Long-term Inflation Control for a stable sustainable economy

Place bug reports / questions here.

Moderators: Balthagor, Legend, Moderators

Post Reply
mrgenie
Brigadier Gen.
Posts: 923
Joined: Jul 08 2008

Long-term Inflation Control for a stable sustainable economy

Post by mrgenie »

I always felt like when playing and just make sure to run positive on cash I'd be doing great, but eventually the economy always collapsed!

The economy according to socialist programs:'just make sure you create ever more money'
basically what all current governments are doing worldwide.. increase money non-stop

Doesn't matter if voting Dems, Reps, Progressive, Liberal, Convervative.. today it's all about
"buying votes" for that you ever create more money, run positive.

That economical crisis are looming as a result of this I and every voter on the planet
chose to ignore. We continue this nonsense of ever creating more money to run positive.

GDP and money increase is all that matters.

Now in SR I found out this always leads to economical crash..

But there's an indicator in SR that helps you stabilize economy also for the long term and it's
called "INFLATION"

Now in the real world the inflation is calculated by CPI data, which is an artificial basket
that doesn't actually reflect real inflation but mere an indicator to justify political policies
by either a government or a central bank or both.

in the game however the inflation indicator doesn't do these tricks to keep inflation
artificially low but it shows the real inflation calculated neutral by the engine.

I discovered if you're a poor country you can have inflation of 6% for prolonged periods
without killing economy or even as much as 12% for short periods of economical expansion.

But once your economy kicks/boosts/improves you can't sustain it. You need to get it to 2%
and from the moment you have a functioning economy you should keep it around 2%

everything you do in the game should from there on be focused on the 2% that's the golden rule
in my game I'm now running for decades.

This kinda reflects also the real world economical teachings where 2% or close under it
is the aim of central banks. Sadly, the real inflation is quite often 4-5% in western socialist
led countries although they report 2%, but you ask your neighbor of products on a year to year
basis really only increase 2%.. Because I know it's not for my household.

So that's why economical crisis keep coming in Europe, America, etc.. because they trick
and lie about the inflation. In reality, it's higher.

And SR is pretty much an accurate prediction of what happens if you can't keep Inflation controlled.

That being said, how do you control inflation.


_________________________________________________________________________________________________________________________________
Inflation Control:
The following increases inflation
1) Increase social spending
2) Build facilities
3) Increase military spending
4) Increase research spending

The following decreases inflation
1) Increase taxes
2) Increase domestic prices

So I figured, if you keep your inflation around 2%, try to keep it there..
very small changes in for instance the "Social Spending - Infrastructure" just move the
slider a little bit can already change inflation from 1.9 to 2 or 2.1
Move the slider to the right and your inflation goes up
move the slider to the left and your inflation goes down


_________________________________________________________________________________________________________________________________
Elections: skip maintain inflation 2% during this period,once the 90days start (assuming domestic approval is around 20%, if it's lower you might put more in social spending)
1) keep your taxes 10% 25% 25% 25% 10% 2% 3% 2%
2) social spending at 100% 100% 100% 0% 100% 100% 0% 0%
3) every construction halt it
4) Domestic prices all to 0%

Obviously you need some cash reserves for this, not much though,and it'll make sure you have an >30% election result while the other parties <30%


_________________________________________________________________________________________________________________________________
Building facilities: this can sky rocket your inflation.. again if you're a low GDP you can sustain 12% inflation without breaking your economy..

So if you build facilities, use the above 6 methods to increase/decrease inflation to keep it under control while building and once
building stops, change them again to increase/decrease inflation to keep it under control!
I can't stress this out enough:"INFLATION CONTROL!" is the key for this game long-term


_________________________________________________________________________________________________________________________________
Inflation going into 2 digit:
If lower GDP you can handle higher inflation for a while.
Once you start to hit upper regions on GDP, 12% inflation will cause your economy to collapse and from there on no matter what you do!
You can't do it right anymore. you can't finance an army, building units, your social spending will always outrun the income you could possible gain from tax..

Hence you need to borrow money (see the relation here to real world economies today) and once you start borrowing money,you can continue for
many years, ever more debt, if you use this time to get your inflation under control and keep it there and pay of the debts
you can continue the game and sustain economy but you need to keep down the interests so don't borrow to much money!

