LindeX at 251

[SabaothMastema]

Going down is just a harmful to the SL economy as going up is. If starts going down then L$ will eventually begin to lose buying power. If anyone can easily get L$1000 then prices start to climb because the customer can afford to pay higher prices. Eventually what was once a cheap L$100 impulse buy becomes a cheap L$1000 buy. While at first that sounds it isn't. Eventually the L$ will swing the other while prices will not. This is due to merchants setting the prices at what they had been getting before. If the L$ stays in current fluctuation zone then everyone is better off.

[Rya Nitely]

The last time we had significant L$ fluctuations was late 2011 according to the data. Since then it was stable around 247 and 248 until late last year. If a fluctuating L$ is so important to the SL economy then why did things run so smoothly for 4 years?

If it keeps going up then merchants will start looking to recoup their losses. These small increases might seem insignificant, but they add up. Many merchants depend on their SL income. If their income keeps decreasing as a result of L$ price changes (and also the recent cash out fee increase) then this might lead to consumer price increases.

 ETA: Stable around 247 and 248 from late 2011 to September 2015, and after that 249, then 250 and now 251 for a quick sell.

[Rya Nitely]

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SabaothMastema wrote:

 If anyone can easily get L$1000 then prices start to climb because the customer can afford to pay higher prices. 

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The effect you're describing here is an increase in L$ /US$, which is the current situation. Buyers get more Lindens per dollar, which gives them more buying power and hence they can afford to pay higher prices.

So, prices could climb, not only because the customer can afford to pay more, but also because of sellers recouping the loss at the exchange.

But of course we're not talking about 1 or 2 points here.

[Qie Niangao]

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SabaothMastema wrote:

To add to this, the L$ is actually more stable than some RL currencies.

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"Some"?

In exchange for the US dollar, the L$ is more stable than any RL currency that isn't directly pegged to the US dollar (as once was the Argentine peso, notoriously).

And that's because the L$ sort of is pegged to the US$, or at least the Supply Linden "central bank" very actively manages the exchange rate.

Do not mistake the Lindex for a normal currency market. The entire L$ currency depends on Supply Linden minting and selling a steady stream of fresh L$s to resupply all the currency destroyed in upload fees, Marketplace commissions, and all the other little "sinks" that outweigh organic "sources" (such as stipends for the remaining Premium members). This currency needs "quantitative easing" in spades, lest the quantity shrink to the point we'd need to take out a new RL mortgage to pay for a texture upload.

What's not known is whether Supply Linden ever buys L$s, too, or merely relies on those hungry sinks to protect the L$'s value. It's very difficult to tell for sure, but I think no such purchases ever happen, and that Supply's sale price is all that's needed to control the market.

So yeah, I'm pretty sure Supply is now actively managing the exchange rate upwards about 1L$/US$/calendar quarter. I don't know why, unless maybe it's trying to very gradually correct for long term appreciation of the US$ vs the Euro, Sterling, etc., against which the L$ really has become expensive over the past few years.

[SabaothMastema]

Yes pegged to the USD yet still it still acts as an independent currency. No further argument however. I do agree despite being mouthy lol

[Rya Nitely]

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Qie Niangao wrote:

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So yeah, I'm pretty sure Supply is now actively managing the exchange rate upwards about 1L$/US$/calendar quarter. I don't know

why

, unless maybe it's trying to

very

gradually correct for long term appreciation of the US$ vs the Euro, Sterling, etc., against which the L$ really has become expensive over the past few years.

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I've always leaned towards this view. It makes more sense than any other, and here's why:

There wouldn't be many new sell orders going in at 249. They'd be placed at 250 to 252. And if the current orders at 249 are not getting filled then you would expect these sellers to move their orders up. This should then help to reduce the quantity at 249, but this isn't happening, and it won't happen because it isn't a backlog of orders, it's Supply Linden. It is a wall that has been purposefully created - for whatever reason. Maybe it is a correction to make L$ more affordable outside USA, which is a good thing.



