Korah Arnelle
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Posted - 2011.07.02 05:11:00 -
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Originally by: Adunh Slavy
Originally by: Ein Phantom @OP You have a lot of that backwards.
The op does have a point. We must first recognize that Eve's economy is somewhat inside out of the real world economy. The most significant thing we must realize, to grasp the inside out nature of Eve's economy is that, Bastiat's Broken Window Fallacy does not apply to Eve.
The Broken Window Fallacy does not apply only on the grounds that wealth created doesn't improve the future creation of future wealth (e.g. a battleship doesn't aide in the creation of more battleships or modules created now don't add to product of future creations of the same modules).
Quote: Destruction of goods is a good thing for Eve's economy, it creates demand. In the real world there is unlimited demand as there are unlimited ways to express that demand.
This is dead wrong both in real life and in a virtual economy. Demand isn't unlimited, it's simply not quantifiable. Quantity demanded for a good is not the same as demand of the good in micro-economics. Demand is something that is related to economic value, but not to the quantity demanded of a good or the supply of the good created in relation to the demand (relative to the price which to which the good is supplied).
Quote: Take that coupled with the truth that the broken window fallacy is infact backwards in Eve, and combine that with the fact that ISK, although fiat, is indeed a commodity money. It bears no debt upon its creation.
Money in the real world isn't even a true commodity, it's a medium of exchange for future goods (following similar to Say's Law).
Quote: The propensity to save, to which the OP directs the argument, is a curious one in Eve. There is no direct expression of credit in any meangful sense, so long term investments in the direct expression of labor, ISK, seems to stand up quite well as the OP has expressed.
That's because ISK is more of a script than a currency. It's a coupon to exchange for commodities that can be treated as money (Plex, modules, ammunition, and the like). In essence, the economic value of a single unit of ISK is relative to the utility that it offers in terms of exchange. Hayek wrote on this matter regarding fractional reserve free banking.
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