Hyperinflation

vivatifosi

Cleaver wrote: »

If I played the game (and I never had) I'd just wander around naked and sleep on the pavement to save money. And this would be okay because...

IT ISN'T REAL!!!

Or am I missing something?

Crikey can you imagine MSErs on Second Life? We really would be licking windows to get water and foraging for berries. That's until we go round Dopester's and eat the dog. Sorry Dopester. I'm a vegetarian in RL, honest.

Hank_Rearden

Cleaver wrote: »

I've read about Second Life and as much as try to get my head around it I just can't.

My understanding is that you exchange real money for virtual money and then you can do things like buy a car, house, new haircut, clothes etc. all for your virtual avatar. Is this correct?

If I played the game (and I never had) I'd just wander around naked and sleep on the pavement to save money. And this would be okay because...

IT ISN'T REAL!!!

Or am I missing something?

[I promise I've never played either]
At the moment it's lots cheaper to do that in SL than in RL. So people forego little pleasures in RL to buy big pleasures in SL. If they convince themselves enough (and there's plenty of evidence of people who start to "exist", in psychological sense, in SL) then they're winners in perceived utility. It sounds to me like you're less prone to conning yourself. But this is big sociological stuff - biggest film of the year I think was Inception - which questions real vs dream life.

Also SL is (or has been, I really don't keep up with it regularly) going through a nice big growth phase, so everything's rosy - assets (yes, including property) only goes up. etc. etc. Loads of businesses are finding markets (selling those haircuts, etc) and people are making virtual money. So for some people, possibly those with low means/low capabilities/low drive, but a high imagination/suggestibility - it's an easy fix. A little like drugs, frankly.

It'll be interesting to see whether the SL economy continues to grow. If it doesn't then people can just logout.

globalds

Cleaver wrote: »

I've read about Second Life and as much as try to get my head around it I just can't.

My understanding is that you exchange real money for virtual money and then you can do things like buy a car, house, new haircut, clothes etc. all for your virtual avatar. Is this correct?

If I played the game (and I never had) I'd just wander around naked and sleep on the pavement to save money. And this would be okay because...

IT ISN'T REAL!!!

Or am I missing something?

In one simple step you enter the world of Asheron

I've read about Real Life and as much as try to get my head around it I just can't.

My understanding is that you exchange Gold for virtual money and then you can do things like buy a car, house, new haircut, clothes etc. all for your self. Is this correct?

If I played the game (and I never had) I'd just wander around naked and sleep on the pavement to save Gold. And this would be okay because...

IT ISN'T REAL!!!

Or am I missing something?

Maybe our climate doesn't make the naked thing possible but lots of people decide to live on the streets ...many more decide to take no competitive part in society choosing to accept what it gives them for doing nothing.
The people who seem to play the game hardest, either on-line or in the "real"world are the ones who happen to be winning the most whilst playing and therefore stand to lose the most if the game changes.

Generali

Masomnia wrote: »

I find it interesting that your criteria are both related to psychology/behaviour and not based on statistics.

Well economics is about people and the way they behave in the end.

As a student I had endless arguments with professors along the lines of 'Basically economics is rubbish because you don't take real people into account'. The response was generally along the lines of either it's too hard to do so or that you don't need to because people are rational and thus predictable.

At what point of inflation do people lose faith in the currency? We've seen inflation at 2%/month in the 1970s and a little under 1%/month in the 1980s and people still seemed happy to hold cash in the UK. Probably because most people in the UK trust that Governments will do the right if unpopular thing of maintaining sound money. Inflation rising rapidly from say 5% to 25%pa in Brazil or Argentina would probably see people refusing local currency as much as possible and insisting on doing trade in US dollars, causing hyperinflation as the value of the local currency collapsed.

Cleaver

Generali wrote: »

At what point of inflation do people lose faith in the currency? We've seen inflation at 2%/month in the 1970s and a little under 1%/month in the 1980s and people still seemed happy to hold cash in the UK.

You say that economics is really the study of people and psychology and I completely agree with this.

So with that in mind I could suggest that it's not just that people are 'happy to hold cash' at the moment, I think it's the case that a lot of people (and even those with a good amount of savings) don't really understand what inflation is and how inflation can erode savings.

I genuinely think that if you asked the average joe on the street what the connection is between your savings being at 4% gross and inflation running at 2.6%, you wouldn't have many who could tell you. And that's not me being patronising or insulting as I'm not sure I fully understand myself.

Generali

Cleaver wrote: »

You say that economics is really the study of people and psychology and I completely agree with this.

So with that in mind I could suggest that it's not just that people are 'happy to hold cash' at the moment, I think it's the case that a lot of people (and even those with a good amount of savings) don't really understand what inflation is and how inflation can erode savings.

