Stop calling inflation "minting money"! It's not!

[Monolith]

Im tired of seeing everyone respond to complaints about inflation with "well thats what happens when you mint money." The way the sliders are setup, youre not minting money. Youre simply removing money from a tech slider and putting it into your "bank" (the treasury). If you were actually minting money with the treasury slider, then it should be SEPARATE from the rest of the sliders, allowing you to literally create money from nothing (leading to inflation).

The way the game currently portrays things, you arent minting money, youre just reallocating money from one area to another... and that should NOT be leading to inflation!

 

[Zagys]

Thank you, I feel the same way.

 

[Vormaerin]

You, the king, are not spending the money that goes into tech research. Your economy as a whole is spending that money. When you are squeezing money out of the 'general economy' into your personal treasury, then you get what the game calls inflation.

Which is not inflation in the proper economics sense, really. But has generally similar effects (ie things cost more than they used to).

That said, I think its silly to get upset about game terms. Folks use all manner of abbreviations and nicknames for stuff, sensibly or not. As long as its pretty obvious what aspect of the game is being discussed, it should be okay.

 

[lenny]

Relax, it is a game mechanic. Everyone with some basic knowledge of economics knows that it doesn't work that way, but the intend of the mechanism is to penalize you for filling your treasury too much by making things more expensive then. And everyone knows that inflation makes things more expensive, hence the obvious choice of name.

 

[SirLaughAlot]

everyone knows what inflation means......really? i didnt until yesterday but hey...thats just my math-hating self :rofl:

 

[Sernaton]

This has been discussed long time ago, in EU2 threads, as the mechanics are identical.

Actually, if the monarch would divert gold from the country & its people (the tech sliders) into his pockets, the amount of gold circulating in the economy is reduced. This actually would cause DEFLATION in real life.

An analogy from today: if the government increases taxes, but doesn't spend them, it would cause deflation.

But then, it is just a game mechanic, and an important one in my opinion. I would have used another name instead of inflation, like for example "corruption costs" or similar.

 

[Barkdreg]

Don't want the term inflation in your game?
localisation\text.cvs with notepad, search for inflation and replace it with whatever term you like more. Hey presto, inflation gone.

 

[kolpo]

A more realistic effect would be unemployement. If you don't spend as much money in tech shall some of those people who where researching be fired or no longer earn enough to make a living. It shall take some time before those people find a new job. Also lowerings stability investement means firing guards and parts of your administartion.

If a government would suddenly stop all it's funding, then would that country have anhorible unemployement, revolts are quite a given in that situation. Eventualy would most of those people find a new job(maybe for rival powers) but before that would you have a very ugly situation.

EDIT: also lowering your army maintenance too much should produce army revolt events.

 

[unmerged(9136)]

Well, yes and no. When coins are tied to precious metals, you can't deflate too much. More likely it would just cause a rise in exports, as other countries can provide the coins that are missing at home, if you don't mint any more. A pound of gold is a pound of gold, regardless of whether it's in coins with your face on them, or in Spanish/Venetian/whatever coins.

What it would cause is an inflation when you actually spend that hoarded money. The production is the same, but you just gave a small horde of mercenaries a few coffers of money. It's going to play chaos with the prices in the short run.

In yet another sense, the economy is a more complex thing than just minting money. See the <a href="http://en.wikipedia.org/wiki/Philips_Curve">Philips Curve</a> for example, and there are examples where it did apply before the 20'th century. E.g., the inflation (and resulting price-fixing attempts) that happened in the wake of the plague epidemics: demand for workforce becomes higher than available supply, salaries go up, prices go up.

Hoarding all those shiny coins creates an extra demand. If you still get the same amount of money per year in taxes (which is what happens in the game), that money must come from somewhere if you're not minting them, so that means exports. Someone else will be minting enough money to buy your stuff. Suddenly it means less supply of goods locally (so prices go up), and more demand for workforce to produce them (so salaries go up, so prices go up.) It's not minting, but it could have the same effect.

