A Breif e - Economy Evaluation
Day 1,582, 15:48
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Published in USA 
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by
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by blondeninja
A Brief eRepublik Economic Evaluation:
So recently we’ve all noticed the rise in prices of ecommodities, and other egoods, such as tanks. I’ve seen many a person ask “why is this happening?” and I thought I might offer an explanation as to why this is so.
Note: All data will be using the current USD price of goods , and will not reflect the international effect, and may change due to the cyclic nature of the market.
I thought that I might start by giving a brief explanation of what inflation is before I delve in. Inflation, is the general increase in prices of all goods for a given currency over time. I say this specifically because while inflation is a rise in prices it is also a depreciation of the currency of the country where the inflation is taking place, which results in a lessening of the purchasing power associated with that currency. Normally you would see this reflected in the monetary exchange rates of said currency, however as this was recently eliminated from the erep econ module, this cannot be observed.
Now, the inflation that has been happening in erep recently is related to the leveling of the price of gold in relation to a given currency, or in other words the “tweaking” of a gold standard. What the admins did is create a fixed rate by tying the USD to the price of gold, which was levied at 1000 USD per gold. Normally this is a way to fix inflation, but here it had the opposite effect. The exchange rate at 1 USD = .001 gold which translates to 1000 USD per 1 gold. However the gold to USD rate (currently at the writing of this article) is 1644 USD per 1 gold. Which means that the value of the currency is decreasing since it's set to equal .001 gold, but the exchange rate is much less. As you can see this created a depreciation in the USD, this depreciation rose the level of prices over time. In this case the price on one Q5 Tank rose from (approx.) 15 USD to 32 USD which is an effective doubling or more exactly a 113% price level rise. This rate may vary for other goods, as I did not do a consumer index calculation. However one can easily observe the adverse economic effect.
I hope this was helpful, and I hope this can clear up some of the debate surrounding this issue. Now as for a solution, that must arise from the admins, and I suspect that a solution should arise, eventually, as this problem may continue at a similar rate (if one can accurately extrapolate).
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The surge in prices experienced in USA is linked to the removal of monetary exchange barrier. Now the price is set by the merging of all markets. The result is that prices in high productivity bonus countries surged until it reached the minimal offset from other markets' price.
In a normal economy it would have driven to a great depression, caused by a excess production that was impossible to absorb (wam production) driving a collapse of prices, firing of workers due to negative marins, further collapse of demand etc etc.
Here we have the buyer bot, aka infinite sink of goods and infinite source of money.
People around the world in now buying and selling goods without restrictions, so the only driver of goods exchange is now, in first approximation, the delta in price between markets, usually in the range of 0.01-0.02 currency. Bear in mind that volume of goods destroyed through use (food for health and weapons for wars) is marginal with respect to the goods produced and thrown to the bot mouth.
around the world, the bot price in low production bonus country was usually set to 0.33 local currency, while in high production bonus it ranged between 0.1-0.2 . The cross between the two has been found in
0.30-0.31 for high production and 0.31-0.32 for low production countries. That is a 200% to 100% increase of good prices in high countries and a 3-6% decrease in low countries.
The effect is that now trade with positive margin is now possible ( after an adjusting time in which low countries changed the taxation to avoid to be flooded by foreign goods) only by citizens of low production countries.
Summing up:
the wam+bot bubble doubled or tripled the income in high production countries, wihle the
trade+bot bubble ( a brand new bubble) is allowed only in low production coutries.
Another effect is that the bot is producing a huge lot of new currency while destroying the surplus goods, but this money is alimenting the wam+bot bubble ( new raw lands built) .
v+s
Great article, keep it up Blondie!