blaek7

The most expensive rare, the christmas cracker is at 700 mil. Phats range from about 145 mil for the purple to 450 mil for the blue. The cheapest rare, the easter egg is now pushing 10 mil. Masks vary from arround 20-37 mil, depending on the color. Santa hat are also 18-19 mil, not 5 mil.

As a hedge against material inflation/rare bubble collapse. Although any potenial crash or panic is probably a year or so away, Jagex might cause the money supply to decrease due to an update at anytime. Also, I wouldn't have all my money in a rare at the moment, so you don't get ruined if you misjudge the end of the bubble. For example, suppose your on vacation the week of the rare bubble crash, and a single rare constitutes (say) 80% or more of your net worth. Also, although the material and money supply continue to grow at slowing rates, (particuarly the material supply) no one knows exactly HOW MUCH growth we need in these areas to hold off the panic. Right now, I'd suggest a mix of rares and materials (I'd probably do rare heavy right now), gradually becoming heavier in materials as time passes. I agree, the individual player is NOT concerned with maintaining price stability on his own (nor is he in anyway able to do so). The main point in mentioning that is to prevent the accusation that I will be responsible for the panic when does hit or be blamed for its severity. If there is hyper-inflation with the materials market, rares probably wont' keep up proportionally with materials. That mean an drop in rare prices "adjusted for inflation", which may mean a collapse of the rare bubble. This would probably be less severe than a collapse due to a decreasing money supply, but you'd have atleast a few speculators droping some rares to get more tradable goods to "speculate" (i.e. gamble) in the economic chaos. Rares might (or might not) hold reasonably well, but that isn't a risk I would want to take; especially not with the vast majority of my characters net worth.

In my opinion, what is happening is that there is a "bubble" in rares which is allowing the relative supply of gps to rise while holding down the cost of everything else. This bubble is a bit different than any economic bubble in the real world for several reasons; basically it is dependant on "cheap" money and "cheap" materials. Or more correctly, both gps AND materials must enter into the economy of Runescape in order for prices to go in the expected direction (stability for materials, rising prices for rares). To use a real world analogy, imagine the Runescape economy as a market in its boom phase. The U.S. in the 1920's for example. Gps represent money, Rares stocks, and materials consumer goods. To spell it out clearly, a "panic" is a severe market shock in the Runescape economy caused by sudden changes in prices. There are, in my opinion, three basic ways in which Runescape could experience a panic. 1) Material Price Inflation: Inflation creeps into the materials market because material production lags too far behind gp increases (even with the gps going into the rare market). This will probably be caused by a slowing rate of growth in the number of players in the Runescape economy. This is the real world equivalent to (price) inflation (more or less). 2) Bursting of the Rare-Market Bubble: The price of rares falls (or does not continue to rise rapidly enough) because the world supply of gps contracts (or does not grow fast enough). This will probably be caused by Jagex over-reacting to inflation or a fall in the number of players. The price of rares then begins to fall, speculators panic, then the bubble implodes. This the real world equivalent of a stock market crash. 3) GP abandonment in Mega-Transactions: Assuming both gps and materials continue to flow into the economy, the rising cost or rares will present another problem; their cost become so large it can not be handled in gps. Players can only hold 2.1 bil gps in their bank accounts, because it is held as a 32-bit number. (I'm guessing should be 2^31 -1 or 2,147,483,647) Once the price of rares approaches this, it will become increasingly inconvenient to trade in gps. Even before rares reach this limit, trading may become difficult, as sale of a single rare may person's total gps over 2.1 billion. However, as Duke_Freedom suggested, if rares trade for slightly over this amount, it will probably be common for a less valuable rare and gps to be traded for a rare. However, eventually, some sort of commodity become the "currency" of rare sales, thus lowering the demand for gps and possibly leading to currency abandonment of gps. There is no real-world equivalent to this. Also, I would