Real estate! Real estate! Feudal state!
Inflation is "the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling."
Inflation affects anything that can be bought or sold. It affects volatile markets the most. An mmo developer can enact various measures to slow inflation, but due to its nature, an MMO existing in the state they do today, will experience inflation in one way or another. Some faster than others.
In Chronicles of Elyria, the world is composed of a finite amount of resources. They will not inflate over time. However, we will still experience inflation due to discovery of resources. We will then need to gather the resources and refine them, but we will experience a level of inflation due to increases in the supply of certain goods.
Inflation is usually a slow, steady process, but sometimes periods of unusually high inflation occur. This is called “hyperinflation”. This is usually the result of a massive influx of supply. For example, if we were using gold doubloons as currency, and someone minted hundreds of thousands of gold doubloons, the value of a doubloon would crash. This would cause a period during which, gold doubloons lose a large percentage of their value.
Hyperinflation may occur naturally in the economy. For example, if several duchies in a kingdom decided to start massive stone quarrying efforts and poured all their research into mining tech for gathering stone, they may end up with an extremely large surplus of stone. This would cause the price of stone to plummet. Thus temporarily causing hyperinflation of stone and decreasing its value.
Typically in an MMO the developers’ choices increase or decrease the speed of inflation, but a player’s choices generally cannot. In Chronicles of Elyria, while the developers do have a great deal of power over the economy, they don’t directly control the NPCs actions, so in reality, the actions of the player base as a whole will shape the direction in which the economy goes. The NPCs will react to our actions, so we can cause them to do certain things in the economy as a result of what we do. In that way, we affect the ways in which our economy changes.
The question is: “How can players respond to inflation, in order to best protect themselves?”
The answer parallels the real world… “By moving their wealth into the items of the highest value and lowest volatility.”
In the real world, civilizations had four criteria that helped them choose a currency:
Malleability (ease of distributing and dividing)
Lack of danger to possessor (no acidic or radioactive compounds)
Longevity (it can’t rust or corrode when encountering common elements)
Rarity (rare enough to be valuable, but common enough to allow widespread use)
Ancient civilizations settled upon one primary element as a currency: Gold.
It could be melted and divided easily
It was innocuous, posing no risk to owners
It wasn’t easily corroded and could survive contact with common elements
It was relatively rare, but found in many places
In video games, these criteria can be applied, but in a different fashion. The criteria affect us differently in a digital world.
Ease of division and distribution is still a factor in Chronicles of Elyria. We have to carry currency with us to use it. We can mitigate problems through banking services though.
Dangerous materials less so, but there are still materials to be avoided.
Longevity may be a factor as well. Depending on the level of detail implemented, this may or may not be very important to us.
Rarity will definitely be a factor. We need something recognized as valuable, but also available in some capacity in the areas in which we reside.
If we apply those criteria and look for a resource with low price volatility, we can use it as a “currency” to safeguard (to some extent) ourselves from inflation. The right “currency” to safeguard value over time, may change significantly as the market changes and new resources are found.
If we can find good long-term stores of value, it allows people to stash away funds to be used later, without worrying about changes in the value of the currency or materials being stored.
What are your thoughts about inflation and how it might affect us? Do you have any ideas for maximizing the efficiency of currencies and minimizing losses?
By the way, if you are interested in discussing Elyrian economics, game mechanics, or just hanging out, come visit us at the Duchy of Vitalis discord server.
But..... but.... i was told if you ever run out of money you just print more! :p
Inflation in the real world and in a mmo are both based on the same principle governments print more money when they need funds. The more money is printed the less value the currency has since there is simply more of it.
In mmos the problem isn’t money is printed but every wolf that respawns indefinitely carries gold. So instead of the government in control of how much money is added to the system “farmers” who kill various critters flood the market with an unlimited money supply.
Now in CoE we in theory will have the same issue with inflation as the real world. With WYSIWYG every wolf won’t be carrying gold and you won’t be able to “farm” for gold. Instead the governments in game will set the currency standard and inflation will be based on their ability to gather and “mint” more gold coins.
Remember to also account for periods of large deflation pressure. When the US still used the gold standard, inflation ranged between -14% inflation to 17.8% apr (I ignored the brief period during the civil war where the gold standard was dropped). So kingdoms/duchies will need to figure out how they will handle markets where your best bet is to sit on your money and do nothing with it as well.
Posted By Kaynadin at 4:55 PM - Tue May 15 2018
Remember to also account for periods of large deflation pressure. When the US still used the gold standard, inflation ranged between -14% inflation to 17.8% apr (I ignored the brief period during the civil war where the gold standard was dropped). So kingdoms/duchies will need to figure out how they will handle markets where your best bet is to sit on your money and do nothing with it as well.
"sitting on money and doing nothing with it" only works if you have the luxury to not need to spend money.
In reality you need to pay for housing, food, taxes, clothing, tools, etc. and probably won't have much, if any, left after all that.
