How is it minting?

[unmerged(11819)]

Can anyone explain to me why having extra money coming in at the end of the month is considered "minting" and drives inflation?

Assuming a constant rate of transactions within your
closed economy, a constant supply of money, in this
case gold, implies a constant price level. An
increased supply of gold would generally raise prices
and lower the value of money. Productivity or
population increases would tend to increase the rate
of transactions and the demand for currency, causing
deflation, as the value of money rises and relative
prices fall. (I'm not sure the implications are as
clear cut if you don't need currency to conduct
transactions, i.e. credit and debit cards.)

Storinga government surplus, presumably temporarily,
would not be considered minting new money. It may,
however, temporarily cause deflation if the surplus is
large enough, and inflation back to the original level
when the surplus is spent at a later time. This would
not be minting new money. New money would be minted
only when newly discovered gold is minted into gold
coins, or the old coins are recalled and then reissued
with a different weight or composition.

It bugs me that if you have more money coming in thru taxation than u spend (even if you spend it all later on troops, forts, etc.) it causes inflation. its not new money! inflation should only come from gold mines, as that actually *adds* to the money supply (and we should have control for that).

am i wrong?

 

[Incompetent]

...

Yes, it's very silly; it's a game mechanism for controlling players' spending, but one that has no real justification in historical terms. No, it's not going to be changed.

 

[DSYoungEsq]

Can anyone explain to me why having extra money coming in at the end of the month is considered "minting" and drives inflation?...It bugs me that if you have more money coming in thru taxation than u spend (even if you spend it all later on troops, forts, etc.) it causes inflation. its not new money! inflation should only come from gold mines, as that actually *adds* to the money supply (and we should have control for that).

am i wrong?

You are incorrectly stating the way inflation works in the game.

The Treasury, the King's personal money chest, receives money only once per year, unless something unbudgeted happens, like a peace proposal, a gift, etc. That money comes from census taxes, and arrives between December 31 and January 1. I say between the two because, although you don't see it until your display says 1 January, it is logged as having been received the prior year in the ledger. This is intended to represent direct taxation of the people of the nation by the central government.

If this is the only money you receive into the Treasury, you never experience inflation. You can store it up as much as you want, and it doesn't matter.

Each month, you are credited with receiving from your nation a variety of things which are valued in ducats. These include "production," "tolls," "gold," "trade income," etc. The receipts do not go to the Treasury, normally. They are "invested" in your effort to better your nation. You can direct those investments towards making your armies or navies better, towards improving your trade system or your basic manufacturing and tax-collecting infrastructure, or towards making the people of the realm happier and less likely to do things like revolt, refuse to pay as much in tax, etc. ("stability"). In essence, this monthly receipt and investment of "money" represents the slow and steady (you hope!) growth of your economy.

Please ignore the detailed, and hopelessly incorrect, discussion of this aspect of the game contained in the maual that comes with the game. It is so grossly in error in describing even the basic mechanics of the game that you will drive yourself nutty if you read it and try to figure out what the ledger is telling you actually happens!!!!

You may, if you desire, "siphon" money out of your economy into your Treasury. If you do so, your Treasury gains value. Because this doesn't represent actual taxation coming in from the land, it must represent some other method of making the Treasury contain more than it does. In medieval times, it would represent debasing the coinage, for example. In any event, if you direct money out of your economy to your Treasury, you will suffer from "inflation." It doesn't matter if you spend it immediately, or save it up, the inflation will occur that very month.

The amount of inflation depends upon the amount you siphon off as a percentage of the whole monthly economic increase. If you siphon off the entire value of your monthly "income," you gain 1% point of inflation score, divided by 12. Do it for a whole year, and your inflation score for the game increases by 1. That is, everything you spend money on thereafter will be 1% more expensive than it would be if you had never had any inflation from the beginning of the game (do NOT think of "%" in this case as a "rate" of inflation; the inflation doesn't compound, so 1% is the same increased cost regardless of whether you only started with 0% or already had 50%).

This represents the fact that you made money appear out of "nothing." You didn't earn it; instead you manufactured it. While not in any way a perfect rendition of what happens in a real economy, it does at least mimic the effect of "creating" money.

