OK, so that last article covered Why Price-Fixing Sucks. Hopefully that's all clear. Now I'm going to explain the factors that lead to inflation of prices, and what can be done about it.
Essentially:
Inflation happens because the amount of money sloshing around in the economy increases over time, so individuals become wealthier over time and can afford to pay more for scarce goods.
In the real world, there is a relationship between inflation and unemployment. You can find out more about it by reading up about the Phillips curve, but the basic system is:
Generally-Accepted Macroeconomic Wisdom
1. If there is a high level of employment, individuals in the economy are productive, and get paid for being productive.
2. Generally, individuals try to live in a situation where income > expenditure (otherwise they spiral into horrible debts and that's sad).
3. The result of 2. is that individuals become wealthier over time by saving up the difference between income and expenditure.
4. The result of 3. is that individuals are able to pay more to procure scarce goods for themselves, outbidding their rival consumers.
5. The result of 4. is that the market price of these scarce goods rises. zomg! Inflation! surprised
2. Generally, individuals try to live in a situation where income > expenditure (otherwise they spiral into horrible debts and that's sad).
3. The result of 2. is that individuals become wealthier over time by saving up the difference between income and expenditure.
4. The result of 3. is that individuals are able to pay more to procure scarce goods for themselves, outbidding their rival consumers.
5. The result of 4. is that the market price of these scarce goods rises. zomg! Inflation! surprised
The faster the rate at which money is getting put into the economy (that is, the more productive (i.e. employed) the population is and thus the more they're paid per unit time), the higher the rate of inflation. So Low unemployment -> High inflation. In GAIA terms this is why after the botting/gold glitch episode, the rate of inflation went nutso, as there was much more gold in the economy, and people could afford to pay much more for rare items. Lots of counterfeit banknotes getting dumped into circulation would have a similar effect in the real world.
Conversely, in times of low employment (= high unemployment), less money is getting put into the economy, people can't afford to pay so much for scarce goods to outbid their rival consumers, so prices rise much more slowly.
So, how can we reduce inflation (that is, slow the rate of price rises), or even implement deflation (actually lower the prices of goods)? Simple! By taking gold out of the economy! The less gold everyone has, the less they can pay for rare items, and the lower the market prices will be! Huzzah! After all, if no one has, say, a million gold for a NM Scarf, then no vendor's going to be able to sell their NM Scarf if they set the price to a million gold! They'll have to lower their prices if they want to make the sale - a palpable victory for the forces of Charity, Community, Justice and Niceness! A crushing blow for the forces of Greed, Avarice, Meanness and Unfairness!
I propose scrapping the 10g reward for filling in polls, vastly reducing the rate of gold earning for browsing the site (say, 1g every ten pages browsed), abolishing Pink Links (or at least reducing the reward granted by them by a factor of ten or so) and maybe even sucking gold out of people's accounts so everyone's got less to spend!*
Sure, people will take even longer to earn the gold for their quests, and some of the more expensive store items will be even harder to save up for (thus prompting even more complaints from newbs about how expensive the store items are), but it's a small price to pay to defeat the eeeeville demon of Inflation, right?
Who's with me? domokun
*Astute readers will note that this last point is pretty much exactly what happened during the building of the Gambino tower - users were encouraged to donate thousands and thousands of gold to Gambino's appeal, which removed that gold from the economy! Oh, those sneaky admins! How terribly economically-aware of them! whee
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