suggest that ANY panic OR severe market shock may result in some or all of the evils of material price inflation, bursting of the are bubble, and (partial) abandonment of gps in player-2-player trading. Also, I would like to add, that, short of a miraculous tweaking by Jagex, some sort of panic is fore-ordained at some point. I can not say when will happen, which sector of the Runescape economy it will start in, or how bad it will be, but it will happen. The question is this, are there enough "collectors" to buy up the rares "speculators" will sell of at prices reasonably near the pre-panic levels? Also, few players are pure collectors or pure speculators. How many players might sell of their rares if they were reasonoably certain that the rare could be bought at a later date more cheaply. Right now, the Christmas cracker costs about 650 gp, assuming 500% price increases per year, (meaning a rise of a factor of 6 right?), we have about 226 days (this is a projection, and I know inflation is getting less severe) until the Christmas cracker costs more gps than is holdable in one's bank account. That works out to be the 25th of Febuary 2007. Basically, because the materials market has nowhere to go BUT up, and further more it WILL go up. Also materials can be bought in smaller quantities, while the cheapest rares are pushing 10 mil gp now. Gps have no where to do but down. If you have gps collecting dust in your bank account, why NOT stockpile materials. I agree the panic probably won't happen tomarrow, all the more reason to advocate stockpiling materials now instead of latter when such actions might very well trigger the panic we are trying to prevent. Lastly, I want to address the issue of the wisdom of spreading knowledge about a potential panic in the runescape economy. My theory is that if players have some idea about what will happen, they will be less likely to "panic". Also not everyone in Runescape is a merchant/speculator whose sole goal in Runescape is to amass wealth. (I wonder why I sometimes assume that :-k Some players will attempt to go about there activities as normally as possible during the panic, which will protect against speculation-induced inflation. If people know that rares will not increase in value forever and ever, speculators will not seek after these items as much, which means that the rares will not fall as far to the "collector price floor" AND fewer speculators will be holding (and selling) these items in the crash. Also, if currency abandonment does occur, large stockpiles of materials would be helpful in allowing items to function as money. When the new medium of exchange does arrise, there is the problem that its current supply might to small compared to its potenial supply. This will create a contraction is the total value of the money supply, resulting in a potential rare-crash. The larger the material stockpiles, the more secure the rare-market will granted. Granted, I don't want to be holding rares in hyper-inflation, but they might have some value left.

How many people are holding rares on the "greater-fool theory", if not on the assumption they they will raise in price forever and ever? Also, the half jug of wine is now up to 45-60 million (acording to the zybez price guide.) Also, rarity does not generate value in itself. It seems reasonable that players may pay alot for a "status symbol" if the price will decrease over time; for example, "pseudo-rares" generally sell for alot when first introduced then fall later. Basically, why own a half-jug of wine or a pumpkin? Any ideas on how to stop it from happening? In my opinoin, the best course of action for players (both to help themselves and the Runescape economy in general) is to STOCKPILE MATERIALS. Obviously, when the panic hits, those holding materials will be best position, and may even come out ahead when the dust settles. Also, by buying up materials now, the existant stockpiles will be larger when the panic hits; making the price increases less severe when the run on materials does occur. Granted, if everyone attempts to buy materials at the same time, that might very well generate a panic in itself, or more properly, cause a fore-ordained panic to happen sooner. (Theoretically, merely by writting this entry, I (and Duke_Freedom) could burst the rare market bubble.) So its probably not a good idea to run arround Runescape saying "O.M.G!!!! THE ECONOMIC APOCALYPSE IS AT HAND!!!! GPS AND RARES WILL BE WORTHLESS!!!! BUY ALL THE MATERIALS YOU CAN NOW BEFORE ITS TOO LATE!!!!!!!" Is is possible to to engineer a "soft-landing", either by player co-operation (which is really unlikely by its nature) or Jagex?

