The REAL reason we can't beat inflation

[Reed Meroe]

Having lurked in the GCD (and other forums) for quite some time, it seems to me that it's time to speak out against the current economic trends. I'll try to be brief.

I think we're missing the real problems caused by Gaia's economic inflation. Because of that, we're trying to fix them in the wrong ways. My points:

• Gold sink kickstarters are not beneficial to the economy.
~ The inflation is caused by the gold already in the system. Creating gold just to sink it does absolutely nothing to affect the inflation gold.

• Reducing the gold in the economy does not affect the economic imbalance between the poor and the rich.
~ Those who cannot afford better items on Gaia will still not be able to afford them, no matter how many zeroes are taken off of the inflation.
~ Gold sinks are also really depressing for this reason. (I hate watching people throw gold away when I could have used it—gratefully—to buy something on my wishlist.)

• Because we're buying into Gaia's lie that gold is worthless, it is becoming so.
~ Gold, as the major exchange currency of the site, is not worthless. But we're treating it like it is! The more we do so, the less it will mean.

Prices are high because people want items. If we were to address the economic imbalance (not the inflation), the demand would be lower—thus affecting the inflation.

Talk to me. Tell me I'm right, tell me I'm wrong. Let me know how you feel, too. (Feel free to talk about gold generators, though I did not mention them. We know they're bad.)


Discussion:
~ Do you see value to the gold sink kickstarters? Why or why not?
~ Do you consider yourself rich or poor? Do you think gold has any value?
~ What do you think are the best ways to "sink" gold (examples: gifting, buying gold shop stuff, donating to quests, kickstarters, etc.)?

[Slick Southpaw]

The value would be in Gaia immediately chucking all ggs into the void

but

it's incredible wishful thinking here.

[angry anime dads]

Gold is not worthless.
In fact, some people are spending hundreds of IRL dollars on it.

[Reed Meroe]

PixelJerk

Gold is not worthless.
In fact, some people are spending hundreds of IRL dollars on it.

Exactly! But then they decide to throw it in a black hole. Treating it like it's worthless doesn't help the economy at all. I can't figure out why they do it.

[Sheeobee]

The gold sinks would be beneficial if they would stop with all the GG's. There is a slight, though noticeable decline in the price of items when Elysium's gate was on the go. But they can only work if the rewards are worth the gold, and that no more gold can be artificially pumped back in after. So, yes, as of right now, its a pointless, vicious cycle that I wont be participating in.

[Parodius-Daryl]

Reed Meroe

I just want some awesome achievements o3o

[sterek]

Reed Meroe

• Gold sink kickstarters are not beneficial to the economy.
~ The inflation is caused by the gold already in the system. Creating gold just to sink it does absolutely nothing to affect the inflation gold.

The inflation is caused by too much gold in the system. Gold sinks remove part of the excess gold. Problem, meet solution. The reason the deflation is only temporary is because some users choose to keep buying gold generators anyway. Without the gold sinks, the inflation would be considerably worse.

Quote:

• Reducing the gold in the economy does not affect the economic imbalance between the poor and the rich.
~ Those who cannot afford better items on Gaia will still not be able to afford them, no matter how many zeroes are taken off of the inflation.
~ Gold sinks are also really depressing for this reason. (I hate watching people throw gold away when I could have used it—gratefully—to buy something on my wishlist.)

Reducing the amount of gold in the system means that people have less to spend, and the vendors who pretty much control the economy make less profit on their sales as a consequence. Gold donated from one user to another will only end up going to the same few people and make them richer in the end. You said it yourself--you'd buy something on your wishlist. That would make you poorer, and the seller richer.

Quote:

• Because we're buying into Gaia's lie that gold is worthless, it is becoming so.
~ Gold, as the major exchange currency of the site, is not worthless. But we're treating it like it is! The more we do so, the less it will mean.

Gold is currently practically worthless. The decreased worth of a currency is the definition of "inflation". To give it worth again, it has to be rarer. As in, less of it in the system. As in, GOLD SINK.

Quote:

Prices are high because people want items. If we were to address the economic imbalance (not the inflation), the demand would be lower—thus affecting the inflation.

Prices are high because people want items and, on average, can afford to spend more on them. Sellers do the smart thing and price their items accordingly, because the economy is based on individual profit. People inflate their prices to buy inflated items, and so on.

For ******** sake people, stop all the "gold sinks are bad, don't participate" propaganda. If it wasn't for gold generators still being released, gold sinks would be enough to permanently stabilize the economy. The only cause of the inflation is that people still buy gold generators; the rest is a consequence.

[Reed Meroe]

Sheeobee

The gold sinks would be beneficial if they would stop with all the GG's. There is a slight, though noticeable decline in the price of items when Elysium's gate was on the go. But they can only work if the rewards are worth the gold, and that no more gold can be artificially pumped back in after. So, yes, as of right now, its a pointless, vicious cycle that I wont be participating in.

