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MM value

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MM value

Post by nikko_33 on Sat Feb 26, 2011 8:07 pm

Have we determined what the PHP's value should be?

If not, I think it's time that we do. As a businessman, it's one of the tools I use in making decisions. Hard as the economic times are, we should have something stable we can rely on.

So let me open up the debate and propose to: Set the PHP Value at 0.008 gold

Advantages:

1. Our products will become cheaper. Although artificially at the start, as the imported raw materials' cost would most probably rise. However, the general trend of most currencies' value rising these days may offset this, making our products still attractive. I'm not so sure how profitable businesses are at current rates, but extra buyers surely wouldn't hurt.

2. Due to current game mechanics, we could make gold off the MM fast. Let me illustrate:

I recently decided to get back my companies from a friend who held them while I took a long break from the game. Seeing that I would need 2 extra lands to complete the process, I searched the MM for the cheapest currency so I'd save on gold. The cheapest (and nearest) I found was the THB, at 0.007g. The PHP was at 0.009g at the time. So for 14g, I was able to buy 2000 THB, instead of 18g if I bought PHP's (4g savings). The MTs and food needed for the 2-way trip to Thailand to buy the land cost around 0.5g. Thus, I was able to save 3.5g.

(Interestingly, 2 hours later, the cheapest THB was at 0.01g.) lol!

The next day, I decided to have room for expansion, just in case. So once again I scoured the MM. The cheapest I found was the AUD at 0.008g. It was the cheapest and only one in the world. The rest was at 0.009g and up. The PHP at the time was at 0.01g, so I'd still save 2g. So I bought 1000 AUD for 8g. I haven't bought the land since I don't need it yet. I figured if I eventually decide not to buy land, I could wait until the AUD is at 0.01g or higher. Currently, only the Reserve Bank of Australia (10,000 AUD) and two others are offering AUD at 0.008g. There are a couple of other currencies at that level, the rest of the world - at 0.009 and up.

What I see here is an opportunity to make extra gold for the BoP. There will always be players putting up or buying companies. And sooner or later, they'd need land, which costs 1000 units of a currency. Some, like me, are preparing for expansion. I'm sure most of them will figure out that buying cheaper currency could save them gold. So if the BoP, say, offers 10,000 PHP at 0.008, we would earn 80g from 10 people buying just 1 land each. I don't remember how much gold it would cost to print 10,000 PHP, but I assume we'd still see some profits.

Disadvantages:

1. The PHP value goes down. It would take more PHP to buy gold, and imported products become much more expensive.

How much of the population would be adversely affected by this? I have no idea...I'm just an average citizen and I'm content with what I find in the market. I just hope that some of them gets cheaper lounge lizard

So for me, I'd prefer that we peg the PHP at 0.008g, seeing that the benefits (could stimulate the economy and offer the Treasury (BoP) a chance to earn extra gold) outweigh its drawbacks (more expensive gold and imported goods).

What do you think?

thank you
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Re: MM value

Post by Negosyo sa tao on Mon Feb 28, 2011 4:15 am

I have always found that there is a danger of being too cheap. Maybe it's my mindset, or maybe that I come from the US where I forget that this isn't RL. :)

Agreement with Advantage #1.

Option #2 is interesting to consider, but only works if (1) you buy land in the country of currency purchase, (2) you have enough labor in that country to make it work, and (3) you're very active in doing those MM trades.

Currently I can only see the currency value going down until they hit the marginal cost, or the govt. issuance cost, for MM value at the 0.005 limit.

As for the disadvantage, the problem with that lies applies more for the domestic producers than for the consumers, because of MNO (multi-national orgs) and all that it implies in terms of goods purchasing for consumers.

From the domestic production POV, depressed ePHP MM values means (1) Goods are worth less in terms of relative gold value, (2) Increase in consumption of ePHP as larger nominal wages are paid out, (3) Goods price will increase as inflation, and other economic considerations, come into play. (i.e. Business owners want to make a profit)

NOTE: The most basic assumption here is that Gold, and it relations to all other currencies, is still the dominant factor in this game.

Conclusion

I agree that the ePHP must be lowered to meet with market realities. One just wonders how to go about this. To mark it to 0.008 makes it with nearly no margin to fall back upon. If you're economically gone from that position and need to lower it some more, it ain't going to happen. That's one danger. Also the question of how to rehabilitate the currency, if and when the world market gets out this depression.

I agree with marking the official stance down to 0.008, but do not support selling anymore ePHP from the BOP. Why? Because there is too much of a market saturation of ePHP from the BOP already. Too many ePHP out there already. Let's back off the selling and see where the MM is heading.

