The first link is an article revealing how inflation can move in virtual worlds discussing the Diablo 3 and World of Warcraft communities. It provides important insight into elements of inflation and the poor results that come from trying to control the outcome of things, especially with humans. The ultimate solution: Let the market clear on it’s own.
As virtual fantasy worlds go, Blizzard Entertainment’s Diablo 3 is particularly foreboding. Within this fairly straightforward gaming framework, virtual “gold” is used as currency for purchasing weapons and repairing battle damage. Over time, virtual gold can be used to purchase ever-more resources for confronting ever-more dangerous foes. But in the last few months, various outposts in that world have borne more in common with real world places like Harare, Zimbabwe in 2007 or Berlin in 1923 than with Dante’s Inferno. A culmination of a series of unanticipated circumstances has over the last few weeks produced a new and unforeseen dimension of hellishness within Diablo 3: hyperinflation. Considering the level of planning that goes into designing and maintaining virtual gaming environments, if a small, straightforward economy generating detailed, timely economic data for its managers can careen so completely aslant in a matter of months, should anyone be surprised when the performance of central banks consistently breeds results which are either ineffective or destabilizing? The Austrian School has long warned of the arrogance and naïveté intrinsic to applying rigid, quantitative measures to the deductive study of human actions and the events of the last week provide a stark reminder of the power and inescapability of the laws of economics.
DETAILS: The case of Hyper Inflation
h/t Tyler Durden
The second Link discusses the world of bitcoin and the status of this emerging currency giving the proverbial finger to the central banking system and a banker’s serious threat should this ever move forward without their ability to control it.
Underscoring a few points related to bitcoin:
1. The supply is constrained, and with the client in the “wild” with hundreds of thousands publicly available nodes scattered across nearly every country on Earth – good luck getting a consensus on changing it. (There are even more hidden behind encrypted proxies and Tor.)
2. Note how minting “MOAR” failed. I wish Bernanke was a gamer – he might even “get” it. (Or does, which is why he’s hiding from Jackson Hole this year.) Anyone telling you inflationary currencies “work” is forgetting all those that failed. Enter bitcoin – the hybrid payment/currency network that doesn’t play by the rules of sovereign failures.
3. China is a major force in the games they adopt and play – they were reselling virtual gold before anyone even considered virtual currencies to be worth anything. Oh, and guess what? They’ve got the most bitcoin nodes running, with the USA second. I think the Chinese are very aware that bitcoin means giving the middle finger to every existing banking/issuance system on the planet – and they’re fine with that. Even their government allowed multiple spots on bitcoin to be aired on their state-sponsored TV channels.
The rest of the world has no idea what is coming, or howfast it will change. The deniers and clingers-to-the-old will keep reaching towards their backsides to throw some steamy brown rebuttals, but the truth of the matter is – change is coming, and you’d better be prepared.
(Public Bitcoin Node Data: http://bitnodes.io)