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blankseplocked Inflation, PLEX and You
 
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290Katana
Posted - 2011.09.03 17:52:00 - [1]
 

I don't always post on the forums, but when I do, I prefer to say something useful...

Inflation: Rise in the general level of prices of goods and services in an economy.
PLEX: Pilot's License EXtention. Adds 30 days of gametime to an active EVE account. Can be exchanged for AUR.
You

13 PLEX for $200
Who: CCP
When: LIMITED TIME ONLY!!!1!!(TM)
Where: New Eden


The Q4 2010 QEN focuses on inflation and its relation to ISK faucets/sinks. It is correct in saying that an increase in money supply will lead to inflation. What it fails to say, however, is that the increase in money supply has to be RELATIVE to the goods available. You can have a constant, never increasing money supply, but if the amount of goods diminishes, inflation will occur regardless. This is the type of inflation that CCP is risking by injecting massive amounts of PLEX into the market with the bulk discount deal.

How:
Mass injections of PLEX will drive their price down, causing miners/missioners who grind for PLEX each month to have a lower goal to achieve. Once reaching the goal of buying that month's PLEX, they will likely move on to more engaging areas of gameplay and stop producing either through salvage/loot or mining ore directly. A reduction in materials available to producers will lead to increased prices and that price will work its way up through the producers to the consumer. The "counter" to this inflation is the expected use of the PLEX in microtransactions through the NEX store. This essentially creates a massive ISK sink where ~350m ISK at a time is flushed from the money supply in exchange for 3.5k AUR. It is this writer's opinion, however, that the EVE community will not flush ISK for AUR in quantities sufficent to offset the inflation produced by the reduced amount of goods available. It is clear that the intense negative reaction to the NEX (warranted or not) will prevent it from becoming a prominant ISK sink.



Discuss...

SilentMajority
Posted - 2011.09.03 17:57:00 - [2]
 

1/10

Inflation is an increase in the supply of money. Increases in the general price level have multiple sources, only one of them is an increase in the supply of money

Dane El
Posted - 2011.09.03 17:58:00 - [3]
 

Originally by: 290Katana


The "counter" to this inflation is the expected use of the PLEX in microtransactions through the NEX store. This essentially creates a massive ISK sink where ~350m ISK at a time is flushed from the money supply in exchange for 3.5k AUR.




Wait. I've never bought AUR so maybe I'm missing something but converting a PLEX to AUR will not affect the ISK supply.

Cipher Jones
Minmatar
Posted - 2011.09.03 18:03:00 - [4]
 

Originally by: Dane El
Originally by: 290Katana


The "counter" to this inflation is the expected use of the PLEX in microtransactions through the NEX store. This essentially creates a massive ISK sink where ~350m ISK at a time is flushed from the money supply in exchange for 3.5k AUR.




Wait. I've never bought AUR so maybe I'm missing something but converting a PLEX to AUR will not affect the ISK supply.


Nope, youre right. only buying/selling a plex with ISK will effect the isk supply.

Simetraz
Posted - 2011.09.03 18:12:00 - [5]
 

There are threads all about how the mineral prices have taken a dive.
So if people do what you say then the mineral prices would go up which is what some want.
Therefore this isn't a problem but a fix.

1,000 or more plex's are sold every day on the Jita market.
Even if a very large percentage of them are resales, it still leaves a lot left over.

This deal will not even create a blip on the market economy.
All it is going to do is give some people a few extra bucks back on something they were going to purchase anyways.

Dane El
Posted - 2011.09.03 18:14:00 - [6]
 

Originally by: Cipher Jones

Nope, youre right. only buying/selling a plex with ISK will effect the isk supply.


That doesn't create or destroy isk either. It just transfers ownership.

Tippia
Caldari
Sunshine and Lollipops
Posted - 2011.09.03 18:22:00 - [7]
 

Edited by: Tippia on 03/09/2011 18:26:54
Originally by: Dane El
Originally by: Cipher Jones
Nope, youre right. only buying/selling a plex with ISK will effect the isk supply.
That doesn't create or destroy isk either. It just transfers ownership.
Actually, PLEX trading only ever removes ISK due to taxes and brokerage fees, so like all (PvP) market activity it's a (tiny) ISK sink.

Also:
Originally by: 290Katana
It is this writer's opinion, however, that the EVE community will not flush ISK for AUR in quantities sufficent to offset the inflation produced by the reduced amount of goods available. It is clear that the intense negative reaction to the NEX (warranted or not) will prevent it from becoming a prominant ISK sink.
It was never intended to be a prominent ISK sink — it can't be, because it doesn't get rid of any ISK and you cannot “flush ISK for AUR” since ISK isn't a factor in the creation of AUR. The NeX a PLEX sink, and it's purpose is to get rid of PLEX in a larger volume than can be done through mere activation of game time.

Cipher Jones
Minmatar
Posted - 2011.09.03 19:02:00 - [8]
 

Originally by: Dane El
Originally by: Cipher Jones

Nope, youre right. only buying/selling a plex with ISK will effect the isk supply.


That doesn't create or destroy isk either. It just transfers ownership.


Ahh yes it does, see the response above, however I misplaced the decimal, so its not that big a deal. I was thinking 40 bil a day in tax, more like 4.


 

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