They make deflation sound bad, because inflation is in the governments and banks best interest, but I don't think deflation is inherently bad, because it promotes saving, and more responsible use of resources. Which is exactly what we are lacking right now. Because an inflation based economy promotes economies of exponential growth, which is by definition unsustainable.
Count LizenÇace VeLeîjres of Mydra's Crossing, VII of the order of the IX.
Here's some thoughts.
I think the primary concern about monetary policy in a game world is a balance between realism and good gameplay.
Monetary policy is a complicated business that even real world governments get wrong all the time. The average player knows very little of these matters, so giving too much casuality to a player government's monetary decisions could cause havoc. For gameplay's sake, it's important that Elyria doesn't descend into economic chaos like Manduro's Venezuela or in Turkey where the president thinks high interest rates cause inflation. It simply would not be fun.
But what is fun is giving players enough power and autonomy to decide these things to create a more dynamic world and gameplay. Finding the balance between the two is key.
Here are my suggestions to find that balance.
No fiat currency. Fiat currency requires very sophisticated and knowledgeable management to do well. The risk of mismanagement, abuse and corruption by a small elite of players who are in charge of fiat monetary policy could really ruin the game too much for everyone else. Also, the technical and adminstrative needs for creating and managing a fiat money supply is way too serious for a game to ever be efficiently run.
Using gold as a standard provides enough stability where player mismanagement doesn't break the game for everyone, yet still offers some real autonomy and choice as well as makes money supply more simple to manage.
The supply of gold in the world is fixed, and its value is determined by the intrinsic value of the material it is made out of. This means that player governments could set the value of its currency by the proportion of gold/silver in the coin. That would also determine exchange rates between other currencies. This allows some player control that creates fun but at the same time, provides some intrinsic stability that doesn't break the game. Corruption and abuse by player elites who control the money supply is still possible (which I think should be apart of the game), but is constrained by the hard limits of the amount of gold/etc. supply in the world. Prices will revolve around the value of gold, which will allow player economies to function more smoothly without the need of a constant efficient, technocratic hand of a central bank.
The one weakness to using a gold standard backed by a limited supply of gold/silver is that the supply is limited. As player population grows and economies become richer in Elyria, the demand for money will grow faster than the money supply, as the pace of money created is limited by the discovery of new mines and the speed of mining and minting itself. As hard limits of the money supply are reached, the "value" of currency will rise too. This can severely constrain economic growth and ultimately player fun.
This problem can be solved by having the devs monitor the size of player population and seeding the world with new gold deposits to be exploited. If the population drops or economy slows down, gold deposits can be limited or dropped. This could make the gold standard in Elyria a meta-currency with a "pseudo-fiat" currency controlled by the dev gods in order to provide stability for game fun yet ensure that moneh supply can keep up with demand.
Thats all my thoughts for now!
Posted By Beauvais at 05:11 AM - Sat May 19 2018
Monetary policy is a complicated business that even real world governments get wrong all the time. The average player knows very little of these matters, so giving too much casuality to a player government's monetary decisions could cause havoc. For gameplay's sake, it's important that Elyria doesn't descend into economic chaos like Maduro's Venezuela or in Turkey where the president thinks high interest rates cause inflation. It simply would not be fun.
Why not? A king's mismanagement of the economy is as much a part of the story as anything else. It could be the spark for revolution, or the chance for some minor noble to shine. Plus, if failure isn't an option, it makes success worthless. The game should reward kingdoms that have put time and effort into their economic policies, and punish those that don't.
Posted By mickdude2 at 07:11 AM - Sat May 19 2018
Posted By Beauvais at 05:11 AM - Sat May 19 2018
Monetary policy is a complicated business that even real world governments get wrong all the time. The average player knows very little of these matters, so giving too much casuality to a player government's monetary decisions could cause havoc. For gameplay's sake, it's important that Elyria doesn't descend into economic chaos like Maduro's Venezuela or in Turkey where the president thinks high interest rates cause inflation. It simply would not be fun.
Why not? A king's mismanagement of the economy is as much a part of the story as anything else. It could be the spark for revolution, or the chance for some minor noble to shine. Plus, if failure isn't an option, it makes success worthless. The game should reward kingdoms that have put time and effort into their economic policies, and punish those that don't.
This.
SBS should be world builders. They set the stage and set the natural laws (gravity, temperature and such) and then step well back leaving us to sink or swim on our own.
hmm i must say that you are all over thinking this a little to much yes the monarchs and dukes can enact policys to help prevent inflationary issues.
but most players wont care or even notice the effects unless they work in the area shortages or over supply take place. in essence just like governments of our world there is only so much direct intervention you can do and actually get a result because by far and wide the results are completly out of there hands.
inflation is also due to events completly out of our control like when the flooding happened in twain many years ago and Hard drives prices increased by nearly 50% and warrantys droped to 1 year.
or now the advent of crypto mining forcing the price of ram and certain video cards up in price.
it is ok if you able to predict a shortage or a surplus issue before it happens but sadly i ant one to beleive Seers or such and why some predictions can be made based of known facts you cant predict them them all.
so again i find worrying over somthing as chaotic as this that truly no way to foreseeable change is realy a waste.
sure you could talk on measures you could take given a certain situation to fix it but worrying about the inflationary costs or random market changes due to it is going a wee bit overboard.