 

[Maddy Effingham]

I must say I am saddened and angered by the arrogance and stupidity of impatient people driving the Selling value of Lindex up so quickly.  Forgive me if my words are harsh but I find this upsetting.  For several years the Lindex was at 247 and actually when I started in SL 8 years ago I believe it was up around 251 (I don't recall for sure) and gradually came down.  Now in a space of 2 MONTHS it has lost 5 L$ value going up to 252 because people are IMPATIENT and don't realize that their own greed is costing THEM as well as everyone else a better return.  SO WHAT if you have to wait 4 or 5 days more or a week more???  If you sell once a month at say end of month every month, it's exactly the same as a credit card company who gives you 3 weeks to pay.  Everything is off set by that delay.  Meaning if you sell on 1st of every month, you will always receive your amount roughly 30 days apart from last month anyhow.  I can't believe that the people who sell their L$ (small time sellers) are in such DIRE need of their money that what....they will end up in the street?  Lose their home?  Have ROCKY BALBOA come break their arm?  Really?

People!  Those of you in such a rush!  SLOW DOWN!  Stop and smell the coffee!!  Don't like coffee?  GET TEA!!  I'll even pay it for you!  But think of what you are doing!  Sheesh!:smileymad:

K I said my peace!   Anyone got crumpets to go with that tea?

[Pamela Galli]

I cancelled my last order @ 249 after three weeks. Evidently you do not understand that in order to sell, there must be buyers. 

[wherorangi]

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Pamela Galli wrote:

in order to sell, there must be buyers. 

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yes. agree

as somebody mentioned way earlier and at other times, the L$ is depreciating against the US$ inline with non-US currencies as demand for US$ strengthens due to international market conditions

at the depth of the recent US recession (banking crisis, quantitative easing, growth slump, etc) the price of US$ (in foreign currencies overall) fell. In the last few months the US$ price (in foreign currencies) has risen, as the US economy begins to recover

it costs more now to buy US$ than it did a few months ago. Therefore given that a person has now bought US$ with their foreign currency and wishes to sell them for L$, then they would expect to get more L$ for their US$ than they would in previous months. As would a US resident holding (now-in-demand) US$ ordinarily. And further also given the economy sluggishness of the SL economy

given that the L$ has depreciated by only about 3/247ths against the US$ over this long RL recession period then is not too bad really

[Qie Niangao]

It's actually the last couple years that the US$ has been especially strong against the Euro. It was all the way back to the 2008 recession that the US$ gained against the Pound Sterling. And the L$ has been stable against the US$ through much of that until recently -- but as we've seen (above) from historic Lindex data, the L$ was much weaker than this in 2009, too, for a while, until these past few years of extreme stability.

Across the street, there's speculation that the current blip is caused by folks cashing-in L$s to take advantage of the grandfathered rate buy-down offer. Makes some sense to me; I've certainly heard a lot of Estate owners exercising that option.

If that's true, then the rate is likely to revert to status quo ante, which might be a rare opportunity to make money on the Lindex, for those bold enough to speculate.

That's not me, that's for sure, and I'd never recommend that. I don't think the Lindex has much resemblance to a currency exchange, and even if it did, there's a risk of betting against the "central bank" -- a sure way to lose your shirt!

[wherorangi]

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Qie Niangao wrote:

It's actually

the last couple years that the US$ has been especially strong against the Euro

. It was all the way

back to the 2008 recession that the US$ gained against the Pound Sterling

. And the L$ has been stable against the US$ through much of that until recently -- but as we've seen (above) from historic Lindex data, the L$ was much weaker than this in 2009, too, for a while, until these past few years of extreme stability.

Across the street, there's speculation that the current blip is caused by folks cashing-in L$s to take advantage of the grandfathered rate buy-down offer. Makes some sense to me; I've certainly heard a lot of Estate owners exercising that option.

If that's true, then the rate is likely to revert to status quo ante, which might be a rare opportunity to make money on the Lindex, for those bold enough to speculate.

That's not me, that's for sure, and I'd never recommend that. I don't think the Lindex has much resemblance to a currency exchange, and even if it did, there's a risk of betting against the "central bank" -- a sure way to lose your shirt!

