Inflation Creation Bill.

[Erik Mortis]

That too. I forgot that one.

If we ever get to much out at one time we can tax more and decrease it.

But we still want the numbers higher by a lot, then they are now.

[Erik Mortis]

And we need a Duke to put this before the Landsraad. Any one willing. Wait.. MiniTrade can do it... yes? It directly involves the Economy.

[Andreas the Wise]

Oh, so you are expecting us to make huge payments and get a large chunk in circulation then?

I'm a Ducal rep anyhoo ...

[Erik Mortis]

I am. It is required for the current system to work. Wait, not HUGE payments. But payments the size of what we have been doing. That will allow us to proceed as we have been, and for things to work out.

I think we have the same goal. mine is to make the money, and continue as we have been.

And as MiniTrade you can't. But yes.. as Emissary of your Duke you can present a bill.

[Ari Rahikkala]

We are trying to run a economic simulation off micro-economic values at best. We need LARGE numbers to get the simulation running.

Well, we *are* a microeconomy, you know...

[Scott of Hyperborea]

This is such a bad idea I can't even begin to describe it. I seriously think this could utterly destroy the economy.

I mentioned some of the reason inflation is bad here. You're talking about doing it a little differently than Hesam was, but the effects will be the same. Moving these large amounts of money from the Crown Account to the real economy will effectively be constantly inflating the real economy and thus making all transactions necessarily a loss. This will prevent intelligent people from ever making transactions, and the economy will stop.

Unless I'm misunderstanding what exactly your plan is.

[Andreas the Wise]

Er ... that sounds a bit like Erik and Mikes plan, as I understand.

But rest assured I understand inflation and that's not my plan.

[Scott of Hyperborea]

The whole justification for this seems to be that it's too hard to deal with small fractional payments. But can't the bank handle payments of up to .01 erb? Why not just have an economy where really cheap products cost .1 erb or so? There's no reason our economy has to be exactly the same as America's in every way; in fact, considering how much smaller we are and how much less we use money in our daily lives, there's no reason it should be. Multiply everything by a million, and we're just going to have to put lots of zeroes after everything.

The economy is working really well right now. In the few cases where it wasn't inactivity, it's ALWAYS been poorly managed inflation that causes micronational economies to die. Why let the genie out of the bottle?

[Erik Mortis]

What inflation? Shireroth has always used small numbers, and no one has been willing to part with their precious little erb. No one has any concept of what an erb is worth, because they can't relate it to their real life, and have no frame of reference to work with.

And as for fractions of erb.. we aren't talking about tenths or hundredth or even thousandths to make it make sense. The bank doesn't go past the 2nd decimal place. I could change that if I really wanted to, but it makes math get ugly, and I don't know where to cut off.

By devalueing a single erb it's worth less individually and more likely to be spent.

This money won't be hitting the streets at once. As we are seeking, the size of bounties will not change. EVERYTHING would continue as it is now. Just the value of a single erb will be small enough to promote people to spend them more willingly.

[Erik Mortis]

Let's put it this way. If you have 1 erb. and that won erb represents a months worth of work.. will you spend the erb on a single meal, or movie? Now.. if that erb is worth say..just an hours minimum wage, would you then be more willing to spend it on dinner.. or a movie?

Right now we give say 20erb to someone for writing a short story.. maybe 2 hours of work.. That single bounty is almost half a percent of all the money in the nation. And in real world terms is like paying someone 25billion dollars. last a wage of 12billion USD per hour.

Do you start to see the discontinuity? We started handing out these HUGE bounties.. now we have to accept that we need to make enough money for them to make sense.

[Andreas the Wise]

Right, we're talking from the wrong books then.

The money will be hitting the streets at once, otherwise Scott's right - rampant inflation. Inflation comes from increasing the amount of money IN CIRCULATION. How much is actually printed is irrelevant. Now, currently, there's a little under 5000 in circulation. It changes a little depending on whether the Crown is taxing or bountifying, but its about the same. If you're proposing that we just keep paying the same amount of bounties and just never tax again - no. That means we have maybe 500 extra erb hitting the streets each month. The amount of money in circulation is increasing each month - and so each individual erb gets worth less slowly. That's inflation. And even worse if someone says "oh look, there's 999 990 000 in the Crown account ... the Kaiser should buy a holiday home for 15 000.' or 'oh look, there's 999 990 000 in the Crown account ... lets pay that general in the war 2000 erb.' That is what ruined the Novatainian economy - when the King (who previously had 1 000 000 in his bank but never did anything with it) spent 150 000 all at once and most of that went to a private citizen. Everyone else has < 5000 and suddenly one person has 150 000. It's madness.