 

[Banquet]

That's a great explanation DSYoungEsq.. helped me understand a lot. I've only just started playing EUII and the inflation thing was buggin me too.

You are incorrectly stating the way inflation works in the game.

The Treasury, the King's personal money chest, receives money only once per year, unless something unbudgeted happens, like a peace proposal, a gift, etc. That money comes from census taxes, and arrives between December 31 and January 1. I say between the two because, although you don't see it until your display says 1 January, it is logged as having been received the prior year in the ledger. This is intended to represent direct taxation of the people of the nation by the central government.

If this is the only money you receive into the Treasury, you never experience inflation. You can store it up as much as you want, and it doesn't matter.

Each month, you are credited with receiving from your nation a variety of things which are valued in ducats. These include "production," "tolls," "gold," "trade income," etc. The receipts do not go to the Treasury, normally. They are "invested" in your effort to better your nation. You can direct those investments towards making your armies or navies better, towards improving your trade system or your basic manufacturing and tax-collecting infrastructure, or towards making the people of the realm happier and less likely to do things like revolt, refuse to pay as much in tax, etc. ("stability"). In essence, this monthly receipt and investment of "money" represents the slow and steady (you hope!) growth of your economy.

Please ignore the detailed, and hopelessly incorrect, discussion of this aspect of

the game contained in the maual that comes with the game. It is so grossly in error in describing even the basic mechanics of the game that you will drive yourself nutty if you read it and try to figure out what the ledger is telling you actually happens!!!!

You may, if you desire, "siphon" money out of your economy into your Treasury. If you do so, your Treasury gains value. Because this doesn't represent actual taxation coming in from the land, it must represent some other method of making the Treasury contain more than it does. In medieval times, it would represent debasing the coinage, for example. In any event, if you direct money out of your economy to your Treasury, you will suffer from "inflation." It doesn't matter if you spend it immediately, or save it up, the inflation will occur that very month.

The amount of inflation depends upon the amount you siphon off as a percentage of the whole monthly economic increase. If you siphon off the entire value of your monthly "income," you gain 1% point of inflation score, divided by 12. Do it for a whole year, and your inflation score for the game increases by 1. That is, everything you spend money on thereafter will be 1% more expensive than it would be if you had never had any inflation from the beginning of the game (do NOT think of "%" in this case as a "rate" of inflation; the inflation doesn't compound, so 1% is the same increased cost regardless of whether you only started with 0% or already had 50%).

This represents the fact that you made money appear out of "nothing." You didn't earn it; instead you manufactured it. While not in any way a perfect rendition of what happens in a real economy, it does at least mimic the effect of "creating" money.

 

[unmerged(11819)]

... These include "production," "tolls," "gold," "trade income," etc...

...You may, if you desire, "siphon" money out of your economy into your Treasury. If you do so, your Treasury gains value. Because this doesn't represent actual taxation coming in from the land, it must represent some other method of making the Treasury contain more than it does. In medieval times, it would represent debasing the coinage, for example. In any event, if you direct money out of your economy to your Treasury, you will suffer from "inflation." It doesn't matter if you spend it immediately, or save it up, the inflation will occur that very month...

...This represents the fact that you made money appear out of "nothing." You didn't earn it; instead you manufactured it.

But the only thing in that list of yours that "creates" new money is the mining of gold. And even if im "siphoning" it out of the economy, it returns eventually - new money isn't created. None of this creates inflation (with the exception of new gold or actual debasing). That's whats bugging me. I understand there are some abstractions and blah blah but i think this is a particularly poor one and i dont consider myself a real complainer about any of paradox's games. at least it could have "inflation" from real sources like new gold, or a "debase currency?" option (like war taxes) or some such. I mean, even war taxes cause +1 inflation. huh?? that makes no sense!

