Will there be inflation in game?

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DuroSVK

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Apr 18, 2015
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In Vicky2 the player could endlessly pump a ton of money into economy by either social spending, military spending or endless subsidizing of every single factory in a country in order to ensure 100% employment for all the time.
Quite unrealistic feature to be honest….

I am aware there will be only one currency in game, so perhaps it won’t be possible to simulate it perfectly. But, maybe only partially could be implemented. Like in reality, due to huge government spendings a currency looses its value, which translates into decreasing of consumer purchasing power and also into devaluation of all their savings, effectively creating poverty and unrest.

The question is, can we have some of this in game? Would it be good idea to implement it despite most of the audience does not have an economy degree and would most like have no clue what is going around? Paradox usually dumb their games down in order to bring more audience to their newer games, but hope this is not the case of new Vicky
 
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The sort of inflation that I think will come naturally from the mechanics is that rising wages will lead to rising prices on goods, both because of increased demand and from higher production costs, since we know there will be wage competition between factories and local markets, not one huge world market. Large government spending giving more money to the pops would also increase demand and rise prices (though it also depens on if you can ofset this with cheap imports, interesting).

The effect of monetary policy we have however not seen any hints of mechanics for yet.
 
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The sort of inflation that I think will come naturally from the mechanics is that rising wages will lead to rising prices on goods, both because of increased demand and from higher production costs, since we know there will be wage competition between factories and local markets, not one huge world market. Large government spending giving more money to the pops would also increase demand and rise prices (though it also depens on if you can ofset this with cheap imports, interesting).

The effect of monetary policy we have however not seen any hints of mechanics for yet.
Yeah, but I was thinking more about yearly inflation rates about 20% all the way up to hyper inflation. Those damage economy significantly both industries and consumers. Sorry, I should have been more clear about that.
 
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Yeah, but I was thinking more about yearly inflation rates about 20% all the way up to hyper inflation. Those damage economy significantly both industries and consumers. Sorry, I should have been more clear about that.
We will have to see. There is still a chance that there will be some kind of financial market conected with the investment pools. The buildings de diary did a quick mention of financial districts, but no information on what they will do has come out yet.
 
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Financial markets, monetary inflation and that type of thing I can imagine being a DLC feature if it's ever added. Trying to add all that type of depth before the game is first released will most likely push back the release date quite significantly (although I would love to see it in the game).
 
Like in reality, due to huge government spendings a currency looses its value,
Hyperinflation requires, as a precondition regardless of other factors, a currency whose supply is not meaningfully limited relative to the economy it's being used in.

Vicky 2's supply (and velocity!) of money is strictly limited, making hyperinflation categorically impossible.
 
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I'm not sure it would be possible unless every country will have their own currency that can be valued either versus other currencies or versus some reserve currency (in the case of this time period, either pound sterling or some kind of gold standard).

Fundamentally inflation (and especially hyperinflation) usually just means a devaluation of the currency's purchasing power, not a rise in actual value of the goods. In a time mostly before fiat money, I'm not sure it makes much sense unless they want to let you unpeg your currency.
 
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Would be nice if the Government could issue Bonds which are traded via Banks(if Banks are a thing in vicky 3). Might even buy bonds with the investment pool to finance the government.
 
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Would be nice if the Government could issue Bonds which are traded via Banks(if Banks are a thing in vicky 3). Might even buy bonds with the investment pool to finance the government.
Ooohh, issuing government gilts to raise funds rather than just a generic "take loan" button would actually be really cool.
 
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With the latest screenshots apparently having maximum and minimum prices, I doubt we'll have anything resembling dynamic price levels.

More than that, to have dynamic price levels as an actual mechanic, they would first need to implement local currencies as a mechanic, and that would complicate things many time overs.
 
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With the latest screenshots apparently having maximum and minimum prices, I doubt we'll have anything resembling dynamic price levels.

More than that, to have dynamic price levels as an actual mechanic, they would first need to implement local currencies as a mechanic, and that would complicate things many time overs.
Prices can be dynamic for example tools between 20 and 60 I think. I actually I dont know(and its not confirmed) that tools could probably go to 100 or so and cause a recession... But even at 60 most of the economy wont be profitable. When you look at the picture of farms in New York. That fertilizer price makes them unprofitable.
 
