So what do you think of our inflation system?

[Jiben]

It just feels really weird hearing about how one of the primary reasons spain slowly lost power was that they had a problem with inflation. In game i never really have long term problems with inflation. If i have i could just dump a few hundred admin points and fix if instantly, i know it's a waste of points to do so it's more that it feels weird i can do so at all. IRL spain should just have reduced inflation with their admin mana and they would have been fine. I'm no economist so i don't know of how to fix it and on some level i get it's a game and gameplay goes before accuracy but it just feels wrong as it works right now.

Anyway what are other peoples thoughts on this?

 

[RAID186]

Weirdly enough this is something I was thinking about earlier today.

Anyway, slightly off topic, this is why some people are against Monarch Points/Mana in the game, and it's current implementation, it's just an instant click and you've got your problem solved.

Inflation doesn't have enough factors contributing to it either, only gold income, gold fleets, loans, and peace deals, whilst these were the primary sources of inflation to European countries, the game doesn't represent other causes of inflation, nor have logical impacts of inflation, but this isn't an economic simulator, so I understand why inflation is dumbed down to an extent.

 

[RedArmy]

By the time of the game takes place, nobody really understood what is inflation and how to manage it.
In the Roman Empire and in medieval Spain, when the prices increased they just extracted more and more gold, which worsened the problem...
Hyperinflation spiral could be represented as a disaster I suppose, but then you wouldn’t have the tools to fight it !

 

[R.Graymarch]

As far as I can tell, it's the same mechanism as in the original boardgame from the 1990s

 

[Titanius Puffin]

I did major in economics - some time ago- and I echo your feelings on inflation.
Inflation is well-implemented . It's just too easy to bring inflation down, and fairly hard to raise it.

Fighting inflation put simply:
Currency is withdrawn from circulation by central banks.
This means there is less currency chasing the same amount of goods.
Sellers then realise that they can't continue to raise prices because people just don't have that much currency.
Once everyone gets the message, prices no longer rise, and Inflation declines.

In the old days, they did something similar I think. Often the decision was to re-standardise the currency and/or crack down on counterfeits.
Sir Isaac Newton (the English Physicist) was the warden of England's Royal Mint in his later years, and was very harsh on counterfeiters. He was apparently fond of a good hanging....
Scary man.

 

[RedArmy]

Hanging? Then reducing inflation should cost sword mana rather than paper mana!

 

[Chazb5046]

By the time of the game takes place, nobody really understood what is inflation and how to manage it.
In the Roman Empire and in medieval Spain, when the prices increased they just extracted more and more gold, which worsened the problem...
Hyperinflation spiral could be represented as a disaster I suppose, but then you wouldn’t have the tools to fight it !

rising prices isn’t inflation. An Increase in the money supply is inflation and a symptom of that is rising prices.

 

[Titanius Puffin]

Hanging? Then reducing inflation should cost sword mana rather than paper mana!

Shouldn't marching armies use paper mana? Think of the logistics!
'Of course we can't feed your soldiers! You're supposed to be in Toulouse!'

Seriously, the whole Admin/Dip/Mil monarch point division is a little arbitrary.... the ability to 'focus the govenment' on one category kind of nods at this.

 

[Titanius Puffin]

An Increase in the money supply is inflation and a symptom of that is rising prices.

Well.. there's the thorny issue that if people expect prices to keep rising, they often will. I'm pretty sure inflation is a social expectation too.
My understanding is that it takes time for people to readjust their expectations.

 

[Chazb5046]

Well.. there's the thorny issue that if people expect prices to keep rising, they often will. I'm pretty sure inflation is a social expectation too.
My understanding is that it takes time for people to readjust their expectations.

Mmmm. I prefer the Austrian school’s interpretation/explanation of (everything but especially) inflation. Peter Schiff has written some interesting books on the subject.
I wish it was handled better in game

 

[RedArmy]

My point was, there was no Austrian school nor any consistent school of economy in 1444...

By the way, inflation doesn’t affect trade in game, nor does trade affect inflation, which is unrealistic. If your economy develops through trade you should get inflation, and if you have inflation your trade power should decrease.

 

[Titanius Puffin]

Mmmm. I prefer the Austrian school’s interpretation/explanation of (everything but especially) inflation. Peter Schiff has written some interesting books on the subject.
I wish it was handled better in game

If we're name-dropping, I'm fairly sympathetic to Keynes myself - my opinion about expectations is pretty Keynesian. I'm guessing you find yourself agreeing more with Hayek?
I'm not completely sure how Hayek would combat inflation that wasn't created by printing money... his advice to the Spanish in the early 1600s might just be 'stop using all this gold as currency'.
How would you put it?