Because if you do borrow too much, for rapid expansion, and inflation for too long time in 2 digit range, you can only do this until you crumble under the interests..

Overall, INFLATION is the key indicator for long-term economical stability and knowing you're not building/expanding too fast..

BUT, as I said, if you're a developing country lagging with your GDP behind the big players, you can sustain higher inflation for a while.


_________________________________________________________________________________________________________________________________
Note here, do NOT go with inflation over 20% I tried 2 scenarios in this case my GDP start to go up very fast into the millions and my inflation to 99,9%
eventually the whole fell together like a card-house.. in fact I managed to ruin the whole world economy although i made up only 15% of world economy in the end.
I deliberately did this to see what happens if I explode inflation and see if I can get it back under control. Obviously not. You'd need a "debt-cut" which
the game doesn't facilitate..

Those are my observations for maintaining a healthy economy for long-games into the decades..


_________________________________________________________________________________________________________________________________
Cheating $$$, military resources, industrial resources, etc. I did that using the "Cheat Engine 7.0" to see what happens..

It looks promising because it let you expand very fast.. BUT, inflation will catch up with you and kill everything you've done..
So you can cheat all you want, as long as you keep inflation under control. So basically the inflation limits your possibility to cheat anyway..
As such, cheating is worth only a little bit.. finish that building you just lacked 2000 or 3000 military resources.. that won't kill the inflation too much.
But if you think:'let's cheat 100.000.000.000.000 USD and 1.000.000 Industrial Goods and 500.000 Military goods, great, works for a few years..
On games you plan to play decades that's gonna catch up with you and kill your economy.


_________________________________________________________________________________________________________________________________
Inflation going towards 99,9%

From here on conventionally getting it back under control I found to be impossible. Your economy is going down the drain..

I found out 1 solution if inflation gets beyond control:"start scrapping everything you don't necessarily need, or even beyond that literally killing your economy, your
country can get you back on track "

Max/Min the above 6 points I mentioned that increase/decrease inflation.

If you max/min this and start scrapping facilities you actually do get things under control again.. eventually even paying off the debt..
but you'll lose the next election as you have no funds to adjust the sliders to win it (unless you cheat again)

_________________________________________________________________________________________________________________________________
Since I was puzzling for such information on how economy works in SR I thought I write down some experience I made with running games for 50-100 years.
[UI-MOD] All-In-One viewtopic.php?f=91&t=31906
mrgenie
Brigadier Gen.
Posts: 923
Joined: Jul 08 2008

Re: Long-term Inflation Control for a stable sustainable economy

Post by mrgenie »

I actually felt this should be made sticky, or in a wikipedia entry.. and needs also feedback from other players that do long-term playing of the game since these findings only represent my observations which obviously is limited to only a few long-term games..

It might be interesting how "inflation control" as basics to maintain long-term economical stability would affect other players and if they observe the same effects on inflation and economical stability as I have written down here.
[UI-MOD] All-In-One viewtopic.php?f=91&t=31906
User avatar
Balthagor
Supreme Ruler
Posts: 22083
Joined: Jun 04 2002
Human: Yes
Location: BattleGoat Studios

Re: Long-term Inflation Control for a stable sustainable economy

Post by Balthagor »

You can always add to the Gamepedia page, any one can.

For now I'll just hock a loogie on this one ;)
Chris Latour
BattleGoat Studios
chris@battlegoat.com
SGTscuba
General
Posts: 2544
Joined: Dec 08 2007
Location: Tipton, UK

Re: Long-term Inflation Control for a stable sustainable economy

Post by SGTscuba »

This is actually quite interesting. I wonder if it works across the whole time span. I usually start in 1936, but at the start I usually have quite high inflation for 4-5 years right at the start from building, quite often over 20%. I'm wondering now if that is what is causing the economy to collapse long-term (rather than the transfer to cold war values), even if I take over larger, poorer countries which drops inflation for a while (goes negative), at least on paper. (think USA taking China and Japan and annexing them). Maybe its already too late by then? Maybe its something to try in my next playthrough, trying as the USA or UK or China maybe?

