Economy Ideas

[Scooterdanny 285]

This thread is for those of us that want to discuss economy and inflation taxes and all that goodness, without congesting other threads, enjoy!

[Sasqaucth 45]

Derps... Now you've gotta move all that info on over to here :3

[Scooterdanny 285]

It was requested that we do this, that is why i created this thread.

[abandoned mines 119]

hmm i am no good with the numbers behind economics though i am fairly skilled with the inner workings of the commodities market (thanks to my job as a miner / geologist)

how could we create an economy that rotates around commodities when worlds are infinite? if a group requires more of a resource, they simply expand outward until the resource becomes available.

[Scooterdanny 285]

Well if you have a gander in the thread about electrum, we made several suggestions on how this might work, including a taxed system by the OP's, lending land, and having a mint to regulate currency. However, it should operate similarily to real life before govt, the precious materials are used as currency, because they are valuable intrinsically.

[abandoned mines 119]

Well if you have a gander in the thread about electrum, we made several suggestions on how this might work, including a taxed system by the OP's, lending land, and having a mint to regulate currency. However, it should operate similarily to real life before govt, the precious materials are used as currency, because they are valuable intrinsically.

makes sense i think ill go read that thread

[Sasqaucth 45]

Also check out the post dunk made, the juicy one. creates a whole new open window for ideas, but may not be implemented. it's in balanced diet.

[Scooterdanny 285]

i think that 5 threads is enough to post the same thing... buuut, anyways, i support a lazziez faire approach, with a fixed starting currency, where the metals are valuable, and able to be stamped into coins. i feel it would work, but i think jed has a better grasp on macroeconomics than i.

[Sasqaucth 45]

continue bumping this until we get Jed back on here.

[mrpwase 66]

I need an option for a fully planned economy with restrictions on ownership of capital and systems in place for participatory democracy! ☭☭☭

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the precious materials are used as currency, because they are valuable intrinsically.

Which precious materials are we talking here? Precious stones, or do you mean things with utility like ore and ingots?

[Scooterdanny 285]

Utility, gems, while could be used, have no actual value, unless people start collecting them for their beauty.

[mrpwase 66]

Utility, gems, while could be used, have no actual value, unless people start collecting them for their beauty.

That's cool, I was thrown off by the word 'precious' there.

[Scooterdanny 285]

Lol sorry, but if the gems ever gain a use, which i believe they will, then perhaps they could be used as such, i only worry about sluice farms however, as they turn out raw gems, but whatever, anything of actual value would work.

[dunkleosteus 2,425]

I like the idea, but does it really hold any stock? Gold in real life only has value because we value it. I've been discussing this with bioxx, and unfortunately, a currency system is inherently flawed in the game, because either coins are made from metals with no intrinsic value or would have to be meltable into tools, but they would just be used up. It's probably best to just use a barter system.

same with gems. they don't sparkle and can't be worn as jewelery, so the idea of using them as currency is pointless, as they have no worth.

[Scooterdanny 285]

Well then, i suppose coins minted by OP's that are used merely for currency would be the closest i can come up with other than barter. unless we go with Representative currency .

[EternalUndeath 1,208]

same with gems. they don't sparkle and can't be worn as jewelery, so the idea of using them as currency is pointless, as they have no worth.

idk where everyone's getting this idea that currency has to have intrinsic value...

I'm assuming you've all used paper money at some point...

jeez

[Scooterdanny 285]

Read above post? anyways, yes i support that paper money (aka representative currency in my mind) is the most feasible apart from bartering.

[EternalUndeath 1,208]

Read above post? anyways, yes i support that paper money (aka representative currency in my mind) is the most feasible apart from bartering.

it's called Fiat Currency, and is a staple of modern economics.

As long as everyone agrees to back it, it gains a value far beyond its intrinsic one (scrap of paper, useless gem, or what have you)

[mrpwase 66]

I don't really know what this topic is meant to be suggesting...an in-game economy system wouldn't really be that useful, would it? If a server gets advanced enough to need/want an economy, the players can decide whether they want barter or currency backed by something.

I'm not an expert in economics, but gems being 'producible' with a few planks and sticks and a water source could cause pretty bad inflation, couldn't it? Then again maybe that would be a cool thing to play out on a server - an authority trying to centralise currency by controlling all gem production.

[Jed1314 420]

Transplanting due to relevance:

Ok, so I have decided to write a more detailed explanation of the specific nuances and general features of a minecraft based economy. For your reading pleasure (spoiler'd for length):

What we are talking about today is economics (specifically macroeconomics, the economics of government). There are two primary policy "genres" that economists refer to; Fiscal policy and monetary policy are different in that fiscal policy relies on the manipulation of tax and spending whereas monetary policy relies primarily on control of the supply of the money. There are a few problems with applying either one to minecraft:

1) Fiscal policy won't work. There is no tax mechanism, and no public sector to absorb government expenditure.

2) Monetary policy relies (partially) on interest rates, which also do not exist. These factors mean we have to think about the problem from a new angle. A minecraftian angle.

