I’ve seen seeing the word “inflation” thrown around a lot for things where inflation has zero-relevance. It’s ticking me off, so here’s a quick refresher for you all.
Dictionary Definition
Translation?
When a society’s coin (gold) is being made (farmed) faster then the items we want to spend it on, prices go up because everyone’s got more money to bid.
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Now, if an item price goes up because it becomes harder to find, or goes down because it’s easier to find, that is NOT inflation.
That’s Supply-and-Demand.
The shift of a price because the desire or amount of an item changes, and not the currency.
Example:
When Unidentified Dyes were added to a Gift recipe – They went from 2~5silver to 15~20silver. The massive rise in demand (to use them for that recipe) caused supply to go down, and merchants responded by raising the price.
That price change doesn’t involve the change in how much currency the game has. Buyers were simply willing to pay more then before.
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So.
If Arena Net adds something that will drop more of an item or use up more of an item – like the Ascended Gear that costs 50+ ectos to get OR make ectos more available by making Rares easier to get from chests…
The shift in ecto prices is not inflation.
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Hope this was helpful. Have a nice day~
(I suppose if everyone started selling those Rares to NPCs and never salvaging them, that could contribute to inflation, but that’s just silly)
(edited by DreamOfACure.4382)
What you stated above actually helps stop sny inflation before it happens.
More mat and gold sinks the better.
Think about these Guild Missions. They require you to move all over the world. Full guilds of people 500+ burning silver with way point costs.
In-freakin-geneious
An increase in Mats does not reduce inflation. It simply reduces prices.
The gold stays in the market when spent on the Trading Post.
Guild Missions reward players with up to 50 silvers, so I don’t see how that’s much of a gold sink either. lol
As far as I can tell, the only thing this patch did to encourage more gold-spending is by making unlocking Guild Missions cost a ton of influence. So, guilds may be motivated to buy influence with gold.
This game already has a lot of effective gold-sinks, imo. They just need to curb some of the extreme gold-farming methods like CoF. (Which they will do eventually, so don’t anyone QQ about it.)
(edited by DreamOfACure.4382)
Increase in Mats does not reduce inflation. It simply reduces prices.
Guild Missions reward players with up to 50 silvers, so I don’t see how that’s much of a gold sink either. lol
As far as I can tell, the only thing this patch did to encourage more gold-spending is by making unlocking Guild Missions cost a ton of influence. So, guilds may be motivated to buy influence with gold.
That and you have to spend gold with guild commendations to get earrings.
How don’t mat sinks reduce inflation? If im to lazy to farm and burn 300g in mats for a legendary thats one hell of a sink.
Reminder also that arenanet is the one who controls supply. Just sayan. A true super sayan.
Ecto is a currency for Arenanet.
Adding more uses for it is Anet way of keep its purchasing power since “coin” keeps losing value due to expansion of supply.
If you want to keep your purchasing power you trade your coin into ectos.
Think of ecto as real life gold – its a natural occurring currency that has other uses. The difference is that ecto has an infinite supply where gold is finite in Earth soil, so Anet needs to add sinks to remove ectos and keep its worth.
How don’t mat sinks reduce inflation? If im to lazy to farm and burn 300g in mats for a legendary thats one hell of a sink.
Ignoring the Trading Post fees (which are a gold sink) for a moment, buying items from the Trading Post means your money is going to another player.
That’s not like buying from an NPC.
An NPC never uses the gold, it’s removed from the system.
When you buy from another player, (most of) your money stays in the system.
You do realise that inflation can be caused DUE to supply and demand right? I introduce you to cost push inflation and demand pull inflation.
Inflation can be caused by a factor changing which causes suppliers to want/need to sell their commodity for a higher price than usual. Inflation can also be caused by a factor changing which results in consumers being able to demand more of a good, so the price of a good increases, as to meet the new level of demand.
Inflation is a general price increase, usually measured in the CPI (Consumer price index, however in games I wouldn’t know how they measure inflation. Either way, supply and demand both can, and do affect inflation.
What you have to understand is that inflation is of the GENERAL price level, so only a good which is general, or widely used will have a reasonable cause on inflation. A real life example is petrol, petrol is used by most consumers and is consumed on a large scale by firms and producers.
Ecto would probably be the best example of an item that could cause inflation in GW2, if the price were to increase. I would go into more detail, but it’ll just end up being an essay worth of garbage that no one wants to read. Look into basic economics if you’re interested in how inflation actually works.
(edited by The Mexican Cookie.3690)
it doesn’t mean that what’s happening in the market cant hurt the economy no matter what its called .I fear the price of ectos will drop too sharply . As it stands now I’m all but guaranteed a rare at chest events and can hit them all day
I believe this topic should be on the Black Lion sub-forum.
You are almost 100% correct in what you said! People do often by ignorance misjudge what is happening to trader prices. Some think it’s the Market manipulators vudu magic that is making the prices flow as they please. And that’s not correct.