I wonder how well and to what value the AI minister could hold inflation too, and if its worth just leaving them to do all the work.
My SR:U Model Project, get the latest and post suggestions here:

http://www.bgforums.com/forums/viewtopi ... 79&t=28040
mrgenie
Brigadier Gen.
Posts: 923
Joined: Jul 08 2008

Re: Long-term Inflation Control for a stable sustainable economy

Post by mrgenie »

SGTscuba wrote: Nov 23 2020 This is actually quite interesting. I wonder if it works across the whole time span. I usually start in 1936, but at the start I usually have quite high inflation for 4-5 years right at the start from building, quite often over 20%. I'm wondering now if that is what is causing the economy to collapse long-term (rather than the transfer to cold war values), even if I take over larger, poorer countries which drops inflation for a while (goes negative), at least on paper. (think USA taking China and Japan and annexing them). Maybe its already too late by then? Maybe its something to try in my next playthrough, trying as the USA or UK or China maybe?

I wonder how well and to what value the AI minister could hold inflation too, and if its worth just leaving them to do all the work.
I have no answers to any of these questions.. still puzzling.. now running a game with "bursts" of inflation up to 10-15% with Australia and see what happens..

but I do know keeping it stable around 2% works all the way beyond 2010, that's where I stopped..

And I know excessive growth even if you manage to get it back to 2% will also lead to collapse..

So now trying to figure out of small bursts have a long-term damaging effect..

_________________________________________________________________________________
I might add, I know for certain that inflation control leads to long-term stability..
and being an engineer who worked in the field of fluid dynamic simulations, actually been writing c++ code for professional software used by car manufacturers for welding technology simulations,
that you need to maintain convergence within the simulation or else there's "no solution"

a software named FIDAP very good to show this effect..

but there's a margin you have to maintain within the convergence criteria so the mathematical equation maintains a solution..

my guess is, in this game it works pretty similar.. as long as you maintain within a certain max/min with the inflation you remain within the solution for the mathematical
equation and prevent economy to collapse..

once you breach the max min on the long term it'll fail and you get this point where the numbers don't add up anymore = failed economy..

that's a "hunch" I don't know this as I have no access to the actual math/programming behind the SR series..

But out of my belly I'd say.. maintain a solid average around the 2% and figure out the max/min of inflation to remain within the mathematical solution to keep a
stable economy..

My experience is every game I went over 20% inflation for some time and then back to 2%.. economy will crumble eventually anyway..
[UI-MOD] All-In-One viewtopic.php?f=91&t=31906
mrgenie
Brigadier Gen.
Posts: 923
Joined: Jul 08 2008

Re: Long-term Inflation Control for a stable sustainable economy

Post by mrgenie »

Ehm, the testing if 10-15% inflation for limited times maintains long-term stability is in the attempt to catch up with the rich countries..

obviously to win against the rich, that can afford much more expensive military, you gotta catch up of course..

My assumption is though, catching up takes time. Can't simply have a >20% inflation to make your GDP catch up with them..

And a ~2% inflation all the time you never catch up either..

So I think that's the trick of the game.. catching up.. beating them economically, without overheating which would ultimately collapse your own economy..
[UI-MOD] All-In-One viewtopic.php?f=91&t=31906
SGTscuba
General
Posts: 2544
Joined: Dec 08 2007
Location: Tipton, UK

Re: Long-term Inflation Control for a stable sustainable economy

Post by SGTscuba »

mrgenie wrote: Nov 23 2020
but I do know keeping it stable around 2% works all the way beyond 2010, that's where I stopped..

but there's a margin you have to maintain within the convergence criteria so the mathematical equation maintains a solution..

my guess is, in this game it works pretty similar.. as long as you maintain within a certain max/min with the inflation you remain within the solution for the mathematical
equation and prevent economy to collapse..

once you breach the max min on the long term it'll fail and you get this point where the numbers don't add up anymore = failed economy..

that's a "hunch" I don't know this as I have no access to the actual math/programming behind the SR series..

But out of my belly I'd say.. maintain a solid average around the 2% and figure out the max/min of inflation to remain within the mathematical solution to keep a
stable economy..
If its beyond 2010, what time did you start at? 1949? or before, I may actually try it with the 36 sandbox. I guess the key to not going too low as the USA is to simply make everything a colony a some of the larger countries will throw inflation WAY out of whack in the negative direction (unless of course you follow up with a massive build program on annexation).

