The Making of MoneyMaker

An inquiry into the reality of money and the translation to a game.

An exploration of the possibilities of documentary game design

By Paul Brinkkemper Supervisors: Miguel Sicart, Rilla Khaled

Dedicated to all those who live under oppression, And to the multitudes more who falsely believe that they are free.

Soli Deo Gloria

Table of Contents
Chapter 1: Introduction. ................................................................................ 4 Chapter 2: Theory .......................................................................................... 6
2.1 The design of the money system ......................................................................................... 6 What is money? ......................................................................................................................... 6 The Goldsmiths Tale ................................................................................................................ 7 How does a central bank work?................................................................................................. 7 How did money change from gold to paper?............................................................................. 8 What does this mean for the nature of money? ......................................................................... 9 But doesnt that lead to inflation?............................................................................................ 10 How is money created in a credit money system?................................................................... 12 Where does the interest come from to pay off the debt? ......................................................... 14 Can the debt keep on growing? ............................................................................................... 15 What happens at that crash point? ........................................................................................... 16 Has this happened before in history?....................................................................................... 17 A small history of ideas; Ideology versus Logic. .................................................................... 18 2.2 The Austrian Theory of the Business Cycle. ..................................................................... 19 Only Austrians understand inflation........................................................................................ 27 1. This can only be done with paper products..................................................................... 28 2. The boom and the bust is the health of the banks............................................................ 28 3. Banks are not inherently evil........................................................................................... 29 Lessons from other games. ...................................................................................................... 31

Chapter 3: Design Framework. ................................................................... 33

Distortions in the business cycle can only be done with paper money. .................................. 33 The boom and the bust is the health of the banks.................................................................... 33 Banks are not necessarily evil.................................................................................................. 34 Adhering to ethical design. ...................................................................................................... 34 The Socratic Method................................................................................................................ 34 The overall structure of the game. ........................................................................................... 35 Language in the game. ............................................................................................................. 36

Chapter 4; The development process........................................................ 37

1) Gold................................................................................................................................. 45 2) Choice. ............................................................................................................................ 45 3) Language......................................................................................................................... 45 4) Fate versus Destiny......................................................................................................... 46 5) Humour. .......................................................................................................................... 46

Chapter 5: Evaluation .................................................................................. 49

Playtesting reactions. ............................................................................................................... 49 Viewing reaction...................................................................................................................... 50 Learning experience................................................................................................................. 51

Chapter 6: Conclusion................................................................................. 54
1.Computers will never have Free Will. .................................................................................. 54 2. Applying the principles of ethics creates an ethical game experience. ............................... 55 3. Obsessive focus with translating reality impairs the game design eye................................ 56 Final Conclusion ...................................................................................................................... 56

Bibliography ................................................................................................. 57 Appendix....................................................................................................... 59

1. Testing Story........................................................................................................................ 59 2. Developer Diary................................................................................................................... 62

Chapter 1: Introduction.
In the autumn of 2008, all of the sudden it seemed like the sky was falling down. Without any warning all of the banks around the world were suddenly on the brink of collapsing. Our brave politicians took unprecedented actions and put public treasuries around the world deep into debt to save the banks from bankruptcy. When the bakery cannot do their accounting or pay their bills they needs to go bankrupt, but apparently these banks were too important to allow that to happen to. The sudden collapse was unexplainable, there seemed to be very few people around who could tell what was going on and there was a lot of conflicting information. I decided to investigate myself and before long I became entirely captivated by the magical world of money, where nothing is what it seems it is. I looked into all kinds of financial jargon, CDO's, Swaps, CDS's, bonds, but all the problems that surfaced appeared to be the symptoms of a deeper-rooted disease. A disease that had been with us for a long time. All of the scandals and mischief that came to surface pointed to the same question. What is money? Having embarked on the journey to answer that question, I felt like Neo in the movie The Matrix, after having taken the red pill. The journey that started at finding the origin of money and banking led to the field of economics, an entire different field of economics than what was taught to me in high school. From there the journey continued to Law, History, Philosophy and Politics. Slowly but surely the dots began connecting themselves and I began to see a most beautiful view, I caught a glimpse of the bigger picture. I found the undeniable existence of Eternal Principles, Universal Laws if your will, that hold as much truth today as they did thousands of years ago.

