Almost all games across all genres use a fixed value currency system in that a credit earned on day one is exactly equal to a credit earned on day 10000. This practice while simple to program and understand does carry with it certain problems however. The primary problem is that usually after a short period of time the player has earned enough money that it is no longer an issue. Some games try to solve this by presenting the player with equipment that has an exponential cost built in to it. Other games simply allow the player to accumulate vast sums of money because it has no real effect on the outcome of the game. Massive Multiplayer games however run into severe long term problems as players acquire vast fortunes simply through time spent and the money does not always leave the system when the player leaves since the credits can be passed to other players or given to larger organizations which can exist perpetually.

Fiat currency in the real world carries with it a large number of problems that usually results in its own destruction. Inflation, deflation, recession, depression and total collapse of the economy are just a few of the problems that fiat currency carries with it. At first look most people will wonder why would anyone want to inflict these types of problems in a game environment. Strange as it may seem within these problems are the very tools by which player finances can be reshaped . Players by nature all desire to get rich quick and will usually find the most efficient means to do so. To balance out this need usually most games try to provide various money sinks to help remove the excess credits. It is impossible to force the players to spend themselves broke without destroying the games desirability. However, it is possible to systematically destroy the value of player assets and remove them from the game.

Inflation and deflation of the monetary value is the first construct we need to look at. A basic method to implement inflation is to establish a base price for everything in the game and then adjust it based on the supply of money in the game relative to the number of players. By adding a small bias factor player income can effectively be reduced and player expenses can be increased over time. This will incur a small penalty to new players but the end result more then justifies it. Any amount of simulation of this effect will show that the method will almost always result in an inflation that tends to spiral out of control rendering the currency worthless.

Our second construct is the use of multiple currencies. By having several different currencies at different stages of inflation players are forced to move their wealth from one currency to another or watch it be destroyed by inflation. In order to enact these currencies an exchange method must be established and the value of each currency must be known. All exchanges of currency should be subjected to a small exchange fee of around 2 to 5 percent. As a ready example "Vendetta Online" has 3 official factions and 1 unofficial faction which could each issue its own currency. Each faction will prefer to deal in its own currency and may charge a surcharge for any transaction not in it's native currency. Each faction would also only pay out in its own currency as well.

The combination of multiple currencies and variable monetary value will eventually lead to two possible results. Players will readily move their holding to a different currency that is more favorable to them at a small loss until the excess is removed and deflation sets in restoring the currency to lower levels or players will hold on to the currency and continue to increase the amount of excess causing inflation to spiral out of control. At some point the amount of inflation will lead to ridiculous amounts for even the simplest transaction. Before that level is reached a state of monetary collapse should be declared and the old currency replaced with a new currency at the base rates of the game. A short period of exchange should be allowed at very unfavorable rates after which any remaining currency becomes lost removing the last of the excess from the game possibly rendering billionaires into paupers. During the final exchange period the old currency should not be accepted by any merchant. So long as this is a known game mechanic players will in fact accept it as a rare event that is meant to shake things up and can be easily avoided by exchanging out currencies in advance of the collapse. Any real sting left over from the transition will quickly be forgotten as money will once again be easy to make and a new period of good times will begin to roll.

Essentially what has been created is a financial merry-go-round of inflation and shifting currency values but how does this actually help the game? The most obvious effect is inflation which devalues the overall wealth of the player by constantly raising prices faster then wages paid. Any astute player can get around this somewhat by careful management and asset investment. Simply investing in a stockpile of hard assets such as guns will offer a player a safe haven against our campaign to rid them of excess credits and in fact create new opportunities for profiteering. The hard asset part of the problem can be solved by limiting storage and/or charging high fees that are also subject to the inflation. Hard assets can also be destroyed by enemy attacks and random events which affect the storage facility used. Having 50 ships stored at a player controlled station that is taken over by other players can either cause a redistribution of wealth, outright destruction or a combination of both with only a small percentage of ships surviving the attack.

Implementing Inflation in a static game environment is a fairly straight forward process. Two variables are needed to make most of the adjustments. The Rate of inflation is an hourly calculation of the total amount of money available divided by the total number of players to yield the average wealth of the players. The average player wealth is then compared to the desired amount to produce a percentage of inflation which should be limited so it does not exceed 5 percent. This percentage is then added to the inflation adjustment variable so that it represents the total effect of the inflation. This will allow a 120 percent change in prices over a 24 hour period which is historically possible. The average inflation rate should be around 0.1 percent yielding a total inflation of about 17 percent per week. A longer period of time between calculations can be used however this will cause prices to change in a much more abrupt fashion. Once the total amount of Inflation is known then the base price of each item is multiplied by the total inflation. A separate total wage inflation variable can be maintained by reducing the inflation rate about 10 percent so that wages fail to keep up with inflation. There are several other ways these calculations can be done so long as the desired result is achieved.

There are a few "corner" cases to deal with during the implementation process. Inactive players and excessive inflation are two main areas of concern. Due to the effects of inflation the only real way to "freeze" a player is to convert their monetary assets into a static credit and then restore them at current values once they become active again. Since our purpose here is to strip money from the game simply allowing the player to be broke upon returning is also a consideration. Dealing with an excessive amount of inflation usually will require a replacement of the currency with a new one. In-game this simply means that a new name should be generated for the "new currency" and whatever method desired is employed to move all the players from the old currency to the new one. A few trigger levels should be chosen to warn players of impending doom and then to finally trigger the forced exchange. Prior to the currency exchange there should be several "news" reports or rumors circulated to warn and encourage players to avoid the final currency meltdown. Any funds that are not exchanged are lost after the final exchange period.

tl; dr. Use more commas.

