Economics, Investing, and The Basics, Part 3

Day 1,212, 10:32 • Published in USA USA • by Teucer

I’d like to start today’s article with a little reminder about why and how I write these articles. Many people dislike the economic module in this game because it has flaws and I am one of those people. At the same time, I also understand that this is a game and we have to work with what we are given. I hope people keep this in mind as they read my articles and remember that real life comparisons are not usually applicable beyond the most basic aspects of the module. Also keep in mind that none of the things I write are a call for change. They are simply a statement of what the economic module is. With that being said, let me begin.



Equilibrium

Equilibrium is the condition of all acting influences in a system canceling each other out and causing a system to become stable, balanced, and/or unchanging. Economies operate around this principle and will destabilize from market changes followed by them then stabilizing again over time. There are various influences on an economy which include supply, demand, inflation, and deflation. Supply comes from the people selling products as well as gold or other currencies on the Monetary Market (MM). Demand comes from the consumers who want to purchase those products, gold, and currencies. Supply and demand are the two main factors, but I added inflation and deflation because the price of gold and other currencies have a profound effect on market prices (note: inflation and deflation still come back to supply and demand in the end).

If you look at market prices over the last month, you will see that prices are dropping rapidly since the beginning of the week and have been dropping slower over the last several weeks in general. This is mainly due to a couple large factors that were implemented by the admins and I intend to break down what they do and what they cause.



Work as Manager

First is the addition of working as a manager. This recent addition that allows business owners to work as a manager has caused a great deal of oversupply in the market and has caused wages to start dropping. Managers are no longer worried about keeping employees because they make almost pure profit from just working on their own and the hassle of managing workers isn’t worth the meager profits. On top of that, managers can self supply much easier now and regular workers have less money in their pocket to purchase products. This has caused the markets to become oversaturated with products and raw materials that do not sell very quickly and has encouraged many players to buy companies instead of working for someone else. This is one of the reasons why prices are dropping through the floor at the moment and will continue to do so for the foreseeable future without admin intervention.

This is where the buyout bot comes into play. The buyout bot is basically an admin implemented price floor that will purchase any raw materials and products below a certain price. It is also used occasionally to adjust the MM, but this is more rare. The buyout bot was added (I presume) because the markets will fall rapidly and possibly collapse without some intervention to stop it. The reason we are currently seeing prices fall quickly is because the bot has either had its price floor lowered or has been shut off completely (again, an assumption based of what I have watched). Before several days ago, the market was being artificially floated by the buyout bot and prevented players working as manager to crash the economy. Without the bot in place, economies around the world will watch prices fall and stabilize at low prices where supply finally meets demand. The current profit players are making by being able to work for themselves is not realistic and would not last long in a real life setting.



Buyout Bot

The second thing causing market problems is inflation in gold prices due to the buyout bot’s intervention several weeks ago. The US market in particular watched the buying price of gold rocket from about 90 USD to 120 USD in a split second, which has finally deflated down over the last few weeks to 81.299 USD as of 10:00 eRep time today. There had also been inflation in the gold price before the buyout bot due to players flooding the USD market with the USD they made from working as manager.

To the n00bs reading this: this is where things get even more hairy so please hang with me.

Many players see the price of USD to gold and are concerned, but it isn’t necessarily a bad thing. Pegging is the practice of fixing a currency’s exchange rate to the value of another currency. In the case of the USD, the eUS Treasury Department fixes the USD price to a gold standard. The standard used to be pegged at 50 USD = 1 gold, but that’s not the case anymore. There is nothing wrong with a high peg to the average player unless someone intends to convert every penny they make into gold. A higher peg will allow players converting gold into USD to get more bang for each gold and with the falling prices this could make getting 300 food fights with weapons much more feasible for players. At the same time, this is going to make it harder for players that rely on company profits to convert their currency into gold in order to boost their training. Keep this in mind when you decide to convert gold to USD or vice versa.



I have given you a lot to chew on today, so come back and reread anything you’re having trouble grasping. Go look at the markets and look for the things I have discussed, then go check out your accounts and businesses and consider how these changes affect you. This stuff doesn’t come easy, so don’t get irritated if there’s still confusion with the material. It will come with time and practice.

There is one last thing to add since I got the PM from Plato as I finished this up. Something new is coming tomorrow (Day 1,213), which I interpreted to be another gold sink to make working in companies more profitable. Keep your eyes open for it tomorrow and possibly another article from me addressing the new addition to the game.

In My Next Article: Branding and the Effects It Has On Competition







I love to hear opinions and comments, especially if they are contrary to my own or from young players who want to learn this game!

A silent nation is a dead nation. Speak up and be heard!