 

[Meglok]

Staying on topic, inflation in EU4 is very simplistic. Taking a lot of money at peace conferences or having gold mines will drive it up, and you can drive it down by burning admin points. This reflects focusing your bureaucracy on the problem. Do I want it to be more involved? Not really. There is enough stuff to micro manage as it is. Maybe eu5 can come up with a better system, but leave eu4 alone.

 

[swagmeister]

Hanging? Then reducing inflation should cost sword mana rather than paper mana!

Sounds good to me. Spending admin points for inflation reduction is the worst.

 

[Froonk]

Amount of inflation during price revolution of 16th and 17th centuries was nothing like a modern hyperinflation. Especially since high demand for gold in Europe and silver in China the yearly inflation only rose marginally.

What the game needs to change is debasement. It was a combination of debasement of currency and loan defaults that made the prices really unstable, right now debasement only gives corruption and no inflation. I think debasement mechanic could use some change.

 

[Chazb5046]

If we're name-dropping, I'm fairly sympathetic to Keynes myself - my opinion about expectations is pretty Keynesian.

Uh-oh!

I'm guessing you find yourself agreeing more with Hayek?

Ha you’ve got me. Most definitely. Von Mises and Friedman also indispensable.
The money I would give to see a debate between Hayek & Keynes

I'm not completely sure how Hayek would combat inflation that wasn't created by printing money... his advice to the Spanish in the early 1600s might just be 'stop using all this gold as currency'.
How would you put it?

Wouldn’t that be funny? All the bellyaching modern Austrian econs do about a gold standard! In seriousness I don’t know. I know next to nothing about the Iberian economy of that time, the new world economy, how they interacted (more than the triangle trade) and what the spanish state’s relationship to its own economy was.

having said that I very much doubt the prescription would have been for artificial manipulation of the money supply. They tend not to be fans of doing that! Will look into it though because you’ve piqued my interest. It’s an interesting scenario because so often the inflation referred to by Hayek et al, was in relation to a paper based currency backed or not, by precious metals. In a scenario when there’s no paper..? Interesting

 

[qer]

I wouldn't apply current inflation theories of any type (neoclassical, austrian or post-keynesian) to the time period. Spain surely suffer an inflation problem, but there were much more important factors to explain it's demise. Most modern age societies had a very small inflation (at least according to what few estimates we have on the period) and I wouldn't say that the current implementation is bad for a game except for the mana spending to solve the problem. Having it tie to gold seem to me good enough considering the simplicity of the economic model employ( I mean, we can touch buttons to make a province to literally produce more money)

 

[Tarroque]

In seriousness I don’t know. I know next to nothing about the Iberian economy of that time, the new world economy, how they interacted (more than the triangle trade) and what the spanish state’s relationship to its own economy was.

Just the economic headlines, I'm sure someone will love to elaborate with proper sources but the Spanish monarchy determined the following foolproof guaranteed way to permanent economic success:

1) Tax domestic economy but not imports
2) Use imported gold to import foreign manufactured goods
3) Use money earned from domestic taxation to pay for a military to go fight abroad
4) Pay military better than domestic skilled labourers
5) Keep army units in foreign countries
6) Let the army units in foreign countries buy manufactured goods from occupied enemy nations
7) Take out loans from domestic businesses
8) Default on loans to domestic businesses
9) Blame domestic businesses for inflation
10) Fine domestic businesses for causing inflation

But uhhh back to OP; I kinda agree that inflation ought to be made into a significantly more dangerous obstacle.

 

[Canute VII]

Inflation in Ming China in fact had nothing to do with gold, but rather with the printing of paper money (debasement?)

https://en.m.wikipedia.org/wiki/Da_Ming_Baochao

So it's indeed funny that

• debasement doesn't give inflation
• Inflation doesn't increase the cost to root out corruption and
• Ming is the world's wealthiest country in 1444

 

[Chazb5046]

Inflation in Ming China in fact had nothing to do with gold, but rather with the printing of paper money (debasement?)

https://en.m.wikipedia.org/wiki/Da_Ming_Baochao

So it's indeed funny that

• debasement doesn't give inflation
• Inflation doesn't increase the cost to root out corruption and
• Ming is the world's wealthiest country in 1444

everytime I debase my currency in game and it doesn’t cause inflation I scream at my pc