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VOs economy figured out...
the economy is fine! see in the distant future, Mexico has taken control of the universe and the Peso is the intergalactic standard currency!
...No
I think the picture is a much better explanation.
So Mexico takes over the universe, and their currency is still massively inflated? Damn Mexicans should learn some of the finer points of managing a world economy...
I want that picture framed.
Mexico and the Peso is one step towards the tequila-based economy. I'm all for this.
the us dollar aint far behind, we cant borrow the couple TRILLION this recent bailout will end up costing, cause we're maxed out (we are borrowing money from north korea for christ's sake). And we can't tax much more, leaving printing, give it about 18 months, you think 4% (really 11, but hey they've been using distorted figures since the 70's) per year is bad, try 10% a month.
On the plus side, the dollar is amusingly strong atm, making it a good time to throw a few thousand into gold before things really go to shit.
The Fannie May/Freddie Mac bailout won't cost a couple trillion- only a fraction of their holdings are in genuine danger of default, but due to bad practices that fraction is larger than their supply of liquid capital. For too long, banks worldwide had been operating on the assumption that everything was going to be GUD-4-EVAR, and let their liquid capital reserves dwindle well below a reasonable percentage of their debt load. The assumption was that incoming funds from timely and full payment on their held debt would supply their capital reserves and enable them to make further loans. Now that things have taken a downturn, their income has been slashed, their obligated expenses remain, and their liquid capital supply isn't large enough to make up the difference. Thus, they have to cut expenditures by reducing staff, salaries, cancelling plans to make new loans/buy more debt(the economic activity killer), or even defaulting on their own obligations (which would result in bankruptcy).
Also, thew government can borrow more- congress just needs to raise the limit (again). The real killer isn't debt, but the interest that has to be paid on that debt. This expense must be covered by income. Printing more money is one of the last gasp attempts to cover the interest before defaulting on payments, and devalues all other money as it increases the supply without a corresponding increase in value (hence turbo inflation).
It's that last part that corresponds to the VO situation- credits just 'appear' from an endless line of printers, meaning that you'd need to pull in (your credits/total credits in existence)% of the printed volume just to break even. This figure increases steadily as more credits are made- good old inflation.
Now, if we took away the credit printers but left the economy as it is, station payments for goods would crash as their credit supply was all acquired and stuck in guild banks/Ecka's wallet, making the remainder more valuable. Mass deflation sets in, and soon you'd have to be chopping credits in half to buy 'moths. Economic trade grinds to a halt as holding credits as long as possible earns you more value than exchanging them for goods.
(Commodities, including Gold, are iffy right now- the economic slowdown is cutting them down just as much. I'm waiting to see who wins the election, and what their first budget proposal is- if it doesn't include some drastic bordering on draconian spending cuts to eliminate the budget deficit, start paying down the debt, and shore up the future expense obligations from SS and Medicare, it's time to seriously look at moving the bulk of my investments into non-dollar based economies. Patience is key, diversity is good, and taking the long-term outlook pays off. I'm foreseeing stagnant overall worldwide growth for the next five years or so as banks slowly return to sound fiscal practices and proper liquid capital reserves, after which markets will finally resume reasonable growth, barring major natural disasters or knee-jerk government action beyond additional regulatory oversight in the interim.)
P.S.- Why the heck did I write all that? Leber, did you slip me something?
Also, thew government can borrow more- congress just needs to raise the limit (again). The real killer isn't debt, but the interest that has to be paid on that debt. This expense must be covered by income. Printing more money is one of the last gasp attempts to cover the interest before defaulting on payments, and devalues all other money as it increases the supply without a corresponding increase in value (hence turbo inflation).
It's that last part that corresponds to the VO situation- credits just 'appear' from an endless line of printers, meaning that you'd need to pull in (your credits/total credits in existence)% of the printed volume just to break even. This figure increases steadily as more credits are made- good old inflation.
Now, if we took away the credit printers but left the economy as it is, station payments for goods would crash as their credit supply was all acquired and stuck in guild banks/Ecka's wallet, making the remainder more valuable. Mass deflation sets in, and soon you'd have to be chopping credits in half to buy 'moths. Economic trade grinds to a halt as holding credits as long as possible earns you more value than exchanging them for goods.
(Commodities, including Gold, are iffy right now- the economic slowdown is cutting them down just as much. I'm waiting to see who wins the election, and what their first budget proposal is- if it doesn't include some drastic bordering on draconian spending cuts to eliminate the budget deficit, start paying down the debt, and shore up the future expense obligations from SS and Medicare, it's time to seriously look at moving the bulk of my investments into non-dollar based economies. Patience is key, diversity is good, and taking the long-term outlook pays off. I'm foreseeing stagnant overall worldwide growth for the next five years or so as banks slowly return to sound fiscal practices and proper liquid capital reserves, after which markets will finally resume reasonable growth, barring major natural disasters or knee-jerk government action beyond additional regulatory oversight in the interim.)
P.S.- Why the heck did I write all that? Leber, did you slip me something?
"The Fannie May/Freddie Mac bailout won't cost a couple trillion..."
Yes, let's trust the IRS on how much tings will cost.
"It's that last part that corresponds to the VO situation- credits just 'appear' from an endless line of printers, meaning that you'd need to pull in (your credits/total credits in existence)% of the printed volume just to break even. This figure increases steadily as more credits are made- good old inflation."
Again, don't listen to the IRS. The game economy has a built in system for fighting inflation. It's called PVP combat. Hey, taxman! Next time I see you in game, it's inflation fighting time! Pew Pew - BEWM!
-===CC=-
Yes, let's trust the IRS on how much tings will cost.
"It's that last part that corresponds to the VO situation- credits just 'appear' from an endless line of printers, meaning that you'd need to pull in (your credits/total credits in existence)% of the printed volume just to break even. This figure increases steadily as more credits are made- good old inflation."
Again, don't listen to the IRS. The game economy has a built in system for fighting inflation. It's called PVP combat. Hey, taxman! Next time I see you in game, it's inflation fighting time! Pew Pew - BEWM!
-===CC=-