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In Vicky2 the player could endlessly pump a ton of money into economy by either social spending, military spending or endless subsidizing of every single factory in a country in order to ensure 100% employment for all the time.
German economy since 1945 in a nutshell.

And it works!

I definitely wouldn’t want to miss advanced economic and financial management stuff in Vic3 too.
 
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With the latest screenshots apparently having maximum and minimum prices, I doubt we'll have anything resembling dynamic price levels.

More than that, to have dynamic price levels as an actual mechanic, they would first need to implement local currencies as a mechanic, and that would complicate things many time overs.
It would have to be super abstract and basically you could probably only have two types - pegged to something (either a global trade currency like the British Pound or something fixed to gold) and these would basically just move in unison. Or you could go fiat (unheard of for most of the period of the game) and then it gets really complicated as these are extremely hard to predict in reality.

Only way would be to extrapolate your borrowing costs in relation to some measure of the country’s perceived solvency (a debt ratio of some kind).

For such a niche mechanic, probably not worth it and very hard to craft in practice even on a basic level.
 
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The sort of inflation that I think will come naturally from the mechanics is that rising wages will lead to rising prices on goods, both because of increased demand and from higher production costs, since we know there will be wage competition between factories and local markets, not one huge world market. Large government spending giving more money to the pops would also increase demand and rise prices (though it also depens on if you can ofset this with cheap imports, interesting).

The effect of monetary policy we have however not seen any hints of mechanics for yet.
Wage increases in Vic 2 are mainly caused by the improvement of productivity, in this case price will not increase because demand only increases according to supply.
German economy since 1945 in a nutshell.

And it works!

I definitely wouldn’t want to miss advanced economic and financial management stuff in Vic3 too.
No? Germany had a very strict balanced-budget rule, its full employment is mainly achieved by export competitiveness, not government spending.

If you want inflation in game you’ll probably need to have the growth rate of supply of money higher than the growth rate of good supply, that doesn’t make a lot of sense to me and is not what happened in the game’s time frame. PDM attempted to address the late game liquidity crisis by pumping money into the economy, but the excess money usually end up in the player country’s treasury, which only made everything worse and even less realistic.
In real life the velocity of money can change, so inflation can occur even without a monetary expansion. In the game, however, velocity of money has a very hard ceiling, a unit of money can only be used for one transaction each game tick, the velocity of total money supply can go down, as savings do not circulate in game due to it lack of representation of a banking system.
I don’t expect a useful banking system anytime soon, so I’d say let’s have no inflation, the calculations are easier this way.
Maybe you can just pretend inflation is still there and the in-game unit of money is inflation-adjusted.
 
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Yes, but also no.

Inflation is a phenomenon that happens when your domestic currency loses value. In Victoria 3, domestic currency does not exist. Everything is valued at an abstract international currency, including the pound sterling. It's as if every currency is pegged to a gold standard. Inflation, in the game, is when your POPs can't buy stuff. Not because the prices are high, but because their salaries are low. That means their domestic currency is worthless in international markets. But the price of local goods increasing due to government spending, no. You'll see price fluctuations in the game for sure, up and down, and your POPs may be able to buy products or not, and that would be inflation, it's just that you can't actually see it as a statistic, because there's nothing to measure.

About the fluctuation of the price of goods in international markets, yes, of course they'll fluctuate. Resources like coal and oil, will of course increase in price with demand, and decrease with supply. So you would have inflation as the overall prices of consumer goods increase overall, due to the increase in the price of inputs, not Government spending.
 
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German economy since 1945 in a nutshell.

And it works!

I definitely wouldn’t want to miss advanced economic and financial management stuff in Vic3 too.
We definitely dont have full employment. We have millions of unemployed people. We juste hide it better than most other countries.
Also our welfare state is EXTREMELY expensive. Taxpayers are getting around 70% to 80% of their income taxed.
 
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Wage increases in Vic 2 are mainly caused by the improvement of productivity, in this case price will not increase because demand only increases according to supply.
Well, this isn't Vicky 2, Vikcy 3 will work differently from what we have seen because of more elastic demand, local markets and wage competition.
 
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