[MUD-Dev] DESIGN: Active and Inactive currency

[Brian Thyer]

I snipped this up a bit, basically just taking out the points and
sections where I had something to talk about.

From: Freeman, Jeff

> But I thought about the tracking we're doing and how we're
> overlooking some drains (banned, cancelled and inactive accounts
> chief among them), along with 'sponges' which don't have a
> real-world parallel, I don't think.

By "sponges" do you simply mean a person who hoards money?  Just
want to make sure =) There are some real world parallels, being
people who throw their money into the mattress.  I don't know any
myself, but if you watch movies like Matchstick Men, where Nicholas
Cage keeps his money either in that Dog safe in his house, or in a
safety deposit box.  I'm sure there are plenty of people out there
who distrust banks in the real world that do this.

> What I think would be more useful to us would be to track economic
> activity.  My thinking here is that money changing hands
> frequently is the sign of a healthy economy, whereas a lack of
> economic activity is the sign of a weak economy.

I think this can be true, but not always.  Just because there isn't
a lot of economic activity doesn't mean the economy is weak, and
just because there's a lot doesn't mean it's healthy.  What you're
looking for is the right balance.  Too much activity could be the
sign of an impending hyper inflation, and too little activity could
be the economy recovering from over inflated prices.

> I think anything which stymies economic activity is bad, and
> either extreme of inflation (too much or too little) would result
> in fewer transactions and a 'weak economy'.  Not because the high
> rate of inflation has made money 'worth less', but because a high
> rate of inflation creates a lot of 'inactive money' relative to
> the amount of active money in the system.  That is, it's not so
> much that it's worth less that's the problem, but that it is
> un-used (could be due to inflation, I think there are other
> reasons why money would go un-used, too).

I'm not sure on this point, I may need an example to see it?  My
thinking would be that extreme inflation would cause less inactive
money, not more.  If you're in an inflationary economy I would think
you would be more likely to spend your money early and often because
if you wait, the item you're trying to buy is only going to be
*more* expensive.  Rather, I would think inflation would cause the
opposite, less stagnant money.

> In order to properly track their economy, we need to monitor
> transactions in both number and amount.  I would consider money-in
> and money-out as a transaction, but player-to-player transactions
> ought to be of primary importance in a player-driven economy.  If
> it's not a player-driven economy, then tracking money-in and
> money-out does cover all the bases: But not for the usual reasons.
> Rather, it is because those are the only transactions the game
> has.

I would agree here except for one thing.  In a non player driven
economy, can't you still have player trade?  Or are you talking
about an economy where you totally do away with players ability to
trade?

> Now, where I'm stuck here is with the idea of developing a
> 'healthy ratio' of available money to active money.  i.e. in the
> real world there's a 1:1 ration, all the money which is available
> is actively being used (or nearly all of it - people do hoard
> coins, I guess).  In the game world the ratio is much, much lower,
> particularly when we consider money attached to inactive accounts
> to still be "in the system".

> So, we need better tracking mechanisms to separate that out - to
> say "this money isn't in the system, so we don't care about it".
> Whereas money in a person's bank account ought to be considered
> 'available'.  Perhaps we take the lowest amount of money in their
> bank for the month and say "That money was inactive this month".
> For example if a person had 100 credits at the start of the month
> and their bank never dropped below 50 credits, then we can say
> that 50 credits was inactive.  If next month they start with 1000
> credits and their balance never drops below 900 credits, then we
> say that 900 credits was inactive.  Also, we can see that they
> converted 850 credits from active to inactive.

How important is it to monitor how much money is being
saved/hoarded?  I'm asking not because I agree, but because I want
to know.  Player A has a constant minimum of 40 credits in his bank
account per month where as Player B has a constant minimum of 150 in
his bank account.  Player B, therefore, has the higher purchasing
power, right?  But if he's averaging a minimum of 150 that means he
never spends it, and if the other player is averaging a minimum of
40, they never spend it.  So isn't their base the same?  I mean,
Player A could spend 1,000 credits a month because they make more
per month where as Player B only spends 100 because he doesn't make
that much.  I'm setting myself up for a point later on here.

> For that matter, forget 'banks', because just carrying around the
> money on-hand doesn't make it active...

> So, the problem I see is determining what impact active/inactive
> money has on a) the individual and b) everyone else.  My 100
> million credit friend has a huge bank balance, her account is
> active, but most of that money is not active.  She trades in about
> 25 million credits per week (with an average of +10 million to her
> favor).  So right now there's maybe 90 million 'inactive' credits
> there, and next week there'll be 100 million inactive credits.
> Her balance may drop to 90 million some time this month, but it'll
> be back up to about 140 million by the end of the month... And
> next month instead of 90 million inactive credits, there'll be 130
> million.  She's unlikely to gift her balance to another player
> when she quits the game, but even if she did, it would be inactive
> money moving from her to them, and the bulk of it would likely
> remain inactive.

But that bulk of money *does* have the ability to become active.  In
my example, at the end of the month Player B has a higher purchasing
potential than Player A.  But that money does have potential.  It's
left circulation maybe, but not the economy.  But wait, maybe that's
what should define the economy?

I guess that's the point here, how do you define your economy.  Is
the economy simply the demand and supply of goods?  Or is it the
wealth and relative buying power of the players?  If it's simply the
demand and supply of goods, then when a player sits on 40, 150, or
90 million credits per month, you could deem that cash to be out of
the economy.  But if you judge your economy to be the wealth and
buying power of your players, I don't think you can discount the
credits they don't spend per month, even if they continue to not
spend them.

<snip the rest>

In the real world we have interest rates.  Interest rates are how
the Fed monitors and controls this problem.  If they see
inflationary tendencies in the market they tend to raise the
interest rate.  A higher interest rate tends to discourage people
from spending their money (as it tends to raise loan interest rates
and credit card interest rates) and encourage them to save or invest
it.  Technically, you're only saving your money if you're putting it
in your mattress.  You're investing it if you put it in the bank,
even if you have a 0 interest rate bank account (because, as was
pointed out, the bank recirculates it).  Whereas lower interest
rates encourage people to stop saving and investing their money and
to spend it.  Japan did this in the summer of '99 after the Asian
Market Crash by going to a 0% interest rate to encourage money to
flow in the economy.  The US has been doing it over the past few
years to encourage people to spend after the Bubble Burst of '01.

The best fix, I think, is to institute an interest rate system for
the banks in a MMO.  Unfortunately, this isn't always feasible for
any number of reasons (one of which being how that idea fits the
theme/genre of the game).  I don't think anyone would disagree with
me that it would be odd to get interest on your Platinum from the
magical banks of Everquest, for example.

What you do from here, I think, is decide what kind of economy you
want to focus on.  Straight up supply and demand (which is, of
course, the center of any economy anyway), or one more player
orientated dealing with the relative player wealth and buying power.
_______________________________________________
MUD-Dev mailing list
MUD-Dev at kanga.nu
https://www.kanga.nu/lists/listinfo/mud-dev