I'm guessing that you are right with the min/max, maybe it causes something like integral windup within the game and once its there, your screwed as you cannot use the "reset" function like you would normally on a controller.
mrgenie wrote: Nov 23 2020 My experience is every game I went over 20% inflation for some time and then back to 2%.. economy will crumble eventually anyway..
I think this is my experience too - usually early game I get really high inflation from the building, and then major negative inflation from annexing China/India and practically everywhere else. maybe the solution is to colonize, although I'm not sure how much this will help whilst taking land in wartime. (unless of course you push slowly and try integrate it on the way, then you'll be fine to directly annex post war).
My SR:U Model Project, get the latest and post suggestions here:

http://www.bgforums.com/forums/viewtopi ... 79&t=28040
mrgenie
Brigadier Gen.
Posts: 923
Joined: Jul 08 2008

Re: Long-term Inflation Control for a stable sustainable economy

Post by mrgenie »

So doing some more testing with the "burst inflation up to 10-15% range for building" and then "pushing it back to under 2%"

I started around 450 GDP/c and when I build to the point where I hit a GDP/c 1000 and inflation 15% I lose money.. I have to cut back on all social spending and insane taxes to make money..
overheating economy..

Then I used the 6 points I outlined to push back inflation and started making money again but GDP/c went down to 700 in that time..

Then building again, inflation going up, then pushing it back using the 6 points and I make money again..

Then I pushed GDP/c to over 1500 by building facilities and then using the 6 points to push it back to control inflation..

here's the screenshot where I am now:
SR-Economical data3.jpg
SR-Economical data4.jpg
So I pushed by inflation using the trick to max all prices to 200%, raising taxes to 60%, cut on social spending.. I kept research and military roughly at the recommended because I'm at war at the same time so didn't use these controlling tricks.

By doing just 3 out of 6 to control inflation I pushed my GDP/c back to 1000 from the 1500 (1500 was overheating economy)
when Inflation was at 0% I make a lot of cash every turn, even with social spending 3 levers at recommended setting (Police/family planning/infrastructure)
and tax back to 40% and while inflation back at 0% I started building facilities again.

3rd time now I try to push&control technique to maintain a solid economy and make sure I run positive..

also my approval rating seem generally to increase .. where I had approval rating 16% after cutting back first time to control inflation
and 17.4% after the 2nd round
now after the 3rd round after pushing back inflation (high tax/high prices/low social spending) it's still 19.2% so generally
using this trick over the long term of a game seems to improve all factors..

My aim is still the 2%.. I go over it when building but never over 15%
and then I push it back to 0%

The 15% is for very short periods of time..
the 2% is what I try to maintain for prolonged periods..

Note: all my games I start my own made map at 1912.. so when I wrote up to 2010, that's a solid 98 years through the game.. but that game I tried to avoid wars/avoid building military, etc..
anyone could have wiped me out.. because that game I tried a solid "always around 2%" which doesn't allow to build facilities..at least not beyond the economical ones.

So that's why I'm now trying the "burst/push" trick for building railways and military installations while going to war but once inflation goes to 15% push it back to well under 2%

I'm now at 1928, thus only 16 years.. but this seem to work for now..

So thus far I can say:'the trick is really all about inflation control to beat this game economical engine.." if your GDP/c grows too fast.. you kill economy..

That's my observation.. for now..

Thanks SCUBA for being interested also in the economical part of this game.. because it kept wondering me always how to maintain a solid economy for longer games..
and I wanna nail that one, how to maintain a solid economy! I really wish to figure that out..

Oh on my private games I also made units all build times 5 times more..

This to keep the game running fast even after decades of playing :)

Also, it's kinda weird to build aircraft carriers and battleships in just 1 year.. prior to WWII Russia spend years on getting battleships build.
apart from WWII, even the USA takes many years to build them..

Infantry build in just a few weeks is also weird.. training of infantry in the real world takes months for regular army units..

