SF/Chaos Plains Farm Will Not "Ruin Teh Economyz"

I'm tired of seeing a dozen new "a-net U must nerf teh SF/Chaos Planes cuz it will ruin teh economyz" threads pop up almost every day. Rather than try to refute this idiocy as it pops up over and over again, I'm going to consolidate my responses into one post, here, and just link to it for all future "a-net U must nerf teh SF/Chaos Planes cuz it will ruin teh economyz" threads.

1. SF/Chaos Plains Farm Is NOT Causing the Drop in Ecto Prices; Rather Hysteria about SF/Chaos Plains Farm Is Causing It.

• SF/Chaos Plains Farm Is NOT Causing the Drop in Ecto Prices.
  Ecto price is set by supply and demand. There is an illusion that the chaos plains farm is causing a huge spike in supply. It's not. After 3 years of farming and hording ectos, there are already so many of them out there that the chaos plains farm cannot make a very large impact on the supply, except over a very long period. The farm has virtually no impact on demand (which would have stayed constant had people behaved rationally). Thus, since the farm has only a small impact on supply, and no impact on demand, it has only a small impact on price.
  
  
• Hysteria about SF/Chaos Plains Farm Is Causing the Drop in Ecto Prices.
  The hysteria over the possibility that ecto prices might fall is, in fact, the reason that they've fallen. Chatter in ToA and "a-net U must nerf teh SF/Chaos Planes cuz it will ruin teh economyz" threads on the forums have convinced some people that prices would fall. This has affected supply by leading people to sell their ectos short and it has affected demand by leading people not to buy ectos who otherwise would. It's a classic "self-fulflling prophecy"/"run on the bank" scenario.

2. A Drop in Ecto Prices Is NOT Bad for the Economy.

Even if SF was behind the drop in ecto prices, it wouldn't matter because a drop in ecto prices is not bad for the economy.

• The ecto price affects only ectos; nothing else will be affected.
  Let's say you wanted to sell an item for 100k+10e back when ecto were at 5.5k. That means you were really trying to sell it for 155k. Let's say the ecto price falls all the way to 1k. ("ectoz R 1k?!?! OMG teh economy iz runed!!!!111") What do you do? You mark your item up to 100k+55e and go on your merry way because it's still worth 155k -- exactly the same amount it was worth before ecto prices dropped. As you can see, ecto prices only affect ectos. Other items are not impacted.
  
  A couple of small caveats:
  
  
  • The opportunity cost of a small class of very high-end trades will increase. The trade window can only hold 100k + 1750 ectos. That means that, at 5.5k per ecto, it could hold 9725k; but, if ectos fall all the way to 1k, then it could only hold 1850k. That means that, for those high-end trades that fall between those two values, the buyer is going to have to spend the time to convert some ectos to armbraces if ecto prices fall, but not if ecto prices stay high.
    
    To this I say, "boo fricking hoo." I couldn't care less if someone trading an item worth more than 1,850,000g has to take some time to buy armbraces. I've never even seen an item that valuable, and neither has 99% of the playerbase. For the vast majority of us, this is a non-issue.
    
    
  • Extremely rich people will have less storage space. If ecto prices fall from 5.5k all the way to 1k, then the 1375k that could be "stored" in 1 stack of ectos at 5.5k/ecto will instead require 5 & 1/2 stacks at 1k/ecto.
    
    Again, "boo fricking hoo." If you're so rich that you have trouble finding a place to put all your ecto, you can always just give some to me.
  
  
• The Rationales for WHY a Low Ecto Price Is Bad for the Economy Are Faulty.
  Often, posters in the "a-net U must nerf teh SF/Chaos Planes cuz it will ruin teh economyz" threads don't provide any rationale at all. They seem to take for granted that a low ecto price means the end of the world. But they never explain why a low ecto price is bad for the economy. Largely, their reasoning follows this progression: 1. Ecto prices drop. 2. ???? 3. "Oh noez, teh economy is ruined!" This is poor reasoning, and unconvincing.
  
  Sometimes, they provide an explanation, but it's faulty. Pretty much every explanation of why a low ecto price is bad for the economy boils down to one of two faulty arguments:
  
  
  • 1. "A low ecto price is bad for the economy because it means my stacks of ecto are worth less."
    
    Well, that's certainly bad for you, but you are not the economy. Someone else is gaining as much relative buyer power as you are losing, so the net effect for the economy is a wash. If anything, it's actually good for the economy because it might motivate you to become more productive in order to reestablish your relative buying power.
    
