Economics Modcomp discussion

[CivFanCCS]

Methinks you need to read up on economics more. Slow inflation (1-2%/year) is ideal. Metal currencies can have rapid boom bust cycles simply because the supply changes from new metal deposits. Inflation encourages people to spend money rather than hoard it, since money loses value over time. Spending money expands the economy, etc etc etc...

Inflation in-its self is a result of our economic structure and corruption nothing else. If paper was based on hard metal and the gov. controls the metal then inflation would cease to exist. Take New York State where I live. Any gold deposits in New York regardless of what property they are on, belong to the State. If no corruption occured (miners keeping ore, etc) then the state could keep inflation at 0 by expanding the supply as the population grows.

If way back in the 1500's the spanish military and privateers took all the gold right to the king, no inflation would of occured unless the king made it so. They did not do this, they kept 80% for themsleves and turned in around 20%.

And I can't remember the last time I spent 10 grand because I feared inflation, and actually my savings account bascially earns me enough interest on my money to account for recent average so I guess I'm breaking even with our current economic model.

Incorporate a corruption index, which will affect not only the economic model, but also esponage, and stability.

 

[konradcabral]

As for inflation, which is purely a self made problem because we no longer base our currencies on hard metals. As for what was mentioned above about the gold brought back from the new world causing inflation, that was more to do with corruption than anything else as the King's could of just stashed the gold away in a duck tails style vault and nothing would of happened.

Methinks you need to read up on economics more. Slow inflation (1-2%/year) is ideal. Metal currencies can have rapid boom bust cycles simply because the supply changes from new metal deposits. Inflation encourages people to spend money rather than hoard it, since money loses value over time. Spending money expands the economy, etc etc etc...

Oh my god! Keynesians versus monetarists even in Civfanatics! LOL

Seriously now, what I think @CivFanCCS was trying to express was the monetarist idea that every inflation is due to excess of circulating money. It's definitely true that if more money is printed (or "produced", in the case of metals or any other physical money), so the prices will rise. What we could argue is if modern inflations have other sources. Keynesian economists believes in other sources for inflation, basically cost-types.

And that argument that Afforess used, that "Inflation encourages people to spend money rather than hoard it, since money loses value over time. Spending money expands the economy, etc etc etc." is clearly based on ideas found in Keynes. Although I consider him as the greatest economist of all times, there are very good ideas from other economists that doesn't agree with this so-called healthy "circular flow of money", e.g. the austrian F.A.Hayek.

Long story short, economics is never a consensus. ;-)

 

[Afforess]

Oh my god! Keynesians versus monetarists even in Civfanatics! LOL

Inflation in-its self is a result of our economic structure and corruption nothing else. If paper was based on hard metal and the gov. controls the metal then inflation would cease to exist. Take New York State where I live. Any gold deposits in New York regardless of what property they are on, belong to the State. If no corruption occured (miners keeping ore, etc) then the state could keep inflation at 0 by expanding the supply as the population grows.

You may simply more aware of corruption due to your residence being in NY then the actual presence of corruption in the monetary system. Inflation is a necessary part of the economic system, to counterbalance the trend of increasing population and expanding market.

You can see what happens w/o inflation by observing the digital currency of 'bitcoins'. Their price relative to USD has fluctuated, but has a general trend of becoming more and more valuable. It has become so valuable, that it is often more useful to hoard the currency then actually spend it, because it may be worth more tomorrow than it is today. This will ultimately lead to the death of the currency, as the point of any money medium is to be spent as a medium of exchange.

This has real world examples as well. Oil speculation, before the '08 crash, was due to the belief that Oil would keep increasing in prices. This was a self-fulfilling prophecy and would have continued had not the financial sector collapsed for unrelated reasons.

If way back in the 1500's the spanish military and privateers took all the gold right to the king, no inflation would of occured unless the king made it so. They did not do this, they kept 80% for themsleves and turned in around 20%.

Inflation here happened because the money supply expanded w/o any central authority. Are you advocating a metal backed currency that the government controls all access to?

Anyway, metal currencies themselves are only worth money because we think they are valuable. Gold was worthless for any purposes other than aesthetics for thousands of years, and despite it's worthlessness, was highly treasured. Even if you make your currency metal backed instead of fiat, it still is, in a backward way, fiat.

And I can't remember the last time I spent 10 grand because I feared inflation, and actually my savings account bascially earns me enough interest on my money to account for recent average so I guess I'm breaking even with our current economic model.

That is because our monetary system, as a whole, is functioning correctly. (Monetary system...not financial sector. They are very different things. )

 

[CivFanCCS]

You may simply more aware of corruption due to your residence being in NY then the actual presence of corruption in the monetary system. Inflation is a necessary part of the economic system, to counterbalance the trend of increasing population and expanding market.

...that may be true.

Inflation here happened because the money supply expanded w/o any central authority. Are you advocating a metal backed currency that the government controls all access to?

I am in no way advocating for such a system, just that one is possible.

 

[os79]

Just remember that game structure is (pun intended) structured. Human economics is not so no matter how much economists wish we humans were rational agents. We have emotions and intuitions that make us buy/sell stuff for various reasons. Enough of that will snowball into one effect or another. Then that would argue for hard to predict economics analysis.

Better to stick with simple mechanics in the game. Then go play. Personally, I view Civ4 as our idealized vision of the world if we were a god controlling the civilization, that's it.