Literally not a single person in this thread stated that gold squish causes inflation. They refer to it as a solution to inflation.
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Member
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Member
Why not just make a huge gold sink, like trading gold for coins, but not trading to another player and making that gold unavailable for further use? That way players will still grind gold to get items, but there will not be so much inflation since the gold is getting out of circulation? I don't think these gold squishes are a solution whatsoever, it's even making more harm than good. And if someone wants to buy gold, make it available via store. It's better if there is a permanent price for gold rather than players and overall market dictating it.
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Forum Veteran
So why prices doubled overnight after squish was announced? That's not inflation?
Why prices were pretty stable almost whole year and started to inflate at the end of October?
After second squish prices went back to pre-squish values, can't really call that deflation. You think third squish will make economy "healthy" - whatever that means?
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Member
Last gold squish made cata realm vanish
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Member
I did, several times. Its the same result as if you told a small nation that you were squashing its economy, massive inflation.
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Member
Went back and reread it and you are right, you did say it, my bad. Though can't say I agree with you. It's the announcement of the upcoming gold squish that's PARTIALLY causing it, not the gold squish itself.
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Member
If you falsely yell gun in a crowd you'll get arrested for how the people react, pushing, shoving each other, trampled. Its all on you.
The natural reaction if I announced a gold squash would be inflation and that inflation caused by my actions would be all on me. Its a cause and effect that you could bet on and win 100% of the time.
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Member
Well, first because people are stupid, it doesn't matter how much you raise a price, the trade will fit to the supply-demand equilibrium. The market prices are not the offer price, but the trading price; i can put a Stone for 30 million gold in the AH, it doesn't mean somebody is going to buy it, so, the stone price is the price when people will start in fact buying it.
Second, money is a CURRENCY, it doesn't have per-se value, but only the PPP (Purchase Power Parity) it gives. Same with cutting money, if you cut ALL the money in the same ratio (x), the PPP will stay the same, prices will drop to 1/x and money will drop to 1/x. Think of it as we were changing the money.
Think of it this way, from this point, we are changing the currency nomination. We are printing a new coin called "2 gold" which will have a 2 gold value and changing every gold amount in the game for "2 gold" coins. The prices will be the same, what before costed you 2 gold coins, now will cost one 2-gold coin. Now we are just changing the name of the coin to "1 gold" coins. Voila!
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Member
except that there are fixed prices/costs to items that are obtained from vendors, which affects directly to the low level players which need to purchase things from vendors (spells, mounts, etc). so this awesome economics theories you guys have, only benefit the ones on top of the pyramid. but hey, thats how everything is done in this planet aye?
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Member
I took my time to read every comment related to this post and I've realized 95% of the people talking has no clue about basic economy and how it works, therefore I will try to explain my reasons in simple ways of why I think gold squish is one of the few good choices Warmane staff has made over the last 4 years.
Inflation is described as the constant rises of prices in specificated periods of time ( basically inflation tends to be constant unless huge amounts of money are sent into circulation all at once) putting the concept onto warmane's in-game reality you will have the first reason of why having a gold squish each year is good for all of us. Let's put some real statistics to analize this:
Last year's (1 week after squish) Primordial Saronite price: 400 gold
Pre-speculation Primordial Saronite price: 800-850 gold (october, first days of november)
ATM price (1/24/2019) : 1100-1200 gold <<<<< THIS IS NOT TAKEN AS A MEASURE FOR INFLATION IN LONG TEMRS, THIS IS JUST SPECULATION THAT WILL END AFTER THE SQUISH. You can think this as a ''partial inflation'' and the solution is to not buy during speculation times (Just a tip here, this is the best moment to sell your stuff, stack as much gold as possible. The reason for this will be given right below.)
As you can now see the price for this reagent is around 3x times the price it had a year ago due to speculation+ inflation, if you get to sell them now for 1200 gold you will end up winning after the squish because there's literally no way Primordial saronite price will be 600 gold after the squish and I will give you 2 reasons why:
1-Everyone is stacking materials now since they think to stack gold is now worthless, once the squish happens they will all try to sell the materials generating an overflow of materials that combined with the low amounts of gold circulating will produce deflation or will keep prices low for some months.
2- The price right now materials have is increased by the speculation generated by the squish, therefore once the speculation goes off prices will once again fall down to normal amounts ( remember they should be 900 gold top atm, but speculation gets them way higher to 1.2k)
So, to close this up inflation is generated most of the time by the amounts of money circulating on the economy and the amount of products circulating, is a simple relation between products and their price ( the amount of money you will have to spend to get them), therefore inflation is a monetary issue caused mostly because there's a high demand of products and the amounts of money circulating are always growing up. On in-game terms a simple example will be able to make a good explanation here:
Since most of the items are converted I'll put once again Primordial saronites as the example of a PRODUCT that we will use. They are reagents, therefore they do not always remain as primordials, most of the time they will be used to craft items, therefore the amount tends to be stable along all the year except for this especulation times when everyone with a wrong concept tries to buy as much as them as possible.
