I have successfully played the market since release, but have become increasingly frustrated by the incessant market speculation that occurs on the BLC, particularly in contrast to past MMO’s I have played.
However, I was just reading Maynard Keynes; ‘The General Theory of Employment, Interest and Money. Chapter 12. The State of Long-term Expectation’ as part of my economics course, when I realised in some regards, its high applicability to the current GW2 market, and, more precisely, my own investments.
Some will scoff at this, thinking I take the game to seriously. I dont really, I read this as part of my Degree, not to enhance my gaming experience. However, the crossover is very interesting.
The point I wish to bring attention too, is the context within which players view the high Trading Post tax. That is, it is a plague in the market stifling free trade and the generation of wealth. However I argue (or Keynes argues) it actually reduces speculation and instead encourages long-term investment, creating a far more healthy market.
In a nutshell:
Keynes argues that as a highly organized market increases in size (the GW2 market is both incredibly organised and very big in this context), market speculation begins to take precedence over long-term investment. I.e. People begin to invest not based on what an asset is worth, or what it will be worth in say 2 months, but instead, on what they think the market thinks the asset will be worth in 2 months. This means that an asset with a true value of 20g now, and say 30g in a months time, may not be a good investment, since the market may value it at 20g in a months time instead. Speculation has made it a terrible investment.
In effect this creates a spiral of opinion. In which we are not predicting the true value of an asset, but instead predicting what others predict its value to be. This creates a positive feedback cycle, where people just continue predicting what others predict that others predict the price is. This can be seen in the rampant market speculation on items such as Eggs, and Black Lion Chests a few months back.
Keynes argues that a less liquid market reduces this speculation as it hampers the ability to cash out so fast and thus mitigate risk. In a highly liquid market an investor can cash in his investments almost instantly, thus mitigating risk as he knows he can act on instinct when new news becomes available. Contrast this to an illiquid market, where the investor would be unable to cash out at all.
This of course has benefits, such as encouraging risk. However, it also favors speculation over long-term investment, an aspect widely seen as unhealthy for the economy. Keynes suggests a way to reduce liquidity is to add high transaction costs, as evidenced by the difference between Wall Street and the London Stock Exchange (LSE) at the time of writing his book. (The LSE had far higher transaction costs than Wall Street and as such had far more stable market).
TLDR: The high transaction tax (15%) on the Trading Post acts not just as a gold sink, but also against market speculation. Subsequently it contributes to a more stable market.
Evidence: John Maynard Keynes, one of the most influential economists of our time.
http://www.capatcolumbia.com/reading%20packet/Keynes%20Long%20Term.pdf
but nice reading. I’m no economist nor do i plan of ever become one but i think i understand … xD. and i hardly think a programmer/dev put a random number there, “15% sounds reasonable hurr durr.” i think it was a very informed decision and a _very_intentional one as well. i wonder if they achieved what they aimed for. but that’s another question never to be answered here on the forum ( not complaining).