Many people have written down these Laws many different times. Usually they were written down because beforehand Man had broken them and learned the consequences. These laws did not seem to come separately, but rather came in a set. Because history showed that as soon as the smallest of these laws were broken, it was merely a matter of time before all of them were broken. Strangely this breakdown in the adherence to principle always coincided with an increase in political laws, controls and eventually outright oppression. Lawlessness breeds Totalitarianism. I followed the news religiously and I began to see a pattern emerging. And wherever the same pattern had existed before, bad things tended to happen. Robberspierre's Terror and Hitlers Third Reich were made possible by preceding hyperinflationary chaos. It seemed to me like the people who wield the nations scepter were, and today still are, under the impression that a debt crisis can be solved by going deeper into debt. This fallacy is the highway to ruin and chaos. I tried to shake people awake and make them aware of the immoralities that were perpetuated daily. But when I started arguing with other people it very quickly became my word against theirs. Even though I stubbornly knew how righteous I was, the other person usually tended to think the same about himself. There had to be another way to show people the wicked nature of money and banking quickly, because I saw bad things coming over the horizon. A wise man once said: "the truth is most often seen, seldom heard." I decided a long time ago to try to translate the things that I had learned about money and banking into a game. The objective of my thesis is to answer this central question: How can we create a documentary video game that can educate people to understand the central banking system? A very well known fallacy that serious games or educational games are known for is that they lack any form of fun. And people do not like to play things that are not fun, because games are free time and free time is supposed to be fun right? So in order to try not to fall into the trap that many educational game designers have fallen into, there is a second question that I wish to answer in this thesis: How close can we stick to reality of the banking system while keeping the game entertaining and interesting? The thesis is quite heavy on the theory but this is for a necessary purpose. Firstly the claims that I make are quite outrageous, so I had better come with some decent evidence to support them. Secondly, as another wise man once said, there are few things as practical as a good theory. As we get to the practical part of the thesis we shall see why all this theory is essential for the games design. So without further ado, allow me to share with you the answers that I have found to the question what is money?.

Chapter 2: Theory
2.1 The design of the money system
During the research phase while I was trying to distinguish causes from effects, I came across the following quote that greatly influenced the direction of the research and thereby of the whole game. There is no means of avoiding the final collapse of a boom brought about by credit [debt] expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit [debt] expansion, or later as a final and total catastrophe of the currency system involved.(Mises, Theory of Money and Credit, [1912] 1980) Given the fact that it was written almost a century ago and that it accurately describes the economic woes that the people of this world are currently suffering, as we shall see further down this chapter, the man who wrote this clearly knew what he was talking about. From the ideas of this man, Ludwig von Mises, an entire school of economic and philosophic thought sprang about that is commonly referred to as the Austrian School, since the layers of its foundations, Mises and Hayek, were both originally from Austria. It is on the same foundations that I have built the design of my game. The following chapter represents the results of my research into money. In order to understand money, we have to understand its nature, to see if we can find out where it comes from, how it is created. How is it possible that a little piece of paper with numbers printed on it, holds value in peoples minds? To be able to answer that question, we need to follow the money through history, in order to see how the nature of money has changed over time. As we do so, we shall take a look at the effects that came with the changes in the nature of money. Thereafter we shall take a look at the Austrian Theory of the Business Cycle, as it is upon this theory that the design of this game is founded. We shall compare the Austrian theories to the economic theories that were taught to me in high school, generally known as Keynesian Economics, after its founder John Maynard Keynes. Eventually we shall take a short look into Procedural Rhetoric, or the art of conveying ideas through game design, and see how the lessons that we have learned from that field have influenced the eventual design of the game.

What is money?
Before we answer the question 'How does money work?' we must first answer the question 'What is money?' In ancient times long past, people used to barter trade the things that they produced for the things that other people produced. But as societies expanded there quickly became a demand for something that would facilitate trade. How does one compare a bushel of wheat with a days work on the land, a number of goats with a shiny necklace? they are completely different things. There grew a need for substance that would allow things that are unequal to be traded as if they were.

For a substance to be used as money, it must meet a set of requirements It must me durable, it must not rust away, it must be a stable store of value over time, it must be of a limited supply, it must have a high value per amount, it must be easily divisible and it would help if it was pretty. Since the dawn of time civilizations have used gold and silver as money, it is the only substance known to man that fulfils all the obligations that money should. "In almost all cultures gold and silver was seen as a valuable medium of exchange. Whether we are talking about the Inca's, the pharaohs or the Romans, almost everywhere gold and silver became the basis of money. The monetary metals are longstanding the best measure of wealth, since it is not possible to gain more of it by manipulation" (Middelkoop, 2009)(translated from Dutch)