While not in any way a perfect rendition of what happens in a real economy, QUOTE]

I'll agree with you there!
i realize its semantics and probably wouldnt be changed but i think its a terrible system, as it doesnt allow you (as the govenment) to redirect monetary resources in an economy or direct things through "taxatiON"

 

[unmerged(45766)]

i realize its semantics and probably wouldnt be changed but i think its a terrible system, as it doesnt allow you (as the govenment) to redirect monetary resources in an economy or direct things through "taxatiON"

Exactly : semantics. EU2 is a game, and it uses concepts like inflation, stability, cores, state-culture, technology, and the like, and gives certain effects to each concept. None is totally well-defined, nor strictly applies to a specific real-life reality, and a great deal of abstraction (does it exist ?) and rationalization needs to be kept at hands when toying with them.

DSYoungEsq might have nice rationalized explanations, but in essence, inflation is just used by the creators of the game for :
- "punishing" you for not wanting to dump all you monthly income in technological research and/or stability-increasing process (even if you've maximized your techs and stability is at +3 )
- depicting the bad effects of a bankruptcy of the state, i.e. not taking care of keeping the expenses under the bar of the revenues
- used in events to represent bad shape of the economy, or corruption, or many other situations (even real inflation IIRC).
In short, just a game concept.

 

[DSYoungEsq]

Um, inflation occurs because, for example, the increased amount of gold coin in the realm (caused by debasement, that is, scraping a small amount of the edges of each coin and melting that down and recasting it into new coins) makes each individual coin worth less. Thus, it buys less. Because you don't have a change in the nominal denomination, you have inflation.

In short, an increase in money without a concomitant increase in the value of the money will result in inflation. This happened all the time in Europe during the period in question.

And no, the inflation issue is not solely an attempt to reign in spending. You already get a sizeable penalty for moving the "To Treasury" slider to the right at any point in time because you lose progress towards increasd technology. For game balance, it wouldn't make an iota of difference whether or not you could use your monthly "income" to finance wars, forts, manufactories, etc. inflation free or not.

 

[unmerged(33799)]

EU2 is a game, and it uses concepts like inflation, stability, cores, state-culture, technology, and the like, and gives certain effects to each concept. None is totally well-defined, nor strictly applies to a specific real-life reality, and a great deal of abstraction (does it exist ?) and rationalization needs to be kept at hands when toying with them.

In short, just a game concept.

quite right... if you look at it, in a strange way (to real life that is), the only thing causing inflation besides minting and your total economic dependency of gold (ie the Aztecs), is the size of your military forces... if you have them big (support limit is enough for both navy and army or, depending on the nation, prioritize one or the other) and fully financed (not advisable in peace times ) keeping your treasury at zero increase (no minting or monthly losses in the treasury) will increase your inflation rather fast... on the other hand you can have your slider to full left gaining no inflation at all, but you may not have any profit from yearly revenue due to monthly losses which won't allow you to do anything, even though your tech research is doing good...

it's all a matter of balance, ignore real life rules in this matter

regards

 

[unmerged(3931)]

Um, inflation occurs because, for example, the increased amount of gold coin in the realm (caused by debasement, that is, scraping a small amount of the edges of each coin and melting that down and recasting it into new coins) makes each individual coin worth less. Thus, it buys less. Because you don't have a change in the nominal denomination, you have inflation.

I can see no reason why minting and paying people to build a fortress causes inflation, but paying people to research a better gun causes no inflation. Do you mean to say that fortress construction workers are gold scrapers, but research assistants are not? Also, why do you get inflation if you mint money to pay maintenance costs yet get no inflation if you have zero ducats in the treasury while leaving the treasury slider fully left?

As implemented, inflation is an unrealistic and gamey aspect that greatly detracts from the game. Once you start toying with gamey features, where do you draw the line? Somehow it costs more to research a better gun if I have 1000 population in a province instead of only 999 people. Master the rules, and you master the game. The game is nothing like reality. Why twist, turn, and dodge on arguments in order to insist that it is? It is such a far stretch.

For game balance, it wouldn't make an iota of difference whether or not you could use your monthly "income" to finance wars, forts, manufactories, etc. inflation free or not.

That is debatable. I'm still waiting for your response in the Money in treasury or investment: which is better? Please do not post your opinion as fact. At least use an IMO or something. Don't make me stomp on you in another argument.