As I understand it, it appears your concern is that the Runescape economy is dependant on new players selling goods in mass to hold the price materials down. Eventually, the rate of expansion has to stop sometime; not everyone in the world is going to play Runescape, it is up to 9 million active users already. After Runescape reaches its peak in popularity (or the rate of growth slows enough), the amout gps in circulation will continue to increase, while the amount of materials produced stays the same or falls, thus resulting in inflation. However, is daily production keeping pace with the money supply now? (I have no idea on this one, I'd assume its not) The solution to this problem in not holding the money supply, but creating ways for the money supply to adjust itself downward when needed. This sounds like the same thing, but there is a difference; don't focus so much about the total money supply, but make sure if a surplus of money does occur, it will leave the economy to npcs (i.e. construction, npc shops, et cetera) instead of chasing after materials. Has Runescape classic experienced any inflation or signs of upcoming inflation yet? NO new players are entering into it, it has a slowly declining population of increasingly high level characters; and fewer sinkholes than Runescape(2) It is in a stage that Runscape2 (or its successor) probably will never enter. (I don't know the answer ot this, but since I haven't heard anything, I assume its going fine) What I really think Jagex should do is create a few really expensive clothing items for the sake of proving that one can afford such a thing. These would be purchased at a store a fixed prices. However, for this to work, rares would also have to made buyable, for the simple reason that these items will have a constant cost while rares increase in cost forever (supposedly). This idea just came to me recently, I thought of another senerio for "hyper-inflation", or more likely, severe price inceases in materials. Suppose the money supply in Runescape begins to decrease, the price of rares therefore will fall. Because alot of rares are owned mainly because they are an apprieciating asset, this may crash the rare market. Most likely, non-wearable rares will affected most severely; wearable rares preform the function of showing off your wealth, while non-wearable ones don't. This fall in prices will mean a shift toward the materials, as all the money being saved up for rares is shifted toward stat increasing. The effect will probably be most severe in the non-wearable rares area (I would not be suprised if they fell by a factor of hundreds or thousands). As material prices increase, some people may start stockpling materials, assuming that material prices will continue to increase. If alot of people start doing this, it might (but probably won't) provoke "currency abandonment" described earlier. Basically, its a panic-induced hyper-inflation senerio. Or, more likely, order might be restored in the materials market after a "one-shot" across the board price increase. Still, a non-wearable rare market crash will harm several and nearly wipe out a few players. Since there are gp sinkholes in Runescape(2), the money supply might start to decrease in the number of players fell in the game, OR if Jagex overreacted against inflation. This raises the question, is a panic fore-ordained for Runescape? Either the money supply increases forever, and we have spiraling inflation entering the materials market, or the money supply levels out and falls, resulting in the crash of non-wearable rares market, and a run on the materials market. Both these senerios might occur as the rate of population growth slows (meaning at any time), and one or the other WILL occur once the population peaks. One possible solution to this problem is for Jagex to close gp sinkholes or even add money into the Runcescape (preventing my doomsday senerio) AND "force" in materials to hold down costs (preventing your doomsday senerio). Forcing in materials would include better monster drops, increasing respawn rates, moving resources closer to banks, randomly spawning materials, et cetera. Unfotunately, this would make the players even richer, and therefore less likely to gather resources, requiring more 'forceful" entry of materials as time goes on. Basically, its the equivalent of keeping an economic bubble going on forever, or staying eternally drunk to prevent a hang-over. Another possible (and the only feasible one I can come up with) solution is to hold the price of rares up by making them buyable (and sellable). This should be done before the panic hits for obvious reasons. (Also, I'd like to say this entry was NOT to support the idea of buyable rares per say, but to address the more serious issue that the Day of Reckoning, as it were, might be at hand. It may be the non-wearable rares hold up fine with a decreasing money supply, or material prices stay down despite inflation. I myself have no problem with rares inceasing in price until the end of time, and the 2.1 bill cap on gp can be raised by Jagex (in theory) without any major problems.)

