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Interest, Inflation, Capital, Investment, and Savings

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Akeron
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Post: #1
Interest, Inflation, Capital, Investment, and Savings

Nominal interest [?] 10.19 % 8.60 %
Annual average of inflation 3.04 % 2.11 %

How can I have more inflation when my interest rate is higher?

It really doesn't make sense because my commodity index is lower too:

Commodity index [?] 1.24 1.28

That means capital has to be inflated instead which it probably is, but I still have more investment while having a lower savings rate:

Capital 13,755 Bil. € 13,797 Bil. €
Gross investment 945.35 Bil. € 725.39 Bil. €
Saving ratio 10.42 % 11.01 %

The only other thing I can think of is my low unemployment rate is affecting things, but my net income difference is much higher than my living costs difference. I'm not sure wages are inflated either since my people have more free time in exchange for having less labor time as well:

Unemployed 0.38 % 9.58 %
Net income 2,698 € per month 2,288 € per month
Living costs [?] 1,026 € per month 902 € per month
Free time 7.14 h/day 6.53 h/day
Labour Time 7.78 h/day 8.27 h/day

This is despite how my automation level is relatively lower as well. Therefore, more labor is needed.

Automation 69 85

I'm so lost by how the economy works in this game. Kopfkratz Suspect


Why return? That's a good question.

This post was last modified: 18.07.2017 02:02 by Akeron.

18.07.2017 01:54
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Akeron
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Post: #2
RE: Interest, Inflation, Capital, Investment, and Savings

My economy's gone totally bizarre. Last quarter, I had inflation over 5% from picking a pro-life abortion policy and a moderate policy on eating meat. I've no idea how either of those have anything to do with inflation. Before that, I've seen inflation hit around 2% at a maximum. It's usually +/- 1%.

In any case...

Nominal interest [?] 6.90 % 7.44 %

I haven't touched interest since the bank reform policy that completely screwed this up. It keeps going down now which is really aggravating since I can't use interest as a substitute for taxes to afford government spending. On top of that, money earned from interest has never been an accurate percentage of the national surplus.

Even now:
National debt [?] 996.02 Bil. €
Payment of interest [?] 41.40 Bil. €

Given my interest rate, that should be 67.72. At the very least, even if people aren't interested in borrowing, you would expect the government to buy private bonds to earn money when it has a surplus like how the government sells public bonds when it has a deficit in real life.

Even then, I'd expect the people to borrow since savings haven't gone up:

Saving ratio 9.63 % 11.06 %

On top of that, inflation's been higher which suggests credit is effectively cheaper:

Annual average of inflation 2.84 % 2.16 %

Again, I've no idea where this inflation comes from. Commodities have barely gone up at all:

Commodity index 1.25 1.44

Capital's been stagnant as well despite having no capital tax and low income tax:

Capital 15,602 Bil. € 17,759 Bil. €
Taxes on capital [?] 0.74 % 2.69 %
Acquisition taxes [?] 4.98 % 30.79 %

I've no idea why living costs aren't lower either and why net income has stagnated:

Net income 3,095 € per month 3,080 € per month
Living costs 1,264 € per month 1,095 € per month

Free time has also collapsed while labor time has remained constant.

Free time 6.88 h/day 6.91 h/day
Labour Time 7.88 h/day 8.03 h/day

I don't know why automation has gone down either despite how the level of progress has gone up:

Automation 61 97

Lastly, it's rather aggravating that the arts haven't gone up despite how religion has gone up. If anything, this should encourage a classical renaissance of patronage, but it hasn't happened. It's as if conservative policies are automatically associated with puritanism despite how that isn't automatically the case.

The bottomline is it's very aggravating that the game doesn't account for discipline in its economic model. When I talk about discipline here, I'm not just talking about law and order, but respect for the cultivation of technique. Instead, it assumes education spending automatically results in increased performance which isn't the case either since you can end up with spoiled bratty students who just don't care to learn as well as a politicized public education system that doesn't care to really encourage quality study habits.

I've become rather disillusioned by the game's economic model. It seems that social liberalism is the only way to encourage holistic economic development which not only doesn't necessarily work since it can tolerate poor performance, but isn't the only way to make things work since it doesn't have a monopoly on encouraging people to perform.


Why return? That's a good question.
21.08.2017 02:00
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CommieScum
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Post: #3
RE: Interest, Inflation, Capital, Investment, and Savings

It's probably random variance.

21.08.2017 15:14
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Malone
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Post: #4
RE: Interest, Inflation, Capital, Investment, and Savings

Quote:
Nominal interest [?] 10.19 % 8.60 %
Annual average of inflation 3.04 % 2.11 %
How can I have more inflation when my interest rate is higher?