Good for you! ^_^

[Reed Meroe]

Paro-Daryl

Reed Meroe

I just want some awesome achievements o3o

Indeed. I was rather surprised they didn't have a low-level achievement for this particular kickstarter (like the last one). I'm not trying to get all of the achievements, but I do when I can, and I felt a little left out that there was no way I'd be able to get the 75 billion ones.

[Parodius-Daryl]

Reed Meroe

Paro-Daryl

Reed Meroe

I just want some awesome achievements o3o

Indeed. I was rather surprised they didn't have a low-level achievement for this particular kickstarter (like the last one). I'm not trying to get all of the achievements, but I do when I can, and I felt a little left out that there was no way I'd be able to get the 75 billion ones.

I agree. 75 billion gold is way out there..pretty crazy how close it is the previous sink..Gaia should've gave more time. Some people like myself sold their entire inventories to reach that insane goal..so as you stated, I really don't have any choice but to buy GC to sell and reach the goal in time sweatdrop

[Reed Meroe]

Thank you for your well thought out comments!

sterek

The inflation is caused by too much gold in the system. Gold sinks remove part of the excess gold. Problem, meet solution. The reason the deflation is only temporary is because some users choose to keep buying gold generators anyway. Without the gold sinks, the inflation would be considerably worse.

Gold sinks do remove part of the gold. I'm focusing on the attitude of many Gaians I've seen who buy gold generators specifically to dump the gold in the sink, though. When this happens, new gold is generated and then immediately destroyed. It doesn't affect the current gold at all.

Quote:

Reducing the amount of gold in the system means that people have less to spend, and the vendors who pretty much control the economy make less profit on their sales as a consequence. Gold donated from one user to another will only end up going to the same few people and make them richer in the end. You said it yourself--you'd buy something on your wishlist. That would make you poorer, and the seller richer.

The value of gold is in buying items (which I do to keep them and wear them), so how would buying items make me poorer? I would have the items I wanted. And I'm not talking about donating gold to the same few people; I'm talking redistributing that gold to the people who don't have it. (I know, that's a dangerous word to use. Revolution!) I have already seen lots of people doing this, and I think it's a far better idea than dumping gold down a hole.

Quote:

Gold is currently practically worthless. The decreased worth of a currency is the definition of "inflation". To give it worth again, it has to be rarer. As in, less of it in the system. As in, GOLD SINK.

Once again, we have to sink the gold that already in the economy, not new stuff. (I know, new stuff that's generated by GGs.)

Quote:

Prices are high because people want items and, on average, can afford to spend more on them. Sellers do the smart thing and price their items accordingly, because the economy is based on individual profit. People inflate their prices to buy inflated items, and so on.

For ******** sake people, stop all the "gold sinks are bad, don't participate" propaganda. If it wasn't for gold generators still being released, gold sinks would be enough to permanently stabilize the economy. The only cause of the inflation is that people still buy gold generators; the rest is a consequence.

At what point does inflation become "standard"? I think we've hit that point in many ways. We can't go back to the prices of yesteryear. (The only reason it's still considered inflation is because Gaia's gold payouts from other things, such as games, don't match up yet.)

I'm not trying to say gold sinks are all bad, but creating more gold to throw into them does nothing to affect the gold already in the system. I think the reason so many people buy gold generators (besides throwing the gold into a sink) is because they know that, if the economy did indeed stabilize and they hadn't "bought" gold, they'd find themselves so poor they wouldn't be able to afford anything.

[Reed Meroe]

Paro-Daryl

Reed Meroe

Paro-Daryl

Reed Meroe

I just want some awesome achievements o3o

Indeed. I was rather surprised they didn't have a low-level achievement for this particular kickstarter (like the last one). I'm not trying to get all of the achievements, but I do when I can, and I felt a little left out that there was no way I'd be able to get the 75 billion ones.

I agree. 75 billion gold is way out there..pretty crazy how close it is the previous sink..Gaia should've gave more time. Some people like myself sold their entire inventories to reach that insane goal..so as you stated, I really don't have any choice but to buy GC to sell and reach the goal in time sweatdrop

Yeah. I'm sorry to hear about your inventory. (Maybe I look at the market a little differently than some, because I buy items to keep; I don't sell them back again.) I hope you recover from that.

I don't think Gaia's very good at timing anymore...

[Whip]

The gold sinks aren't creating the gold. Inflation is not caused by gold already in the system as such, but new gold introduced to the system at a poorly controlled rate at a much greater rate than that which leaves the system.

We have to sink some of what exists and not generate more at the same time. Cause, you know, gaia sells the generators, but we generate it by clicking a button.

Reducing the gold will lower prices of items and make them more achievable for those who do not spend cash and earn gold only by using site features, of which none have increased their gold payout, to my knowledge. In this way, gold sinks do benefit the poor.

If enough people throw their gold away whilst not generating more gold, we all benefit from lowered prices.

