Join the new world

We are by now all aware of recent changes to the game that has resulted in a single, global currency market. While each citizen holds currency denominated in their citizenship country’s bills this is purely branding and all citizenship currency is traded on a single, global exchange market and therefore of identical value. This is something along the lines of the euro gone global, but with the added excitement of each country being able to ‘brand’ their currency differently.

I’ve read quite a few articles and posts about this, mostly of a fairly negative tone, and thought it was time to put my own thoughts together and attempt an objective analysis of this change. Firstly I’ll outline the advantages and disadvantages of a single, global currency, then add my own 2 euro-cents with a summary and editorial. I will also foolishly attempt some predictions just to keep my credibility low.

ADVANTAGES

Despite the negative press there are certainly some strong arguments for a single currency.

1. Financial market manipulation and currency runs are effectively eliminated

Under the previous regime it was not uncommon for me to wake up to find all reasonable currency offers had mysteriously dried up. Very wealthy speculators (or for the conspiracy theorist foreign governments) could band together to manipulate the markets of small economies relatively easily.

With a single, global currency market the cost of waging such a war is no longer within the realms of possibility for a few rogue traders no matter how wealthy due to the vast sums of currency that pass through the market. The result is a far more stable and predictable exchange market.

2. Reduced complexity and risk for commodity/goods traders

The relative stability of the exchange market, and the elimination of the requirement to convert currencies minimises the transaction costs and risk for commodity traders and wholesale buyers of manufactures. While it was easy enough in the past to move countries and buy cheap commodities (for market resale in the home country) or buy large quantities of food/weapons for MU supplies or black market resale, the elimination of the need to convert citizenship currency to foreign currency makes this process even simpler and virtually risk-free. The only cost associated with commodity trading now is the cost of moving.

3. Price stability in commodity and manufacturing markets

Mostly driven by the ease of trading and wholesale buying globally the prices of commodities and manufactures in all markets will trend towards a common price level and be far more resilient to the business cycle as changes in local supply/demand dynamics will be far more easily accommodated by foreign market buying and trading. This will lead to very stable goods prices in all countries subject primarily to global supply & demand dynamics. Price volatility will primarily be affected by global issues, such as market bot buying patterns and outbreaks of large-scale war.

4. Elimination of asset-driven migration

Not sure if this is an advantage or a disadvantage, I guess it depends on which end of the transaction you sit. It was common practice under the old regime for those in countries with higher valued currencies to change citizenship to countries with lower valued currencies for the purpose of purchasing fixed-value land/company assets. Now that there is no difference in currency values this practice no longer makes economic sense.

DISADVANTAGES

1. No exchange rate adjustment for local economic conditions

Though the currency market was already partly ‘broken’ under the old regime, there was still a role for appreciation/depreciation of the Currency/Gold buy rate to adjust to the business cycle. But for a few more decimal points available in the Gold/Currency buy rate there could well have been a functioning exchange system. Economic factors such as increased resource bonuses, population growth, outbreak of war and so on could be partially adjusted by increases/decreases in the exchange rate. Under the current regime as outlined above the exchange rate will only change in response to global supply/demand changes, so the number of automatic adjusters available due to business cycle changes is now less one.

2. Difficulty of trading on a global market

It used to be fairly easy for currency market speculators to make a living using the sell/sell method, i.e. sell local currency for Gold then sell Gold for local currency making a profit from the bid/offer spread. The limit of receiving 10G per day and the willingness of buyers to pick up exchange market offers were the only factors limiting profitability.

With a global exchange market the flood of currency offers on the market with the aforementioned lack of decimal places makes sell/sell speculation a very long-term proposition. I’m not sure how sell offers are ordered but I’ve watched several currency/gold sell offers I’ve placed on the market expire. Who knows, I might get lucky one day and sell some currency, but it is not a reliable source of income as there are many more offers than marketplace demand. I checked just now and there are 5,244 currency/gold offers at 0.001 on the market many of which exceed the 10,000 daily limit. It probably makes sense to leave 10,000 currency on the market if there is no other obvious use for it, but the speculator can expect to wait weeks/months for the offer to be taken up.

SUMMARY & EDITORIAL

Overall it is difficult to rate the changes as positive or negative. There are certainly some positives to come out of it, and the negatives are limited by the fact that the exchange market was mostly broken already.

I guess my major criticism of the move is that instead of trying to fix the exchange market it was deemed easier/better to eliminate it, and indeed the new market is still missing a few decimal points in the currency/gold offer that leads to a ridiculous spread (>60% markup).

A currency exchange market provides an interesting diversion and extra layer of gameplay for those interested in speculation and/or economic warfare, but effectively this possibility is eliminated from the game as far as I can see.

FEARLESS PREDICTIONS

OK, time to put my neck on the line and make some predictions about the long-term impact of this change. Kids, don’t bet your money on any of my predictions as this is all highly speculative.

Prediction 1 - the rise of buy/sell currency speculation

The crippling of the sell/sell currency speculation market will see a shift towards longer-term buy/sell speculators. Speculators will buy gold from the market when they perceive a change in the wind that will result in devaluation, and sell their gold when rates are higher. At a large scale even minor fluctuations in the currency/gold sell rate could net tidy profits, as the 10G per day limit only applies to Gold. The returns will be marginal but those with significant wealth and a reasonable appetite for risk could probably make some decent profits. To be sure there is far more risk involved than the lazy sell/sell method but some are motivated by challenges such as these, and in particular those with some inside information affecting major economic events (global wars, gold offers, changes to the bot buying algorithm, etc) stand to make substantial profits.

The ability to profit from predicted currency market fluctuations will however be limited by the actions of admin in managing the ‘buying bot’. The global money supply is now as far as I can tell entirely managed by admin’s injection of currency into the market by way of the bot, and while one could usually expect an event such as a 30% additional gold offer to result in a gold exchange rate devaluation if admin pumps additional local currency into the system at the same time the exchange rate may not change at all.

Prediction 2 - the demise of export licenses

With global prices tending towards parity due to unlimited mobility and elimination of risk and transaction cost for currency exchange the export license, already a rare phenomenon, will be relegated to “curious historical relic” status.

Prediction 3 - a rise in regional production centres

It is already common practice among national armies and militia who use the commune production/supply model to move to high resource bonus countries. This is now significantly more simple as there is no need to manage balances of local and home country currency balances to pay wages and facilitate transactions for supply. It is now even easier to set up a high-productivity commune and this will make the practice even more common.

It will also make sense for a business owner to change citizenship and continue selling on their ‘home’ market as the elimination of the need to balance local/foreign currency balances makes this practice very simple and far more profitable.

Both of these outcomes are not very ‘fearless’ predictions as they are simply extensions of existing trends. There are already countries recognised as the ‘home’ of production for major alliances.

The more interesting and less certain prediction is the establishment of agreements between less powerful nations to form economic alliances. Recognising the importance of resource bonuses in a global economic system that does not allow for local price/exchange rate adjustments countries will agree more readily to swap regions and create high-productivity economies and encourage commune managers to shift their production to these countries. Rather than focus all significant economic production in a few countries (Brazil, China, Poland, etc), middle powers will recognise the impossibility of getting a ‘full house’ of resource bonuses and strike agreements with their neighbours to create production centres. This represents at the same time greater centralisation of production at a regional level, and a decentralisation of the current super-alliance based production economies.

This last idea is probably more speculation than prediction but hey, may as well throw it out there.