On the other hand, let's pretend that, on the contrary, it actually were a closed economy and that you managed to deflate. If the available quantity of money went down and prices went down, then a smaller quantity of money is circulated around and you get less taxes per year. So if, say, you managed to deflate by 10%, the next year you might get 90 ducats instead of 100. (Actually even less, because deflation really plays havoc on the economy.) So now you can pay less mercenaries with those taxes (they'll go work for someone who has more gold coins instead), or less craftsmen/philosophers/scientists to do your research and army modernization (ditto). Unemployment goes way up too, so a lot of those gunsmiths designing the next great gun will probably bugger off to another country or be busy begging instead of being a gunsmith. So in the end the results wouldn't be that much better, even though it's another mechanic.

But in the end probably either is an over-simplification. It's just a game mechanic. Let's leave it at that

 

[kolpo]

Well, yes and no. When coins are tied to precious metals, you can't deflate too much. More likely it would just cause a rise in exports, as other countries can provide the coins that are missing at home, if you don't mint any more. A pound of gold is a pound of gold, regardless of whether it's in coins with your face on them, or in Spanish/Venetian/whatever coins.

What it would cause is an inflation when you actually spend that hoarded money. The production is the same, but you just gave a small horde of mercenaries a few coffers of money. It's going to play chaos with the prices in the short run.

If everyone uses gold to pay. Then if your goods there prices go even slightly above the average price, shall foreign countries stop buying your products. All that is left then is a local economy that has only 90% gold, people shall have less money to spend on producs and wages causing a slight deflation. People shall also spent some of their gold on foreign products because they are slightly cheaper, the foreign gold that entered your economy before is gone.

As soon as that deflation starts, become your products again competive in the worlds market, gold enters your country and you get inflation. When that get's too high shall foreign countries stop buying your products and is all that is left a local economy that has only 90% gold, people shall have less money to spend on producs and wages causing a slight deflation. People shall also spent some of their gold on foreign products because they are slightly cheaper, the foreign gold that entered your economy before is gone.

Net inflation 0%
Net wealth change:-10% wealth for your population

Suddenly spending all of your gold shall produce a temporary inflation, but again shall that destroy your competiveness and encouraging your population to buy foreign products. This shall cause the economics to balance again, result:

Net inflation 0%
Net wealth change 0%

As long as gold doesn't get's mined at a faster pace then production raises, shall their be no or little inflation. A plague lowers production(by killing and weakening people) without destroying gold, that is why it creates a ton of inflation.

 

[Nilmerf]

If putting gold into your treasury didn't cause inflation.. my guess is that people would just put all of their money into that, build mega armies, mega improvements, crush enemies, and then catch up with the low tech costs from being behind. So it's needed.

 

[N Katsyev]

Don't want the term inflation in your game?
localisation\text.cvs with notepad, search for inflation and replace it with whatever term you like more. Hey presto, inflation gone.

Wonderful post.

 

[Owl]

Wonderful post.

If just a little sarcastic ...

 

[Peter Ebbesen]

"Inflation" in the EU series has always been more of a balancing game mechanic than anything approaching the real world inflation concept. It is the concept that makes "spend money on 'actors' on the map (armies, province improvements) now vs. spend later vs. invest in tech without incurring direct economic penalties" a real balancing act.

Your current cool cash is always shown in the display, thus the term "minting money" (or "coining money" or "minting coin" or "diverting money to treasury" or whatever) is entirely appropriate to the player action which makes your pile of money grow on a monthly basis.

Are they the right terms from a real world economic POV? No, hardly that, but they are eminently understable within the abstracted economic system and that's good enough for me.

 

[unmerged(9136)]

As long as gold doesn't get's mined at a faster pace then productivity raises, shall their be no or little inflation.

Well, since the game gives you the same amount of money per year in taxes, even if you hoarded some (so they didn't go back into the economy), _someone_ out there must be mining gold.

But, as I was saying, even in the deflation scenario you still get indirectly the same effects. If you made your population 10% poorer, next year you'll have 10% less in taxes, so that's 10% less research you can pay for.

