and control payouts by configuration) and allow PC's to barter with NPC's for other goods, wouldn't that be more interesting?  And what if the high-ticket items were themselves items that could not be traded to help control farmers?

Not sure what's already been debated and dismissed by game designers around economic and RMT problems, but I always thought reducing currency and supplementing it with a barter system might help.  Point me to some other discussions on this if you could.  Thanks.

See a few posts above, where I talk about why barter systems suck.  Less specifically, it's annoying and not fun to people who actually participate in bartering as the only/primary means of trade.

Sorry, should've added that I was idealizing having the NPC's know the current real value of the item and it would be a challenge to barter to something reasonable.  I'll read the whole thread.  :-D

IF bartering with NPC's were a decent mini-game, it might be fun. Bartering with people, though? Only fun for some, and I'm not one of them. No game stops you from doing this currently, they just don't make it the only means of trade.

I consider them very different.  One is a design challenge, the other a customer support responsibility.  I have no problem w./ RL sales of VL items but I still expect CSRs to deal thoroughly with farmers actively ruining other player's service experience (e.g. kill stealing, PK/training to hold spawn spots, etc)

Barter always happens - it's better to code in money and let the players define the barter system.

why?

That strikes me as the intrinsically obvious answer to mudflation: make resources finite. Make it so there is only X amount of 'gold', therefore a vast hoard becomes a target. Thereby spawning conflict.

And now you have a game.

Instrinsically obvious, but not easy to implement. That hoard would have to be awfully accessible to targetting, or the game locks up like (extremely) early UO. Once you've made it accessible, the player or guild in control needs to guard it, likely by catassing. If they succeed, the game locks up like ShadowBane.

Very few consumers like to be on the losing side... the life of a revolutionary striving to overthrow a great power works well in fiction, but Joe and Jane gamer in a similar situation tend to play serfs for a short while, and then leave. Zero Sum: The Rich Get Richer! is not a realistic MMORPG.

Great topic, testical tweaking aside.  Although sometimes that's helpful too.  Still interested.   

If we agree that if NPC bartering as a system is built intelligently into the game (i.e. it is tracked and indexed centrally so there is an invisible hand at work) it could alleviate the need for some of the gold supply?   It could act as a means of throttling some of the need and thus some of the supply for gold?   The existing alternative are sinks.

If so, what about extending this further and controlling the overall money supply.  Index available currency to total player currency wealth (i.e. how much coin is in game with PC's). If you have the technical means to monitor and index all NPC barter transactions (since there is a finite catalogue of goods to trade as assets in the game) you might be able to monitor and track all PC gold.  If you can do that, then you would have the technical means to do more interesting design with things like barter.  You would also have the means to consider ways of helping new players over veterans who are more wealthy, since time-in-game is still the only non-RMT way to gain the most wealth. 

Or better yet, make resources decay. 

Making hoarding a risk with mini-sinks from design ideas like theft, or decomposition, or spoilage or whatever.  Crafters could maintain small amounts of resources they really prize, and have to likewise maintain sane amounts of grinding resources they don't care about.  Anything above some design limits starts to drip.  Don't like the idea otherwise of finite resources -- finite nodes like in WoW maybe, but not overall.

Im torn

Why do they even try to institue a fiat currency system in mmorpgs? When i talk about barter - i dont mean that everyone should run around and try to trade a horse for a sword, but rather some sort of gold standard. I know know gold is a misgiving term in mmorpgs since most players go gold = currency, and not gold = goods. Basicly, why not use a currency that have an inherent value as a trade mean. Since alot of the reasons why we started to use gold and silver standards in RL doesnt apply to games - not just logistical issues, but also the fact that gold, as a resource or good, is laregly worthless in game to players. Why not use lifepotions as someone suggested above, or some sort of standardized stackable equipment? Or why not use _experience_ as currency?

  Let me start by saying that the gold standard is not something to we should wish to attain, but rather something we should wish to rid ourselves of. The gold standard is a crutch, or better yet, a couch. Think of when an infant is learning to walk for the first time, in the beginning they literally climb up on things like couches to achieve their upright position.  Then as they become more accustomed to standing and walking they hold on to it for stability. Eventually however, those things to which the baby clings to are actually limiting what they can accomplish, where they can go. And so, eventually, they learn to walk on their own two feet. Likewise the gold standard was at first the only thing sustaining value in currency, then it was simply stabilizing it and finally it was holding the economy back.

  With that in mind there are two perspectives on MMOG currency. One holds that a game's economy springs fully formed from the void when ever the game is turned on because that is how the game was designed. In this instance the programmers have decided the value of money and created it accordingly. The definition of fiat currency. But the other perspective, the one to which I ascribe, is that when the game is first started it initiates the birth of a new economy. But oddly enough this too calls for fiat money. If players are to ever have a currency like the one which the modern world is used to they need a form for capitol, the fiat currency. By having the programming support currency and its transfers, players feel confident that their exchanges and stores of money are secure. But there are two ways which this perspective differs from the previous.  1) Money is not given a value by developers just an availability. (An economist knows the price of everything and the value of nothing.) 2) Any structural elements of the economy, like NPCs, must be fluid, and flexible, or completely removable. (Put a fitted ring on a baby’s finger, and as the baby grows, either the ring comes off, or the finger does.)

  Long story short and ramblings aside, the gold standard can’t be applied until players know what everything in the world is worth. Until then it can only be either all out barter, or fiat currency, you have to pick one. Oh, and to make the decision easier just remember, people like Haemish will cry if you chose the wrong one.

gold standard IS all out barter - money is just an easily portable replication or representation of gold, which would be to heavy to carry in RL.....

