Why the entire NO economy is fatally flawed (long)

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CppThis
Posts: 305
Joined: Mon Nov 03, 2008 12:43 am

Postby CppThis » Fri Dec 12, 2008 5:52 am

"Reed" wrote:You're still making out selling your lux material at 3. It's a reasonable buyer's market now. Make bread and buy up!


Actually the opportunity cost for luxmat is 3.4, but I do agree that the market shift is both inevitable and not the end of the world. The Nile now belongs to those of us who planned around self-sufficiency and bread production. :cool:

edit: That being said, would it be possible to increase the bread production per laborer to be a little more than 2.4 units? Its kinda lame that around half the global labor pool has to be devoted to producing bread. 3 is a sexy looking number, and reasonable particulalry if it is implemented by making wheat laborers produce 12 per instead of 8 (and thus turning annoying 3:2 wheat-bread into 1:1).

edit2: I'm stupid, the opp cost really is 2.4. That's what I get for not double-checking that the numbers I'm using in one economy formula are the ones I need for another one :o

All the more reason bread should probably get a boost, though.
Last edited by CppThis on Fri Dec 12, 2008 8:30 am, edited 2 times in total.

Caelicola
Posts: 32
Joined: Thu Nov 20, 2008 8:12 am

Postby Caelicola » Fri Dec 12, 2008 6:34 am

"Hoborg" wrote:
Originally Posted by Caelicola
This is the greatest evil of our time: a purposeful policy of currency debasement. Soon there will be nothing left and we will all realize how silly we were to trade goods and services for worthless pieces of paper.

LOL, where'd you copy-paste this from?

Sadly, that's just how my brain works. If you want to know more all you have to do is google until you find out where money comes from, and you too will become one of the crazy people. :D

Hoborg
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Postby Hoborg » Fri Dec 12, 2008 7:52 am

"Caelicola" wrote:Sadly, that's just how my brain works. If you want to know more all you have to do is google until you find out where money comes from, and you too will become one of the crazy people. :D


So you're serious...

Currency is neccessary because barter systems greatly restrict market liquidity, and thus inhibit the growth of small economies and the existence of large economies (not to mention that they make equitable trading almost impossible to oversee, so the poor can be endlessly abused by the rich).

Commodity-based currencies won't do because commodities either can be widely produced and thus rapidly decreased in value with improved technology, or they cannot be produced, making the amount of money available fixed at a maximum value for all time (the actual amount necessarily decreases over time due to thermodynamics, which means that there would eventually be "peak economy" similar to but much worse than what is being called "peak oil").

Any economy which hopes to stably grow past its current size must then have a currency which is reproducible, but have a central organization within that economy with a monopoly on the production of that currency and the ability to enforce that monopoly. Further, the fiat value given by the economy to that currency must be great enough that its slow deterioration can be paid for with the currency itself. The way to maximize efficiency of the fiat currency, then, is to minimize its cost of production (real worth) while maximizing it fiat value. Hence worthless pieces of paper.

Institutionalized inflation isn't something to fear, either. High inflation rates, over 4% per year, are bad and can be traced to the central organization with a monopoly on making new money increasing in the actual monetary supply by more than they should be. Smaller rates are normal and result mostly from two phenomena. The first phenomenon is exponentially increasing demand for nominal money. This happens because people expect long-run returns on their efforts while businesses and governments operate in the short term, thus higher nominal wages are always promised in the future while higher real wages can't be afforded, the result of which is the price of everything increasing and the worth of money decreasing. The second phenomenon is that the effective money supply is regularly increased via investment even if the actual money supply isn't increased. Essentially this allows someone to spend money while someone else can also act like they are still holding onto it. The result is that the economy grows much faster than it would otherwise, but the ever-increasing effective pool of money out there drives the demand for actual money down, devaluing it. You can think of this as the price of not investing in the agressively growing economy. You can also think of this as being the cost at large for having a rapidly growing economy because a rapidly growing economy requires a extremely well-functioning credit market, and it is the liquidity of this credit market that allows the economy to behave if there is a nearly unlimited amount of effective money out there even if there is a fixed amount of actual money. Because of both of these phenomena, though, the actual monetary supply must be increased to keep up with inflation or else both the labor and financial markets will grind to a hault, leading to rapid deflation and unemployment, effectively losing a lot of the economic growth that was gained (looks like this is happening anyway, lol).

edit: If you are referring to all the stuff that is wrong with the Federal Reserve et al in the US specifically, then yeah, they're pretty bad, but their inflation rates aren't nearly the worst of it, and in no way is that "the greatest evil of our time".
Last edited by Hoborg on Fri Dec 12, 2008 7:55 am, edited 1 time in total.

CppThis
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Postby CppThis » Fri Dec 12, 2008 7:59 am

The problem with fiat currency is it suddenly becomes worthless when whatever institution endorses it goes under. If, for example, we woke up tomorrow to learn that a coup had replaced the USA with the Grand Duchy of the West and GDW would not recognize USD, everyone who trades USD would suddenly only own the stuff in their house. At least with the gold standard someone, somewhere would have the gold so people could at least in theory trade in their USDs for gold--which being gold would have value in the GDW even if GDW currency is not gold-specced.