Another relation to my thoughts of market saturation of ePHP is my perception of Gold scarcity. Gold has so many uses in this game, and is the real currency in this game, but it is a scarce resource. Even back when this game started, we knew the importance of gold in relations to all others things. Now the choices for how we spend our gold have gone up (and most of it does not return into the economic cycle) and the gold that we do get from our accomplishment is not enough to offset this. This of course increases the price of gold in relation our nominal currencies, and well, we have the situation that we have.

Nonetheless, whether Gold scarcity or ePHP market saturation is true, we need to know our objectives with the ePHP. If we're still committed to being the cheapest in the world, we must realize we'll eventually, if this depression keeps up, may have to go to 0.005 g per ePHP. That is the danger in lowering the ePHP too much.


Last edited by Negosyo sa tao on Tue Mar 01, 2011 9:03 am; edited 1 time in total
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Re: MM value

Post by nikko_33 on Mon Feb 28, 2011 3:35 pm

Good to hear from you, Nego! good post

It's great that we agree on setting the PHP's value at 0.008. It's a good baseline, at present economic realities. It would complement the gov's Socialism plans, and may lessen the amount of the expected salary cuts we'd all be getting once it's implemented. It also helps in making our products join the cheapest in the world market.

But it seems we differ on how to implement the policy: you seem to prefer going about it slowly(?) while I think we should offer a large amount right away and maintain it for as long as we responsibly can. Please consider the following reasons:

1. Maintaining a large amount of PHP in the MM stabilizes our prices.
--There is consistency in the pricing, and producers are not at the mercy of the speculators/players.
-- In order to attract the bulk buyers, we need to maintain our presence on the top of the world listings. If the PHP value goes up and down, our placement in those lists would go up and down as well. We would be missing out on opportunities if this happens.
-- And since we expect a rise in sales on account of being the cheapest, there must be enough PHP's available all the time for the buyers to use.

2. We may attract land buyers who buy currencies by the 1000's. The great thing about this is that once they buy land, the PHP goes poof! It does not go back to the system and flood the market.

I think it's the admin's way of cleaning up excess currencies. Due to current game rules, you can only setup or buy a company if you have land. Each land costs any 1000 units of a currency. Once you buy the land (anywhere in the world), you take it with you wherever you are. It also doesn't matter where you setup or buy a company - it would follow your citizenship.

So if a Taiwanese decides to buy land, he'll be better off buying 1000 PHP (cost: 8g) than 1000 TWD (cost: 12g). All he has to do is hop over here, buy the land, then setup his company (which will be based in Taiwan, even if he sets it up here). It will probably cost him 0.5g for the MTs and food, but his total savings will be 3.5g.

Meanwhile, that 1000 PHP he used to buy land will be taken out of the system. Additionally, the BoP would earn 3g in the transaction, since printing 1000 PHP costs 5g. Imagine attracting just 5 of these transactions daily: that's 15g of daily extra income we would otherwise miss out on. Evidently, if we'd take this course of action, the congress's cooperation will be vital. I suspect the Thai gov't is doing something like this. Check out their recent congressional actions. Their Thai Treasury has been selling THB for 0.007 recently (as much as 37,000+ THB, grossing 259g in a 10-hour period.).

Gold is indeed the most dominant factor in this game. And I hate to see this "controllable" and safe opportunity to earn some slip past. I think maintaining an offer of around 10 or 15 thousand daily in the MM market is the best way to go about this - it's relatively low, but with enough room for adjustments if needed.
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Re: MM value

Post by Revilo X on Tue Mar 01, 2011 1:47 pm

Wow!! It is nice to see two of my idols in terms of Finance and Economy are brainstorming here.

What can I say...

I think I would have to agree whatever decision both of you will decide regarding this matter.
Both of you are the ePhilippines' best.

I like the style o Thailand... They earned alot of gold in a few hours.

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Re: MM value

Post by nikko_33 on Tue Mar 01, 2011 3:50 pm

hahaha...bolero! Gun Fire
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Re: MM value

Post by Revilo X on Tue Mar 01, 2011 4:02 pm

hahah!!

I thought I was reading a thread from the "archive" of this forum. Razz

I'm glad that you are back!
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Re: MM value

Post by PigInZen on Wed Mar 02, 2011 3:06 am

One of the side effects of establishing a monetary peg is whatever inflation or deflation that occurs in the system shows up in raw & product prices first and wages second (trailing indicator). By allowing the currency to "float" we can use it as a hedge against rapid inflation/deflation in product & raw prices.

