Money supply
Money supply
I have a question about the system. I'll describe how I would hope it works and ask if I am correct with that:
The supply of money is linked to a factor such as number of states. When a state joins it can request money and then inject it into their markets. The people trade with this and it creates a small market. Sharing markets with everyone else means that we have no transaction costs when trading with people in other countries.
That would make sense to me. The problem I have is when it comes to the stock market. From what I've read:
People invest in a company, the company is developed and then the company grows in value. The people then make a profit.
My only concern is that the profit means an increase in the money supply. If I am running an internal market and there are lots of people making investments with returns then I would be worried for what that means for inflation. Everyone is getting rich off of trading on the stock market and not on trading with each other.
I'm not opposed to a stock market. If people were to open a bank and offer private loans with interest for whatever reason then investing in that bank would yield profits for the investors. My problem is that there are little short term costs in what we are producing. If we are producing anything in the real world then we have input costs and need investment, but if we are creating things online then we don't actually need any investment. Our profits come from being able to produce things people want from thin air. There is nothing inherently wrong in that, it just makes the need for financial investment and stock trading a bit smaller.
I hope I've got this all worked out and that I can get an answer to my worry. I am a bit worried about giving people money, having no control over the money supply and then people being completely unable to calculate how much their products are worth or newbies not being able to afford anything.
The supply of money is linked to a factor such as number of states. When a state joins it can request money and then inject it into their markets. The people trade with this and it creates a small market. Sharing markets with everyone else means that we have no transaction costs when trading with people in other countries.
That would make sense to me. The problem I have is when it comes to the stock market. From what I've read:
People invest in a company, the company is developed and then the company grows in value. The people then make a profit.
My only concern is that the profit means an increase in the money supply. If I am running an internal market and there are lots of people making investments with returns then I would be worried for what that means for inflation. Everyone is getting rich off of trading on the stock market and not on trading with each other.
I'm not opposed to a stock market. If people were to open a bank and offer private loans with interest for whatever reason then investing in that bank would yield profits for the investors. My problem is that there are little short term costs in what we are producing. If we are producing anything in the real world then we have input costs and need investment, but if we are creating things online then we don't actually need any investment. Our profits come from being able to produce things people want from thin air. There is nothing inherently wrong in that, it just makes the need for financial investment and stock trading a bit smaller.
I hope I've got this all worked out and that I can get an answer to my worry. I am a bit worried about giving people money, having no control over the money supply and then people being completely unable to calculate how much their products are worth or newbies not being able to afford anything.
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Re: Money supply
Some good questions. I'll just clarify a few points, and that should hopefully answer your concerns.
With the SCUE, the underlying principle is to keep the amount of money in circulation roughly proportional to the number of real people in the economy - nations entering and exiting is just a more manageable proxy for that. That should be what keeps inflation from being a problem.
When designing the SCX, the reason that inflation can't become rife in the SCUE (though it can in the SCX) is that the SCX uses a separate money, 'credits', for which SCUE money can be traded in and out. That means that any SCUE currency people get from the SCX was originally obtained via the 'keeping money roughly proportional to the number of real people' principle. Indeed, the whole system is automated so once that amount of credits within the SCX reaches a certain level, the amount you need to trade out for 1 unity of SCUE currency starts getting bigger and bigger, to ensure there is enough SCUE reserves in the SCX account left for everyone to be able to trade out with. So inflation can go rife there, and doesn't filter into the SCUE, because your SCX money just becomes worth less. The reason you can make a profit is that the initial 'trade out' value is so high that it's *more* than was needed to keep the SCX with enough SCUE reserves - so there was scope for people to profit in the SCX for a while, and only when the net wealth in there got really high would it start being a zero sum game. If that makes any sense.
The other thing is that at one point, when people developed a micronational company that was on the SCX, I would manually apply a modifier to improve its price based on the amount of development they did, which would make profiting off it easier. I haven't done that for years though, because there wasn't enough interest and then I got busy. So currently it's just a beautiful exercise in random numbers, with slight changes to each exchange based on the amount of SCUE currency moving around in that nation (which we use to proxy that nation's GDP). See it as another simulation (just an automated one), for people who like simulating stock exchanges.
Finally, on the idea of input costs - I see it less as us making goods, and more as us offering services. Ultimately, anything in micronations comes down to time and creative effort - you're paying people to direct some of that time/creative effort your way, that's all.
Does that help clear things up?
With the SCUE, the underlying principle is to keep the amount of money in circulation roughly proportional to the number of real people in the economy - nations entering and exiting is just a more manageable proxy for that. That should be what keeps inflation from being a problem.