The Goldsmiths Tale

In the middle ages, the goldsmiths of the city offered to its customers a place to rent in their vault, so that their money was safe from thieves. In return the customers were given a paper receit with the value of their deposit written on it. The bankers used their own money and money from investors to hand out in loans to entrepreneurs, and issued these loans also in written receits. The bankers noted on the marketplace that the receits were being traded as if they were the gold and silver itself. This gave the bankers a very bright idea. Since not too many people came to collect their gold, and they never came all at once, the banker found out that they could issue new loans simply by writing a new receit, without having the gold to back up the receit. People were having so much trust in the paper, that they traded and stored it as if it were the gold itself. The goldsmiths discovery that he could loan out more gold than he had in store was the invention that led to the creation of banks. (Federal Reserve Bank of Chicago, 1961)The process where a bank can expand the money supply by only keeping a fraction of the deposits that are stored is the core mechanic of banking, and is called fractional reserve banking. Fractional reserve banking literally means that only a fraction of the money issued is actually in the vaults of the bank. Trade flourished with this new money, al went well and nobody thought that the banker had the guts to loan out money that they did not posses. Until, some time later, people came noticing that there was somehow a lot more of the bankers receits in circulation, and that this caused inflation. Some people went to the banker to demand their gold back and of course the banker could not reimburse all of the paper money that he had issued. This is what we call a bank run, and it is what every bank fears. Today most banks would go instantly bankrupt if more than 10% of their clients demanded their deposits. This is why the banks operating in a fractional reserve system have a need for a central bank.

How does a central bank work?

G Edward Griffin describes in his book The Creature From Jekyll Island the mechanism by which the Federal Reserve of America creates money. A mechanism which he describes as the Mandrake Mechanism. (Griffin, 1994) This mechanism is works the same in central banks all over the world. We shall leave it here with a very 7

simple explanation of this mechanism, as it was revealed in the discussion between a Federal Reserve Governor and a US congressman. On September 30th, 1941, during hearings of the House Committee on Banking and Currency in the USA, Congressman Patman and Member of the Federal Reserve Board Marriner Eccles had the following conversation. Congressman Patman: "How did you get the money to buy those two billion dollars worth of Government securities in 1933?" Eccles: "Out of the right to issue credit money." Patman: "And there is nothing behind it, is there, except our Government's credit?" Eccles: "That is what our money system is. If there were no debts in our money system, there wouldn't be any money."

How did money change from gold to paper?

The words that economist use to describe the nature of money that is in circulation in most countries these days is credit money or fiat money. Credit money means that the money is created as a loan, as debt. Fiat money means that the value of the money is not backed by a valuable commodity, but by the peoples faith in its value. In his monumental book on the origin of the Federal Reserve, Griffin describes how fractional reserve money eventually always turns into Fiat money, and how Fiat money always ends up with hyperinflation. (Griffin, 1994) The people of the world did not suddenly wake up and find themselves in a fiat money system. The switch from gold and silver to paper and digits took nearly 100 years. It resembles a conmans bait and switch trick, slowly executed over five generations to complete. We shall summarize the switch by highlighting four milestone events. In 1872 most European governments abolished the use of silver as money. From then on, only the paper and coins backed by the nations gold supply was allowed to be used as money. The Central Bank promised to abide the Golden Standard, meaning that every banknote in circulation corresponds to a certain weight of gold in the nations gold reserves. In 1912 tensions between European nations were rising and most governments were preparing themselves for the event that might trigger a war. Raising armies is very expensive and taxing the population in order to pay for a war proved historically to cause riots and revolts. So instead central banks chose to break their promise of the gold standard and issue more paper money that there was gold to back it up. The Dutch central bank president of the time stated that: the Gold Standard does not allow for enough playing room (Huizinga, 1938) In 1944 during the height of the Second World War the future of the monetary system was discussed at a conference in Bretton Woods, USA. The International Monetary Fund and the World Bank were incepted at this conference, as well as the dollars status as the worlds reserve currency. In exchange for a lot of Marshall aid, European leaders agreed to use the dollar instead of gold as the backing of their currency. The American government was able to keep their promise of the dollars convertibility into gold for around twenty-six years. In 1971 the USA found themselves entangled

