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There has been some confusion recently on the gold nerf that took effect March 11. I am writing this in the hopes to better educate the confused population and help them to understand why the nerf was implemented in the first place. Let's get started.

What is a nerf? Isn't that a football or something? :T
Technically speaking, yes. NERF™ is a toy manufacturer that creates foam footballs and dart guns that are generally amusing and entertaining. However, a nerf is neither of these adjectives; it is a method of control game designers implement to reduce the effectiveness of a site feature in order to improve game balance. In this case, gold was the target of the nerf.

So why did we need to reduce gold? D: I like gold!
In short, there were a number of players who started "abusing the system" if you will. Through sEB and PS, people were earning gold art an excruciatingly rapid rate, causing our Gaian economy to go into a state of hyperinflation.

Hyperin-what now? What's that?
Hyperinflation is crazily out-of-control inflation, where prices on goods (items) increase rapidly in response to a decrease in the value of currency (gold). A good example of hyperinflation is the German economy in 1923.


"Before World War I Germany was a prosperous country, with a gold-backed currency [and] expanding industry. The German Mark...[was] exchanged four or five to the dollar. That was in 1914. In 1923, at the most fevered moment of the German hyperinflation, the exchange rate between the dollar and the Mark was one trillion Marks to one dollar, and a wheelbarrow full of money would not even buy a newspaper."

How did this happen? The government dropped the gold backing of it's currency and began to borrow from other countries to fund the war. This left them with one hell of a debt when everything was said and done. Instead of creating a tax to bring money to the government and re-implementing gold-backed currency, the Kaiser and Parliament chose to begin minting new currency at a rapid rate in order to pay back their debt. This made the value of marks decrease rapidly, causing prices of goods to rise.

"So the printing presses ran, and once they began to run, they were hard to stop. The price increases began to be dizzying. Menus in cafes could not be revised quickly enough. A student at Freiburg University ordered a cup of coffee at a cafe. The price on the menu was 5,000 Marks. He had two cups. When the bill came, it was for 14,000 Marks. "If you want to save money," he was told, "and you want two cups of coffee, you should order them both at the same time.""

Source: PBS: Commanding Heights

So why did you bring all that up? That was random and pointless. -_-
Well, basically said, we are currently in a similar situation.

O.o wait wth? There was a Gaia war? We have a debt to pay? Where was I when this happened?
No, there's no war debt. However, we the players are "minting" money at a similar pace of the German rate, making it essentially worthless. Ever notice how items in the marketplace have skyrocketed in the past few years and alot of people have a ton of gold? :T yeah. We call that hyperinflation.

Think of it this way:
Gaia has no set amount of gold in a reserve. They don't have a limit to how much is in the economy at all times. Therefore, there is an infinite amount of gold in the system, no regulations on it at all. Through the abuse of features like zOMG's End Boss and Papa Saw, people were able to create their own gold out of thin air to their hearts content.

So wait. How did people abuse EB and PS?
Through a method called sEB, players are able to get ridiculously high amounts of gold in a matter of hours. I broke it down into math a while ago. Remember, this math was done before the nerf.



Now, this wasn't horrible if you did only one run every few days (as some people did), but alot of people would continuously go on runs, earning a boatload of gold per day. In addition to this, there was also Papa Saw Farming. This method of PS involves doing successive battles against the boss, earning alot of money in the process, but nowhere near as hefty as EB.



However, these aren't the only two in-game features that grant alot of gold; there is also Tiny Terror Farming, Fluff Farming, the use of Fortune's Favor Ring to farm areas, Shallow Seas Mob Runs (sMOB), Shallow Seas Speed Runs (SS Speed), et cetera, et cetera. The Developers and HQ knew that, overall, zOMG was hemorrhaging a massive amount of gold into the economy and that it needed to be slowed down at the least. That is why the cap was implemented in the first place.