 

[unmerged(45766)]

Agreed with ws2_32.

As a counter-rationalization, it is putting money on stability that should give inflation. As well research as building manus is part of increasing the economy, so these are economically sound options ; on the opposite, making lavish receptions and setting up festivals and holydays to keep the people happy (= investing in stability) is not leading to anywhere economically = comparatively impairs a country in regards to a neighbour that focuses on economy.

 

[DSYoungEsq]

That is debatable. I'm still waiting for your response in the Money in treasury or investment: which is better? Please do not post your opinion as fact. At least use an IMO or something. Don't make me stomp on you in another argument.

Tom, what I mean is that, if everyone played by the same rules, AI and human, then it wouldn't make any difference if you had inflation or not. I suppose you can view it as a way to slow down a human player, but that is kind of silly, given that the AI players ALL regularly run economies that increase their inflation score at the same rate, even after they hit Infra 5 and can promote governors.

As for the other aspect of what you talked about, you can't view the monthly "spending" as something you, the ruler, are doing. It represents instead a view of the economy as a whole, not the King's personal treasury.

 

[unmerged(3931)]

Tom, what I mean is that, if everyone played by the same rules, AI and human, then it wouldn't make any difference if you had inflation or not. I suppose you can view it as a way to slow down a human player, but that is kind of silly, given that the AI players ALL regularly run economies that increase their inflation score at the same rate, even after they hit Infra 5 and can promote governors.

Their inflation score suposedly increases at the same rate as what? The same rate as the player? I am sure that someone trying to survive as Byzantium is going to find it much easier if the concept of inflation goes out the window. Some players rack up twenty percent inflation in as many years. The AI does not suffer that kind of inflation.

As for the other aspect of what you talked about, you can't view the monthly "spending" as something you, the ruler, are doing. It represents instead a view of the economy as a whole, not the King's personal treasury.

You have side-stepped the issue of why paying people to do research causes no inflation while paying people to build fortresses or manufactories causes inflation. Besides, there is no real need to store up all money to fund the building of a manufactory. The manufactory can be funded in phases. There are monthly expenditures in the process.

 

[unmerged(11819)]

Agreed with ws2_32.

As a counter-rationalization, it is putting money on stability that should give inflation. As well research as building manus is part of increasing the economy, so these are economically sound options ; on the opposite, making lavish receptions and setting up festivals and holydays to keep the people happy (= investing in stability) is not leading to anywhere economically = comparatively impairs a country in regards to a neighbour that focuses on economy.

so you slam me, then agree with ws2 for supporting my side? hmmm..

anyway, why would festivals cause inflation? that makes even less sense than the current model. things like directing money to festivals and receptions could be seen as less economically important than building a manu or investing in technology, but then u get into side benefits and utils and we dont need to go there

the point is, as ws2 said, whether they are researchers or fortress builders, none of that is a cause of inflation! redirecting money does not cause inflation! an increase in the money supply causes inflation! (or scarcity can raise prices)

the reason i said yes there are semantics and abstractions is that i realize not everything this game is supposed to model can be done in great detail - but that doesnt give license to a poorly-implemented abstraction (IMO). there are much better ways to model inflation and its consequences than just what you are doing with your monthly 'income'. if im redirecting the goods and whatever the DSyoung said that the monthly income is representing to fortresses and military, im already causing myself problems by not having that income invested elsewhere. zero-sum game - but in EU, im double penalized by it magically causing inflation. THAT is my issue.

 

[unmerged(11819)]

Um, inflation occurs because, for example, the increased amount of gold coin in the realm (caused by debasement, that is, scraping a small amount of the edges of each coin and melting that down and recasting it into new coins) makes each individual coin worth less. Thus, it buys less. Because you don't have a change in the nominal denomination, you have inflation.

In short, an increase in money without a concomitant increase in the value of the money will result in inflation. This happened all the time in Europe during the period in question.

..snip..QUOTE]

that's exactly what im saying - because what is called "minting" in the game is not minting at all. its redirecting income. obviously new gold, or if we had a button which said "reissue money with new composition or weight" or whatever, THAT would cause inflation.

