Inflation

Just for a change I decided to look at my economy screen to show me what the breakdown of my expenditure was - and found out that my biggest cost was inflation on my costs as it was running at a whopping 59%!

Is this normal? I don't think I've ever encountered inflation before, what affects it? Why do I have it in the first place? Do I need to be putting this question in the vanilla folder?

All help gratefully received.

Inflation is a thing from Vanilla. Every X turns, the inflation rate goes up and is a multiplier times your current expenditures for civics, city maintenance, and unit maintenance.

The only way to get it to go down is to reduce your costs in one of the areas.

The theory is that the value of 1 gold goes down over time as more gold is produced in the game.

There's a number of threads about it in the Civ 4 sections - it's always a feature. Basically it's a way of balancing the increasing availability of commerce as the game progresses.

...but unlike the real world, FFH has a gold standard instead of massivly over produced fiat currency...so as production increases, prices should go down...

bdmarti said:

...but unlike the real world, FFH has a gold standard instead of massivly over produced fiat currency...so as production increases, prices should go down...

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No, the Gold mines add to the amount of gold above surface and increase the money supply, which is the primary factor of inflation. Until the discovery of fractional reserve banking, of course.

we could revamp inflation to be effected by gold found, the dragons horde would cause a significant amount of inflation....
pillaging would also cause inflation

Producing more wealth doesn't cause inflation though, at least not in the real world. What causes inflation is when the government produces more money. Since money in civ is gold, there would not be such damaging inflation unless gold was somehow being produced faster then all other goods.

That being said, I have noticed that inflation in FfH is quite significantly greater then it is in vanilla... any reason for that, in particular?

As a note: Realistically, inflation in FfH should be significantly less then in vanilla... medieval-type societies aren't developed enough to allow the government to perform such damaging manipulations of the money supply. The only way that such obscene inflation as Iblis reported (59%!) could occur in a fantasy setting is if there was magic available that created gold (possibly transforming it from lead or whatnot). Otherwise, there simply isn't any significant inflow of currency to cause much inflation at all... likely as not, the inflation rate will hover around zero.

This opens up for a whole new Armageddon spell: "Lead to Gold, the commoners guide to thaumaturgic transmutation." A widely distibuted tome that teaches the secrets of making gold to peasants. Effect +500 points of inflation to every civ in play.

Build, kick back and watch those non-Order civs suffer

Endovior said:

That being said, I have noticed that inflation in FfH is quite significantly greater then it is in vanilla... any reason for that, in particular?

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Because FfH takes more turns to play than vanilla Civ I guess.

Personally I'd prefer if civic upkeep was removed and replaced by more interesting and varied penalties. Even simply giving small percentual commerce penalties IMO would be better as it would eliminate the need for inflation.

Endovior said:

obscene inflation as Iblis reported (59%!)

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It's not 59% since last turn, it's 59% since turn 1. The civics costs, tile yields and any other source of commerce/gold/science in the game are not affected by time or game speed, but inflation is. So the figures you can see in the display really tell you the (virtual) inflation rate from turn 1 to the current turn.

I personnally find that the inflation rate is fine as it is. I admit that it's not a very funny feature, but it's simple enough to be quickly assimilated and it's pretty well balanced IMO.

DieselBiscuit said:

This opens up for a whole new Armageddon spell: "Lead to Gold, the commoners guide to thaumaturgic transmutation." A widely distibuted tome that teaches the secrets of making gold to peasants.

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It's called Alchemy, and its already in the game. As a tech and as a spell; It creates copper into gold, and gold into copper.

sashaddin said:

No, the Gold mines add to the amount of gold above surface and increase the money supply, which is the primary factor of inflation

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Endovior said:

Producing more wealth doesn't cause inflation though, at least not in the real world. What causes inflation is when the government produces more money. Since money in civ is gold, there would not be such damaging inflation unless gold was somehow being produced faster then all other goods.

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Either you tried to corrrect me for the fun of it, either you don't know what you're typing.

Sashaddin said:

Either you tried to corrrect me for the fun of it, either you don't know what you're typing.

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I do know what I'm typing... what I'm trying to do is make a point.

Mining gold won't cause inflation unless gold is being mined faster then goods are being produced... because what inflation IS is money being produced faster then goods are. Normally, gold will be produced at a rate similar to that of other goods, according to the Uniformity of Profit Principle... and as such, mining gold in and of itself would not cause inflation. I could explain further, but only those who have taken some economics would understand... also, it would be somewhat off-topic.

Endovior said:

I do know what I'm typing... what I'm trying to do is make a point.

Mining gold won't cause inflation unless gold is being mined faster then goods are being produced... because what inflation IS is money being produced faster then goods are. Normally, gold will be produced at a rate similar to that of other goods, according to the Uniformity of Profit Principle... and as such, mining gold in and of itself would not cause inflation. I could explain further, but only those who have taken some economics would understand... also, it would be somewhat off-topic.