I was hoping to just put out more money so the value of an individual erb is the same, but nowhere near a billion gets out ... but it appears you're really thinking on a different track than me. So I'm going to just make my thoughts open. Not a billion. Far too crazy. Increase it to 50 000. Then each erb is worth 0.002%. Aim to have 5000 in the Crown Account at any given time. Taxes are 1000 per Duchy. Standard Bounty is 100 (or 0.2% of a vote). New Citizen bounty is 250 (or 0.5%). There are no more rank bounties ... but to get the initial 35-40 000 kick to get it all out into circulation at once, and then force the crown to operate to budget, MiniTrade gives away either 1000 to each current citizen, or a large payment based on current rank (which effectively dwarfs any unfair payments currently) as well as distributing about 5-10 000 based on recent economic activity or bounties. And from then on, the economy operates with a larger amount in circulation, people are happy to do small transactions often, and the economy operates near capacity so there is no inflation - there's just a one off major boost in money. If a standard bounty is 100, psychologically it makes you think something done well should be worth 150, maybe 200. Which is a definite improvement on our current - standard is 20 ... but 70 is the market price for images ... maybe 70 is a fair amount for something really good. Or 100, nice round number. So bounties will be lower, and you're happy. Forget trying to compare to America. Compare to the income of 26 Americans, if you must, because that's how many people there are in our economy. Or just think ... 25 people, approximately 4% vote each, if a bounty is 0.2%, takes 20 bounties to take up a full person ....

[Erik Mortis]

I'm just trying to decrease the value of an individual erb. If you want it to hit all at once. Okey. I'll trust you on that one. But the value needs to be low enough to make people willing to part with erb. Not hoard it. Right now we hoard it.

And at no point did I say stop taxing. TAX PEOPLE! TAXES ARE GOOD! The government needs to make money to help balance what it spends.

[Andreas the Wise]

Right then. We're semi agreed. I just think 1 billion is so much as to make it pointless. 50 000 should be quite appropriate. The average person should have 2000 in their account then, and so parting with 10 should be no trouble at all.

[Erik Mortis]

How bout 100,000. Way more modest then 1billion and it's a power of ten thus the math is easier...

[Andreas the Wise]

Nah. 50 000 fits nicely. Remember, the charm in the Shirithian economy is that there isn't a million dollars floating around like normal micronational economies. 50 000 retains this charm, but has enough around that people don't value 1 erb that much.

Anyway, I reproposed the bill. Minor changes in wording are fine, but hopefully the general thing passes muster without needing change ...

[Scott of Hyperborea]

I'm just trying to decrease the value of an individual erb. If you want it to hit all at once. Okey. I'll trust you on that one. But the value needs to be low enough to make people willing to part with erb. Not hoard it. Right now we hoard it.

That makes no sense. The value of an erb is meaningful only relative to the value of goods and services, not based on absolute numbers.

If there was only one erb in the whole system, I would be willing to do work, sell products, or whatever, for .002 erb. If there was only one one-millionth of an erb in the whole economy, I'd be willing to do work, sell products, or whatever for .000002 erb. The actual number doesn't matter, because whatever the number is everything else automatically adjusts based on it. You can't have the exact same economy with a zero after every number and expect it to magically change whether people hoard erbs or not.

What will make people hoard erb is the threat of inflation, as I've explained above.

[Andreas the Wise]

Um, Scott ... evolutionary psychology?

By which I mean, there's a basic trait, bias, call it what you will within us (or within me at least) to look at numbers for money in micronations and say "yeah, paying in multiples of 10 sounds reasonable". So I might consider 5 the absolute minimum of erb worth exchanging for a basic service. And I think I'd view that the same if there were 5000 or 10000 erbs. Even though, in fairness, its worth half as much in the second system .... it still looks right both times. It's like, if basic level is 20, going up to 60 sounds fine, 60's not that much, eh? If basic is 100, going to up 200 feels like rather a lot. And I'd feel that with erb anywhere from 5000-50 000. So what Erik means is that we're not all as rational (/overcome bias) as you, and we'd like to be able to trade away 5 or 10 erb and know its not worth too much. Well, me at least. But put too many 0s in and it becomes stupid. Which is why I say 50 000 sounds a good amount. 100 000 is probably too much, anything more is certainly too much. Because once you start trading away 100 like its nothing, then jumping to 500 isn't hard ... but in the current, slightly too small, jumping from 10 to 50 in paying sounds like a huge amount ...