Hoborg
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Postby Hoborg » Fri Dec 12, 2008 8:48 am

"CppThis" wrote:The problem with fiat currency is it suddenly becomes worthless when whatever institution endorses it goes under. If, for example, we woke up tomorrow to learn that a coup had replaced the USA with the Grand Duchy of the West and GDW would not recognize USD, everyone who trades USD would suddenly only own the stuff in their house. At least with the gold standard someone, somewhere would have the gold so people could at least in theory trade in their USDs for gold--which being gold would have value in the GDW even if GDW currency is not gold-specced.


Yeah, but you simply can't run the world economy on the gold standard, there just isn't enough of it and we're already past our peak rate of mining it so we'd be doom to forever be in recession.

Also, fun fact, there's very little of value in gold. The only way it differs significantly from other solid metal elements is that it doesn't oxidize readily in air (this is the only reason it is even usable as a currency, because it can sit in a vault without turning to dust, but that doesn't give it value). It is fiat valuable in the same way paper is, the only difference is that it can't be reproduced currently, so as it slowly disperses out due to ever-increasing entropy we will be left with no currency and be forced back into a barter system. Above I mentioned a problem of regulating such an economy against abuse. It also would be impossible to tax such an economy to the extent necessary while also paying for the things we enjoy today. The gold standard is nice in some theoretical models, but the problem is that all of the models in which it is nice miss at least one crucial element of how it would function in reality.

That isn't to say that there isn't the problem of the dissolution of economies wholesale whenever using fiat currency, and thus the value of their fiat currencies, but that is much less a danger in a well-maintained democracy than is the sudden devaluation of any given commodity, say gold, because of technological breakthroughs which make it producible or replaceable (or, heaven forbid, market fluctuations). Even if the US government gets overthrown, the people living within its lands will still likely use US currency because in a democracy the fiat is mostly upheld by the people, not a monarch or other authority figure. If the people want to continue using the old currency then the Grand Duchy violates that desire at his own peril. History has shown that the only way to replace a currency in a democracy without public support is to print so much of it that it becomes valueless, but then your people revolt against you and you lose power eventually anyway (Zimbabwe currently has the record for how long this is taking, and even there Mugabe is losing power... and some would argue that Zimbabwe has never been a real democracy, at least not a well-maintained or westernized one by any standard).

Generally fiat currencies are as stable as commodity based ones, even ones based on the gold standard. There are advantages to each, but fiat currency definitely wins out for modern economies and to look at the small advantages that the gold standard offers with envy is a case of "the grass is greener on the other side".
Last edited by Hoborg on Fri Dec 12, 2008 8:54 am, edited 1 time in total.

Grexes
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Postby Grexes » Fri Dec 12, 2008 1:28 pm

I like the idea of random upgrade requirements. Maybe for only the palace, and maybe only for the secondary lux. It wouldn't solve the problem by any stretch, but it would make sure that demand was spread around more equally.

Maybe if sites didn't have so many shop plots. Maybe if destroying shops was a lot more painful. Then people would have to trade/buy more, instead of self producing.

Definately if there were more choices on what to produce.

Definately again if there were more goods that could be gained by military, and that were required for various things. If your city lux resource isn't in demand, get your military up and go capture a lux that is!

Ouijdani
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Location: Near an active volcano

Postby Ouijdani » Fri Dec 12, 2008 1:49 pm

I guess I don't see the fundamental problem. I log in for 10-15 mins in the morning. If I need something for my next upgrade, I post an offer on the scroll wall. I come back at lunch for 10 mins and see if anyone sent me a response. Usually I get the response I desire and ship the goods. In the evening I log back in and do my upgrade -- unless it is a 24 hour shipment in which case I wait until the next day. I leave the browser up all evening but rarely spend an aggregate of more that 20 mins actually playing it.

I have a few of people I trade regularly with, and occasionally I will top off an item I need with a small quantity from the market, but I never do mass deals on the market.

I'm not in the top 10, but I started at 101S and I'm in the low 400's with 3 cities and a small but growing army-- I'm happy with that.

Ouij

aeval99
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Location: 3rd rock on the left

Postby aeval99 » Fri Dec 12, 2008 5:58 pm

"Beamup" wrote:If the economy were better balanced, the supply and demand would go up in tandem with extra cities. There's no reason in theory why three cities shouldn't demand three times as much stuff as one.


Three cities on the same resources would demand three times as much stuff, but not three cities on different resources. When you only have one city you need 4 other luxury goods that you have to trade for or buy on the market. With two cities you only need three. With three cities you only need two. (cedar cities excluded)

You still need the same amount of goods, but you can make more and more of them for yourself rather than having to buy them, so you are buying/trading for less and less.