    
  • 2. "A low ecto price is bad for the economy because it means other people will be able to get the same FoW + Chaos Gloves + Dread Mask outfit as me!!"
    
    Again, that may be bad for your e-peen, but your e-peen is not the economy either. More importantly, you should take a good look at what exactly you're saying here -- you're asking a-net to act to prevent other people from achieving their goals so that you can continue to feel superior to them. That is selfish, petty, and, frankly, pathetic.
    
    (A marginally more valid argument for a nerf would be that, since your FoW + Chaos Gloves + Dread Mask outfit is so horrifically tacky, people should be prevented from making more of them on aesthetic grounds.)

Short Summation:
SF/Chaos Plains farm is NOT causing the drop in ecto prices. Rather, hysteria about SF/Chaos Plains farm is causing it. Even if SF was behind the drop in ecto prices, it wouldn't matter because a drop in ecto prices is not bad for the economy. Why? Because ecto prices affect only ectos and nothing else. The two reasons commonly given for why a low ecto price is bad for the economy are wrong because they confuse what's bad for one's personal pecuniary interest or one's e-peen with what's bad for the economy. You are not the economy. Your e-peen is not the economy.

Good day.

i agree
/signed

Clearly not a valid discussion. SF made it rediculously easy for anyone with half a brain to make a stack of ectos in a matter of hours. There is no build out there atm that made ectos farming so efficient. That means we have loads and loads of ectos farmed every day and poured into the economy.

If we discover a way to turn sea water into Oil efficiently and for cheap, we wouldnt be paying $4.50/galon for gas. Basic supply and demand.

/close please

I'm pretty sure SF is causing the drop in ecto price but I couldn't care less.

~A Leprechaun~

from someone who has farmed a lifetime total of 22 ectos, i agree.

1. You are wrong.

2. Even if you were right, it wouldn't matter because a low ecto price is not bad for the economy.

SF is actually raping the economy
it farms ecto mainly until the prices are down so badly they're not even worth farming anymore
then the attention will be turned to other things until the entire economy is milked dry by perma farmers

Oh okay. Ecto prices drop by 2k right after the SF update, but it's not cause of the SF update!

You're just another moron making just another SF thread. Grats.

Reading was apparently too hard for this guy.

OP has it exactly right.

Arguing that SF didn't cause the ecto prices to drop is nothing short of laughable. If you truly believe so, there is clearly no point in continuing this discussion.

Again, you are wrong. But let's assume for a moment that you're right. So what? Explain, if you can, why a low ecto price is bad for the economy.

The only reason ecto prices have fallen is because of the idiots selling all of their farmed ecto to the trader, NOT hysteria.

Edit: He never said a low ecto price was BAD for the economy. He simply said ectos were being poured in at a higher rate than before because of the farm, which is true.

The only thing laughable is the hysteria of those who think it's a supply/demand problem. Like the OP, many others, and I have said for some time, this is wrong thinking. You cannot have a Supply/Demand issue WHEN YOU HAVE AN INFINITE SUPPLY.

The supply of ectos was infinite before. It is infinite now. The traders do not care how many ectos are "in circulation." Their prices are affected by the number of ectos SOLD TO THEM. So when some troll started this whole chicken-little fiasco, the hoarders got their panties in a twist, started selling short to liquidate, and flooded the seller, driving the price down.

One of the best (economical) posts in a while, good job.
You're completly right about the fact that there are already loads of ectos ingame, while this new farm only gives the illusion of bringing in loads (which it does, but as I said, there are already loads out there). However, the ecto price will most likely stabilize again (Currently dropping a bit atm) after the SF 'nerf'.

There's no infinite/unlimited supply, there's a large, very large, supply of ectos, but certainly NOT infinite. It would be wrong to state that, as it gives a different image of the reality.

Ummmmmmm no

There is a great increase in supply of ectos, and people also use the ectos for armor, not just trading it with rare weapons, so ectos don't stay in the game forever. Slowly we are seeing a decrease in ecto price. If you have noticed, the ecto price did not drop immediately so your "hysteria" explanation is false. I believe the farm was around for a week or two before the ecto price actually started to drop. If the price decrease was really caused by speculation, then people would have noticed a more immediate drop.

Also with all the newly farmed ectos, people like to sell them off quickly so they can put the money earned to use. There would be no point of farmers to hold a stack of 50 ectos and not sell it. We now have a huge increase of people selling a large supply of ectos... of course the price will decrease.

Retake high school economics and close this thread.

