Victoria 3 - Dev Diary #12 - Treasury

[lachek]

An idea that was floated upthread is to treat the amount of the credit limit/debt ceiling a country is using as a measure of the market's trust in them - if you have modest debts, such as England in the DD, people are more confident you'll repay them than if you're running very close to the red line. So modest deficit spending might have its supporters among your pops but if it spirals out of control, they'll be steadily more worried.

Our first debt model during early prototyping did actually use escalating interest rates the closer to the debt ceiling you got, for exactly these reasons. In practice, since compounding interest and escalating interest rate becomes exponential, that made for terrible, unfun death spirals where if your investments didn't all pan out perfectly all you could do was sit and wait for bankruptcy. It discouraged players from deficit spending, which was the exact opposite we wanted from our loans system. So nice idea, but didn't work.

 

[lachek]

Lovely stuff. Would it be possible to tie Minting to a building? And can the player create new taxes, or remove any of these?

Any Gold Fields the country controls adds a fixed amount of money to the Minting revenue stream.
Several of the tax categories are controlled by Laws which the player can change or abolish, thus creating or destroying revenue streams.

 

[Wizzington]

A correction on tariffs: It should indeed have said they're a way to make money on goods exported to your market, not from your market.

 

[lachek]

IMO, there is no real need for the treasury ceiling since a country hoarding its money is not necessarily a good thing for the economy and should impact the economy negatively just by its mere act. I wish the whole lending thing could have been handled more realistically by using banks, gilt edged securities, credit ratings and fluctuating interest rates to deter high levels of borrowing rather than just an artificial cap.

You're right! There's no actual, rational need for a soft cap to hoarding, because those funds are extracted from your economy in various ways and are completely unproductive while in the Treasury. Outside of saving for a rainy day (by which I mean, probably war) there's no compelling reason to let money pile up in your treasury.

But this does not account for lizard brain psychology. Most strategy gamers - myself certainly included - have been trained to believe "big green number good" and "red debt very bad" and the soft-cap counteracts that by gently nudging the player to put the money back in circulation if their pile of gold gets way too big compared to their GDP. Sure, we could have made the Pops get mad if the government's hoarding their hard-earned tax contributions instead, but we didn't want to hurt the player for doing well. Instead we just apply some diminishing returns to encourage upping your spending.

The debt ceiling / credit limit on the other hand is a hard cap, and I'd argue this is not particularly unrealistic - because once the debt reaches this point, every last pence in the private national money reserves has been borrowed against by the national government. This is money that has been actually earned by your industries, not arbitrary parameters selected for optimal game balance. I fully stand by that it's a reasonable component of a game simulation - at least in this era - to not let a government to be able to borrow more from its economy than its total net worth via normal financial instruments.

 

[lachek]

As for the interest , is it simple interest or compound interest?

The interest rate listed is annual but levied weekly along with all other expenses. So if you have a 10% annual interest on the principal, this is split up into 52 payment chunks of about 0.2% on all outstanding debt per week. As a result, if you keep running a deficit your actual interest paid over 1 year will be higher than 10% as your interest hasn't been paid but instead compounded onto your principal.