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on the first. Yes that makes sense. Demand for US$ would be high at the moment for the sim/estate owners

+

just on the foreign thing. I am bit biased in my thinking. Over the last month or so then there has been a uptick in the value of the US$ against the basket of other currencies. I am pretty sensitive to this myself when I have to buy stuff online priced in US$

like on 7 Sep 2015 the exchange was 1 USD = 1.59 NZD. 19 Oct 2015 = 1.47. 27 Jan 2016 = 1.55. 1 May 2016 = 1.43. 18 May = 1.48. Is pretty volatile for me. Same as lots of other countries

+

i also agree about speculation against/with the L$. Supply Linden does a pretty good job of ameliorating volatility in the L$ market

I think tho that 250L ( or even maybe as high as 260L) might be the new normal for quite a while. Is less new US$ coming into LL itself overall, so it would make sense for the new dollar introducers to get more L$ for their money

eta: by this I mean that the more L$ a person gets for the same US$ then the more L$ they have to spread round. More share the love, than not

[Rya Nitely]

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Qie Niangao wrote:

Across the street, there's speculation that the current blip is caused by folks cashing-in L$s to take advantage of the grandfathered rate buy-down offer. Makes some sense to me; I've certainly heard a lot of Estate owners exercising that option.

 

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So there would need to be a lot of people who have a spare L$160,000 (~$US600) sitting around for a rainy day, and they are selling it to pay the buy-down fee. I thought most people (merchants and estate owners) sell their excess L$ regularly to pay tier and/or take profit, not hold onto such large amounts.

I'm considering buying a full sim, and if I do I will sell my lindens as usual but I won't process credit. My selling would have no impact because it's my regular activity.

Perhaps people are selling some of their land to pay the buy-down fee, but then there must also be people buying L$ to purchase it, and this would be an offset. 

I don't understand how the buy-down fee is causing the current blip? 

[Rya Nitely]

Hi there kiwi

From September 2011 to September 2015 the L$ has sold steadily around 247 to 248. This was very stable, as Qie pointed out. During this same period the Australian dollar has gone from AUD$0.93 to AUD$1.40 per US$1.00 Huge fluctuations, yet the L$ did nothing over this period.

However, I'm not complaining as the AUD/US exchange rate is good for me as a merchant. 

It's also a good thing to see SL consumers get more L per dollar.

[wherorangi]

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Rya Nitely wrote: 

I don't understand how the buy-down fee is causing the current blip? 

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it wouldn't be the only reason, it would be a contributing factor tho. 160,000L seems like a lot, but for the estates is not a whole lot of L$. About the monthly rental for about 2 sims

i think that the smaller estates are maybe cashing their L$ more frequently, to convert their higher tiered sims to the lower tier rate as quickly as they can. The reason being that when they do this they are able to compete, against the larger grandfathered estates, sooner on parcel rental price  

[wherorangi]

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Rya Nitely wrote:

From September 2011 to September 2015 the L$ has sold steadily around 247 to 248. This was very stable, as Qie pointed out. During this same period the Australian dollar has gone from AUD$0.93 to AUD$1.40 per US$1.00 Huge fluctuations, yet the L$ did nothing over this period.

However, I'm not complaining as the AUD/US exchange rate is good for me as a merchant. 

 

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hi aussie (:

yes definitely its been good over the last few months to be buying AUD with your earned USD. Conversely has not been great for Aussie consumers buying USD. Has been the inverse for NZers. Altho I think the USD v NZD bottomed out at 1.43. Could be a dead cat bounce tho (profit taking) maybe dunno.

if I knew the exact answers to all this stuff then I would like one of them ebil 0.000000001 % ers. I would have like zillions of money, and I would have bought SL off LL ages ago, and I would be the boss of the world, and all them SL devs would have to do what ever I wanted  (:

 

[Motor Loon]

...and it gets worse...



I'll agree with those posting earlier, for many years I've been cashing out at 247 (or 248 when I needed it done quick) so numbers like this, I consider really bad and an obvious recent change to an otherwises rather stabile rate.

[Chavo19]

If you aren't watching the buy side you're missing what's going on.

When the market was stable there was always 80 to 100 million linden for sale on the buy side.

Last year all of that linden suddenly dissappear from the market for a couple of days. Before buy orders started getting put back the market dropped to 248.

This year that has happened several times, mostly in the last month.

All of the buy orders will either fill or get taken down. Shortly after new buy orders of 10 million will start getting put back a couple of linden per dollar lower than where they had been.