So I found by increasing everything by 5 is a bit more realistic.. (although then some units take a bit too long, that's true, but it helps keep running the engine smooth and fast )
You do not have the required permissions to view the files attached to this post.
[UI-MOD] All-In-One viewtopic.php?f=91&t=31906
mrgenie
Brigadier Gen.
Posts: 923
Joined: Jul 08 2008

Re: Long-term Inflation Control for a stable sustainable economy

Post by mrgenie »

SGTscuba wrote: Nov 24 2020
If its beyond 2010, what time did you start at? 1949? or before, I may actually try it with the 36 sandbox. I guess the key to not going too low as the USA is to simply make everything a colony a some of the larger countries will throw inflation WAY out of whack in the negative direction (unless of course you follow up with a massive build program on annexation).
I have an self-made map and scenario which starts in 1912, it's far from done that's why I don't publish it..
But I added a lot of small towns (like over 1000) on their true locations in desert areas, amazons, Siberia, etc. With their proper names. so units don't get stuck there but have very limited supplies
In my game it actually doesn't take the AI years to get stuck in Siberia.. instead if China wants to beat Russia, they can now heheh
SGTscuba wrote: Nov 24 2020 I'm guessing that you are right with the min/max, maybe it causes something like integral windup within the game and once its there, your screwed as you cannot use the "reset" function like you would normally on a controller.
It's actually a friend of mine who has 2 master degree in economics who said:'if the game engine is well written you might aim for a 2% inflation control, usually that smooths out every
economical mismanagement as a 2% inflation auto-corrects most economical mistakes our governments make, that's why all central banks aim for a 2%.
So I figured, ok, then I try that.. maintain a solid 2%
and now thus trying the maintain a solid 2% with bursts between 15% and pushing back to 0%
SGTscuba wrote: Nov 24 2020
mrgenie wrote: Nov 23 2020 My experience is every game I went over 20% inflation for some time and then back to 2%.. economy will crumble eventually anyway..
I think this is my experience too - usually early game I get really high inflation from the building, and then major negative inflation from annexing China/India and practically everywhere else. maybe the solution is to colonize, although I'm not sure how much this will help whilst taking land in wartime. (unless of course you push slowly and try integrate it on the way, then you'll be fine to directly annex post war).
I agree this is also still puzzling to me what's the best strategy here.. for now I just return most lands to the original owner.. and try to keep good relations..
"fund foreign government" is a great help here to keep your relations solid.. basically bribing hehehehe
I guess that's why we have these "3rd countries development funds" it's basically bribing foreign governments..

Hope I don't step on the toes of the Liberals by saying that, but yeah I'm sure a lot of that money is used even for "arguments sake" to get our industries nice orders and projects even if
not directly bribing.. it does the same trick.. in the game also hehe
[UI-MOD] All-In-One viewtopic.php?f=91&t=31906
SGTscuba
General
Posts: 2544
Joined: Dec 08 2007
Location: Tipton, UK

Re: Long-term Inflation Control for a stable sustainable economy

Post by SGTscuba »

I'll have to give a '36 save a try.

Just to note, if I remember, going over roughly $10bn causes extra social spending to happen automatically. So this may also end up screwing with the figures eventually.
My SR:U Model Project, get the latest and post suggestions here:

http://www.bgforums.com/forums/viewtopi ... 79&t=28040
mrgenie
Brigadier Gen.
Posts: 923
Joined: Jul 08 2008

Re: Long-term Inflation Control for a stable sustainable economy

Post by mrgenie »

SGTscuba wrote: Nov 24 2020 I'll have to give a '36 save a try.

Just to note, if I remember, going over roughly $10bn causes extra social spending to happen automatically. So this may also end up screwing with the figures eventually.
Is that the reason for the "Surplus/ Deficit" vs "Last day trades" bug?

I mean, look at screenshots
SR-Economical data6.jpg
SR-Economical data5.jpg
One can clearly see: Surplus/Deficit is -7M
The trade is 7.31M

Thus the upper left should show a slight increase in treasury (green arrow up)

I noticed at some point in the game (although I didn't actually verified if this still happens with the 2% inflation control games) this breaks
and you can have a trade of 250M eventually with a Surplus/Deficit -200M but the treasury is still going down..

250M - 200M should be plus 200M but at some point you still run negative. I posted this bug already but Balthagor said it's normal.