Hopefully that rambling makes some sense.

[Malliki]

I disapprove of the new bill as well. Why are you increasing the bounties? Keep them as they are.

[Erik Mortis]

Instead of larger bounties, give more of them. We seek a significant reduction in the value of the erb. This doesn't do that. It basically maintains its value, and just makes the numbers bigger, not what we wanted. You want to get the money all out at once, so not to cause inflation over time. I understand that now, and agree. But instead of larger bounties, just give more bounties.

Proportionally, or near proportionally bigger bounties just sets us back where we were.

And I still call for 100,000erb. Honestly, I still want more then that, but I will settle for 100,000.

[Hesam Jayatar]

Gents, if I may I can see a few issues here.

- Shireroth's economy does work, but only at a higher function. Considering most citizens in Shireroth are simulating positions of power in one sense or another, we're currently placing the value of the erb as something much much more than a hypothetical "commoner" could afford. This is because the economy only functions as a power share and not a consumer economy.

- The lack of a consumer economy. Since there is no true "need" to purchase things, Shireroth does not have businesses which provide products and services as a successful element of the economy. The erb is worth 1 vote and as such is pretty valuable. This means people are less willing to part with even one erb to purchase goods and services. A nice custom image is not worth even 1 erb in the reduction of influence in the Landsraad.

- The result is that the companies that do exist have no customers. The amount of work that goes into making a custom image is huge while the return is low.

- The use of fractions of an erb (meaning fractions of a vote) is impractical. The human element of our economy means (in my experience) that people see no value in a fraction of an erb and don't want to bother messing about with them.


To solve this there are two issue which need to be addressed. The first is that some inflation is necessary. But I believe it should be universal as Scott and I agreed in another thread. Which would mean EVERYONE'S accounts would double or triple (etc) depending on what all of you agree upon. The result is that people will see the decreased value of ONE erb and therefore be more willing to spend. (in theory). This might also not work at all. I don't know either way until we try it.

The second issue is much more complex. It requires all of us to brainstorm some ideas. The one element which is holding back the economy is the lack of a consumer market. This is killing off interest in establishing business. We have no needs therefore we have no market. The one element where there is sort of a need (media, images etc...) is too labour intensive to be profitable and the potential market is too small for everyone to have business in.

I made some suggestions elsewhere as to what could be done to establish need, but I've forgotten where I wrote them. The ideas included the purchasing of ORBATs for various sub-divisions, purchasing the services of lawyers etc..

So the crux of the issue is that at the present time, 90% of what has value in Shireroth is the Landsraad vote. Only 10% or so of the remaining potential market is consumer goods (again images etc..).

If we could somehow create a need, we could then introduce the element of decision: "What will I do with my erb? spend it on these items I need, or save them to ensure the influence of my duchy?"

The question of course, is how do we simulate need?

More ideas: (good and bad)

- Purchasing land to increase the size of a sub-division
- Purchasing orbats
- Purchasing rights (freedoms? ideas?)
- Paying someone to join your sub-division?
- Loans?


These are just some ideas. The economy does work, but it's new. We should work to stimulate people to see the full potential of the economy by giving them ideas on what they can do with it. This cannot be enforced, but suggested or demonstrated.

The fact remains that unless consumer economics can be established, we are doing little more than circulating erb from peoples accounts (through taxes) and then re-issuing them back in the form of bounties. No amount of discussion on the nature of inflation will have a significant impact on this problem. Collectively, I am certain that we can come to a solution if we have the interest in doing so.

[Oroigawa Koreyasu]

- Purchasing rights (freedoms? ideas?)

Blasphemy!

- Loans?

Me and Ben are working on that, actually...

[Hesam Jayatar]

I was just bringing up ideas. Not trying to force anything on anyone. Please try to be less critical.

[Oroigawa Koreyasu]

That "BLASPHEMY!" might require one of these:

And the second one is just letting you know that one of those is actually in the works...

Not being critical, just...you know...posting...

[Hesam Jayatar]

Okay, no problem.

This is straying from the issue though. How do we create need to construct a free market? Right now, the economy is basically "socialist" in that almost all economic functions are controlled by the state*. How do we spread it out?






(* Very cool, someone write this down. Shireroth successfully invents a working socialist economy, mercantilism and capitalism to follow)

[Andreas the Wise]

Instead of larger bounties, give more of them. We seek a significant reduction in the value of the erb. This doesn't do that. It basically maintains its value, and just makes the numbers bigger, not what we wanted. You want to get the money all out at once, so not to cause inflation over time. I understand that now, and agree. But instead of larger bounties, just give more bounties.

