#pixls things

lets start with the hermitcraft economy. unlike the real economy, hermits rarely adjust prices according to how many diamonds are "in circulation". i say this despite the fact grian in a recent-ish episode says that "everything costs more this season because diamonds are more common". that can't be true because the caves and cliffs update literally made diamonds more difficult to acquire. I will circle back to this point made by grian later

hermits not adjusting prices by server-wide abundance of diamonds (because they cant really know how much anyone has, much less the total amount of diamonds in circulation, they just know who has a lot and who is broke) means that more diamonds doesn't make them worth less like it did with German marks, it just means hermits have more expendable currency and can spend more money and less time gathering materials for projects. It is also notable that diamonds are constantly being added and taken out of circulation because they're an actual useful currency rather than real life currencies which are symbolic slips of paper. diamonds can be used for armour and tools and it can be acquired by mining. so because of how hermits spend money, taking diamonds out of the economy in s9 did nothing but make them poor and angry at the government. the hermitcraft economy is actually stronger with more diamonds in circulation and is worsened by gov't intervention.

so already the use of real life strategies is utterly useless in hermitcraft economy but there are a few other reasons as well

the hermits tendency to resist government as well as the flawed and greedy government itself are a couple but also the fact that all the hermits are self employed (in real life but also in universe). they own and stock their own shops meaning all profits are more or less direct; its not passed through hands of big corporations so the person producing the product gets mere cents. the hermits are essentially small business owners (which becomes a bit of a problem come season 10 but we're still talking about season 9). The important part is the self employment. the season 9 gov't introduces the quests which mimic and echo real life government funded projects but because they're all employed and the quests gave small amounts of diamonds back, they did very little for the hermits

I'm sure theres more to say but i think its time to move on to the very interesting season 10 economy

if you've missed it you must be living under a rock but hermits are all using permits this season meaning only one shop in the shopping district is selling any given item/material and as a result of this prices have gone sky high. at one point a single stack of mangrove logs cost 7 diamonds when in previous seasons you could get at least 1 stack of wood for 1 diamond if not more

So what is causing this economic depression and hyperinflation?

well, circling back to the point grian made about resources costing more because of abundance of diamonds, I would think it actually costs more because of the permits.

grian thinks the diamond prices are fair because he has middle of the road permits (and is one of the hermits who designed their shopping district, permit and economic system this season so he's biased), there is enough demand to keep him afloat when he's stocked but its nothing people are clamouring for and buying him out. on the other hand, joel made a lot of shops that no one shops at because his objectively weighted permits have not been selling as well as they anticipated when making the permits (also some people like etho and pearl have additional income from their not as fabulous permits because they've made a pay to play game to go with it) and finally there are hermits like mumbo whose gold, iron and item frame shops were constantly getting bought out so he was frustrated with trying to restock despite getting lots of profit

(another interesting dynamic to think about is permits like cleo's book permit which lost value as the season went on because everyone needed books early on but now that they're all playing late game Minecraft, everyone is pretty stocked up and buying from cleo less often)

Basically, grian is satisfied with the pricing because he's middle class and couldn't afford it if they were more expensive but appreciates not being constantly out of stock, joel is unsatisfied because he is lower class and never has enough expendable currency to fund his projects because materials are too expensive and his permits aren't worth enough to sell them for more, and mumbo is unsatisfied because he is higher class and is constantly out of stock because his materials sell out too often and he wants to sell them for more to stay in stock more (classic supply and demand, he doesn't want to stock them as often making the supply lower and the demand proportionally higher making them worth more and therefore more expensive)

the reason i say the permits are to blame for the high prices is because they cause the responsibility of constantly stocking something to fall on one person (in past seasons, if one persons sandstone shop was out of stock you could go check someone else's sandstone shop). the threat of taking the permit away if they arent stocked along with the difficulty of constantly stocking some of these materials raises the cost.

a great example of this is skizzleman because his mangrove and cherry wood shop was one of the first shops to be built in the shopping district, meaning he somewhat set the prices this season. now, mangrove and cherry are both difficult trees to harvest because of their unconventional shapes and the fact that they are more recent additions (and skizz's stubborn desire to design his own farms...) so because of the time required to gather them the prices already were hitched up. add that to the fact that they are trying to constantly be in stock and therefore low prices that allow hermits to completely buy out the shops are unfavourable, and you get sky rocket-ing prices. (it is also difficult because skizz had no prior experience with hermitcraft pricing)

in conclusion... hermitcraft needs a laissez-faire economy (f. a. hayek) to function and not go into economic depression. Between the nature of the diamond currency, hermits' tendency to rebel against governments, the way they use the concept of supply and demand to price their goods, and the restrictions permits put on supplying products, hermits have proven that extensive structure and government intervention have not improved economic wellbeing the way that it does in real life