On this point, I'd have to say your correct; inflation means an increase in the money supply. However, it is completely "reasonable" to assume the money supply SHOULD increase in Runescape. More items are being produced and more people are entering the game. I assume the goal is to maintain price stability; a fixed money supply would result in massive price decreases in everything. The rate of "economic growth" in Runescape is far faster than the the real world, and unlike the real-world, most the higest rates or growth occur early and slow with time. I think a fixed money supply could work; but it switching over to such a system will create a "panic" and annoy alot of people. Other than proving an economics experiment, I don't really see the point. :D The M0 of the USA in 1898 was $2.637 billon, in 2004, in was $688 billion. That works out to an increase factor of 260.9, or 5.50% per year. (Granted, this data should be taken with a truckload of salt). This is about the same rate of incease of the 1804 silver dollar, 258.57, or 5.71% per year. If anything, the "rare" is increasing slighty faster than the money supply; its basically within the margin of error. (The follows data should be taken with truckloads of salt and is a first order estimation only). In 1962, the Mona Lisa was valued at $100 million. M1 of the USA was $147.8 billion. In 2004 (the only year I have data, the M1/M0 ratio was 1.994. Therefore, the M0 of the USA was (ok, might have been) $74.12 billion. The World GDP/US GDP in 2005 was 3.559. Therefore, the world M0 was (might have been) $263.79 billion. The Mona Lisa was worth 379.1 ppm (parts per million) of the worlds currency supply. Using your assumption of 1.78 trillion gp, an item "worth" the Mona Lisa should (ok maybe) cost 674.8 million in the Runescape economy. This is actually near the middle range of the most valuable rare in Runescape, the Christmas cracker. (Estimated at 500-800 mil gp, 650 gp is the middle of the range.) Granted everything else is all out of proportion with the real world. For example, take tools, the equivlent of machinery. The only expensive items used to gather resources (excluding combat) are pickaxes. (Correct me if I'm wrong about that). Assuming 9 mil active players and all owned a rune pick axe (which they don't, I'm overestimating to prove a point), that is 288 bil gps in tools. That works out to a mere 16.18% of the Runecape M0 (i.e. currency). "Estimating" the world M0 at $2.449T, that would mean only $396.1 billion worth of machinery in the world., and remember, this based on an overestimation of probably a factor of 3 or 4. As a side note, the M0 is the total supply of currency allone; the M2 or MZM is normally taken to be the total money supply. These numbers will be several times larger than the M0. I used the M0 to compare apples to apples; the Runescape economy does not have any equivalent to demand deposits, but the real world does not have an equivalent to noted coal or other such currency replacements. I think this is the best "apples to apples" comparison possible. Also, one could object that the real world had 3 billion people as of 1962, while Runescape has only about 9 million active players. However, we both accept that rares tend to keep pace with money supply, regardless of population. This information doesn't "prove" anything, its just weird how it works out so closely. Yes, do players smith and craft at a loss, but they can only handle so much loss before they smith and craft less. (Basically, they can't sink infinite money into these skills). If the high-ach value dropped, there would be a drop in the price of ores and hides. Finally, what is your suggestion about dealing with rares? You seem to have put a lot of work into this area, but I haven't seen your suggestion for dealing with it? Personally, I think rares should either become buyable at prices slighty higher than their current market value; or the current situation should be allowed to continue and Jagex should only focus on price stability of other items.