When designing the SCX, the reason that inflation can't become rife in the SCUE (though it can in the SCX) is that the SCX uses a separate money, 'credits', for which SCUE money can be traded in and out. That means that any SCUE currency people get from the SCX was originally obtained via the 'keeping money roughly proportional to the number of real people' principle. Indeed, the whole system is automated so once that amount of credits within the SCX reaches a certain level, the amount you need to trade out for 1 unity of SCUE currency starts getting bigger and bigger, to ensure there is enough SCUE reserves in the SCX account left for everyone to be able to trade out with. So inflation can go rife there, and doesn't filter into the SCUE, because your SCX money just becomes worth less. The reason you can make a profit is that the initial 'trade out' value is so high that it's *more* than was needed to keep the SCX with enough SCUE reserves - so there was scope for people to profit in the SCX for a while, and only when the net wealth in there got really high would it start being a zero sum game. If that makes any sense.
The other thing is that at one point, when people developed a micronational company that was on the SCX, I would manually apply a modifier to improve its price based on the amount of development they did, which would make profiting off it easier. I haven't done that for years though, because there wasn't enough interest and then I got busy. So currently it's just a beautiful exercise in random numbers, with slight changes to each exchange based on the amount of SCUE currency moving around in that nation (which we use to proxy that nation's GDP). See it as another simulation (just an automated one), for people who like simulating stock exchanges.
Finally, on the idea of input costs - I see it less as us making goods, and more as us offering services. Ultimately, anything in micronations comes down to time and creative effort - you're paying people to direct some of that time/creative effort your way, that's all.
Does that help clear things up?
Andreas
"He showed up three or four years ago and accidentally took over the micronational world by being way more competent and enthusiastic than everyone else. Now he sort of rules us all, but it's a benevolent sort of thing, as far as we know."
~Scott Alexander
"He showed up three or four years ago and accidentally took over the micronational world by being way more competent and enthusiastic than everyone else. Now he sort of rules us all, but it's a benevolent sort of thing, as far as we know."
~Scott Alexander
Re: Money supply
No that makes sense. I had been reqlly wanting to develop some sort of economic policy qnd create some debate in the Commonwealth but had not had e time previously to understand how the SCUE works.
The SCX was my only issue. I assumed that the crdits to currency ratio would stay somewhat similar and so once people started producing things domestically then we would see a huge increase in prices because people would start investing in the SCX. I have no problem with them investing, but I do with the lack of information newbies would have and everyone using that as their source of income. You have convinced me it shouldn't be such a problem, mainly because of the randomness of the numbers. I'll keep an eye on how people act in our market when we open it to individuals a little more.
There are input costs in terms of time, but nothing investment worthy. If a business was to have employees then maybe that would be factored in, but I haven't seem that yet and that would take big developments and risks.
If it is any use I'll report back after a while concerning how our economy has been affected by the above.
The SCX was my only issue. I assumed that the crdits to currency ratio would stay somewhat similar and so once people started producing things domestically then we would see a huge increase in prices because people would start investing in the SCX. I have no problem with them investing, but I do with the lack of information newbies would have and everyone using that as their source of income. You have convinced me it shouldn't be such a problem, mainly because of the randomness of the numbers. I'll keep an eye on how people act in our market when we open it to individuals a little more.
There are input costs in terms of time, but nothing investment worthy. If a business was to have employees then maybe that would be factored in, but I haven't seem that yet and that would take big developments and risks.
If it is any use I'll report back after a while concerning how our economy has been affected by the above.
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Re: Money supply
By the way, if Hamland is using their market (HAM) actively, I can give you guys the ability to modify the prices according to company development for it - or may even have already done that when I set up your market, I can't remember.
Andreas
"He showed up three or four years ago and accidentally took over the micronational world by being way more competent and enthusiastic than everyone else. Now he sort of rules us all, but it's a benevolent sort of thing, as far as we know."
~Scott Alexander
"He showed up three or four years ago and accidentally took over the micronational world by being way more competent and enthusiastic than everyone else. Now he sort of rules us all, but it's a benevolent sort of thing, as far as we know."
~Scott Alexander
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Re: Money supply
That would be fantastic. I was actually just trying to see if I could do that.
""YJD: Een Recwar is prima zolang Bijaro niet deelneemt."
Re: Money supply
I agree it would be good idea. Think we could use that pretty well.
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Re: Money supply
I'll see what I can do. My ftp access to modify the source code is playing up, but if Ari can fix that (I've pm'd him) it's very easy to add in what I'm thinking of, I did it originally for Jonas and the Batavian stuff, so the code is all there.
Andreas
"He showed up three or four years ago and accidentally took over the micronational world by being way more competent and enthusiastic than everyone else. Now he sort of rules us all, but it's a benevolent sort of thing, as far as we know."
~Scott Alexander
"He showed up three or four years ago and accidentally took over the micronational world by being way more competent and enthusiastic than everyone else. Now he sort of rules us all, but it's a benevolent sort of thing, as far as we know."
~Scott Alexander