The MMOG Economical Flaw

[Roac]

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.

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.

[Roac]

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.

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 book balancing someday. Or even algebra.

Take a class on econ.

[slog]

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.

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.

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?

[slog]

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.

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.

[koboshi]

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.

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.

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.

Where are the concrete suggestions?

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!

[HaemishM]

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).

[slog]

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

[Strazos]

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.

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:

General Motors issues 2 Billion dollars in short term 30 day notes..  Everyone who buys this debt has 2 Billion dollars

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.

GM has 2 Billion dollars are well.  We started with 2 billion, and ended up with 4 Billion.

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

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.

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.

[koboshi]

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.

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.

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.

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.

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 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.

[HaemishM]

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?

[koboshi]

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.

[slog]

a bunch of stuff.

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. 

[Xilren's Twin]

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?

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

[koboshi]

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.

[Samwise]

Slog, your forgetting what happens if all the people want their money back.

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?

[slog]

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.

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

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.

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

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

[slog]

Slog, your forgetting what happens if all the people want their money back.

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?

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

[koboshi]

Slog, your forgetting what happens if all the people want their money back.

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?

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.

[slog]

Slog, your forgetting what happens if all the people want their money back.

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?

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....

[slog]

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.

[koboshi]

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....

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.

[Strazos]

^^^^    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.

[Pococurante]

I surrender.  Good luck with your lives.

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.

[schild]

I surrender.  Good luck with your lives.

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.

[Pococurante]

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. ;)

[Bell_]

I surrender.  Good luck with your lives.

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.

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

[Pococurante]

[Strazos]

Jeezus Buttfucking Christ, resize it.

[schild]

Jeezus Buttfucking Christ, resize it.

I'll translate that.

Jesus christ, make that less funny.

[Samwise]

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

[WindupAtheist]

Epilogue...



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)

[Glazius]

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.

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.

[Pococurante]

Jeezus Buttfucking Christ, resize it.

I'll translate that.

Jesus christ, make that less funny.

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!

[Pococurante]

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

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.

[slog]

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.

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.

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.