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Regarding currency: Gold was not the only material used as currency. There was also silver and (I believe) copper.
A lord could give a silver armring to his subordinates that did well. They could then sell those armrings again (whole or in pieces) in cases where they needed money.
I've also heard that the wealth of the nobility was not in the amount of silver and gold they hoarded but in the land they owned and the amount of produce they could get from that (e.g. grain, horses, linen).
These points should all decreas the likelihood of an inflation to occur.
Regarding inflation: There are money sinks in the game, like paying for the maintenance of buildings and equipment.
Another point I've recently heard was that guilds in medieval Europe had the power to determine how many craftsmen there were in the region. Thus guaranteing constant prices.
A last-ditch attempt during a period of high inflation could be to mint new currency. Basically new gold and silver coins with the face of the most recent monarch on it.
Posted By Turlorn at 10:28 AM - Sat May 19 2018
Regarding currency: Gold was not the only material used as currency. There was also silver and (I believe) copper.
A lord could give a silver armring to his subordinates that did well. They could then sell those armrings again (whole or in pieces) in cases where they needed money.
I've also heard that the wealth of the nobility was not in the amount of silver and gold they hoarded but in the land they owned and the amount of produce they could get from that (e.g. grain, horses, linen).
These points should all decreas the likelihood of an inflation to occur.
Regarding inflation: There are money sinks in the game, like paying for the maintenance of buildings and equipment.
Another point I've recently heard was that guilds in medieval Europe had the power to determine how many craftsmen there were in the region. Thus guaranteing constant prices.
A last-ditch attempt during a period of high inflation could be to mint new currency. Basically new gold and silver coins with the face of the most recent monarch on it.
Yes, there will be multiple currencies in all likelihood. However, that probably will not mitigate the inflation of one of the currencies.
Also, while typically maintenance fees for buildings and equipment are money sinks, in CoE they will actually feed back into the economy. So the money doesn't disappear.
Guilds may have been able to enforce that in medieval Europe, but it might be a bit difficult to do in-game. Unless the nobility decides to play favorites.
Minting new currencies may help in an inflationary setting, however, unless they are of a distinctly different material, I expect they will probably suffer from the same issues. Also, that may cause a whole bundle of other issues.
If you expect SBS to design the game so nothing catastrophic and story-driving can happen, you may be backing the wrong game.
Also, unrelatedly, I'm looking forward to the first time someone works out the concept of a promissory note.
Posted By Turlorn at 4:28 PM - Sat May 19 2018
Regarding currency: Gold was not the only material used as currency. There was also silver and (I believe) copper.
A lord could give a silver armring to his subordinates that did well. They could then sell those armrings again (whole or in pieces) in cases where they needed money.
I've also heard that the wealth of the nobility was not in the amount of silver and gold they hoarded but in the land they owned and the amount of produce they could get from that (e.g. grain, horses, linen).
These points should all decreas the likelihood of an inflation to occur.
Regarding inflation: There are money sinks in the game, like paying for the maintenance of buildings and equipment.
Another point I've recently heard was that guilds in medieval Europe had the power to determine how many craftsmen there were in the region. Thus guaranteing constant prices.
A last-ditch attempt during a period of high inflation could be to mint new currency. Basically new gold and silver coins with the face of the most recent monarch on it.
Technically there aren't money sinks, but they're not needed either, since resources are limited.
Taxes and payments just make the money circulate. Items will all be made and need to be maintained and repaired, which will mean non-renewable materials will need to be recycled (like stone and iron), and renewable materials have to be constantly harvested (mostly food and lumber, but also leather and clothing items).
Since nothing lasts forever in elyria, the economy will always be healthy in a way. The problem with other games is that an item once acquired lasts forever. (Or at least until you get even better gear).
Count LizenÇace VeLeîjres of Mydra's Crossing, VII of the order of the IX.
I like this. Looking forward to having items of value that I can sell for the right value when needed. Say some games you buy a sword for 50k gold, decide you want the axe, sell the sword back for 5k gold.
Inflation not a huge issue in game. Sure it's possible that it becomes a issue but I doubt that will actually happen. It's not rl
In Elyria I cant resell a item back for same price but if it was a bad buy for me I could take my unwanted item to a larger town, find a auction house sell and get back most of my money back. Saying the item was never used or devalued...
When I am lost, I know I have traveled the farthest. Sayeth the guy jeff. 49F48A =FC
Posted By Varhukan at 6:54 PM - Sat May 19 2018
In Elyria I cant resell a item back for same price but if it was a bad buy for me I could take my unwanted item to a larger town, find a auction house sell and get back most of my money back. Saying the item was never used or devalued...
You don't know that for sure... First law of merchants, buy low and sell high. If I were a merchant, I'd sell you a sword for ten coins, but I'm sure as hell not buying it back for ten coins.