Just a thought.
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Re: MM value

Post by nikko_33 on Wed Mar 02, 2011 7:38 pm

PigInZen wrote:One of the side effects of establishing a monetary peg is whatever inflation or deflation that occurs in the system shows up in raw & product prices first and wages second (trailing indicator). By allowing the currency to "float" we can use it as a hedge against rapid inflation/deflation in product & raw prices.

Just a thought.

That is true. However, the size of ePH's MM and economy is so small that it's vulnerable to attacks. Right now, it would take just around 100 gold to send the PHP's value from 0.01 to 0.017 - translated into a rise of 70% in the goods' market value. This on top of current prices which make our products among the most valuable in the world, in terms of gold.

I don't know if we're experiencing a scarcity of PHP in the market, but the loss of foreign players due to the rise of the Import Tax on grain and iron, sure was felt in the MM - they were the ones aggressively selling the PHP's and were keeping the value at around 0.009. Now, there's just under 200 PHP being offered at 0.01, the rest at higher rates.

So this means the PHP's value is rising. But do we want this?

As mentioned countless times in articles and other threads, our goods' prices are high, compared to other countries'. Rising PHP value aggravates this situation by making our products become more expensive to foreign buyers. Since we cannot compete in terms of resources, we should concentrate on labor cost and the PHP value to make our products competitive. The gov's Socialism plan should take care of the labor cost, while the MM should be controlled in order to achieve the goal of offering some of the best priced products in the world market. In fact, setting the PHP's gold value is a good place to start in figuring out the ideal wages needed to achieve the gov's goals. Once agreed upon, the PHP value should be defended, otherwise the balance between the labor cost and PHP value will be upset.

Additionally, the US-Indo war that just started may last for quite a while. This is a good opportunity for us since more food and weapons will be consumed, thus more PHP's will be needed. If we let things continue as they are, the PHP's value will quickly rise, again affecting market prices. So what's needed is a steady supply of PHP's for the economy to expand, as expected during wars.

Unfortunately, very few are playing the PHP MM, so we are at their mercy. I think the government should step in and provide some stability in the markets. With war going on, opportunities abound. lounge lizard
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Re: MM value

Post by Berritas on Thu Mar 03, 2011 10:07 am

Will the 10gold limit affect this plan?
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Re: MM value

Post by nikko_33 on Thu Mar 03, 2011 10:42 am

Berritas wrote:Will the 10gold limit affect this plan?

Good question! I'm wondering about this myself. I looked at the thread on this topic at the eRep forums last night, and I didn't see any mention with regards to government orgs.

I think gov orgs shouldn't be covered by this rule, otherwise it would be troublesome for us. The way I understand it, should BoP be covered by this rule, the most it could offer per day is 1000 PHP (@ 0.01g) or 1250 PHP (@0.008). This is too small if we want to maintain a certain value. Although there is a work around by having other gov orgs play the MM, it would be tiresome and harder to monitor for the finance director.

So I guess yeah, the new 10g limit in the MM would affect this plan, if they include gov orgs in this new rule. I just hope they don't. !
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Re: MM value

Post by Berritas on Thu Mar 03, 2011 4:22 pm

With the flow that the game has been going ...
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Re: MM value

Post by Negosyo sa tao on Fri Mar 04, 2011 6:41 am

nikko_33 wrote:
But it seems we differ on how to implement the policy: you seem to prefer going about it slowly(?) while I think we should offer a large amount right away and maintain it for as long as we responsibly can. Please consider the following reasons:

1. Maintaining a large amount of PHP in the MM stabilizes our prices.
--There is consistency in the pricing, and producers are not at the mercy of the speculators/players.
-- In order to attract the bulk buyers, we need to maintain our presence on the top of the world listings. If the PHP value goes up and down, our placement in those lists would go up and down as well. We would be missing out on opportunities if this happens.
-- And since we expect a rise in sales on account of being the cheapest, there must be enough PHP's available all the time for the buyers to use.

I don't advocate always going slowly, but re-reading the posts and taking into consideration the land rule, I think we may need to put out more PHP.

nikko_33 wrote:
I think it's the admin's way of cleaning up excess currencies. Due to current game rules, you can only setup or buy a company if you have land. Each land costs any 1000 units of a currency. Once you buy the land (anywhere in the world), you take it with you wherever you are. It also doesn't matter where you setup or buy a company - it would follow your citizenship.
Is this true? If this is the truth, then the BOP is starting to sell PHP at the 0.008 as of now.