Then as it sells they use it to undercut the market. As time passes a few more stacks of 10 million get thrown in as well, also under cutting the market keeping anything from selling.

The way it's been going this month about a week later, with several stacks of 10 million consistently undercutting the market a stack of 50 million gets thrown in undercutting making a pretty large stack undercutting the (now) old going rate.

A day or two later everyone at the old going rate move their money trying to sell, the buy orders dissappear then reappear a couple of linden per dollar lower, then the cycle repeats and if you watch it's predictable when it's going to happen.

To me it appears it's market manipulation being done with between 80 and 100 million linden

[wherorangi]

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Chavo19 wrote:

 

To me it appears it's market manipulation being done with between 80 and 100 million linden

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which would then beg the question. Who has a lazy 80 to 100 million L$  (320 - 500K US$ approx.) to do this ? 

eta:

if was a resident speculator then who buys 500K USD worth of L$ for their own purposes ?  They would have to be able to 'short' these to other residents. Buy at 1:251, sell at 1:247, or about 

[Pamela Galli]

I cash out the same amount each time, so I can easily estimate sales at a glance each month. Now my easy record keeping is all messed up because I keep having to cancel orders that turn out to just sit there. 

[Phil Deakins]

This isn't a reply to you, Motor. Yours was just a convenient Reply button to click.

To those who have moaned that the changes are a huge negative - stop whining, for goodness sakes. It's always changed. So it's had a time of stability. So what? It's not fixed, and it will change in accordance with market forces. My guess is that the ones who post moans about it haven't been around and cashing out very long, so they imagine that, because it's been stable while they've been around, that's how it should always be and, therefore, something must be very wrong for it to go up a few points. Those who have been around and cashing out for some time are used to it. It's not all that long ago when it was up at ~260. So stop whining. You're a few cents worse off. So what?

[Rya Nitely]

Phil, I have posted in this thread quite a lot. I find the topic interesting. Many others might find it interesting. Sometimes being interested and speculating on why it's happening isn't whining. It's curiosity. And merchants have a right to be concerned as this affects them directly. So, if you are NOT interested in the topic or if you find it annoying then stop reading it. Leave it for those who want to talk about it.

[Rya Nitely]

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Phil Deakins wrote:

You're a few cents worse off. So what?

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And maybe it is only a few cents for you. It isn't the case for me and Pamela or probably Motor, and many others. It's turning out to be quite a lot of money.

BUT, as I have said many times, I am not complaining. It might be good for consumers.

[Rya Nitely]

And I think a lot of people would find it comforting that there is a thread on the subject so that they can find out what others think. Would you prefer it not to be discussed at all? Things change suddenly, affecting our income, and everybody should just shut up?

[Rya Nitely]

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Phil Deakins wrote:

It's not all that long ago when it was up at ~260. So stop whining. 

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Why do you say over 4 years is not long ago?

[Qie Niangao]

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Rya Nitely wrote:

 

So there would need to be a lot of people who have a spare L$160,000 (~$US600) sitting around for a rainy day, and they are selling it to pay the buy-down fee. I thought most people (merchants and estate owners) sell their excess L$ regularly to pay tier and/or take profit, not hold onto such large amounts.

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I'm not confident in "the buy-down theory" as an explanation of the recent decline in L$ value, but I don't think the theory assumes the whole buy-down fee is coming out of folks L$ balances in one great clump. Rather, the effect could be more isidious and gradual, as folks divert somewhat more of their L$s toward funding buy-downs instead of spending in-world, which would put more selling pressure on the L$ (and, possibly, cut volumes of residents' L$ commerce, too,which would be only partly offset by a weaker L$).

Anyway, it does look like something is happening, and while the value change is still minuscule (the whole effect still within the range of daily swings in real currency markets), it does make one wonder: Is a "run on the bank" in progress? If so, and assuming the current flood of sell orders eventually falls back below the volume of L$ sinks built into the economy (forcing L$ buys), then this would be a bad time to "pile on" sell orders -- and maybe a time to speculate on recovered prices.

The L$ has overshot targets before, if we go back far enough in history, so that could be what's happening now. If it does correct, it would be more evidence that the Lab only sells L$s and never buys.