Join the new world

There are several persons mentioning that the money market has been neglected. To clarify, I have been posting offers every single day of my Presidency, apart from the 26th July and the 3rd of August (yesterday) which was my RL birthday, and I actually had to travel to my capital city to get a passport (as mine expired the week before and I'm going abroad on Sunday).

Our money market has been a very tricky problem this term. There has been a severe shortage of gold, whilst demand for SGD has fallen. Therefore, people selling SGD are finding it difficult to get gold. Because of this, they sell at lower prices, thus lowering the value of the SGD. This enables speculators to raise the price of gold, and that means a big discrepancy in the values.

Example:
I buy 100 SGD for 0.019 Gold. That costs 1.9 Gold. I sell my 1.9 Gold for SGD where it is currently at 57. That gains me 108.3 SGD. This is a profit of 8.3 SGD, or 12%.

The government cannot create demand for SGD. The problem is that there is a plentiful supply of SGD, which is why there should not have been any SGD printed the previous month. So should the government provide the gold to address the shortage? The answer is Yes and No.

No because:

Companies actually don't need gold anymore. All raw materials are being bought using local currency (unless someone has hours a day to donate RMs) which means there is less of a demand for gold. Companies can actually run using just SGD. This means that if a company owner is making profit and wants to spend his hard earned cash on the battle field, he needs to sell his SGD. Thus there is an oversupply of SGD. So firstly, there is less of a demand for gold on a daily basis.

Secondly, with the advent of the new war module, boosters and treasure maps, more gold is disappearing whilst less gold is being fed back into the system via treasure maps. This is to encourage people to buy gold with RL money (in my opinion anyway 😛). Also, people who are disenfranchised with the game because of bugs etc are hoarding their money in the hope that it will be fixed. These reasons all contribute to the shortage of gold going through the economy.

Another factor is that Singapore government has no gold income, apart from selling SGD. Countries cannot survive without gold. So the government needs to sell its SGD in order to gain gold income. So it needs to decide the rate to sell at which guarentees a gold income. This month is was at 0.02, which guarenteed a good portion of income.
Setting it at a higher rate (e.g 0.022) will not solve the gold shortage, nor increase the demand for SGD. People who are need of gold will still sell their gold for a lower rate. With and without any intervention, this has hovered around the 0.019 mark this month. In order to set it at this rate would require to buy up the offers below 0.022, spending gold to do so. If the rate was to be set at 0.022 and the offers were not bought up, the government would not make gold income, because there just isnt enough demand for SGD.

BUT we cannot just let the gold rate soar. This only plays into the hands of speculators. Yet we cannot just attempt to fill the gold hole, because we don't have the gold to do it. Therefore, what the government needs to do is to coax the gold rate down to an acceptable rate. This was being done by posting a small amount of gold up at 0.001 or 0.01 below the rate set by the sellers of gold, thus forcing them to lower their prices, or they had to buy up the gold. By doing this, I managed to bring the gold rate down from a high of 59.994 on the 26th of July to where it was on the 1st August at 54.3. This requires constant attention, two or three times a day. Looking at the last two days when I was away, you can see the rate soared back up to 57 while the SGD remained at 0.019. This indicates a lack of demand for SGD and a shortage of gold. So if the government cannot create demand for SGD, and it does not have the gold to fill the gold shortage or buy up SGD offers, all it can do is coax the gold rate down. It actually makes a profit out of this, so this is the course of action I recommend it continue to take. The SGD rate could be set at either 0.019 or 0.02, depending on the demand for SGD.

Perhaps I am completely wrong in the above, I don't pretend to be an expert, but that is my understanding of it.