Anarkioflite [1816936] —
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Torn City – The Coming Economic Armageddon?
I am a new player. I’ve been part of TORN City for only a few months, and without question it has been quite an experience coming from a more “traditional” MMORPG where a character is more visual -- than imagined. While frustrating at times, the learning curve at TC has been steep, but still learnable. The “newness” continues as I have been surprised -- and sometimes shocked – at some of the things that go on around here.
One of the first shockers was the price of a Lollipop on the Item Market. I first couldn’t understand why a Lollipop, which cost only $25 at Sally’s Sweet Shop in Torn City should morph into a $750 ticket on the Item Market. That kind of price inflation exists everywhere in Torn, as fully tricked out Private Islands are listed between one and eight BILLION dollars. Obviously, hyperinflation, has made a visit to Torn City. While the markup for a Lollipop – from Sally’s to the item market – exceeds 2800%, even the Torn Bank pays an impressive 40% plus APR.
This fact has not gone unnoticed and several Forum posts have raised questions about this inflationary spiral and many have wondered if the recent drop in bank APR and the progressive decline in the Torn Stock Market is Chedburn’s way of trying to slow down this high speed train before its hyperinflation wrecks our idyllic world of crime and mayhem.
Sadly, IF in fact that IS the method being used to slow down money creation in Torn it is doomed to failure. In economics, lowering interest rates acts to stimulate the economy – not depress it – and Torn’s stock market isn’t a real reflection of how a market works in an auction based environment. An actual RL market exists where value is based (in the long term) on future profitability, and (very simply put) stock prices mirror those glowing promises in the form of valuations calculated as a multiple of past earnings and the rate of expected earnings growth. Complicating all of this is the economic cycle of boom and bust, expansion and contraction – and a healthy dose of fear and greed. In Torn’s stock market, stock prices are simply a function of use by Torn players – and they contain attractive incentives, but only IF massive amounts of stock are bought and held. As such it has some ability to soak up excess liquidity, but only for those who have already amassed a huge cash position.
No, Torn has none of those RL economic brakes that pour cold water on an overheating economy at best, and create catastrophic deflation to burst all economic bubbles at worst. What’s more, there is an inherent conflict between Chedburn and the concept of moderate money growth, because as Torn gets more users, the number of monthly DPs purchased by players will increase and thus even more money will be created in addition to the fresh, daily, monies created from companies and gambling.
Having said all this, then, what’s my point? Well, first; inflation will continue to be a problem in Torn as both money creation AND velocity will continue unabated. Ultimately, that’s going to present real and painful consequences in Torn. Second, Torn needs to take steps to stem this money growth with the tools available to all governments. Specifically, the power of taxation and wealth redistribution and restriction. How? Through higher prices for Torn City items, business licenses, government required business inspection fees and insurance, workman’s compensation costs --- well, you get the idea.. Furthermore, to slow money growth I suggest tariffs on imports, sales and income tax, fines for jail sentences, hospital bills when laid up after an attack, and real incentives on all shares of stock held no matter how modest the position.
It pains me to say all this. I am a hardcore capitalist who despises government interference with the free market economy. But Torn’s is not true a free market economy despite many of the features found in free markets. It’s a market that is ultimately controlled by non free market factors, and these factors need to be reexamined and modified for the good of all.
I am a new player. I’ve been part of TORN City for only a few months, and without question it has been quite an experience coming from a more “traditional” MMORPG where a character is more visual -- than imagined. While frustrating at times, the learning curve at TC has been steep, but still learnable. The “newness” continues as I have been surprised -- and sometimes shocked – at some of the things that go on around here.
One of the first shockers was the price of a Lollipop on the Item Market. I first couldn’t understand why a Lollipop, which cost only $25 at Sally’s Sweet Shop in Torn City should morph into a $750 ticket on the Item Market. That kind of price inflation exists everywhere in Torn, as fully tricked out Private Islands are listed between one and eight BILLION dollars. Obviously, hyperinflation, has made a visit to Torn City. While the markup for a Lollipop – from Sally’s to the item market – exceeds 2800%, even the Torn Bank pays an impressive 40% plus APR.
This fact has not gone unnoticed and several Forum posts have raised questions about this inflationary spiral and many have wondered if the recent drop in bank APR and the progressive decline in the Torn Stock Market is Chedburn’s way of trying to slow down this high speed train before its hyperinflation wrecks our idyllic world of crime and mayhem.
Sadly, IF in fact that IS the method being used to slow down money creation in Torn it is doomed to failure. In economics, lowering interest rates acts to stimulate the economy – not depress it – and Torn’s stock market isn’t a real reflection of how a market works in an auction based environment. An actual RL market exists where value is based (in the long term) on future profitability, and (very simply put) stock prices mirror those glowing promises in the form of valuations calculated as a multiple of past earnings and the rate of expected earnings growth. Complicating all of this is the economic cycle of boom and bust, expansion and contraction – and a healthy dose of fear and greed. In Torn’s stock market, stock prices are simply a function of use by Torn players – and they contain attractive incentives, but only IF massive amounts of stock are bought and held. As such it has some ability to soak up excess liquidity, but only for those who have already amassed a huge cash position.
No, Torn has none of those RL economic brakes that pour cold water on an overheating economy at best, and create catastrophic deflation to burst all economic bubbles at worst. What’s more, there is an inherent conflict between Chedburn and the concept of moderate money growth, because as Torn gets more users, the number of monthly DPs purchased by players will increase and thus even more money will be created in addition to the fresh, daily, monies created from companies and gambling.
Having said all this, then, what’s my point? Well, first; inflation will continue to be a problem in Torn as both money creation AND velocity will continue unabated. Ultimately, that’s going to present real and painful consequences in Torn. Second, Torn needs to take steps to stem this money growth with the tools available to all governments. Specifically, the power of taxation and wealth redistribution and restriction. How? Through higher prices for Torn City items, business licenses, government required business inspection fees and insurance, workman’s compensation costs --- well, you get the idea.. Furthermore, to slow money growth I suggest tariffs on imports, sales and income tax, fines for jail sentences, hospital bills when laid up after an attack, and real incentives on all shares of stock held no matter how modest the position.
It pains me to say all this. I am a hardcore capitalist who despises government interference with the free market economy. But Torn’s is not true a free market economy despite many of the features found in free markets. It’s a market that is ultimately controlled by non free market factors, and these factors need to be reexamined and modified for the good of all.
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