in a very expensive war in a small Asian country, a war which was funded in the same way all wars are funded: by issuing government debt. The French government began losing faith in the American governments ability to repay its debts and started demanding gold for their dollars. In august of 1971 president Nixon announced that he was going to close the gold window of the Federal Reserve. In this one move, the final link between money and gold was cut. Paper money was no longer redeemable in gold. Suddenly, the whole world was on a free floating currency, with nothing of intrinsic value to back it up. The deal that most likely will go down in history as the event that secured the status for the dollar as the worlds reserve currency, was the deal that then Secretary of State Henry Kissinger made with the House of Saud, the royal family of Saudi Arabia. Saudi Arabia is the largest oil producer in the Organisation of Oil Exporting Countries (OPEC) In 1974 Kissinger made an arrangement that Saudi Arabia, and by extension all members of OPEC, would only sell their oil for dollars. (Brown, 2007) Since oil is the prime ingredient for gas, plastics and many common household products, anyone wanting to produce these things would have to buy dollars to pay for it. It is today publicly known that prior to the 2003 invasion of Iraq, Saddam Hussein had formed plans to stop accepting dollars as payment for Iraqi oil and demand euros instead. Similarly, Ghadaffi had just two months prior to start of the bombing campaign in Libya announced plans to demand gold instead of dollars as payment for Libyan oil. There are wild speculations around that these plans are a better explanation for the motives behind the invasions of Iraq and Libya respectively, rather than the publicly announced humanitarian motives.

What does this mean for the nature of money?

In essence this means that central banks since 1971 can print as much money as they wish, since they no longer need gold to back up their notes. The sky literally is the limit. In figure 1 we can see the estimated increase of the most important currencies since 1971. The act of printing money, which gets common individuals thrown in jail, is the core business of any central bank. These days most of the money is never printed, but typed into terminals at a central bank. Since the release from gold, all currencies are free floating against each other. But in measures of gold, all currencies are falling, as seen in figure 2.

Figure 1: increases in the money supply

Figure 2: Increases in the exchange rate of gold

But doesnt that lead to inflation?

Well, to put it more correctly: the expansion of the money supply (creating new money out of thin air) is the prime cause of inflation. In figures 3 and 4 you can the relationship between the amount of currency in circulation and the amount of things that you can buy with it per unit. Further down in the discussion of the Austrian 10

Theory of the Business Cycle we shall see more precisely how the creation of credit money leads to the effect called inflation.
Figure 3: Decline of the pound

Figure 4: decline of the dollar.

As we can see in these graphs: the longer you keep fiat currency in your bank account, the less you will be able to enjoy it. If we start our measuring of inflation in 1912, when the gold standard was released in Denmark, the devastation of wealth becomes even more obvious. The Danish golden 10 kroner coin would today be worth 1300 DKK, by its weight in gold. Or seen from the other way around: to buy 10 kroner worth of goods in 1912 would today cost one 1300 kroner. The decrease of the value of money does not mean that the value disappears into thin air. In another document, the Federal Reserve Bank of Illinois writes: "The decrease in purchasing power incurred by holders of money due to inflation imparts gains to the issuers of money."

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In the mean while, the value of gold remains remarkably stable. In figure 5 we can see how much gold or dollars one would need to buy one barrel of oil. While the price in dollars goes exponentially upwards, in gold it is pretty much around the same price as it was over sixty years ago.

Figure 5: The price of oil, measured in US Dollars and gold

How is money created in a credit money system?

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. Henry Ford. In 1961 the Federal Reserve Bank of Chicago released a document entitled Modern Money Mechanics detailing the creation of money in a fractional reserve banking system. (Federal Reserve Bank of Chicago, 1961) While it details the working of the american system specifically, the general workings are the same in Denmark, Europe and anywhere a fractional reserve banking system is in operation. It is in the working of the money creation cycle that we can see how commercial banks and central banks work in tandem. The example that is detailed below is derrived from the Modern Money Mechanics document. The money creation cycle of a credit money system starts with the biggest creditor of us all: the government. Since the government has the ability to tax its citizens to pay off its debt, it is usually given the highest credit rating. Meaning that its interest returns are among the lowest, but also the most secure. (Note: this was written in June 2011. In a series of developments that started in August 2011, the certainty of the government serving its debts has become doubtfull, to say the least) The credit creation starts at the moment that the central bank deems it neccecary to stimulate the economy by injecting cash into the economy. The most usual way of going about this is by purchasing financial assest, usually governement bonds. Whenever it does this, it creates brand new money into the account of the bank involved, simply by typing it into its account. Let us take a fictional example. For the sake of the argument, lets say that the central bank just bought for one million kroner worth of governement bonds from Bank A. 12

