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MM value

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Re: MM value

Post by Aren Perry on Thu Mar 17, 2011 6:57 am

NIkko, my main concern with going that low with PHP is this, we are already low on product in the nation and the fact is that making our dollar cheap means our products are cheap, which means people will very likely buy some PHP to snap up our products for less with no need to get rid of PHP on the backside, robbing our market.

Already our Q1 food price has doubled recently from .5 to 1$ and there is less than 3k on the market over all food levels, in some none.

We need to prevent BOTH too much important (note I did NOT say ANY) with a high enough value BUT we need a high enough value to prevent a new form of poaching, product buying on the cheap and storing it in the huge storage facilities available to an individual.


That's why considering the NEW aspects of the game I personally don't feel comfortable pursuing a 0.08 policy, I understand the reasoning why that owul dbe nice. Land buyers would come and snap up currency, make it disappear, and give us gold in return.

On the other hand, item poachers would snap up our products, go to another nation (or even our own!) , and make huge profits off of our goods.

This is a new e-world. We should go down gradually, not with all haste. We shall see how that 5k holds up. If it holds up well, good, we can lower it to 0.013 and see how it fares there.
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Re: MM value

Post by nikko_33 on Thu Mar 17, 2011 7:35 pm

This is gonna be long...you have been warned, hehe.

Aren Perry wrote:That's why considering the NEW aspects of the game I personally don't feel comfortable pursuing a 0.08 policy, I understand the reasoning why that owul dbe nice. Land buyers would come and snap up currency, make it disappear, and give us gold in return.
I agree. Due to present economic realities, the PHP's value should be set at 0.010, instead of 0.008, gold.

The 0.008 proposal was made over 2 weeks ago, when the USD was trading at 0.011/0.012g. Since the USD's now at 0.014, I think an adjustment to 0.010 is warranted, which is good since our PHP will be valued a bit higher and we have a bit more room.

Aside from that, the new economic module has to be factored in as well.

Aren Perry wrote:On the other hand, item poachers would snap up our products, go to another nation (or even our own!) , and make huge profits off of our goods.
This can be easily prevented by determining how we price the products we offer in the local market. We are not required to stick to our current prices once the PHP's value is lowered. We can always adjust according to the needs and buying capacity of the local consumers.

Let's take Q1 food, as an example. Current US Q1 food price is 0.57 USD (0.0079g at 0.014g to 1 USD). With the PHP valued at 0.010g, that translates to 0.80 PHP with VAT.

Now it's up to the seller if he wants to stay at par with the US and offer Q1 food at 0.80 PHP locally (0.73 PHP before VAT). Or he could go lower, for faster sales or higher, for higher profits.

At the same time, he could offer them in the US for 0.46 USD, which is equivalent to 0.64 PHP (lower profits, but earns him USD which he could exchange for gold). This is after total US taxes: 21% (20% import, 1% VAT)

Either way, he will theoretically earn decent profits considering that others could sell Q1 food at 0.50 PHP locally. Profits that he can use in many ways like buying more goods than he normally does, and/or increasing his employees' salaries or perks.

Now this is food, the hardest industry to penetrate. Imagine how easy it will be for MTs and weapons (US Import tax on both industries: 1%). A seller could offer a portion of his stocks in the local market just for availability's sake, while the rest he sells abroad for bigger profits.

These foreign currencies could then be converted to gold, which can be used to purchase PHP, for raw materials and salaries. Thus helping the economy.

Aren Perry wrote:Already our Q1 food price has doubled recently from .5 to 1$ and there is less than 3k on the market over all food levels, in some none.
As for food security, this is where DoHA comes in. As I've mentioned in this thread, DoHA's participation is integral in revitalizing our economy.

The supply problem we had earlier today could have been avoided if the policies in DoHA have been firmly established. Let me illustrate: During my time as DoHA head, the companies were run to accomplish the following objectives (in order of priority):

1. Ensure that jobs are available at all skill levels, all the time (hubs);
2. Create and maintain a stockpile on food, weapons & MTs for emergency use;
3. Regulate prices of critical goods in the market - to prevent overpricing and ensure their availablity;
4. Provide training supplies to the military; and
5. Make profit (after achieving objectives 1-4).

I see that objectives 1,2 and 4 are being met by the current DoHA, but I don't know about 3 & 5. Maybe they don't have the mandate?

Currently, DoHA could easily regulate the food market using its 3 food companies:

[PESO JOBS] ePH Training Q1 Foods - 4,455 in stock.

[Department of Finance] ePH National Q1 Foods - 24,409 in stock.

[DoHA] ePH National Q3 Foods - 2,925 in stock.