As soon as that deflation starts, become your products again competive in the worlds market, gold enters your country and you get inflation. When that get's too high shall foreign countries stop buying your products and is all that is left a local economy that has only 90% gold

Umm, no, not really. The point where prices become equal to everyone else's is the point where enough gold entered your market to equalize the prices. I.e., you don't have 90% gold at that point, you simply have 100% of the gold representing your goods production.

You can't judge prices and money as independent factors, which is what you seem to do there. Money is only as valuable as the amount of goods they represent.

Let's say we have an over-simplified small country which only produces 1000 tons of grain per year and 100 tons of crafted goods (tools, clothes, etc) and there are 100 ducats in circulation to pay for it. The craftsmen spend 100 ducats to buy the grain, and the peasants spend those 100 ducats right back to buy the crafted goods. So the prices stabilize at 0.1 ducats per ton of grain and 1 ducat per ton of crafted goods. Let's also say that those are the prices in neighbouring countries too, so there's no net import or export in the long run.

If you remove 10 ducats from that economy, it doesn't just stay 90% poorer, it actually drops prices accordingly. Now the crafters only have 90 ducats to pay for grain, and the peasants only earned 90 ducats to spend right back on crafted goods. But they're still producing and buying the same amount of goods as before. Prices will adjust accordingly. Now it's 0.09 ducats per ton of grain and 0.9 ducats per ton of crafted goods.

Now they're starting to export stuff.

The only point where the prices equalize with the outside world and the exporting stops is when enough gold has entered the economy to equalize them. The point when the prices are back at 0.1 ducats per ton of grain and 1 ducat per ton of crafted goods (and thus exporting stops), is the point where that economy has 100 ducats again to pay for them.

(I'm assuming that the country isn't big enough to significantly affect the whole continent's economy. I.e., that their exporting 100 tons of grain won't move the prices much on the world market, and their getting 10 ducats for it won't make a huge difference for the whole continent.)

Sure, there'll be some fluctuations on the way there, maybe even going between temporarily having too much money and temporarily having too little money. But when the situation has finally stabilized, is when you have exactly as much money as your production is worth on the world market. No more, no less.

But also bear in mind that this equalization takes some time to happen. If you only did this once, sure, it will eventually bounce back to normal.

You are right that on the way there everyone will be poorer, though. If goods are now exported, the local population can buy less of them.

 

[Juba]

Im tired of seeing everyone respond to complaints about inflation with "well thats what happens when you mint money." The way the sliders are setup, youre not minting money. Youre simply removing money from a tech slider and putting it into your "bank" (the treasury). If you were actually minting money with the treasury slider, then it should be SEPARATE from the rest of the sliders, allowing you to literally create money from nothing (leading to inflation).

The way the game currently portrays things, you arent minting money, youre just reallocating money from one area to another... and that should NOT be leading to inflation!

It has been called minting ever since the inflation was introduced to EU was it in 1 or 2 I can't remember. It's unlikely that it will go away even if it's not actually minting. After all you don't DoW people you DWO (declare war on) people.

 

[kolpo]

You are right that gold shall again go to 100%, that was a mistake in my rethoric BUT 10% of that gold is actually not really owned, it costed you 10% of your goods and the only normal way to get those goods back is to give the money back to the country it came from. It is actually some sort of complex loan.

The -10% goods this causes shall most likely not be equally divided, but it shall instead make a certain amount of people unemployed, causing them to lose 100% of their income. Those people have nothing to lose and everything to gain from revolting against their leaders.

The moment the 10% of your treasury goes back in the encomy shall you at first have a 10% inflation. You very temporray have 110% gold but soon shall economics cause 10% of it to go to foreign countries and in exchange shall the 10% missing goods come back(export and importar are equal again). In the end shall their be no inflation or deflation.

 

[minority]

You've got it wrong.

People are not calling inflation "minting money".

They're calling the act of putting as much money into your treasury "minting money", because it is indeed like minting money.

So the term was not made specifically to refer to inflation. It's just that the game mechanics made them related.

cheers