Just kidding. An interesting proposal, but I think you need to add a short abstract at the beginning. I suppose I understand what your aim is, since you explain it in the third-to-last paragraph; a short, concise summary would help reading a lot, though.

This would make for an interesting economic game, but perhaps a bit tedious to deal with as a player. I am also unsure as to whether the current player base is sufficient to sustain such a system for testing purposes, and testing it needs, and not when the masses are already here.

While I especially like and completely agree with your part about the use of different currencies, I don't much like the other parts about inflation. They make life pretty annoying for casual players that don't have any trade interests.

The different currencies and exchange between these would have the fine side effect of adding (gasp) some content and maybe even a bit of RP to the game as well. When the bank takes a 2% fee in exchange ratio, someone will make a comfy living taking 1% surely.

As for the massive fortunes made in the game, this could be solved without inflation. Again, if we use real life examples, give the players something to use their money on. An American amassed a vast fortune selling computer software: The Bill Gates foundation; A Scottish engineer amassed a vast fortune and founded some museums: The Smithsonian; Another Scottish person amassed an immense fortune trading in different goods: Maybe Ecka's Station in Dau?

The biggest problem is that we do NOT have anything to use moneys on. Even the weekly nation war is at best pocket change to the traders and miners (although it may be very nice to the dedicated fighters), and that is why they have so much cash.

tl; dr. Not just kidding.

Somewhat similar idea hashed over here: http://www.vendetta-online.com/x/msgboard/3/20598

I abhor inflation in the real world, so I'd think it would be absolutely terribly to see it "simulated" in game.

Inflation is a tax. It's theft.

The problem isn't that we have rich players that need to be made poorer. What we need to do is encourage and have a mechanism for investment. Player owned stations and trading outposts comes to mind. Employing NPCs or players, investment pools. This leads to a natural decrease in relative prices.

Inflation is a tax. It's theft.

Back to the Gold Standard! W.J. Bryant be Goddammned!!

Back to the Gold Standard! W.J. Bryant be Goddammned!!

The gold standard was flawed and failed. The Bretton Woods agreement was flawed and failed. Now we're witnessing the failure of Bretton Woods "2"

Nevertheless, I do support sound money, but not by edict. It shouldn't matter whether you trade in worthless paper, silver/gold coins, cigarettes or crates of plasteel. If the other party is willing to accept it, you've got a deal. =)

I think this is entirely correct.

Inflation is a tax on people that attempt to horde. As long as the money is doing things, purchasing assets, being moved, it keeps pace with inflation.

Inflation forces investment,

It also does NOT punish the casual player, since the casual player can easily take a job, escort or otherwise, which, since it is (or should be) automatically adjusted for inflation, will always keep pace.

My written expression is sorry to say the least.... It sucks that you have to read it :P

Inflation is indeed a form of theft.... exactly the kind of theft needed to remove the excess money from the game. Charities, investments and nation wars only redistribute the money but it is in fact still in the game. This is in fact a forceable removal of credits from the game.

Regular players actually will barely realise what is going on at least for a while. It is the infrequent players that will suffer the most. PVP'ers usually dont accumulate the large fortunes that traders do so they will be much less affected and the traders themselves will get better immersion out of the situation.

There would be brief periods of time where inflation will be out of hand and total chaos will grip the financial side of game play But such periods would be rare and fairly short in duration.

As a futher thought on the rp aspect of things players could be allowed to vote on various canidates to lead the VO goverment. Each candidate would have various policies and lies that would affect the inflation rate and the availibility of missions. They could even affect the reliability of border defenses or the frequency of skirmishes. Each election period (monthly?) the players might pick from the incumbent and 2 new candidates each with a different platform.

BTW in VO Itani's likely will never accept Serco credits for exchange or payment.....

Inflation forces excessive investment. Investment exists with or without inflation. Without inflation, we are inclined to be more frugal with money. Frugality means I value holding money more than I value the service you are offering to me. if you want me to use your service, you need to improve the quality of your service, lower the price, or get me to care less about the money I have.

If we were to simulate the effect of inflation accurately, there would be a significant lag between a noticeably rise in prices of goods and a equal rise in wages.

Wages aren't automatically adjusted in the sense that they are instantaneously adjusted. Instead of always keeping pace, it would lag behind. So if we maintain an accurate simulation of inflation, even the casual player is punished because his wages cannot keep up with the rise in prices.

Inflation is indeed a form of theft.... exactly the kind of theft needed to remove the excess money from the game

Any money "generated" should be the result of a productive activity. That is, you combine part of your life (time) and your liberty to create a product or service. You take a mission, you complete the mission, you get paid. Perhaps you are being paid too much, or too little. The game doesn't implement the ability to negotiate with a Nation or station. In some cases, you aren't even told exactly what you'll be paid until after the fact. The game isn't sentient (yet) or capable of bounded rationality (yet) so credits mean nothing to it. It just gives out a programmed amount. This functions somewhat like a minimum wage.

Rather than try to patch this problem with a continuous value vacuum, the dynamic economy would need to address this imbalance.

I will add that we have an especially interesting problem. Since all of the in-game "wealth" generated was NOT under a dynamic economy, there may need to be some kind of wealth normalization (possibly inflationary) when the new economy is introduced.

Perhaps the dynamic economy would eventually solve this normalization naturally. Though if done wrong could create more problems than we had before...