Inflation does not only depend on the Nominal interest rate. In AR there are at least a dozend parameters which determine inflation. I beg your pardon that I can't answer all your questions, but what I see is, that you seem to think quite mono-causal. You may be inspired by very simplified economical models and theories. AR is much more complex and sometimes the results may contradict widespread theories. Especcially tasks and reforms can influence the values very much. My advise is: obverse your state over a longer time, I guess it will seem more plausible in the long run.


Politischer Test Test site from Ars Regendi for the evaluation and comparison of political alignments

Kein(e) Planet*In ist illegal!

Autor der Blüte des Zweifels
21.08.2017 20:25
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Helsworth
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Post: #5
RE: Interest, Inflation, Capital, Investment, and Savings

Abolish the Department of Education & treat it like the NHS Smile)


https://www.patreon.com/SerbanVCEnache

This post was last modified: 22.08.2017 16:23 by Helsworth.

22.08.2017 16:20
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CommieScum
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Post: #6
RE: Interest, Inflation, Capital, Investment, and Savings

Helsworth Wrote:
Abolish the Department of Education & treat it like the NHS Smile)


Only the national government is able to education children. Obviously.

23.08.2017 15:49
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Akeron
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Post: #7
RE: Interest, Inflation, Capital, Investment, and Savings

Malone Wrote:

Quote:
Nominal interest [?] 10.19 % 8.60 %
Annual average of inflation 3.04 % 2.11 %
How can I have more inflation when my interest rate is higher?


Inflation does not only depend on the Nominal interest rate. In AR there are at least a dozend parameters which determine inflation. I beg your pardon that I can't answer all your questions, but what I see is, that you seem to think quite mono-causal. You may be inspired by very simplified economical models and theories. AR is much more complex and sometimes the results may contradict widespread theories. Especcially tasks and reforms can influence the values very much. My advise is: obverse your state over a longer time, I guess it will seem more plausible in the long run.


I would like to believe this except inflation keeps getting worse and worse. Living costs are also starting to explode despite how the trade balance shows a strong surplus and how the budget has been balanced as well. Taxes remain far lower than comparable states which have lower inflation rates.

What I see is the game believes there is only one way to motivate people to save more and consume less - education. This is especially problematic in light of my high excise taxes which should be discouraging consumption but are having hardly any impact at all. I'm also pushing religious policies to encourage people to live moral lives instead of being hedonist, but it's not having any impact either.

I've also used employment reform while subsidizing apprenticeships to ensure quality job training, so I'm not sure why labor costs should be inflating either. In fact, when I did these policies, subsidies exploded, and I've now made subsidies by far my highest department of spending to maximize the effectiveness of training to improve labor quality...

...yet still, inflation explodes while the commodity index remains stable.


Why return? That's a good question.
30.08.2017 00:38
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Akeron
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Post: #8
RE: Interest, Inflation, Capital, Investment, and Savings

I think I've found what the real problem is - population and immigration. I say this because the real problem seems to be unemployment:


Exchange rate 1.15 $ / € 0.97 $ / €
Commodity index 1.20 1.65
Nominal interest 10.57 % 5.88 %

These three numbers should suggest my state would have less inflation than the average state, especially since my country has a stronger trade surplus than the average country:

Imports 669.95 Bil. € 1,234.27 Bil. €
Exports 1,221.77 Bil. € 1,452.85 Bil. €

There is no need to believe demand is pulling inflation higher.

However:

Annual average of inflation 2.79 % 2.16 %

Elsewhere:

Unemployed 0.84 % 13.25 %

This happened because I implemented employment reform a while back since I got sick of the 10% unemployment number. That said, I've also created subsidized internships and apprenticeships and banned labor unions. Wages shouldn't be inflated.

The real issue is here:

Contingent of immigrants 5.94 % 14.99 %

Clearly, the game is suggesting that a country with a lot of immigrants, even if they're unemployed, can drive down inflation. This makes no sense at all. Simply having people around doing nothing isn't going to make your society more productive. If anything, it should increase inflation since these people will either have to go into debt, use charity, or require welfare to afford their lifestyle, all of which increase the effective money supply to chase prices without actually providing any production in return.

In fact, the game itself recognizes this:

Annual average of population growth -0.37 % 0.35 %
Annual average of economy growth 1.72 % 2.22 %

If you subtract my population loss and add the average state's population gain to my country's economic growth, my country actually has more growth compared to the average country.

The only other thing I can think of is this:

Money supply 8,169 Bil. € 9,760 Bil. €
Capital 21,259 Bil. € 23,073 Bil. €
Stock index 3,862 3,440

For some reason, despite how my money supply to capital ratio is lower, my stock index is higher. I've no idea why that would suggest inflation though. If anything, it should suggest more efficient economic productivity.


Why return? That's a good question.

This post was last modified: 28.09.2017 13:21 by Akeron.

28.09.2017 12:45
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