Caelicola
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Postby Caelicola » Fri Dec 12, 2008 10:49 pm

"Hoborg" wrote:So you're serious...

Currency is neccessary because barter systems greatly restrict market liquidity...

Commodity-based currencies won't do...

Any economy which hopes to stably grow past its current size... a central organization...


Hi Hoborg. I appreciate your comments. You believe that more good can come about by a central authority issuing currency, while I do not believe that it the government's role to create currencies. I am completely uninterested in whether or not we can create (what I would consider illusions of..) a better economy by centralizing authority and forcing people to use the currency in transactions and to pay taxes. Rather, I believe that always and everywhere, economies will create spontaneously for themselves currencies which should be respected by governments.

So, I hope you can see that I would vehemently oppose any government-imposed currency, including gold. However, when the United States was created, it was the government that looked around and decided to use silver as a currency - because that's what the people were already using (barring areas where whiskey was used as currency).

Further, the fiat value given by the economy to that currency must be great enough that its slow deterioration can be paid for with the currency itself. The way to maximize efficiency of the fiat currency, then, is to minimize its cost of production (real worth) while maximizing it fiat value. Hence worthless pieces of paper.

This is a truly astounding statement of belief. I really can't respond to this, other than to say that I hope you realize that this requires an exponentially increasing quantity of a debt-based currency.

As for institutionalized inflation, it gets me so angry that I can't happily debate it on a forum. Good luck to you. :)

The Sage Nabooru
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Postby The Sage Nabooru » Sat Dec 13, 2008 12:40 am

Well.......

My biggest problem is that I think TM is again trying to make it too tough. I never seem to have enough bread, even after building two bakeries and upgrading my wheat fields a number of times. This means I can never buy anything or sell anything - why the gigantic market fee just to sell a product? The commercial tax is far too high, ridiculously high.

Also, how come a product requires two resources to make and you're lucky if you have both of them in one city? In fact most of the time they're seperate. This is totally unrealistic, if a "it's hard because it's like real life" spin is what TM was aiming for. With the possible exception of Detroit I know of no city that produces only one product, either as a natural resource or manufactured product.

CppThis
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Joined: Mon Nov 03, 2008 12:43 am

Postby CppThis » Sat Dec 13, 2008 3:46 am

Well the idea is that people will trade a lot, and not just be little one man empires whose only contact with outsiders is farming newbies für die lülz. Even wtih 5 cities one can only have access to a portion of the total market.

That being said, I do agree that its a little bit too hard to support a city in terms of how many guys you have available to do stuff. As many are starting to find out, bread making eats up a lot and its only gonna become more obvious as the quiet guys on crap resources who do nothing but make bread get pissed and quit, forcing the rest to take a greater chunk of the pie. NO should be slow, but not so slow that its impossible to get ahead without either outside friends or being in the lucky resource club.

Tunk
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Joined: Fri Oct 31, 2008 10:57 pm

Postby Tunk » Sat Dec 13, 2008 6:17 am

Its funny that bread producing is frowned upon, but with the market as it is a rich pure bread producer can actually manipulate it into some quite horrendous profits.

Even more so if market tax is dropped (its at the right place about now to prevent runaway, keep it there reed).


Also like CPP I believe in being self sufficient in bread, I dont want to rely on the market or direct trading to feed my cities, as both are reliant on outside conditions and I dont need to rely on demand.

Besides 99% of my produce is used internally and with my friend who actually does all the direct trading for me since im lazy ;)

[edit]
Ill just clarify, the bread tax on the market is actually PREVENTING run away prices (aka 80per), aswell as forcing a minimum price (3 per).
Refunding bread tax will CAUSE prices to runaway in the presence of a smart and or rich trader.

The main reason the market is 'deflating' is because there arent enough 'traders' out there to manipulate it aswell as over supply.
Last edited by Tunk on Sat Dec 13, 2008 6:28 am, edited 2 times in total.

Qetesh
Posts: 6
Joined: Mon Nov 17, 2008 12:04 pm

Fixing the economy?

Postby Qetesh » Sun Dec 14, 2008 9:10 am

Well, there's a real simple way to fix the current oversupply problem in the central areas - and that is to mimic real life conditions, where mines actually *gasp* run out ...

I have been wondering all along if this is likely to ever be implemented. It would certainly level the playing field a little for older & newer players, and it would be a useful comparison to real life occurrences.

I'd venture to say that maybe a cap could be put on other resources too - if you go over a level *something* claypit, reedbed, wheatfield, leather or cedar mill, then you start to reduce the renewable level of that resource. That would be easily doable I expect - and interesting modelling for real life realities of sustainability. Can anyone tell me if they know any games which take these kinds of potentials into account, by the way?

Then the game is no longer about endless expansion, and becomes about efficiency and wise trading decisions. Oh and fighting of course ;) But then military would start seeming awfully expensive if you found your bronze mine no longer capable of 150 bronze per day...

And is a lot more interesting that boats being sunk by gods :P


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