 

[unmerged(45766)]

I didn't slam you, I agreed it was semantics. You tell it's far from reality, and I fully agree.

Why inflaiton for festivals ? Because it isn't expanding economy ; because not expanding economy while you could have is a form of loss of economical efficiency ; and then, loss of economical efficiency in your country is making everything much rarer, from weapons to food to wood for the ships to grapes for your refinery (or rather winery ) ; and subsequent increase of costs ; and an increase of the costs is exactly the effect of inflation in EU2.

 

[unmerged(45766)]

that's exactly what im saying - because what is called "minting" in the game is not minting at all. its redirecting income. obviously new gold, or if we had a button which said "reissue money with new composition or weight" or whatever, THAT would cause inflation.

Probably because it's called inflation, people started calling the process of not having treasury slider full left, "minting". Simply lack of knowledge about real-life inflation, coupled with bad terminology, and the fact that most members of this forum are not native english-speakers, leading to a common misunderstanding.

However, it's not that serious : people understand what is "minting" referred to, because it's an agreed terminology for a game feature. Just like DP-sliders, stability, colonization, CoT, etc.

 

[unmerged(11819)]

Probably because it's called inflation, people started calling the process of not having treasury slider full left, "minting". Simply lack of knowledge about real-life inflation, coupled with bad terminology, and the fact that most members of this forum are not native english-speakers, leading to a common misunderstanding.

However, it's not that serious : people understand what is "minting" referred to, because it's an agreed terminology for a game feature. Just like DP-sliders, stability, colonization, CoT, etc.

well, i understand if thats how it came to be called that but either way its still not inflationary. if the govt taxes wineries, lets say, and either takes money or goods produced by them (and sells them?) and then uses those ducats for something else, the money supply has not been increased. thats my point - its semantics, but its still wrong cuz its not minting, and its poor modeling because the action isnt inflationary.

ill give you a half agreement that the costs associated with raising stability could be inflationary but only if they were on such a massive scale that the people were so distracted from producting other things that they were in amazingly short supply (ie 180 days worth of circus maximus, all over the realm)

 

[unmerged(45766)]

well, i understand if thats how it came to be called that but either way its still not inflationary. if the govt taxes wineries, lets say, and either takes money or goods produced by them (and sells them?) and then uses those ducats for something else, the money supply has not been increased. thats my point - its semantics, but its still wrong cuz its not minting, and its poor modeling because the action isnt inflationary.

Exact. Inflation in EU2 is far from real-life inflation. You don't have to look for explanations or rationalizations, those are different. EU2 names inflation a particular concept which has several effects, several causes, and several way to deal with it (or suffer it).

ill give you a half agreement that the costs associated with raising stability could be inflationary but only if they were on such a massive scale that the people were so distracted from producting other things that they were in amazingly short supply (ie 180 days worth of circus maximus, all over the realm)

Well, we're speaking of months of full investment in stability. Much like months of full "minting" (EU2's minting, ie treasury slider not at ful left). What do you think would be the result if one of our modern state suddenly decided to use all the money it gets from income to set up lavish feasts and défilés ? You seem to be enough knowledgeable with economics, I suppose you can easily figure what the results would be.

 

[iBaLkiD]

I thought minting represented minting "Extra money" For example your economy, when the slider is all the way to the left, is growing as is your ability to mint money without causing inflation. Having the slider in a position other then all they way to the left cuases you to mint money that your economey cannot support, deflating the value of your currencey, causing inflation. I thought i read this back in EUI or early EUII, i am absolutley not sure though.

Please do not post your opinion as fact. At least use an IMO or something. Don't make me stomp on you in another argument.

He has a habit of doing that...

 

[Finnish Dragon]

I think the connection between minting and inflation is a good idea. Otherwise, if you are a rich nation, you would just mint for money when you desperately need it without any negative externality.

The people in 15th, 16th, 17th and 18th century didn´t know much about economics because it was the late 18th century when that field of science started to develop. Most of the people didn´t know much about economics in 1819. Also administration knowledge was quite poor in that time because it mostly conducted with feathers and ink.