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Re: MM value

Post by nikko_33 on Fri Mar 04, 2011 7:01 am

Negosyo sa tao wrote:
nikko_33 wrote:
I think it's the admin's way of cleaning up excess currencies. Due to current game rules, you can only setup or buy a company if you have land. Each land costs any 1000 units of a currency. Once you buy the land (anywhere in the world), you take it with you wherever you are. It also doesn't matter where you setup or buy a company - it would follow your citizenship.
Is this true? If this is the truth, then the BOP is starting to sell PHP at the 0.008 as of now.


Yup! Check out this thread: http://forum.erepublik.com/showthread.php/107975-Refund-10g-per-pre-existing-company!?highlight=productivity Very Happy

Just read the main post - the guy summarized the important points taken up in the thread.
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Re: MM value

Post by Paul Delos Santos on Fri Mar 04, 2011 7:46 am

Yes Nego, you will need a free land to buy a company.

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Re: MM value

Post by Myung Kei on Sat Mar 05, 2011 3:42 pm

Hope this MM change is for the better.
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Re: MM value

Post by nicholas2000 on Sat Mar 05, 2011 7:13 pm

I hope this works out well, and can help strengthen the Philippines!

Let me know what the final decision is (implementation speed, mostly), and Hypnotoad Bank would be glad to support this.
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Re: MM value

Post by Revilo X on Wed Mar 09, 2011 3:10 am

With the new rules regarding MM, Hekter suggested that we print 20000 php first to test run.

Btw, is the country account included in the 10 gold rule?
To print 20000 php we need to transfer 100 gold to the country account. Sad
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Re: MM value

Post by Berritas on Wed Mar 09, 2011 4:13 am

Revilo X wrote:With the new rules regarding MM, Hekter suggested that we print 20000 php first to test run.

Btw, is the country account included in the 10 gold rule?
To print 20000 php we need to transfer 100 gold to the country account. Sad

It only said player and organization accounts.

If for some reason we cannot then we can always bypass it using other orgs.
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Re: MM value

Post by Revilo X on Wed Mar 16, 2011 3:15 am

ok, I was informed that Gov Orgs are not subject to 10 gold limit rule...
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Re: MM value

Post by nikko_33 on Wed Mar 16, 2011 7:45 am

Revilo X wrote:With the new rules regarding MM, Hekter suggested that we print 20000 php first to test run.

Btw, is the country account included in the 10 gold rule?
To print 20000 php we need to transfer 100 gold to the country account. Sad

Has the government done this test run? How was it?
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Re: MM value

Post by Berritas on Wed Mar 16, 2011 7:59 am

From what I see they haven't made an offer as of yet.
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Re: MM value

Post by nikko_33 on Wed Mar 16, 2011 8:12 am

Berritas wrote:From what I see they haven't made an offer as of yet.
Argh!
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Re: MM value

Post by Revilo X on Wed Mar 16, 2011 9:08 am

Since the MM as of this writing is at 0.017, I think the plan is to pull it down gradually.
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Re: MM value

Post by Negosyo sa tao on Thu Mar 17, 2011 4:12 am

We've been putting some MM out, but we've got to rein the MM value slowly. We simply don't have enough PHP to do it quickly by flooding the market.
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Re: MM value

Post by nikko_33 on Thu Mar 17, 2011 6:06 am

Revilo X wrote:Since the MM as of this writing is at 0.017, I think the plan is to pull it down gradually.

I don't believe in pulling it down gradually- why prolong the agony and leave the company owners wondering where the PHP will eventually settle? This info is important for owners to make informed decisions. BTW: what is the planned PHP value target?

I see 5000 PHP being offered at 0.015g by BoP. Has any been sold yet? I already see 2 others matching this offer. I expect that more players will match it by today's end. How gradual is gradual? When can we expect the PHP to hit its target value?

Personally, I'd flood the market with PHP's as soon as we can. Aside from the 5K in the MM, there's still 28k PHP's in BoP. So why not offer the 10K at 0.010g? I doubt it will all be snapped up in a day. If it does, good for the BoP - it would've earned 50g in the process.

Meanwhile, congress should be working on Printing PHP's as fast as it can, to support the BoP's policy. Ensuring a healthy supply of PHP's will enable the BoP to:

1. stabilize and control the MM, and;
2. earn extra Gold.

If the MM players see the BoP consistently offering the PHP at a certain level, they would eventually adjust and learn to live with it. Additionally, company owners (especially those who export) would be able to respond to current economic conditions better.
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Re: MM value

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