This info is from 2 weeks ago. I can't see its current stock levels, but I doubt if it had drastically changed since.

If the 2 Q1 companies place 2000 each in the local market, and another 2000 Q3 food by the 3rd company, then I think we will be secured, food wise. Pricing the Q1 at 0.86 PHP (2.58 for the Q3), would give local sellers the chance to sell at 0.85 PHP down.

This way, DoHA companies won't be too pressured to produce huge amounts everyday, and local sellers could still get in on the action. Of course, these figures could still be adjusted.

If the DoHA food companies were maintaining that 0.86 PHP Q1 food in the market (at high stock levels), the panic earlier wouldn't have ensued. As we saw, the buying stopped at 1.00 PHP, and is now at 0.90 PHP.

I don't think it was because our food suddenly became cheap - the PHP was at 0.017g at the time. So whoever bought all those Q1's could have had a better deal somewhere else. Even in the US! So I doubt if any big time poaching happened.

I suspect the usual sellers just fought more than they usually do since the battle was for Mindanao and they were carrying their inventories with them. They probably ran out of stocks to sell, or too few were left, that's why they quickly disappeared from the market.

So, properly managed and with policies to follow, DoHA could regulate the local food market if it wants to.

Aren Perry wrote:This is a new e-world. We should go down gradually, not with all haste. We shall see how that 5k holds up. If it holds up well, good, we can lower it to 0.013 and see how it fares there.
Currently, the BoP has 4,995 PHP offered at 0.015g. Around 2000 PHP is offered at 0.014g, and 1700+ PHP at 0.013g. What this shows is that players are willing to go down; after hovering around 0.017g for the past few days, they've quickly adjusted once they saw BoP made its move.

As I've stated above, if our real target is 0.010g, why prolong the agony? Why do producers have to wait if pegging the PHP at 0.010 will mean more sales?

If a seller is assured of a stable PHP value, then he'll be better equipped to make sound business decisions. He can operate better since he can make his moves based on a stable currency he can rely on.

Our MM is so small, that we are at the mercy of a few MM players. Only the government can provide stability at this point, unfortunately, and it should, for the sake of local producers. The Ph market is so small, I doubt if it can absorb all our produce. The only way to go, I believe, is export.

If we wait for the market, it may never get to 0.010, our target. Or take too long to do so. Meanwhile we would've lost the chance to earn profits - not just for local producers, but for the BoP as well.

We could actually get our target by offering the PHP at 0.011g. If so, you could expect a lot of the players to offer at 0.010. If they do not, BoP would be getting the lion's share of PHP purchases. Printed at 0.005g per PHP, the BoP realizes a 0.006g profit for every PHP sold.

The BoP may offer PHP's at 0.010g from time to time, just to keep prices and money supply stable. We may even attract landbuyers at this rate. Should an oversupply occur, the BoP, should it choose to, could purchase PHP's offered up to 0.008g. Doing so would still have the BoP clear 0.003g per PHP.

Meanwhile, the local producers won't begrudge the 0.001g difference. As long as the MM is stable at 0.010/0.011g, I think sellers could actively compete in foreign markets.

Of course, this would mean close coordination with congress to keep PHP's available for BoP's use. Managed correctly, the government could earn serious gold in the MM, as I've mentioned before. Gold that could be used to purchase those all-important MPP's, among others.

-----

So in summmary:

1. I think the target PHP value should be 0.010g
2. DoHA should step in and regulate critical markets and ensure the availablity of these goods locally.
3. This should be done as soon as responsibly possible. Congressional actions are required, and there may be some shake-ups in DoHA if it decides to focus more on food, to ensure food security.

I hope this helps you and your cabinet in formulating ePh's economic policy. Very Happy
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Re: MM value

Post by Revilo X on Fri Mar 18, 2011 2:55 am

Woah!!

It's really long Nikko, but worth reading.

I can only answer regarding DOHA's participation (Food Industry only).

1. Ensure that jobs are available at all skill levels, all the time (hubs);
2. Create and maintain a stockpile on food, weapons & MTs for emergency use;
3. Regulate prices of critical goods in the market - to prevent overpricing and ensure their availablity;
4. Provide training supplies to the military; and
5. Make profit (after achieving objectives 1-4).

Actually as of this moment 1, 2, and 4 are met.
But if DOHA will try to do number 3, it will sacrifice goal number 5, since the cost of producing Q1 food as of this writing is @ 1.00+ PHP per piece.
Meaning when I offered it at net 1.00 it is already losing.

I suggest, for the mean time while all are adjusting with the changes happening in the economy module, DOHA will stick to 1.00 net of VAT per Q1 food, then eventually when all gets settled, I will pull the price down to 0.86 net of VAT.
But if you think that we need to do it ASAP, please inform me, so that I can make the price adjustment.