On the other side we got the gold that is ALWAYS rising up because repairs-in game mounts- AH fee- ETC are not enough to dry out all the gold players generate by selling grey items, looting bosses, completing quests, etc. When the amounts of gold increase but the amount of offered primordials remain stable is quite obvious that the price of equilibrium will go higher ( you can just make a graphic and check it for yourself).
Being more simplistic if you got to dollars and you want 2 apples you will pay one dollar each. If you've got 4 dollars and you wanted 2 apples you would be able to pay up to 2 dollars each in order to satisfy your needs.
This squish also will apply to this site marketplace right now gold price is destroyed being 1 coin= 3.5k or above (Mostly due to last year inflation+ speculation of nowadays). Last year after squish it was 1.2k= 1 coin ( If you still think getting rid of gold at this point is a good idea I beg you one last time to reconsider that). People will most likely spend more coins to buy gold after the squish and the relation will most likely be the same like the last year ( 1 to 1.5k each coin or maybe even less if people tends to buy a lot of gold)
Now, how squish will affect the players??
Overall is gonna benefit everyone (The rich non-dumb ones, the newcomers into the server, and those who don't even care about the economy)
Rich guys= If they didn't deplete all their money buying expensive stuff nowadays, just by keeping the gold and selling into the marketplace after the squish they will end up making more coins.
Newcomers= they will see non-inflated prices therefore more affordable items or whatever they wanna buy.
Those who don't care= Well here is a bit tricky or maybe bad for them if they still gotta buy some in-game stuff since they will have less gold in their pockets (once again it can't be good for everyone)
Overall is a good measure since prices will settle down after the squish and there will also be a less marked gap between them.
One last thing to add is that in Icecrown with the amount of population the server has basically no one can control most of the prices you will see on AH because there's always too many people offering. Those who say that happens just think on a scenario when there's only one big monkey selling and whatever price he wants and one little monkey buying everything from the big monkey, also they are the same that complain about farming bots lowering AH prices on materials of gathering proffesions ( This is just another example that the theory of a few guys controlling AH prices is impossible since they couldn't even try to fight against bots farming power lowering their prices. Something that can happen is a guy buying everything at any price for just one specific product and trying to control the price for a day but mostly that always end up terrible for the guy since there's too much people offering at reasonable prices)
Keep in mind I analized this on Icecrown which is the biggest server warmane has and therefore the market is way more competitive and will always be more gold generated by players doing quests, looting bosses, selling items, etc. On other server with not that much population could not be as good as here but it will ALWAYS be better than playing with prices multiplicating due to inflation nature ( it starts as a constant and turns onto be progresively higher whenever amounts of money circulating grow more and the amount of products stay the same).
Sorry if my english is a bit bad, it ain't my mother language!
Have a good day/night everyone, and I hope this reply becomes useful for some people not knowing what to do in this kind of situations.
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Member
That probably has more to do with the quality of Cataclysm content than with the squish.
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Member
I agree, but I wish they would introduce (if they can) some large high-level gold sinks. The issue is that there are a ton of gold faucets, but very few sinks. Mostly because I don't like how it has impacted my in-game economic behavior as a player who just joined on the server literally last week. It has created a need to spend my small amounts of gold instead of just saving up for stuff naturally. For example, I've spent time farming for large purchases I wouldn't have otherwise made until I just naturally came by the gold later on because otherwise I'll lose a significant chunk of whatever I'm saving for. For example, buying dual spec for 1K. Instead of just coming by that 1K over the next couple of weeks of playing normally, I don't want to lose (say) 450g by reaching 900g so I'm spending time doing things that are otherwise unproductive just because I don't want to lose out on gold I could've otherwise spent.
I'd rather be saving for my dual specs than keeping my gold as low as possible (within reason) by filling out my bank with bag slots and bags, for example.
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Forum Veteran
It's the simplest and blunt solution. And staff has no reason to come up with something elegant. Because it works, they get to eat the cake. "Healthy economy" is there only for 6 months, other 6 months are volatile.
I'd say yearly inflation is around 20-25%. Excluding squish panic numbers.
No one is interested to see long term inflation. Squish "half-works" - everyone gets half gold and half a year of good economy.
But I'd rather see staff put together heads and come up with something permanent, because there are downsides from players perspective, while none from Warmane's perspective.
I just want reliable, steady and flowing economy in game and making millions off of squish seems like cheating.
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Moderator
The problem is in how anyone can create as many free accounts as they like here and how we can't feasibly track and control who owns what for every single account and character. Unless it was done in complete surprise, people can always shuffle items and gold around to minimize any impact, and even then people could start doing that preemptively anyway to create "safe reserves" if we did it without warning. It might just be a case where an imperfect solution is still better than just doing nothing.
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Member
I would say that by half of the year inflation reaches 15-20 % and then it grows up because everyday there's a bit more gold on the servers and because of speculation so it ends up being over 200% at the end. One good way to maintain a healthy economy could be doing this kind of squishes every month at a 3 to 6% of the total amount or adding some custom way to spend the gold you generate in game such as the black market feature that exists on retail ( Idk, could be buying mounts or whatever from the site directly with gold up to a cap to not generate deflation due to low amounts of gold circulating).
