Wednesday, April 8, 2009

Inflation in a digital world



Random: As a young man who is relatively tech savvy and far too nerdy I too have at one point in time been sucked into the digital timesink known as "World of Warcraft"

Having played through the original game (LV1->60) and the first expansion (LV1->70) only with one character each respectively, I am far from an expert into the intricacies and nuances of this digital space. I have long since "quit" the game (digital social network) but my thoughts stray back towards it from time to time .. In fact I am wondering this:

1) In this "mirror" world where there is 100% employment (every player "makes money" by virtue of smacking rabbits and selling its fur) and industrial capacity (game grind / server space / player time) is not quite an "nmf" multiple but relatively large in comparison to "population size" at what point would we start to see massive inflationary pressures?

2) And in relation to thought #1 - I've pondered this as I watched prices rise on the server I was on for items of no real consequence as individuals flush with "cash" (excluding the effect of "gold farmers") pushed prices ever skyward and costs imposed by the game creators continue to rise with new features costing ridiculous sums are implemented - at what point does there need to be "central bankers" to limit this to prevent new players (the next generation) from suffering?

3) How does this mirror universe reflect the trends in our current one? Falling "real-world" incomes reduce disposable income to spend on games .. but really, US$15 a month is a drop in the bucket compared to other entertainment spending .. so will this recession (deflationary spiral, etc) in fact cause "birth rates" in this mirror world to rise? Will it fuel even more inflation?