Oh btw, most of the ectos in the game are being held by players who have over 1000k, so since they can't get any money, they can't sell them. So these ectos really do not count as supply on the market.

"Im right, youre wrong."

This isn't a discussion. Its a rant.

All for closing, say "aye!"

< concurs with the madame.

The same thing was said when the 55 Monk build started. Ecto prices did drop for a couple of months but they came back up, not as high as before but still high enough. Glad to see A-net nerfed 55 Monks and they exist no more. Oh wait, they do still exist.

If Ecto prices drop then so be it. Go farm something else then. Maybe now regular players will be able to get that over priced crappy looking obsidian armor.

He's wrong about SF not causing the price drop, for the most part it did. But he is right about how it really does not matter, because it doesn't.

~A Leprechuan~

Let's assume you had 1 stack of ectos
when ectos were going for ~5k each you had:
250 x 5 = 1250k

Now that ectos are going for 3.5-3.8k you have:
250 x 3.5 = 875k

That means a grand total of 375k just evaporated from you inventory into thin air.

No matter how much we say ectos are just armor crafting material everyone knows they are not. In a game where you have a cap on the amount of gold you can have ectos have always been a currency. Anything going for more than 100k is always going for 100k+xx ectos. All you need to do is go to the high end trade section on guru and see it for yourself.

Some people were saving up ectos for that rare mini they wanted, or that uber rare weapon they always dreamed of. When SF came about and raped ectos out of 30% of their value in a matter of a couple of weeks, that means that 30 of what people have been saving for that special item have just miraculously disappeared.

I bet you think the mortgage crisis is good for the economy too..

a little math here.

Lets say you drop this really really rare max weapon and you can sell it for 600k

so:
If ectos are worth 5k you sell for 100k+100e

If ectos are worth 2,5k you sell for 100k+200e

As you can see, the price of ectos have no meanning in this exemple, you still get you 600k for your drop.

For those who have 285,358 stacks of ectos in storage, it does make a difference. You go from madly sickening fithy rich down to sickening filthy rich. Now, that is the really sad part of all this.



wortless debate, but that just my humble opinion.

/signed

To many people on these forums think that their opinion is whats best for the game. Well here is mine.. Nerfs to PvE suck... ANET finally got it right when they started to separate PvP and PvE. Now they can leave PvE alone and just balance PvP.

"Bad for the ecto hoarder" is not remotely the same as "bad for the economy"


That's the fault of high-end traders using unstable commodities as hard currency. Still not bad for the economy.


Last night ectos were 4.1k. When this started they were 5.2k. Math says that 1.1/5.2 != .30

Again, that's what happens when you hoard commodities.

Conclusion: Higher gold storage so we don't have to rely on item prices.

Even though i think SF should be nerfed, this part is massive QFT.

Ectos were going for 3.5-3.8 last night in ToA AD1 5-3.5/5 = 30%


You can say ectos are commodities all you like, the reality is ectos are used as a currency for anything going for more than 100K. That's the way it's been since the game came about. Simple fact, no point in arguing against it really.


AYE!

Perception of supply and demand factors ALWAYS sets prices, especially in real life. Simply take a look at crude oil prices...the demand and supply for this commodity has not changed materially from the levels a few years ago, yet the price has quadrupled. The "Hysteria" you refer to is not something that needs to be dismissed, however...it is rooted in some basic perception, and the basic perception is generally based on an actual (but smaller) situation.

In this case, the SF/Chaos Plains Farm IS the root case. You're correct in that the number of ectos being introducted into the community (and being sold to the trader) should not be materially moving the price. The multiplicitive effect that this root cause has on perception, however, IS materially moving the price.

What does that mean? There are two ways to fix that "perception" - either (1) retrain people's perceptions or (2) fix the root cause to eliminate the multiplicitive effect.

Seeing that doing #1 is almost impossible in a game that doesn't have a central communication system, A-Net's primary path has to be #2 - to fix the SF/Chaos Plains farm - IF A-Net views that the current situation is unacceptible to GW's economy.

Personally, I like lower ecto prices (to your point above), but you have to realize that your first argument doesn't dismiss the calls for A-Net to take action.

Actually, you're wrong. The reality is that they ARE commodities, or the price plummeting wouldn't be an issue. They might be USED as a currency, but that is a bad decision on the part of those who do so.

You might want to look up the definitions of "reality" and "facts"

I for one applaud the op, because GOD I've been waiting for someone to say this all damn day.

