The Current Economy

[Mook_Mook]

Houses, from what YoshiP has said will range from cheap to ghastly expensive. So.. "Please look forward to that" (Beyond buying the house you will also have upgrading the house and filling it up - Seeing as YoshiP has also stated that Houses will get its own expansion packs, he plans this to be big).

Another gil sink that "may" go along with houses is reoccurring fees (rental/upkeep/and or tax) - though I dont believe there was any mention of that so far.




Currently

1. Repairs
2. MW Taxes
3. Materia/melds (if the item is destroyed the money you used to buy the gear / materia turns into a null reward. 100000 gil -> null, is a gil sink XD)
4. (Ammunition seems to be largely going by the wayside in ARR - but it was a gil sink)
5. Foods and other consumables

Materia melds are not gil sinks. This is the problem. The only gil sink in this game, is the 4% tax you get when you buy items off the market wards and the special crafting materils. Buying a materia on MW, just shifts the money around, thats it. They should have added the materia melding aspect as part of the gold sink to normalize costs around classes and prep the economy for 2.0 but they didn't.
Examples of gold sinks - Diablo III pony land staff .
World of warcraft mount training.
These are money sinks not money transfer because they effectively take money out of the game. That 2.8k gold you had out of the economy. That 5 mil or whatever, out of the economy. They sink the amount of gold in the game. and help provide a more stable economy for a longer period. Buying a materia just shifts that x amount of gold around but it still remains in the economy, and attributes to inflation.

[Roaran]

People need to understand the role currency plays in an economy before making an informed decision.

Currency is only a medium of trade. The number of dollars that exist in the world has NO impact on our standard of living, the number of things we can produce or services we can provide. These products and services are determined solely by the limiting factors of labor ( the people, how well they have been trained and what they have been trained for) and the resources those people can take advantage of.

Similarily, in FFXIV, it does not matter if the total number of gil is 73 quadrillion, or 5. As long as you can divide of the total gil into a way that still allows it to be a medium of trade, it is sufficient.

Now, that is not to say that a change in the total number does not matter. The rate of change in the total gil is important, as it effects peoples' behaviors in a negative way.

The best thing SE can do once ARR is booted back up, is keep the total gil, whatever it may be or whatever concentration it may be in, stable.

The best way to do this is to have NO gil sinks and NO new influxes of gil. New additions of players does not warrant the need for a growing currency base, just as in real life, larger populations do not justify inflation.

This would mean, not being able to sell items to NPCs, as it is wasteful. You would sell everything on the market for cheap. This would improve the actual economy, as more resources would be available for a lower cost. This also means, things like chocobo rides and airship trips would be free. You would also have to purchase everything you wanted from the market as well.

[axemtitanium]

As for the items I was talking about - I am talking about "Coke" "Aquerius Whetstone" "hardened sap" etc etc

Ah I didn't realize they were exclusive to vendors. Shows how much I know about crafting lol.

The best way to do this is to have NO gil sinks and NO new influxes of gil. New additions of players does not warrant the need for a growing currency base, just as in real life, larger populations do not justify inflation.

This would mean, not being able to sell items to NPCs, as it is wasteful. You would sell everything on the market for cheap. This would improve the actual economy, as more resources would be available for a lower cost. This also means, things like chocobo rides and airship trips would be free. You would also have to purchase everything you wanted from the market as well.

I think having 0 gil sinks and 0 gil influxes would cause huge deflation over time since the same fixed quantity of gil gets distributed over a larger and larger number of players. A very simplified example: There is exactly 1,000,000 gil in circulation and there are 1000 players. The average player has 1000 gil and can buy the average item for 100 gil (10% of each player's cash-in-hand). There is no way to create or destroy gil. Now let's say that 1000 new players joined the game and have integrated into the economy. Now the average player has 500 gil. The average item's price MUST go down to 50 gil because they are unwilling to pay the equivalent of 20% of their cash-in-hand when before they were only paying 10%.

Gil sinks and gil influxes must exist in order for the amount of gil-in-circulation to grow or shrink (ideally) based on the population size. The MW tax is a good gil sink because its effects are in direct proportion to the number of transactions that occur on MW, which is related to population size. The only problem is that MW taxes are not immediately responsive to large changes in circulation numbers (cf. Atomos), nor can it combat systematic introduction of currency on a large scale (cf. RMT) without harming regular players. However, a static currency is not the solution.

[Roaran]

I think having 0 gil sinks and 0 gil influxes would cause huge deflation over time since the same fixed quantity of gil gets distributed over a larger and larger number of players.

Currency/player would decrease yes, that is not deflation. The value of the currency would go up, not because of an actual change in the quantity of currency though. This is how currency should behave.

There was an argument among monetarists who thought that because the U.S. economy grew at a rate of 3% per year on average, the currency should be inflated or devalued by an average 3% as well. This is the argument you are making. The inflation servers noone. And it hurts pretty much everyone, although in different degrees.

[axemtitanium]

I guess that's just a disagreement over whether or not you should keep Consumer Price Index constant. Currently there is no world government that holds its currency circulation completely constant. If you did that, CPI would go down as the same amount of money is divided among more people (assuming increasing population) so a particular amount of money would buy you less stuff.

[Roaran]

Keeping CPI constant is an arbitrary government decision that does not belong in a market. Stable prices always have and always will be a bad idea. Prices are meant to fluctuate or they no longer represent actual value which fluctuates with time.

[Estellios]

Depending on the sources of dark matter in 2.0 NPC repairs might be more desirable than they are now. Grade 5 Dark matter is dirt cheap because it's the go-to dud prize and has been ever since Ifrit was implemented so there are tons of the stuff all over the place. With the token system being implemented and dark matter no longer being the consolation prize, it could become more valuable.