Lets look at the tools which ARE available to minecraftian economists right now:

Monetary:

1) Fixed interest loans. While floating interest is not feasible, loans with fixed interest amounts definitely are. These can be made by anyone by the simple agreement of "I lend x you pay me back x + y or I burn your house down. Simple and effective.

2) (After the implementation of money) Minting aditional coins. These tools both allow the ops to control the supply of money. By dictating the supply, the server ops should be able to maintain the price of money at a reasonable level. As long as this money isn't spawned, no financial imbalance should occur.

Fiscal:

1) Exclusively obtainable resources. Land and spawned items are controlled by the server ops, with no other source to satiate the users demand, this is a poweful tool which may be capable of replacing tax.

2) Operator purchase of user goods (this must be controlled as too much of this will create a false economy, where the demand for goods is much lower than production, but the ops keep buying up the excess, leading to a false price level. With additional effort, tax could easily be implemented by server ops. The gold standard: Many of you believe that currency must be based on something with value. This is not the case. The US currency (along with all others I belive) are now "Fiat money" (http://en.wikipedia....wiki/Fiat_money). In other words, the money is only worth something because of a general consensus it is. Instead of being fixed to the price of gold, fiat currency is fixed to the value of an economy. Ironically, gold is itself a fiat currency, as gold has no real intrinsic value besides the value we attach to it as it is shiny

My model for minecraftian financial policy: Server ops control the supply of land, mob spawners and all manner of other goods. A server op would spawn a pre-decided amount of gold (say 500 gp) which he then lends out to his users, asking for 5% interest on the loan. The users, in return, buy land on which they can mine etc. Some people will get lucky and strike ore, others will not. This ore has actual value, and can be traded for coins to other users, as well as the OP who would obviously still be a market participant. Those who do not strike ore could easily sell their land for coins, or go into the employ of other users as a miner for example. Gardually, an economy would form. To augment the original supply of 500 coins, the ops would buy up gold at slightly above the craftable value of coins. This would help prevent deflation, which would be caused by economic growth outstripping monetary growth, leading to each coin having massive value due to the short supply. The losses incurred for doing this would be made up for by the profit of selling land and non obtainable items.

/rant

[mrpwase 66]

Ok, that post has made me interested enough to construct a worker's democracy on a TFC server, what have you done to me!?

[Jed1314 420]

I like the idea, but does it really hold any stock? Gold in real life only has value because we value it. I've been discussing this with bioxx, and unfortunately, a currency system is inherently flawed in the game, because either coins are made from metals with no intrinsic value or would have to be meltable into tools, but they would just be used up. It's probably best to just use a barter system.

same with gems. they don't sparkle and can't be worn as jewelery, so the idea of using them as currency is pointless, as they have no worth.

Dunk, as many have explained above me, currency need not have an inherent value. Gold only have value because we attach value to it. Although I can see what you mean (as gold is used as jewelery so it has some value). The important thing about currency isn't it's value, but it's ability to provide for trade in situations where barter is unfeasible. The fact of the matter is, I like to play on servers where you won't lend your neighbour a helping hand unless he's on your team. For situations like that, money is great and saves you having to go through like 4 trades when you don't have the right goods.

Money is just barter. Think about it this way:

Money represents the abstract concept of "value". You get paid for your job because you are bartering your services in return for something of value (in this case money). In a communist state, money need not exist because you are receiving food, housing etc. for your labour. In a capitalist state, money represents the value we attach to something. It breaks down the barriers to trade by allowing people with different needs to trade, regardless of what they have to offer one another. Imagine trying to fuel your car using chickens as payment ? People seem to forget that even gold standard money is still an abstract kind of "fiat currency" because it's worth what we decide it is basically.

[Jed1314 420]

Ok, that post has made me interested enough to construct a worker's democracy on a TFC server, what have you done to me!?

Haha I have opened your eyes to the amazing things you can acheive on servers with a couple of items and some imagination ?

With a reasonably realistic economy system, I wouldn't be surprised to see workers collectives, communist economies and pure capitalist states emerge :L

[dunkleosteus 2,425]

the problem is that in our system of government, currency is manufactured by the government, which puts a control on it, you can't get any money if you don't work, but in TFC, you could litterally MAKE money, which destroys it's value.

[Jed1314 420]

the problem is that in our system of government, currency is manufactured by the government, which puts a control on it, you can't get any money if you don't work, but in TFC, you could litterally MAKE money, which destroys it's value.

The trick with any system where people can "make" money is to provide disincentives. If you read my above post, I propose a system where the "government" (in this case server ops, could be other "lord" users) buys gold at 5 coins when you can only make 4 out of them. This way, there is no point in making the coins for yourself. If the economy does become flooded, it is fixed by restricting access to loans for new players and allowing users to buy unobtainable goods, such as mob spawners or more land. Remember that, in the beginning, all users will be indebted to their "lord" in my system, which helps keep inflation and the money supply lower

Also note that the "government" subsidising coin production would be viable due to the interests charged on debts and such