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The OPEC announcing it might lower its quotas to offset a falling barrel price will respect that principle, they are a cartel. Dwarves, on the other hand, will probably mine as fast as Dwarves can, hoarding as much as possible and not caring about possibly debasing the value of the currency.

One point that just dawned to me is that when Copper, Silver and Mithril are discovered, you have that much more metal available to be forged into coins, again increasing the money supply.

Early civilizations didn't produce "goods" like a 20th century economy would (i.e. TVs, VCRs, PCs, IPods and such). Hammers in Civ and FFH represent the training, feeding, equiping and maintenance for military units. They also represent the construction of buildings, wonders and Rituals, none of which can be sold and exported for a profit. Therefore, early productivity doesn't go towards finished goods, so increasing money supply WILL result in a higher Money/Goods ratio.

Ah, but that's just it. The more Dwarves produce gold, the less gold is worth, and thus the less incentive they have to get more of it. There are all manner of products in existence, and it costs money to make any of them... the key is profits. Unless the government is preventing this, each dwarf will inherently attempt to do what will bring him the greatest profit. The industries in which the greatest profit is to be had are those industries in which the least production is taking place relative to demand. As such, those industries will attract more workers and firms, increasing productivity to meet the demand, lowering profitability of that industry towards the norm. The least profitable industries, on the other hand, are the ones in which too much work is being done, relative to demand. These industries will experience perpetually low profits, or even outright losses. In such cases, the existing firms will shrink or fail under such conditions (some businessmen may save their money by selling out), lowering overall production to meet the norm. This norm is the average rate of profit throughout the whole society... and all profits throughout the society will tend to move towards that amount, provided that the businessmen are not prevented from doing so.

The process is inherently self-regulating... if too much gold is produced in one season, then the price for it will be lower, and so will the profits. As such, every effort will be made to avoid such miscalculations.

I disagree.

Its not the amount of gold that is produced. Its the amount in circulation.

In very rough terms it should be related to your industrial output and your government type.....

... in addition.....

The good old dwarven vault is money "out" of circulation.... the same goes for money in your "savings"... so the more you save, the lower your inflation.... conversley, the more you spend, the higher inflation....

.... of course, dont know if this can be mapped in game mechanics.

Wonder if you could have something that impacts your neighbours inflation.... uhmm...
Financial wars......

Grey Fox said:

It's called Alchemy, and its already in the game. As a tech and as a spell; It creates copper into gold, and gold into copper.

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REALLY? Oh my, I totally must have missed that. Just like you missed the joke

Protip: Alchemy in the game exists as government sanctioned magic by presumably officially certified mages. That's why the Armageddon silly joke spell would teach it to peasants.

Endovior said:

Ah, but that's just it. The more Dwarves produce gold, the less gold is worth, and thus the less incentive they have to get more of it. There are all manner of products in existence, and it costs money to make any of them... the key is profits. Unless the government is preventing this, each dwarf will inherently attempt to do what will bring him the greatest profit. The industries in which the greatest profit is to be had are those industries in which the least production is taking place relative to demand. As such, those industries will attract more workers and firms, increasing productivity to meet the demand, lowering profitability of that industry towards the norm. The least profitable industries, on the other hand, are the ones in which too much work is being done, relative to demand. These industries will experience perpetually low profits, or even outright losses. In such cases, the existing firms will shrink or fail under such conditions (some businessmen may save their money by selling out), lowering overall production to meet the norm. This norm is the average rate of profit throughout the whole society... and all profits throughout the society will tend to move towards that amount, provided that the businessmen are not prevented from doing so.

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This is where we seem to differ. You want to apply 20th century economics (profitability, position vs competition, workforce variable in size) to those I see as a medieval society. I imagine them mostly as individuals, each of them going for the gold rush, while you imagine them collectively balancing numbers to determine gold extraction profitability like a corporation would... I agree with all you said as excellent modern modus operandi, but not when you apply those concepts to a relatively stupid level of civilization. Remember that not too long ago (1933), Germany thought that the way to counter inflation was pouring more money in circulation, and that hyperinflation almost brought mighty Germany to its knees... (What's with the US dollar these last 5 years? Hmm... )

The process is inherently self-regulating... if too much gold is produced in one season, then the price for it will be lower, and so will the profits. As such, every effort will be made to avoid such miscalculations.

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I think your two orange statements condradict themselves here. IMO, the lifetime gold digger will still mine as much as he can whatever the current gold demand is. He won't wash the dishes part time at the tavern and gold mine the rest of the time. He does what he's best at: mining. If there is gold to be mined, he will be there.


We could agree to disagree and save everyone else the argument if you want to.

Sashaddin said:

We could agree to disagree and save everyone else the argument if you want to.

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Ohhhh.... cant you two disagree to agree..... would be far more interesting.....