That is the definition of price stablitity, so by stating that you deny inflation :lol: Anway, I played Runescape (before Runescape 2) for brief periods at earlier times, and I remeber prices being lower for alot of materials (I might be wrongh though). For example, getting 100 gp for coal ores was a good deal on a free world, and it sometimes sold as low as 50. Also, how long has have cow hides been at 100 gps each and copper/tin sometimes selling for 50 gp each in bulk? This raises the question: IS THERE REALLY INFLATION IN RUNESCAPE? The price of rares WILL keep going up so long as the total wealth in Runescape increases (either players getting richer on average or more players coming into the game). This would happen even in times of rapid price deflation in all other goods. For example, the 1804 silver dollar is listed as costing $800 in 1902; assuming a dollar is in 1902 is worth $20 in today currency, its inflation adjusted value is $16,000. In 2002, it cost $4,140,000 (in a 1999 trade). This means its 258.75 times as expensive in 1000 years, a price incease of 5.71% per year (which seems reasonable but adds up over time). Trying to hold back the price of these items while they remain rare is like trying to hold back the tides. I don't even think these items should figure into cacluations of "inflation", as they are separate from goods that are "produced" in any sence of the word today. Trying to stop rares from becoming more expensive might result in severe deflation, where everyone tries to sell there goods immediately, and there is a shift toward gp producing activies and away from sold goods. Basically, its (mild) hyper-inflation but in reverse; resulting in the cooks, fishermen, and runecrafters being hurt. What about this possible senerio for hyperinflation; A person can only hold 2.1 bil gps in his/her bank account (I've been told this on the forum, its because the number is held as 32-bit number). What if the prices of blue hats rises above 2.1 bil gps? Then something other than gps must be traded for the blue hats, resulting in another good being "money" for these transactions. Thinking about it more, some sort of food (in addition to an ore or rune) might become the next currency. Mining, smithing, and crafting mostly (but not totally) end with massive high-alching INTO gps. Although; there is some selling of high end goods, and alot of iron is made into iron knives. But food is mostly produced to be sold player to player. Side Note: I was forgetting about the disposable smithed goods in my previous post; that might save some (but not much) of the mining/smithing economy if alching was removed.

Abandoning currencies actually happens in real-life situations; the main thing keeping fiat currency alive is the government "forcing" people to use it. (I.e. the goverment demands taxes in its own currency, et cetera.) Actual currency abandonment occurs when it becomes more effective (i.e. easier) for people to use foriegn currency (or gold/silver) than hyper-inflating currency. The more power the government has to force the usage of its own currency, the more inflation can happen before "hyper-inflation" sets in, and the hyper-inflation phase will also last longer and be more severe before the currency becomes worthless. Currency abandonment in Runescape will start with people "storing wealth" in sources other than gps. Or in laymans terms, buying items to sell later (likes in weeks or months), instead of having gps in one's bank account. This is different from 'merchanting", which is buying from those selling cheaply and selling to those buying at higher costs. The first stage of this would be long term low-risk (or even profitable storage); such as buying rares. Then it will evolve into shorter term storage of more liquidable assets (runes, ores ect), followed by trading in terms of ores/runes (or whatever). While all this is happening, the value of gps will continue to drop at an accellerating rate. Eventually, everyone will try to "dump" all there gps right away and there will be a run on all npc shops with people buying anything of value. Hyper-inflation can also occur if Jagex made a major change in the economy, resulting in a "panic" (i.e. a bank run or stock market crash like event), massive changes in the relative value of prices, and a drop int the value of gps while some other items remain relatively stable. This is why Jagex "tweaks" the system instead of giving it a massive overhaul. Its better to deal with moderate (and expected) inflation risk economic chaos. Basically, the economy of Runescape is "dependant" on certain "features" that; ideally shouldn't be in the game, but are necessary to maintain any sort of price stablity. Getting rid of any one of these would be far worse than the harm it does; getting rid of several and you would no longer have Runescape as it is. But even more importantly, characters will get richer as time passes (if not, then why play the game if your running arround to 'hold the line' on your characters attributes/wealth). The major ones are: 1) Rare items. These things will continue to increase in value until the popularity of runescape starts