Join the new world

Article before last I wrote that I thought The gold supply was being manipulated on the treasure map end and that I expect admins to not change this policy until the end of beta when the game's play merges again. That is not an easy line of reasoning to follow but it makes sense once you think about it just like the fact that white knights are virgins. Read the article before last if you do not get the former.

As a consequence we have a great vehicle for talking about Tax collection. Most people realize that governments run on Gold having currency is semi-useless. Governments can spend currency directly but it is the same as spending gold at the current exchange rate. Spending currency on goods is subtracting from the amount of gold you collect as a government. Every action of the government is therefore an allotment of gold resources. All taxes are to help feed this but only help.

It is therefore accurate and more telling to look at central banks as the true vehicle of taxation. Gold is a means for citizens to leverage their buying power against other citizens outbidding each other with gold to get the resources created. Tempered by the fact that gold is a limited resource this pressure on the market expand the money supply at a given exchange rate by buying new currency from the central bank is balanced against taxes that take them back out of the system.

(warning simplification) If the gold supply dries up faster than the money supply through taxation then buying currency with gold does not require that you buy from the government. The government can technically tax without receiving revenue.

How long can this continue? My gold consumption is linear. with a fixed gold quantity I spend at a given rate and run out on a date certain. Taxes however are exponential. Like exponential decay the amount of taxes at a given rate goes down as the money supply dries up. and if you can put those two simplified functions in your head and divide one by the other you can see that it is possible to accelerate. There is no reason to think that it will stop. The Money supply can deflate just as much as Gold and stop all tax collection.

What does this look like? Governments having no gold= no war. Deflationary currency means nothing to the relationship between wages and purchasing power in produced goods it does mean that wages fall in relationship to gold because there is less gold. It also falls in terms of the units of currency which is somewhat meaningless except in relationship to Minimum wage.

Group mentality is much easier to predict than Government mentality. How will a governement respond to this? I have talked about one senario where they keep the peg and don't chase the gold down. One thing I can say is that the bounds that dictate a set of possible currency prices are even tighter. Min wage either means that noobs don't get hired, get payed too much or are not dirrected to the right industries. If the currency is to expensive the private sector will have a harder time employing them. Governments will also not approach selling currency near the cost of printing. when the price of gold goes up those two magic numbers start getting closer together.

Technically it becomes obvious that the currency is deflating along with Gold. Just as inflation is a tax on people kind enough to hold your currency. Deflation is a subsidy to people who hold your currency. when gold deflates this is the tricky problem. Shall we make holding currency over gold painful or shall we make it an investment vehicle that does not fall far behind gold? The answer is of course contained in the fact gold vrs currency as a relative investment is the first measurement of stable currency prices. deflation of a currency is meaningless as an investment when there is a better one called holding gold. as far as hoarding currency goes that is not important. Min wage should be low and the wage offers should be near it as possible without touching it.

I would suggest that inflating a currency especially at this time would bring in shallow revenues but the price of printing currency is less relevant when you don't have to print more to satisfy the new level of demand. There is precedent for using the argument that min wage encroachment means that we need to inflate relative to gold. While I think of countries with higher currency unit values as more responsible there are more likely to experience min wage as a problem first. I expect most countries to pursue a policy of inflation relative to gold.

What do my predictions imply? sell your stocks of produced goods? yeah, you shoulda. this is not exactly a temporary dip in prices of goods. I don't recommend stockpiles really, ever. I have them because of laziness. Flee to gold as always. I don't think currency prices will be going up relative to gold any time soon. Don't think that prices are going to bounce back this week. My advice is really all hindsight there but I have no intention to slow down my selling or waiting for prices to come up. If you are lazy, with money to invest, just before the end of beta you should sell gold for currencies that went down in value over the past month assuming admins up the map payouts more than the new cost of living. if they do, it won't be instant. In other words I have no real predictions for you regarding where to be. If everone gets out of something it will become very profitable. If everyone gets into something it will be less profitable.

I do have actual advice. find out when beta ends and hold the treasure maps from the month before. Either the payout is fixed and you loose nothing if you didn't have an intermediate purpose or you get the new higher payout. Gold purchases now can be worth more than 25% bonus as well because you can hold cheaper stocks buy cheaper currencies and buy cheaper goods now and perhaps get more gold later or spend less gold later. Admins will have to balance gold so that wars happen. I plan on continuing arbitrage no matter the direction of the price of gold.