I was eager to read it from the intro, thinking it would provide some penetrating insight into the workings of the game’s virtual economy. Unfortunately it does not do that. I can’t tell if the author doesn’t know enough about the game to present a complete picture of the economy, or if he only focused on gold value to make his hyper-inflation parallels work, but it feels like a very partial work. It’s informative about a lot of basic economic functions at least, albeit presented from an Austrian-themed PoV. Quote:
Hyperinflation is the economist’s equivalent of an astrophysicist’s quasar cluster or a marine biologist’s dolphin “stampede”: a rare exhibition of a unique set of circumstances which arise infrequently and are closely studied when they materialize. Such events are exotic enough that they become legendary: many individuals knowing little about monetary policy are aware of the recent outbreak in Zimbabwe, or familiar with the defining instance in the post-WWI Weimar Republic.
Economically, the tipping point in the transformation of inflation into hyperinflation is characterized by a profound drop in the outstanding demand for money: when holders of money expect the supply of money to increase — particularly without any sense of timing, bounds, or other guidance — monetary demand in the present drops in favor of surrendering money for vendibles.
The focus of possessors of money, therefore, devolves into an effort to capture known, present purchasing power against the likelihood of its decline in the near future. Saving, in any event, delaying consumption, is chastened; and if a cycle of declining purchasing power and rapidly rising prices ensues, ultimately the propensity to hold money declines precipitously and may fundamentally disappear.
The article is certainly correct that gold bots (and player improvements in gold harvesting rate) have increased the gold supply, but for the most part that has not caused the huge spikes in prices (inflation) that increases in the monetary supply create in real world economies. This is because players are constantly finding new items as well as gold, which is where the entire parallel to real world economies breaks down.
In real life you earn money to buy toasters and pizzas and automobiles. When there’s inflation, prices rise since there’s more money in circulation, and thus each dollar is “worth” less. But in real life you never just find a toaster or pizza or automobile that you can use yourself and/or sell to others, and the equivalent of that happens all the time in Diablo 3. In fact that’s the whole point of playing the game.
Inflation occurs in the real world when more currency is chasing a finite supply of stuff. In a virtual world like Diablo 3 where an infinite amount of “stuff” exists, where all players can find the stuff, and especially in softcore mode where (almost) none of the old stuff ever wears out or breaks, prices can fall even as the gold supply increases.
Which is where we are today, where most players in D3 complain about deflation, not inflation, and lament their inability to build up gold by selling gear since only the very top quality of items still has high value. And sure, the uber 99.9999% quality gear has constantly risen in price, but everything else is getting perpetually cheaper. Today you can outfit a character for success in Inferno for a fraction what it cost months ago. (Which will make you happy if you set a goal in concrete terms, but might lead to discontent if you evaluate yourself by the status of others.)
So, are you guys happy with how the game economy is working these days? Or do you feel somehow victimized by inflation and deflation simultaneously, as everything you want seems to be increasing in price while everything you have (and find) is constantly less valuable?