They put a nerf up, so now the economy is fixed, right?
Not at all. The cap will merely slow the flow of gold into the economy. But until they find a way to pull gold out of the economy at an equally effective rate, there is no fix. By implementing events like the 2011 Valentines Day Event, where players bought valentines for others, they are able to reign in a lot of gold. (In fact, that event "drained an amazing 1,477,804,200 from the Gaian economy!" Which, in perspective, is a small dent, but a dent nonetheless.)

So then I'll just buy my friends things from the Marketplace. That'll help, right? biggrin
Unfortunately, it will perpetuate the problem more than solve it. See, when you make a purchase from the MP, 98% of your gold is passed from you to the vendor (player-to-player circulation.) Only 2% is drained into the economy and out of circulation. This is hardly any progress towards a fix at all.

So what am I supposed to do? D:
Well, if you want to buy gifts for your friends, start at the gold shops. These are the stores run by NPCs like Barton Boutique and Dernier Cri. All of the gold you spend on these items is put directly back into the economy, no player-to-player circulation involved.

Next, don't create mule accounts to bypass the cap. Yeah, it's something that has been overlooked, but it'll just put HQ in even more of a huffy when they realize a massive influx of "new" players to the system. Not using mules will (hopefully) prevent the need of any more changes to the system.

Lastly, get involved and stay updated. Go to developer meetings, browse the zOMG Forum, make posts, reach out to other players - do whatever it is that will help you become tightly knit into the community. If you familiarize yourself with the workings, the actions made by HQ won't be so shocking.

So you don't think they'll take the cap off any time soon?
As far as I can see, there are no plans to remove the cap. However, I bet tweaks will be made in order to further alleviate abuse of the system. Nothing is perfect the first time around. I feel as though the cap will be here indefinitely, don't expect it to disappear ever.


So, thankfully I was wrong about the cap :3 Looks like we'll get to say our goodbyes to it within the week!

Was free Gaia cash contributing to the hyperinflation?
As far as GC goes, it's hard to say. No, it cannot truly add to hyperinflation because it's a separate method of payment altogether. Instead, it would affect regular inflation, the general increase of prices in the market over any period of time.
In my opinion, yes, cash and some cash items helped to perpetuate inflation.

Random Item Generators (RIGs) like the new Crystal Overdrive are extremely controversial when it comes to the debate over inflation. They contain the rarest of rare items, and create demand through scarcity. The item Fantasy Kitten Star is the perfect example to use.

*EXAMPLE OF SCARCITY AT WORK*
Let's say 10 Fantasy Kitten Stars were made and, (for the sake of keeping things even), there are 10,000 people who want one. That's a ratio of 1000 consumers to every 1 Kitten. This is bad for the consumer - it drives up the price to ridiculous heights because there is a permanent shortage. Basically: Not everyone can get one, and the vendor knows that. They also know that there are very (few) rich consumers who are willing to buy these Kittens, so they set the prices very high and wait for any offers. Once they get a sale, other vendors set their prices similarly, and that's how the ridiculous number of 55.5 million gold per Fantasy Kitten Star is born. It becomes unobtainable to newbies and recreational players, which is unfair by HQ standards.

Now, in a normal economy, we do see gaps between economic classes and the goods geared towards them. Usually, a knockoff item is created to satisfy the consumers who cannot purchase the name brand item, and everyone goes on with their lives. Unfortunately, artists on the site cannot keep creating recolors and gold shop item equivalents due to the amount of work they already have on their plates.

However, since we are "living" in a hyper-inflated economy where only a small percentage of players access the sources of unlimited gold, we see a much larger gap between the rich and poor. HQ took action by implementing the cap and increasing the gold grants in other areas of the site. They're trying to create a fair spreading of the wealth in order to allow the recreational players access to the exclusive items.

By implementing a free cash system, they are allowing all players access to the cash shop, namely those who cannot purchase Gaia Cash with their own money for various circumstances.