“The economy is broken”, “Everything is too cheap”, “X is ruining the eco”

We’ve had these messages for years now, I made two posts about the economy last year, not gonna go too in-depth this time – not got the time. But… I will clear up a few things for you… because the economy is *spoiler alert* not broken. 

Gonna be using Bread, Apples, and Gold as examples.

——————————————————————————-

Explaining Inflation/Deflation

Every item and thing has a value, and it is largely determined by:

1. How much there is
2. How easy it is to get

So for bread: it’s easy for anyone to make, and there is a lot of it; so its value is very low. 
And for gold: it can be hard to find, and there isn’t too much of it; to its value is high.

The same thing applies to any currency; whether its £ pounds, $ dollars, or in-game money. We will ignore how easy it is to get money and focus instead on how much there is.

A common thing people ask in the real world is “well why can’t I just print more money” – but that would make the money more common, and decrease its value. In the short term you’ll be able to buy lots of stuff but as more and more of that money goes into the economy, it becomes worthless. Vice-versa, the less money you have in the economy, every $ is worth more. Its ‘purchasing power’ has increased.

[A different way of thinking about it is to picture a pie: you want to buy some bread, and in return, you have to give 10% of your pie. So you make a bigger pie, but you will also end up paying more. The real value of the apple hasn’t changed, but because you made more pie, it means you will have to pay more. In the real world, everything you buy is a small percentage of the overall money in the economy. ]

This concept very much applies to piratecraft

——————————————————————————————-

Falling Prices

What PMC is experiencing right now is deflation – the value of every $ is now higher, so less $ is needed to buy something – which gives the illusion that prices are falling. So while you lot are complaining about prices falling, it’s actually the value of our currency increasing! And no, I didn’t pull that out of my ass – there are reasons.

Back in 2015-2016, loads of people joined, and money came in. More money in the economy means its worth less, so the prices of everything increases. Among other things, its why things seemed so much more expensive in the past. From 2017 onward (after I made those posts), Gods has tried to remove money from the economy again because several players were now at max /bal. We did this by selling elytras, renting shops, and shulker boxes.

$100 now is worth almost twice as much as it did 2-3 years ago, and its value is increasing every day.

———————————————————————————————-

Recent Events

Recent events over the past few weeks and months have affected the economy. I’m speaking of the few people who spawned in money and items, totaling over $3,000,000, out of a total of ~$10,000,000 in the economy currently. That’s a lot of ‘printed’ money.

The people involved in this were often willing to pay more for items, and as such their value seemed to increase, somewhat offsetting the effects of deflation.

What we (as staff) have done to combat this is to remove as much of the spawned in money as we could by confiscating bought items, and wiping the /bal of a few people. So in theory, we should be back to ~$7,000,000 before this money issue.

In short: expect prices to keep falling again, but their value has not changed.

———————————————————————————————-

The pros and cons of Deflation

Positives:

• The value of your money is constantly increasing
• Favors deckhands and people with not much money
• More buyers, fewer sellers – which is what we need right now (we’ve always had too many sellers)

Negatives:

• The rich are getting richer
• People think the value of things is falling – it’s usually not
• Undercutting can be more extreme

—————————————————————————————–

In short

Prices may be falling, but the value of everything is increasing. Great for buyers, bad for people looking to buy claimblocks. The economy is more active than ever (record number of rented shops and transactions), it’s all fine, go make some money.