eRepublik economy going down, down, down. Solutions.

Day 1,162, 11:32 • Published in Romania Romania • by Alex Craciun

In the last weeks all of you probably noticed that eRepublik ecomony is going down.



It was going down slowly but sure, because of the excess of supply (or overproduction) even before this:

ANNOUNCEMENT

but it went way down the hill after everybody started their own company, supply got ski high, prices dropped 30-40% in just two or three days, salaries followed the trend.
Now the situation got a little better but all the monetary markets are screwed, for example USD got down from 0.022 gold/USD to 0.014 gold/USD, RON got down from 0.020 gold/RON to 0.018 gold/RON.
Something happened, you we will see what when we will analyze a little.

So why all the problem with the supply being bigger than demand?

Two reasons for this, I mean before the change two weeks ago:

1. admins changed the formulas some months ago, increasing the overall production
2. eRepublik medium "age" is getting bigger, this is because we don't have too much "youngsters" and because the "elders" are not retiring to enjoy their well earned pension

Because Plato wants to help the youngsters to be more successful he reduced the 40 gold necessary to create a company to just 20 gold and he also allowed everybody to work in all their companies.
Probably the idea was that everybody would produce their own grain, for their own food company, their own iron, for their own weapons company.

Everybody bought or created a company, I strongly believe that in the first day that this rule was imposed there were at least 10.000 companies activated (bought or created).
So, we had excess of supply before this, now everybody produces even more, so there is a lot more excess.

Because of the real impact, but also because of the panic... prices dropped 30-40%, salaries dropped the same 30-40% with a delay of two or three days and after that all the treasureries of all countries got 30-40% less from taxes (income tax and VAT).

There are speculations, articles in newspapers showing income in companies from a entity called "EREPUBLIK", post of the forum saying the same, that Plato decided to stop all this drop by starting to buy excess products from the markets.
But for these Plato needed lots of money, RONs, USDs, all kinds of money.
He had two options to do that:

1. create gold to buy local money, after that use local money to buy excess goods.
2. create directly local money and use it to buy excess goods.

A week ago you all noticed that all countries started to have problems with their exchange rates, so most probably, if the speculations are true and Plato bought excess products indeed, he used the second option, so he flooded all monetary markets with local money.

Exchange rates were facing at least two problems now:

1. a lot less gold on the markets, because hundreds of thousands of gold were used to create companies.
2. a lot of excess in local money.

I strongly believe that such an impact on the exchange rates could also have been done by "fake money". So this could be a third problem for the exchange rates. We had that before.


I already wrote too much about what the problem is.

Solutions.

First, the least complex one, I think that productivity should be decreased by a change in the formula. By doing this, all the above stated problems will be no more, no more excess supply, no more reason for Plato to buy things, no more excess local money.

Second, if the rumours are true and Plato is buying stuff from the market, he should buy local money with gold and only after that he should buy products. I wouldn't do this, it would encourage lazyness, still it would be better than just creating more local money.

Third, final and best option in my opinion: ADD MORE LEVELS to the companies, get it to quality 10, or quality 50. Nobody will have money to create a level 50 company, still nobody got to God of War.
By increasing the number of levels the total number of products on the market will be decreased, so less excess goods.

Also something should be done about making an upgrade of a company more attractive.
20 gold invested in a grain company will get you a return of around 0.50 gold/day, so you will get your 20 gold back in 40 days.
390 gold invested in a quality 5 food company will get you THE SAME RETURN: 0.50 gold/day, so you will get your 390 gold back in more than two years.


If Plato will do something about this, eRepublik economy will have a chance to get back up.




I wrote this article as the guvernor of the National Bank of Romania, romanians needed some explanations about the problems with the exchange rate and also about the problems with the prices dropping and increasing back again.


p.s. vine si traducerea in romana. 🙂