The truth is that the changes are not linear and cannot be pointed to one explanation only. Prices flow are due to both inflation and supply/demand processes. Let’s talk about the ectos and how that is affected from both situations:
If we look at Spidy’s data about ectos: http://www.gw2spidy.com/item/19721
Ectos before the update costed around 37 silver.
With the update taking place there was a sudden increase of the globs price due to the speculating phenomenon. Some Ascended items costed also ectos and due to that people thought the ectos would increase demand (= increase in price). So they bought a lot to sell them higher and profit from the result.
A contradicting result was introduced with the bigger rare and exotic drop from the world which caused also more availability of ectos forcing the prices to go down again.
This process is made from the supply/demand that you have spoken!
However, with the more rare and exotics dropping on the world and dungeons, the “cost of gold” has definitively decreased. People will have more money to spend and they are willing to spend more in some decisive items increasing their price. This willingness will make the inflation process occur.
After an update that introduces an increase in the value of the monetary unit there is always an adjustment in the inflation!
The “adjustment” process that we see in the trader (during a week maybe), is both a result of inflation and S/D and not one exclusively. There could be also other external factors that make an impact on the economy and not only these two. That’s how economy works!
Cheers
What you stated above actually helps stop sny inflation before it happens.
More mat and gold sinks the better.
Think about these Guild Missions. They require you to move all over the world. Full guilds of people 500+ burning silver with way point costs.
In-freakin-geneious
Not sure if serious. If those 500+ players each gain 50+ silver and two guaranteed rares the guild missions hardly are a gold sink.
how many ectos for the ascended armors will be needed? XD
so……ascended gear is the equivalent of fow armor.
The price of the Unidentified Dyes went up when Anet completely nerfed their drop rate. I ended up buying 30 of them when they were 2s a piece. That was when they were dropping like crazy…then they nerfed it and withing a week the price shot up.
so……ascended gear is the equivalent of fow armor.
No, Fow armour was strictly for the looks, it did not have better stats. Ascended has better stats then exotic.
I like it when people in the BL forum talk about inflation on precursors when inflation is only in a regard for commodities.
I thought the rising of prices for legendary-type items was becsue people started to do the math on what they’d actually cost them. Just like other crafting, it’s easily undervalued.
I thought the rising of prices for legendary-type items was becsue people started to do the math on what they’d actually cost them. Just like other crafting, it’s easily undervalued.
the rising prices more likely have to do with the rise of globs (appx 500) and the increasing demand for precursors
Ecto is a currency for Arenanet.
Adding more uses for it is Anet way of keep its purchasing power since “coin” keeps losing value due to expansion of supply.
If you want to keep your purchasing power you trade your coin into ectos.
Think of ecto as real life gold – its a natural occurring currency that has other uses. The difference is that ecto has an infinite supply where gold is finite in Earth soil, so Anet needs to add sinks to remove ectos and keep its worth.
Except real life gold has no purpose except as a hard currency. Gold usage is distributed as follows:
25% industrial use
50% investment purposes
25% jewelry
For a commodity that’s supposed to keep it’s value that’s insane. If a big player, say the United States, realizes that it’s gold has no purpose except for being gold, they’ll dump it on the market. UK and Russia will follow and a troy ounce will cost 50 dollars. Bubble waiting to happen.
Compare with a real commodity with a purpose such as iron:
25% replacement of rusted iron (iron sink!)
60% industrial use
15% investment purposes
Now there’s a commodity that holds its value extremely well. The only difference between gold and iron is scarcity. But inherently, gold is worthless and iron has a real purpose AND a sink.
(edited by marnick.4305)
Demand-pull inflation…
http://en.wikipedia.org/wiki/Demand-pull_inflation
Feel free to dispute the idea. But to say Supply and Demand isn’t inflation is not some universally held belief…
An increase in Mats does not reduce inflation. It simply reduces prices.
The gold stays in the market when spent on the Trading Post.
You need to work on your fundamentals when it comes to economics.
You make two fallacies here….
1) http://www.economicsonline.co.uk/Managing_the_economy/Inflation_and_deflation.html
“supply-side deflation” is the inverse of demand-pull inflation…
2) Not all gold stays in circulation when transactions are made via the TP.
thank you educating the people who don’t know why precursors are so high
P * Y = M * V
That’s all you need to know.
Demand-pull inflation…
http://en.wikipedia.org/wiki/Demand-pull_inflation
Feel free to dispute the idea. But to say Supply and Demand isn’t inflation is not some universally held belief…
Supply and Demand is not inflation.
An increase in Aggregate Demand that causes suppliers to increase production levels and prices is inflation.
A decrease in Aggregate Supply that causes suppliers to decrease production levels and increase supply (“stagflation”) is inflation.
The concept of Supply and Demand is not inflation. Now, what happens to aggregate demand and aggregate supply might affect inflation. But Supply and Demand does not equal inflation. You could just as easily argue that it can equal deflation.
Also, keep in mind that inflation is for the entire economy, not simply individual products.
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