Having a fiat monetary system with no regulatory instance, no state bank and no control leads to alot of problems, as we have discussed.. and imo its way easier to configure a working gold standard system than try to convince alan greenspan to play a mmog....

This is a recipe for massive deflation.  These games have an ever-increasing supply of goods.  Keeping the money supply stable in this situation would ream all but the very earliest competitors (indeed, it would drive everyone away from using money as a trade medium in your game in the first place). 

I said stable, not unchanging. Instabilities like inflation and deflation will, in the short run and over time, cause the populous to distrust the exchange medium.

Yes, once you start making resources finite and letting players control them, you better have a PVP game. At which point, congratulations, your game just became a niche product. Nothing wrong with that, but you'd better be ready for it.


Playing a guerilla fighter in an MMOG sounds exciting, but it isn't really. The only way for a guerilla fighter to win in an MMOG is to drive the dictator/overlord from the game, thus depriving your game of a customer or group of customers (my guild quits!). Guerilla fighting in MMOG's attracts the griefers, who aren't really out to play the game so much as cause havoc to the established guilds/players. Sure, there are some who aren't out to be griefers, but the very lifestyle attracts the griefers, just like real life revolutions attract the power hungry sadists like Stalin. On the flip side, the larger the victory in an MMOG, the easier it is to hold on to your winnings. The winners get stronger, the losers get bored or become griefers and either is bad because it drives people from the game.

And yes, people like Haemish will either scream bloody murder when you fuck it up (and leave) or just leave the game quietly.

Dead on here.  The other concern in creating an economy where resources are finite is one of alienating new players.  Someone that joins the game at some point when the economy has somewhat stabilized will be at the mercy of those that control scarce resources.  As Haemish points out the only way to circumvent this would be through a PvP mechanism, but the market shows that most people aren't interested in this given alternatives.  Me personally... I'd love it.

Is anyone familiar with the the DAoC economy now?  I think it's instructive.

NPC goods are generally worthless and not purchased,  except for DF and aurulite gear.  This gear is sub-optimal,  and it's not too difficult to farm the seals/aurulite to purchase it.  This is in effect a subsidy to new players or players new to this server,  to get them started.  In the pvp/rvr atmosphere,  no established character would want sub-optimal gear.

NPCs also sell crafting supplies (metal, wood, whatnot).  Since this is the cheapest source of it,  and the price doesn't change,  it leads to a situation where your marginal costs do not rise as you craft more goods.  (Flattened supply curve).  The only limitation, then, is the cost of raising a crafter to appropriate level (fixed cost) and a function of the probability of crafting a selected quality of good. 

For 99% quality goods,  there is almost no profit.  For Masterpiece (100% quality) goods,  which are extremely hard/time consuming to make, there is some crafter markup, so some profit.  If prices go too high for MP items,  players have options:

1. Guild crafting mule
2. Go with the 99% substitute "inferior" good
3.  Wait for the market.  Generally,  crafters start producing more MP items as prices spike and they see profits to be reaped.

The market and prices for crafted goods is fairly stable,  and has been for some time.  Less some changes in markup on MP items for inflation.  99% quality goods are stuck at marginal cost,  and have been for years.

Most of the market is in scroll drops,  unactivated artifacts, and high-end drops from epic encounters.  For which definite prices have been set over time to keep pace with both the change in money supply (increased supply of gold with not many cash sinks) as well as changes in template building (i.e. player demand for "ideal" items in certain slots.)

To earn coin,  you go out and farm one of the new resources:  scrolls, epic/high-end drops, unactivated artifacts.  Sell for coin on your merchant so you can purchase the piece of the puzzle you need.

Generally, some good money can be made solo/casual in scroll farming.  Some blues/yellows (easily soloable) drop decent scrolls.

Guild groups or dedicated farmers can rake in cash farming hard to get scrolls,  or artifact encounters. 

With a good knowledge of demand,  you can make alot of coin playing the market (essentially arbitrage).  Cruise market explorers for in-demand items at sub-market prices, and resell.  I made most of my money doing this.

There is a fair amount of inflation, since gold is continually created in the economy and there are few gold sinks. The rate of inflation appears to be stable, though.  This means gold is still the medium by which all transactions take place,  unlike some games where currency almost completely lost value (AC was the preminent example, right?).

Since the prime method of acquiring gold is by scroll/arty/item farming,  the gold reaped keeps pace with the overall market as prices increase.

The supply of money,  as long the rate of inflation is not constantly increasing, is not a significant factor in this economy.

Just my late night meanderings, though.

There is no "gold standard" in MOGs.  This is a virtual game.  I can't melt down my gold piece.  MOG gold is no different than RL dollars - a fiction that simplifies the exchange of units of work into something portable.  If my game has hit the point that inflation is unacceptable, the problem is NOT the economic model but making sure whatever I allow added to the world carries a strong incentive to be removed from the world.  In UO's case they did something very fun to rectify a past flawed design goal - Clean Up Britannia was fun for the players and did its job.

Why the hell are we trying to wring the fun out of a game by aping financial controls from the real world?  Exactly why would I as a developer spend the thousands of dev hours (ahem, hundreds of thousands of RL dollars) to come up with a barter system that in the end acts just like a gold piece, a silver piece, and a copper piece.  The last thing I'd do as an investor is put my money into an entertainment product full of nothing but coercive "game mechanics" because I'm too unimaginative to put in fun goldsinks or I'm too limp-wristed to standby the requirement "adventurers" find a repair scroll.  After all, this is a Massive game - they don't want to interact with crafters they should be playing an FPS.

There is an exception - targeting a "true" virtual world to education markets.  But I don't hear that as the backdrop.


Sorry Swede first time I've been back to this thread.  "Why" code in barter or why do I see them as two separate issues?