to fall off, and money starts to leave the economy. This allows rich players to grow richer just by sitting on investments. (Speculation is not an evil in itself, but the certainty and rate of price inceases in these items is probably higher than is desirable) However, removing these will anger the best players, probably resulting in them leaving. Also the "wearable" rares provide the important function of showing off vast amounts or wealth. It is feasible (though probably not wise) that this problem could be fixed by either: a) making these items buyable at their current market value (or slightly higher to keep their owners happy) B) remove them, replacing them with more "realistic" items sold at a similar price; and compensating the owners at market values (or slightly more) However, the cure may be worse than the disease on this issue. There are other items that have increased in value over time, and nothing is stopping anyone (except a lack of funds) from investing in these items. 2) Mass production of mid-level goods. There amount of non-consumed goods produced (swords, armour) is probably dozens or hundreds of times greater than the number of people in runescape. If these goods could not be alched or sold at npc shops, then there would be an absurd glut on the market. (It won't be so bad that full rune would be traded for a cabbage, because it would still need transportation to the buyer) The cost of ores (and other ingredients for nonconsumed goods) would likewise fall, while the cost of consumed goods would rise (runes, food). Also, you might see some sort of food replacing gold as currency (probably lobsters). People will still mine, craft and smith (for sake of upping these skills), you'd see a massive shift to food and rune production. Unfortunately, there is no way arround this problem without creating an entirely new game (in fact even if not in name). 3) Alching and npc buying of mass produced goods. This is the result of the previous problem and is covered there. Finally, on currency replacement, I don't forsee it happening unless Jagex does something drastic to the runescape economy instead of tweaking it slowly. Most (if not all) players seem to be willing to live with the current levels of inflation and are not moving to more price stable goods (atleast that is what it appears to be, I don't know if anyone is stock-piling iron ore or santa hats) and definately aren't using other goods as currency. Even if it does happen, gps won't become worthless as long as npcs accept them; but another item might arrise as currency in player-2-players transactions. If another currency does arise, it will probably be a good that is 1) in wide demand, 2) has a relatively low cost (like under 1k per unit), 3) has had a stable or increasing price 4) be one item specific type, or at most a couple Barter really isn't another currency per say, "money" is stuff you trade goods you produce for in order to trade the "money" for goods you yourself want. If I had to guess, I would assume iron ore, coal, or some type of rune would replace gps if the currency was ever abandoned.

It appears the Runescape doesn't have "price inflation" so much as a shift in the relative value of goods. From what I have seen the shifts appear to be thus: 1) Rapid price inceases in un-generated rare items. This happens in any growing economy. You have more money entering the system and the rares not being generated. 2) Price inceases in cheap mass-demanded items. For example cow hides costing 100 gp. This is a result of higher skill levels allowing people to gather more valuable reasources (i.e. what level 50 miner is going to mine copper), and wealthy players who are willing to up there skills at a monetary loss. 3) Prices slightly decreasing in hard to obtain items. For example, rune prices going down. This is the result of more and more players being able to mine rune, kill dragons, et cetera. Each item is going to fluctuate as the economy changes; unless you change the game into "command economy"; i.e. have npc's buy and sell in unlimited quanities a fixed prices. Finally, Runescape's chief economic weakness is fiat(-ish) currency. Fiat currency is money that can not be exchanged for goods on demand. I said fiat-ish because you can still buy items from shopkeepers at semi-fixed prices, but most of the major trading goes on player-2-player. Other than the fact that it can be traded for goods to shop keepers (and other fixed expenses, like al-karid gate), noone has any use for gps. This runs the risk of people "abandoning' gps as currency as they start to use other items as mediums of exchange, resulting in "hyper-inflation", as gps become less and less valued. Hyper-inflation could occur at any large shock to the economy, and would probably be followed by massive shifts in the relative costs of goods. Hyperinflation won't "ruin" the economy in the sence that everyone will stop buying and selling goods, but WILL ruin some characters economically at random, create a "panic" on all trading forums and people more into more stable goods, and will probably be followed by less trading (and some people quiting the game in annoyance.)