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Re: MM value

Post by Hekter on Fri Mar 18, 2011 3:07 am

I think that dumping a large amount of Q1 food at a lower price could have a BoP-like effect on establishing a ceiling, that prices cannot go above it without extreme pressure.

And no, we're not going to make much of a profit anymore, since the DoHA actually employs people, rather than the others on the market that are just selling for themselves.

In theory, now, however, the idea is not to sell much food, and just intimidate the hell out of the market.

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Re: MM value

Post by nikko_33 on Fri Mar 18, 2011 5:11 am

Revilo X wrote:But if DOHA will try to do number 3 (regulate), it will sacrifice goal number 5 (profit), since the cost of producing Q1 food as of this writing is @ 1.00+ PHP per piece.
Meaning when I offered it at net 1.00 it is already losing.

I suggest, for the mean time while all are adjusting with the changes happening in the economy module, DOHA will stick to 1.00 net of VAT per Q1 food, then eventually when all gets settled, I will pull the price down to 0.86 net of VAT.

Hekter wrote:I think that dumping a large amount of Q1 food at a lower price could have a BoP-like effect on establishing a ceiling, that prices cannot go above it without extreme pressure.

And no, we're not going to make much of a profit anymore, since the DoHA actually employs people, rather than the others on the market that are just selling for themselves.

In theory, now, however, the idea is not to sell much food, and just intimidate the hell out of the market.
That is correct. Historically, DoHA's food companies are not profitable. They are there just to regulate the local market - prevent overpricing and maintain availability of goods. These critical markets are Q1 food, Q1 MTs and Q1 weapons. We try to set a price wherein local companies could still get a share of the market and, at the same time, affordable to the general populace. We pursue this policy even if it means taking losses, which is usually in food, but only up to a certain point.

The losses are offset by selling the excess stocks of MTs (profitable during elections), oil, and Q1 & Q5 weapons.

I think the same policy would still be effective in these times. We still need to regulate some markets that are critical to a regular citizen's eLife. You can exhort all you want for the sellers to be kinder in their pricing, but at the end of the day, they are all businessmen, and the allure of higher profits is so hard to resist. The best way to regulate them is to use DoHA to keep them in line and honest.

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Re: MM value

Post by nikko_33 on Fri Mar 18, 2011 5:11 am

Revilo X wrote:But if DOHA will try to do number 3 (regulate), it will sacrifice goal number 5 (profit), since the cost of producing Q1 food as of this writing is @ 1.00+ PHP per piece.
Meaning when I offered it at net 1.00 it is already losing.

I suggest, for the mean time while all are adjusting with the changes happening in the economy module, DOHA will stick to 1.00 net of VAT per Q1 food, then eventually when all gets settled, I will pull the price down to 0.86 net of VAT.

Hekter wrote:I think that dumping a large amount of Q1 food at a lower price could have a BoP-like effect on establishing a ceiling, that prices cannot go above it without extreme pressure.

And no, we're not going to make much of a profit anymore, since the DoHA actually employs people, rather than the others on the market that are just selling for themselves.

In theory, now, however, the idea is not to sell much food, and just intimidate the hell out of the market.
That is correct. Historically, DoHA's food companies are not profitable. They are there just to regulate the local market - prevent overpricing and maintain availability of goods. These critical markets are Q1 food, Q1 MTs and Q1 weapons. We try to set a price wherein local companies could still get a share of the market and, at the same time, affordable to the general populace. We pursue this policy even if it means taking losses, which is usually in food, but only up to a certain point.

The losses are offset by selling the excess stocks of MTs (profitable during elections), oil, and Q1 & Q5 weapons.

I think the same policy would still be effective in these times. We still need to regulate some markets that are critical to a regular citizen's eLife. You can exhort all you want for the sellers to be kinder in their pricing, but at the end of the day, they are all businessmen, and the allure of higher profits is so hard to resist. The best way to regulate them is to use DoHA to keep them in line and honest.

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Re: MM value

Post by Hekter on Fri Mar 18, 2011 5:28 am

Have I ever told you that I love you, Nikko?


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Re: MM value

Post by nikko_33 on Fri Mar 18, 2011 5:45 am

Hekter wrote:Have I ever told you that I love you, Nikko?


Not recently, no... Laughing
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Re: MM value

Post by Revilo X on Mon Mar 28, 2011 2:46 pm

Topic closed.

We have the same topic inside the plenary hall

http://ephilippines.forummotion.com/t2599-hr012-economic-changes-taxes-and-mm
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Re: MM value

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