Anyway, I'll keep an eye out for it.. if it still happens with the games where I focus to keep inflation within "boundaries"
You do not have the required permissions to view the files attached to this post.
[UI-MOD] All-In-One viewtopic.php?f=91&t=31906
SGTscuba
General
Posts: 2544
Joined: Dec 08 2007
Location: Tipton, UK

Re: Long-term Inflation Control for a stable sustainable economy

Post by SGTscuba »

Balth has mentioned elsewhere that the game does end up incurring rounding errors due to the precision formatting of the numbers. This is intentional as lowering the precision of the number allows bigger whole numbers/less performance overhead.
My SR:U Model Project, get the latest and post suggestions here:

http://www.bgforums.com/forums/viewtopi ... 79&t=28040
SGTscuba
General
Posts: 2544
Joined: Dec 08 2007
Location: Tipton, UK

Re: Long-term Inflation Control for a stable sustainable economy

Post by SGTscuba »

Currently playing through the '36 sandbox as the USA, inflation has increased to around 5.8% max in around a year, but I have a built limited (about 10) facilities. I do have my taxes at 95% now. I did have inflation under reasonable control until i went over the $10bn figure, then I ended up increasing domestic prices, increasing taxes and increasing goods costs to rein it in. It is going back down now though.

I do have a lot of cash in game now, $21bn in fact, and have managed to spend money buying any techs and unit designs that I like. Obviously though, industry hasn't really expanded, but I think thats something I can work on over time given a stable long term economy. I'll keep posting on here as the game progresses to let people know how its going.

unemployment also went from 18%ish, to 4%ish which I think helped.
My SR:U Model Project, get the latest and post suggestions here:

http://www.bgforums.com/forums/viewtopi ... 79&t=28040
mrgenie
Brigadier Gen.
Posts: 923
Joined: Jul 08 2008

Re: Long-term Inflation Control for a stable sustainable economy

Post by mrgenie »

SGTscuba wrote: Nov 24 2020 Currently playing through the '36 sandbox as the USA, inflation has increased to around 5.8% max in around a year, but I have a built limited (about 10) facilities. I do have my taxes at 95% now. I did have inflation under reasonable control until i went over the $10bn figure, then I ended up increasing domestic prices, increasing taxes and increasing goods costs to rein it in. It is going back down now though.

I do have a lot of cash in game now, $21bn in fact, and have managed to spend money buying any techs and unit designs that I like. Obviously though, industry hasn't really expanded, but I think thats something I can work on over time given a stable long term economy. I'll keep posting on here as the game progresses to let people know how its going.

unemployment also went from 18%ish, to 4%ish which I think helped.
Yes please keep informed.. I really wish to figure out how to maintain a stable economy in this game for the long runs..
[UI-MOD] All-In-One viewtopic.php?f=91&t=31906
mrgenie
Brigadier Gen.
Posts: 923
Joined: Jul 08 2008

Re: Long-term Inflation Control for a stable sustainable economy

Post by mrgenie »

So in the Australian game I'm running (progressing slowly as I'm hiking a lot here in Luzon in the mountains)

I invaded and conquered successfully New Zealand and Indonesia.

After conquering Indonesia my GDP dropped from 1200 to 700 and Inflation went to -4%

So I started to build massively both economical installations as well as military to increase Inflation again/raising GDP

At -2% Inflation the elections came, so I used the 6 methods described above to create "insane inflation" but that helps getting support of the population:
low taxes, high social spending, and minimize all domestic prices.. so the folks love me..

This increased very rapidly the Inflation to 2.8% limiting thus now further building of installations also my GDP went up fast because of this,
but the biggest problem I came into -150M, -220M, etc.. so I had to balance my budget from here on.. since Inflation was again above the 2%
I increase the tax again (lowers inflation) decreasing the social spending and put all domestic prices just in the range 1-5% profit

Since I'm still building a few installations the inflation isn't really dropping fast but with these settings at dropped back to 2.7% during the election year..
so I cut off the insane increase on inflation while getting the folks to love me..

NOTE all of this I'm doing without cheating because I noticed cheating very quickly gets your economy screwed up.

below the result for elections
2percent Inflation average - max burst 15percent - 18 years.jpg
This is the map of conquest
2percent Inflation average - max burst 15percent - 18 years5.jpg
You do not have the required permissions to view the files attached to this post.
[UI-MOD] All-In-One viewtopic.php?f=91&t=31906
Post Reply

Return to “Issues and Support”