Proportionally, or near proportionally bigger bounties just sets us back where we were.

And I still call for 100,000erb. Honestly, I still want more then that, but I will settle for 100,000.

Erik, Mike ...
Decide what you want.

If you want to reduce the value of a single erb, do that. That's the increase to 50 000.
If you want to keep bounties the same, do that. Increase the amount of erb to 10 000. That puts bounties at a fairer level.
If you want to do both, then that's what I'm doing. You do realise the bounties proposed in the bill are HALF that which they currently are, and because of the psychological reasons stated above, going to increase in much smaller relative increments. How much work should you have to do to be able to earn money? Haven't I already said it will now take 80 hours of work to be relatively worth 2 citizens rather than one? IF nobody else does anything and you aren't taxed. More likely, it'd take 100 hours of work in the same time period everyone else does 20 hours. Would you rather we pay out 5 erb for each of Peachy's posts instead of 20 for the whole evolving story? Would you rather we paid 5 erb for each of Krasniy's story chapters instead of 20 for the whole story? You keep saying "pay more bounties." The reason I haven't even bothered addressing that point thus far is because I know from minitrade that we're actually paying out as many bounties as we should be. We'd be hard pressed to find out more to pay out. We could do it more reguarly, if you really wanted. That means a lot more work for minitrade and its less likely to stay to taxed budget. My plan does more than halve the amount of erb paid out by bounties. How much more decrease do you want? It sounds like you want to devalue bounties till they're worthless ... which then removes the one part of our economy that's admirably functioning.

Proportionally, or near proportionally bigger bounties just sets us back where we were.

They're proportionally half the size. And won't increase as much. Isn't that obvious mathematically, even if I hadn't said it five times?

@Hesam - a. If you're referring to my hypothetical commoner, then since we're almost all not commoners, mine's more a hypothetical baron
If you're referring to the amount a person on new citizen bounty gets, then yes, that is shooting too low.
b. Getting stuff people want to buy is the holy grail of any micronational economy. Though I know I spent a lot on images and only went back to doing my far more dodgy ones when my amount of cash on hand was about half.

[Malliki]

I know about real vs. nominal value, I just don't want the increase. Upping the citizenship bounty to 250 is just counterproductive. Keep it at the current level and make people earn their money instead. I've earned about 5-10 Erbs, most of my account is made up of bounties from the government.

[Andreas the Wise]

So you're saying we should 10* the economy, and pay new citizens 0.1% of a Landsraad vote? You say you've earnt 5-10 erb thus far (excluding bounties). So you'd have been happier if your total bank account was currently at 15 erb, and made virtually no contribution to your Duchies vote? Give them a chance ...

Counterproductive? If we want an economy entirely functioning by private transactions, maybe. And I say maybe, because I think new citizens are much more likely to spend if they actually have money to spend .... wild thought there. But if we want the one part of our economy that's currently functioning well to keep functioning, then no, its not counterproductive at all.

[Malliki]

Spend on what? A low citizenship bounty encourages people to start businesses in order to earn Erbs. The more money you dole out for nothing, the less people will feel motivated to actually earn some Erbs.

[Andreas the Wise]

And a still fairly low but medium sized citizenship bounty encourages citizens to spend on cheap things, and then earn more to get expensive things. I can testify because that's what it did to me. If I'd only got 5 erb, I wouldn't have even dreamed of commissioning images from Scott. Earning that extra 65 would have seemed impossible. If you don't give people anything, what it teaches them is that they should horde erb. Besides, its always horrible in micronational economies were all the established people have 10, 20 times more than new citizens, and to earn up to that takes so much work new citizens are discouraged and don't bother. By all means, keep bounties low to encourage private enterprise. But keep them high enough that citizens can earn money through bounties and it can be equalised out overall by taxes, and they can still be relatively ahead. Because, think, we're a micronation. What do we value? Fellowship and cultural development, say? Economy is just one part of cultural development. If everyone's writing stories and histories and religions and wikifying like crazy, and getting paid bounties for it, then as far as I'm concerned, thats even better than private enterprise working and people being paid worthless bounties. And obviously we disagree on how much is 'worthless'. So lets try a smaller step (halving bounties) before leaping to the other extreme (dividing by 10).

Or, just stop it being you, me, Scott and Erik arguing and getting nowhere, and put it to the Dukes to decide.

[Erik Mortis]

Perhaps, give people a decent sum to start with, but keep bounties for works at the same rate. (whatever that rate is)

I'm honestly more concerned about give out to much for works done, then giving people a decent amount at start up.