Inflation

Last time we started a series on basics economics and discussed Supply and Demand. Today, I am going to discuss inflation and why it is not really a good thing.

Inflation can be defined as “too much money chasing too few goods.” There is a good explanation from the South African Bank here: http://www.resbank.co.za/AboutUs/Documents/Why is Inflation Bad.pdf

But one doesn't need a technical explanation of inflation. One can see it. In addition to Magic the Gathering, I also play Guild Wars. It is an MMO that has no monthly fees and thus has become quite popular as a viable alternative to World of Warcraft. The team which makes Guild Wars is concentrating most of their time on Guild Wars 2. While there is new content for Guild Wars, the team isn't spending much time on it. After all, one man-year spent on Guild Wars content delays the release of Guild Wars 2 by one man-year.

One will be able to transfer 'leet' items and achievements into GW2 and thus, people have been playing GW trying to get such loot and getting achievements.. There are also daily missions which reward characters by quite some gold as well.

Some items though can only be obtained by an accumulation of daily quests, Zeishan coins. Such coins can not be traded and certain items can only be purchased with Zeishan coins. An example. One Zeishan Key can be purchased for one Zeishan Gold coin. Since Z-keys can be traded, the price stabilized initially at 4K gold. Now that some time has passed, the going rate for Z-keys is about 7½ K gold each. Why is that? The amount of gold that is created in the game is much more than the rate of Z-keys.

You might inquire if this is a global in-game phenomenon. It is not. Lock picks can be purchased from a merchant for 1½ K gold, which fixes their supply. Since lock picks also drop as loot, players sell their excesses for about 1.1K gold. This price has held steady.

Next time we'll look into more examples of inflation and why gold farming is a bad thing for online games.