Gaia hasn't lied to make gold worthless, a unit of currency becomes worth less the more of it there is. Think of currency like diamonds and sand. There aren't many diamonds, so people value them, there's a lot of sand, so it's worthless. (ignoring appearance)

[sterek]

Reed Meroe

Gold sinks do remove part of the gold. I'm focusing on the attitude of many Gaians I've seen who buy gold generators specifically to dump the gold in the sink, though. When this happens, new gold is generated and then immediately destroyed. It doesn't affect the current gold at all.

From what I've seen--and I've seen a lot of threads about the gold sinks--most people donate their gold, especially the people of have trillions of it. Not to say that people buying GGs during gold sinks is necessarily a myth, as I'm sure it's what some people do, but it's far from a majority. In fact, most of these people (the ones who buy GGs) do it in addition to donating their own gold to help toward the global rewards. It's certainly not the right way to go, but at least they're not trying to "earn back" the gold they donated. Statistically, there are more people who participate in the gold sink(s) than there are people who buy gold generators. Let's keep it that way.

Quote:

The value of gold is in buying items (which I do to keep them and wear them), so how would buying items make me poorer? I would have the items I wanted. And I'm not talking about donating gold to the same few people; I'm talking redistributing that gold to the people who don't have it. (I know, that's a dangerous word to use. Revolution!) I have already seen lots of people doing this, and I think it's a far better idea than dumping gold down a hole.

True, the Gaian economy strictly revolves around buying and selling items. But vendors don't buy items to keep them, they buy them as investments. When the demand grows and the offer gets smaller, they sell them for profit. Items that you intend to keep don't make you richer; they just make you someone who has a large inventory. Wealth is measured in buying power--that is, pure gold or items you can liquidate. Items (and features that require spending gold) are released daily; if you have 20,000 items you refuse to part with and 100 gold, you're not rich. The users who sold you those items most likely are, and next time you want something, they can buy it first and sell it to you for more. I'm all for donating--I donate a lot when I can afford to! But unless people invest the gold that's donated to them and play the market, the wealth isn't really redistributed.

Quote:

Once again, we have to sink the gold that already in the economy, not new stuff. (I know, new stuff that's generated by GGs.)

See first argument. The majority of people doesn't buy GGs to earn back the gold they donated, although some do buy them to feed to the sink in addition to their own gold. You can tell just by looking at the average payout of the recently gold generators (less than 10 bil per 100-pack) and the reward tiers. People can't possibly win back a 75 bil they donated by playing gold generators unless they're extremely lucky. Since there's no cap (maximum amount that can be donated) to the sinks, it doesn't matter if some people donate GG gold; the others can still sink their own. Fun fact: most vendors know the inflation is bad for them too (fewer buyers to sell to, less profit to be made) and hate gold generators. So, the richest people donate their own gold--which is what we want.

Quote:

At what point does inflation become "standard"? I think we've hit that point in many ways. We can't go back to the prices of yesteryear. (The only reason it's still considered inflation is because Gaia's gold payouts from other things, such as games, don't match up yet.)

It's actually still considered an inflation (or rather, an hyperinflation) because the prices keep increasing. If gold generators stop being released, the prices will deflate (due to gold sinks like site events, gold shops and the 3% Marketplace tax). Gaia will increase "natural" payouts, and the gap between average users and rich users will be smaller. Can the prices return to what they were? Certainly not. But the economy can be stabilized, and it's 100% up to people to stop buying gold generators.

Quote:

I'm not trying to say gold sinks are all bad, but creating more gold to throw into them does nothing to affect the gold already in the system. I think the reason so many people buy gold generators (besides throwing the gold into a sink) is because they know that, if the economy did indeed stabilize and they hadn't "bought" gold, they'd find themselves so poor they wouldn't be able to afford anything.

Except that's not a thing. I mean, it's inaccurate. A stable economy implies users can earn enough gold to get by. Right from the start, gold generators have been a mean for cash users to easily and quickly earn gold. That's their only appeal.

Basically, I'm urging you (and the other people who have been making similar arguments) to stop telling people that gold sinks don't work/do nothing. It's up to us, the users, to make them work. We need to spread the word that buying GGs to win back whatever they donated is bad and counterproductive. (Buying GGs to feed to the sink theoretically isn't because, like said, it doesn't create more gold nor does it lessen the impact of people who do donate theirs. It's of course not the point of gold sinks, but at least it doesn't do more harm.)

[Sher!ock]

I don't get why people keep calling the gold sinks a "black hole" and stuff like that. It's literally the same as going to a gold shop. You are spending money to obtain an item from a personal tier. Sure, I don't personally think that bug companions are worth my gold, but the last gold sink had some nice items up for grabs. You're also buying an opportunity for a better future releases with the global tiers, which feels less like buying something from a gold shop but is still indirectly buying a reward, in that you're contributing to gaining access to it at least. I'm not pretending that the gold sinks are a perfect solution to the inflation, but they're not black holes either.