Where is the inflation?

So a lot of people have been declaring that there is too much inflation in HelloMiners and things need to change. But where is the inflation?

Here’s a quick definition of inflation:

This is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country. (IMF, 2022)

A quick search of posts and you can see that players are referring to how rich players are as some kind of indicator of inflation, yet the prices of goods and services still stagnate.

Money supply is defined as the following:

The money supply is the total amount of money—cash, coins, and balances in bank accounts—in circulation. (Federal Reserve, 2015)

So what are common causes of inflation:

  • Growing Economy
  • Expansion of the Money Supply
  • Government Regulation
  • Managing the National Debt
  • Exchange Rates
    (SmartAsset.com, 2022)

We only need to concern ourselves with the first three bullet points.

Take for instance government have regulated that the price of wild land be 10f / block. We are seeing more and more players who come and go but we have seen a shrinkage in the player base so wealth can only really be measured by those players that are active when we compare and the longer these players are around, the more wealth/money supply they may have accumulated.

As in real life you will see a mixture of players that are wealthy and those that are not.

But again, where is the inflation?

EconomicsHelp.org says this:

In theory, there is a strong link between the money supply and inflation. If the money supply rises faster than real output, then prices will usually rise.

We are seeing player cities up their land price. Some 20F / 25F per block (up to 79% increase on several years ago). Also government cities have set their land price at 20F per block.

When setting up shops many players tend to look around to see what their competition sells goods for. Some who can mass produce using Slimefun can out-beat and lower prices, so surely there is some deflation too?

One risk when setting prices of shops is making sure you are not competing with the Government Trade Centre when it comes to where players buy products. Could the GTC be restricting or controlling inflation on the server? Should the government be constantly regulating it to check the average prices across the server periodically and adjusting? Is inactivity naturally counter-balancing by preventing inflation?

What are your thoughts? What inflation have you seen? Are things cheaper or more expensive?

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Inflation was a huge issue going from 2014 through 2017 where the diamond price went from 50f to 17f. Items are about the same right now and most rares have stayed in value. Currently the main issue with HM is demand, we have so much land and so many rares and so many cities, but not enough demand to turn the economy.

the idea is that most people here are familiar with the term of inflation. it’s there, but just not in consumer goods, or anything for that matter. we haven’t found a reliable way to measure any of it because there is no continuous cost to production (automatic farms for example), competition is always available (due to a lack of tacit collusion / cartels, there’s no oligopoly because theoretically anyone can go get a resource themselves) and most importantly, resources are infinite, we have a huge map and a resourceworld, so there’s no genuine rarity because we can always get more of an item. land can’t even be measured because there have been multiple expansions, and it’s government-controlled. realistically, prices of items that are at GTC will never go above or beyond a certain level either.

the forsal has decreased in value, i can’t prove this using any statistics but i can only speak from experience, i remember in 2014 i was trying every job i could for multiple days to get a F4k house, while now F4k would be really easy to get in an hour or two. the purchasing power of the forsal would have decreased, but this isn’t accompanied by an increase in prices

as we cannot look at the result of inflation and measure, we can look at the causes. we turn to the only cause that we have measured for years, and that’s the expansion of the money supply, which has gone from F46,801,971 to F893,244,554 between 2014 and 2022. a spreadsheet of baltops over the years shows that on average, the balances of baltop have increased by 36x, so this may once again show an increase in money supply, for example we can assume the increase in 2017 in money supply may have been due to the apple exploit.

stlouisfed.org says this

Inflation is caused when the money supply in an economy grows at faster rate than the economy’s ability to produce goods and services . In our auction economy the production of goods and services was unchanged, but the money supply grew from round one to round two.

investopedia.com says this

Inflation can happen if the money supply grows faster than the economic output under otherwise normal economic circumstances. Inflation, or the rate at which the average price of goods or services increases over time, can also be affected by factors beyond the money supply.

the average price of goods cannot increase over time, services perhaps have increased (with the building market being a good example, yet we cannot measure the building market’s increase in prices). it’s not REAL inflation or inflation in the traditional sense, but it’s become a sort-of de facto term for the overall increase in money supply and decrease in purchasing power of the forsal, people have been referring to the apple exploit and pyrofishing situations as an example of inflation on HM. plots have supposedly increased in value in some cities following the increase in land value, so inflation can happen, but it won’t as long as prices are controlled and barriers of entry for competition are small. ‘inflation’ as a term can still be used but it won’t mean what it can mean in a proper economic sense