Seriously, all this QQ'ing about ectos has to stop. So what if it drops in price? The only people who actually care are the people who use it as currency. I personally have only farmed like 20 ectos EVER. I was excited for all of like 10 minutes because this was the first time that I had ever gotten ectos EVER. I personally like the drop in price, because I can get fow armor for the first time.

Am I the only person who thinks the drop in prices helps the little man out and gives them a chance to have fow armor or whatever they want? Plus, Fow is still a bit expensive, because obby shards are high right now.

But god yeah, they need to nerf the QQ'ing threads.

hmm while this is very interesting i will make the statement

NOT ANOTHER SF TOPIC....even if it should be stickied. If anything we have to blame the idiots who sell the ecto to the trader instead of sellign it in town. Then it really wouldn't matter how many ectos were in circ. but then again that would force players to interact which it seems most players dont wanna deal with other players....probolly with good reason. But still ihave never seen the ecto price drop below 2k ever...cept on a few random occasions when someone does that on purpose by selling the stacks of ectos they have stashed to crash the ecto market for a day, but then it seems that anet resets it to 5.5k that night. i remember when UB clearing of UW was causing all the QQ about ecto drops. It just seems that whenever people have a decently easy way of getting ectos the player base of High end PVE QQs non stop...maybe z keys will be the new high end trading item soon enough?

/close
</rant>

i am all for lower ecto prices just to shut up some of the hi end traders about their e peens. It gets a little old.

I find it hard to even read a post when the person can't spell "the" properly. As for the GW economy I don't really care if it is good or bad as it has no affect on my game play.

OP: It has been said that a little bit of information is a very dangerous thing. You do not fully understand the system, nor the incentives in it. As a result you believe that "hysteria" is causing the drop when this is simply not the case.

The only figures that matter to the trader's assessment of buy/sell prices are:
1) rate of purchase of item from trader
2) rate of sale of item to trader

The trader doesn't care in the slightest how many ectos are in existence. It's pretty safe to say that there are a LOT of ectos in existence that have not been tradered.

Now, when you quadruple the rate at which ectos can be farmed, a couple of things happen:

1) Bots keep farming
2) The market for purchasing ectos dries up, as those players are off farming them. Suddenly farming is far more time efficient than trading items.

Net result: bots start tradering ectos in larger quantities. Price at trader decreases.

Now everyone can see the writing on the wall. What's going to happen next?

1) A sizable share of those millions (billions?) of ectos sitting in storage boxes come into the supply and get tradered.
2) Players that farm them sell them ASAP, knowing that they will be worth less later.

This drives prices down further. It's a vicious cycle, driven by the fact that you've increased the rate at which "money is printed" by a substantial amount. This isn't a panic; it's fully rational behavior on the part of all participants. The "idiots" aren't the actors in the market; they're the policymakers that set the whole chain in motion.

Your argument is flawed.

Fact: ectos are used in trade deals for anything more than 100k
In reality: anyone selling an item for more than 100k asks for 100k +xx ectos

Now you made me repeat myself, darn it.


To deny the above is just plain rediculous.

As is yours. Primarily your hypervigilance towards "bots." Anet updated the EULA a while ago to state that they will ban botters, dupers, etc... and have been pretty prolific in doing so, and in "undoing" the offenders' damage.


Fact: Neither of the above makes ectos "currency" which is what you claimed.

Fact: People get really drunk, tie ropes around their ankles and swan-dive off bridges only to spatter on the rocks below. That doesn't make it not-stupid either.

Why do you think hysteria has to be instantaneous? Can't some people decide to sell short the day SF is buffed, while some people wait until they see a particular "a-net U must nerf teh SF/Chaos Planes cuz it will ruin teh economyz" thread that really convinces them, while others wait until they've seen a dozen such threads and seen the price drop by 1k, while others still wait until they see the price drop by 2k? Some people have higher thresholds before irrational panic sets in than others.

(I might add that, at this point, selling ectos because you realize that other people are panicking irrationally might be rational. If SF gets a nerf (or if favor is allowed to run out and stay out), then the hysteria will subside and prices will rise again. If the status quo remains, the hysteria may continue to grow, and prices may continue to fall. I have no idea which is going to happen.)

I think I've addressed this point elsewhere, but I'll address it again. No permanent gap between the player-to-player price and the NPC price larger than the NPC's spread can exist for very long because someone is going to swoop in and arbitrage any such gap until it no longer exists. Idiots selling to the NPC can't lower the NPC price by more than the NPC's spread because the arbitrageurs will "fix" their mistake (and profit from it).