I genuinely think that if you asked the average joe on the street what the connection is between your savings being at 4% gross and inflation running at 2.6%, you wouldn't have many who could tell you. And that's not me being patronising or insulting as I'm not sure I fully understand myself.

Perfectly true. When inflation was running at 15 or 20% you could be sure as hell that people knew exactly what inflation was and what it meant.

Also, the world has moved on. There are many products whose prices have been falling at dramatic rates for many years now (eg cheap clothes, computers, TVs) whilst others have been rising quickly (eg houses, fuel). A gadget freak will be facing a very different rate of inflation to someone that drives a lot.

sabretoothtigger

People are not rational, they are incentive led

A herd of cows is a better comparison for most things.
The average person is not rich but 60 million peoples wealth is very significant so to consider currency is to consider the movement of many people, their thoughts, how they communicate and interact not the individual person.

The sociologist can maybe predict best how a big trend will propagate



A guy stands at the edge of a field holding his hand out empty.
A cow notices and remembering people often bring food, it walks over.
Other cows notice and walk over too
The whole herd notice the other cows moving and realise something is happening and walk over
The entire fields cows, hundreds walk over to the side and the guy holding his hand out walks away.
The cows look on and wait for him to come back with food

The guy gets in his car and goes home, his name is Ben Bernanke

globalds wrote: »

In one simple step you enter the world of Asheron

Asheron is the name of a game funnily enough http://www.google.co.uk/images?q=the+world+of+Asheron&um=1&ie=UTF-8&source=og&sa=N&hl=en&tab=wi&biw=1280&bih=887

you exchange Gold for virtual money and then you can do things like buy a car, house,

Ive read in vietnam they swap gold for the house, no paper as it devalues too quickly for a price to be agreed properly.

Paper is still more usable here but for very large amounts and especially if saving for a house I think gold isnt so stupid though I would not advise owning one thing as you step back into the danger of having something which may suffer a great supply increase.

Maybe we could say forget gold just own a tiny bit of every paper currency, that'd make more sense then being only sterling or only dollars (a problem here is every paper currency relates to fed policy, dont ask me why it has to)


With owning various large companies its not that far off that as hsbc is global so they do own a bit of every countrys currency. Barclays is in Zimbabwe a bit I believe. BHP another london stock, is largely in Australia

Cleaver

Generali wrote: »

Perfectly true. When inflation was running at 15 or 20% you could be sure as hell that people knew exactly what inflation was and what it meant.

Yes, I'm sure that's true. As someone who is (relatively) young and never seen inflation at these levels the prospect scares me a bit.

Generali wrote: »

Also, the world has moved on. There are many products whose prices have been falling at dramatic rates for many years now (eg cheap clothes, computers, TVs) whilst others have been rising quickly (eg houses, fuel). A gadget freak will be facing a very different rate of inflation to someone that drives a lot.

One thing I've noticed over the past couple of years is the increase in the cost of food. We used to comfortably do our weekly shop for £50 and this would buy a lot of nice food (we like our nice ingredients) and be enough for our lunches at work too. I'm increasingly finding that a similar shop is £70 or £80 of late. And I don't think our shopping habits have changed that much.

I guess the really interesting thing if and when food becomes more and more expensive is when you see people buying the ingredients to buy food again rather than buying the ready made version. A pizza is a good example. A basic supermarket pizza will cost you about £2.50 with a very nice one costing nearly £5.

Alternatively you can buy 1kg of flour, yeast, big pot of tomatoes, mozzarella and a chorizo sausage for around a fiver and eat a lovely homemade pizza every night for less than a fiver a week.

Maybe my sign of rising food costs will be people making their own pizza?

sabretoothtigger

Maybe my sign of rising food costs will be people making their own pizza?

Current thing Ive heard is buy Dominos shares because more people eating at home. Ie. restaurants are doing less trade, more people order home delivery.

Also lower cost shops do better, more premium based shops do worse. Some might assume all shops do worse

A gadget freak will be facing a very different rate of inflation to someone that drives a lot.

Yes RAM or memory prices have been volatile. Ram prices fell greatly in first half of 2009 from excess supply and inventory dumping then towards the end they tripled in price as our weak pound cost us I guess. Right now they are falling back again slowly.
The overall effect has been reduced deflation in prices and slower progression in the latest developments

your definition of hyperinflation and, preferably, why?

Hyper is triple digits and/or price changes that average more often then weekly

Hyper is destructive to the efficient transfer of wealth and impedes normal business. It is the failure of money itself to convey and hold worth, the ultimate result being a resort to swapping items.


we wont suffer hyper very much. Money is not physical any more, we can transfer instantly and as often as we like any time of day.
Soon it will be possible on phones re: facebook mentioned above, the twitter founder is doing a mobile money system

in the west silver coins will never be used nor gold. They are a low velocity store /representation only

vivatifosi

Merry Christmas Gen!