However, I could believe that the as the price dropped from idiots selling to the NPC, but stayed within the NPC's spread where the arbitrageurs couldn't get at it, it helped create the illusion that the price was in freefall that sparked the hysteria that really did bring prices down.

Then, so what? I can comprehend "nerf SF/Chaos Plains because it's (going to drive down ecto prices, and low ecto prices are) bad for the economy!" even though I believe that position is wrong. But, if you drop the "low ecto prices are bad for the economy" part, then you're left with just "nerf SF/Chaos Plains because!" and that makes no since at all.

This is an excellent post. I think you are correct. Point 1 in my OP is an attempt to retrain people's perceptions, apparently with rather limited success. Point 2 is the outcome determinative argument -- there's nothing wrong with low ecto prices, so whether SF/Chaos Plains farm is driving them down or not, it doesn't matter.

Now we finally get to the heart of your argument. This is a perfect example of the first faulty argument I addressed in the OP. Yes, the drop in ecto prices is very bad for those specific individuals. (And I'm getting a strong feeling that you happen to be one of them.) But it is also good for other individuals. Everyone who wants FoW armor or Chaos Gloves has gained a lot. The person with zero ecto and maybe 200k in the bank has gained a lot of relative purchasing power and can now better compete to buy expensive items. There are winners and losers here, and the winners' gains exactly cancel out the losers's loses. The economy as a whole is no better nor worse off. Or, as I said before, you are not the economy.

Actually, I don't. More to the point, the metaphor is wrong. The drop in ecto prices has winners and losers; the mortgage crisis has only losers. Homeowners, primary lenders, investment banks, and investors all lost big time. No one won. I might add that the impact distribution is also reversed -- in the mortgage crisis, the homeowners at the very bottom suffered the worst loss, but with ectos the richest are taking the hit (while the poorest gain).

The price of ectos is determined by the number sold to the trader. The SF chaos plains farm is a fast and eaasy way to make "money" for many people who couldnt farm efficiently before. Spending hours in town advertising WTS ectos defeats the purpose of a fast farm to many people so they sell to the trader which in turn drives his prices down. Thats it.

Now as to the, "Hysteria." When players with a stockpile of ectos see prices at the trader go down noticeably and/or try to sell off some ectos in town and find that they cant because there are many people there already tryng (before they give up and sell to the merchant) he may decide to sell to the merchant as well. In fact, not knowing where the price of ectos will stabilize, he might decide to sell his stock off now before prices fall further. The merchant buys his stock and the price goes down further (not from one transaction but many such are being made at any given time).

This process is not hysteria it is a natural and predictable progression. More ectos being sold to the trader reduces their player market value. If there is reason to believe that there will continue to be more sold to the merchant for the forseeable future then selling stock of ectos before your, "nest egg," is further reduced in value is a perfectly valid economic decision based on economic indicators and conditions at the time.

As regards to the effect on certain high end trades. Many buyers in such trades would buy the ectose they needed to make a 100k + x purchase. Of course the seller has increased the number of ectos in his price but since the buyer is buying the ectos at a lower price it should be a wash (or close enough). The only people that lose out here are those who farmed their stockpiles of ectos and have seen the value of their stockpiles drop 30% or more over the last few weeks. I hope that you are holding on to your stock for the next upward swing of the market. In the meantime you do have my sympathy. You worked hard for your wealth and have watched the fruit of your labor dwindle in almost no time at all.

Now a speculator might recognize that this trend will not continue indefinately. That a nerf of the farm seems inevitable or that other economic factors will likely restore some of the buying power of an ecto and will start buying now while they are low. Spend 1000k on ecto now at 3.3k each and sell in 3 months for 5.5k. Even easier money than the SF farm.

If you think that bots don't substantially drive this economy...

Just add up the total number of accounts in this game. Now average out the time each account spends farming per day.

Assume that each bot account farms 24 hours per day snd is swiftly replaced if banned. (This is true.)

It's immediately apparent that a relatively small proportion of accounts that are bots will constitute a relatively large share of the game's new item generation daily.

Further, if you trust information from official sources, I have to ask:

Have you been living in America for the last eight years?

Let's just say that the bot problem isn't as prevalent as it was, but that this has little to do with ANet policies and a lot more to do with the fact that supplying other games has become more profitable.

No I stated they are USED as currency which is clearly a plain and simple fact you are denying.

SF is not helping the ecto prices, but the people merching them is smashing it. An even if ectos went down to 100g all It would effect is chaos gloves and obby armor. Hardly an economy crashing effect. Plus the economy has been dead for over a year.