That bank now has one million kroner on its books. Remember that in a fractional reserve banking system only a fraction of the money needs to be kept on the books. The rest can be loaned out and earn the bank interest. For the sake of the argument, lets say that a fractional reserve rate of ten percent is in use. (in 2011 the eurozone rate was 9%, in China it is 21%) At this moment, the fictional character Tom walks in the bank. Tom has a steady job and wants to buy a nice house. To do so, he approaches Bank A and asks for a mortgage of nine hundred thousand kroner. Bank A takes a look at his income, credit history and the value of the house and it seems that Tom will be able to repay the loan and offers Tom a loan agreement. The moment that Tom signs the agreement, the money gets created into his account. But the process does not stop there. Tom uses this money to pay the previous owner of his house, who puts his money in a deposit in his Bank B. Bank B now has an extra nine hundred kroner on its balance sheets. According to the same fractional reserve rate rules the bank can immediately use 90% of this money to fund a new loan. This new loan gets deposited at Bank C and the whole process repeats. In this way, the central banks injection of one million kroner can theoretically lead up to ten million kroner in new credit. Figure 6 illustrates the growth of credit throughout the different steps in the cycle. Figure 7 illustrates how different fractional reserve rates lead to different total outcomes. All of this money gets created by the promises of lenders to repay their loans. Or, as the federal reserve document states: Commercial banks create checkbook money whenever they grant a loan, simply by adding new deposit dollars in accounts on their books in exchange for a borrower's IOU. (Federal Reserve Bank of Chicago, 1961)

Figure 6: the growth of credit throughout sequential steps in the credit creation cycle (Federal Reserve Bank of Chicago, 1961)

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Figure 7: the lower the reserve rate requirement, the higher the growth potential. (Federal Reserve Bank of Chicago, 1961)

Where does the interest come from to pay off the debt?
Lets get back to our fictional character Tom. Tom is happily living in his new house and working at his job to pay of the mortgage. As he repays the loan, he uncreates the money that was created into his account. But he must not only repay the loan, he must pay an interest over it. But at the inception of the loan, the money to pay off the interest was never created. (Tacitus, 2011) The only way that this money to pay of the interest can come into existence, is if the banks give out further loans. For Tom personally it is not a problem: if he keeps on working he will eventually pay off his debt. But for society as a whole, getting out of debt is impossible.

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Figure 8: Simplified schematic of money (Tacitus, 2011)

Figure 8 shown above depicts the money situation in a credit money economy. The yellow box titled Geld represents all money in circulation. The red box titled Schulden represents all debt owed to banks. Zinsen represents all the interest. The Principal (money in circulation) is always less than the Principal plus Interest, or in economic terms: P < P + I. (Tacitus, 2011) In order to keep the monetary system running without people defaulting on their loans en masse, it is a necessity that there is a constant rate of expansion of the money in circulation. There must come in new debt to pay off the previous debt. And thus the monetary system is trapped in a spiral of debt in which the total debts grow quicker than the total amount of money to pay off the debts. (Tacitus, 2011) The gravest implication of the banking system was at first not shown to the world by a protesting outsider, but by a defecting insider. Baron Josiah Stamp, former director of the Bank of England, spoke the following words during a talk at the University of Texas in the 1920s. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take away from them the power to create money and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money."

Can the debt keep on growing?

In figure 9 we can see the progression of money and debt growing exponentially over time. The further the money and debt grow, the more instable the system becomes, the smaller the disruption that is required to set off a chain reaction of insolvencies, fire sales and bankruptcies. Bank A has to devalue the assets on its balance sheets, and cannot pay back its loans to Bank B. Bank B had borrowed that money from Bank C and they now too become insolvent. The credit bubble bursts, and everybody starts running for the exit. The crash that Figure 9 depicts, the final crash that Ludwig von Mises announced in 1912, has occurred in October 2008.

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Figure 9: the crash is baked into the cake.

What happens at that crash point?

In a credit money system, money is constantly being created through loans and uncreated through the repayment of loans. The creation of new money leads to inflation, the rising of prices due to the increasing of the money supply. In the same way, the un-creation of money leads to deflation; the lowering of prices due to the decrease of the money supply. While deflation is good for consumers, since they can purchase more goods with their money, it is bad for banks since they will face more defaults on loans. In a financial crash, entrepreneurs and consumers will have a lesser faith in future investments and stop taking out loans and try to pay off their debts. In an uninterfered scenario, this will lead to deflation. Given the fact that P < P + I, there is not enough money around to pay off all de debts that people have incurred, many will have to default on their debts, leading banks to collapse. The bankruptcies that follow will lead to a decrease in the Gross Domestic Product and a loss in tax income for the government. The GDP decrease will cause the state debt-to-GDP ratio to increase, which is the most important signal for state bond auctions. State bond prices will rise and the government will default on the interest payments of its debt. Given this scenario we can see that governments and banks alike rather see inflation than deflation happening. But since nobody can be forced to take out a loan in order to keep the money supply increasing. So this is the point where a central bank intervenes in the economy. In 2002 president of the Federal Reserve Ben Bernanke gave a speech titled Deflation: Making Sure "It" Doesn't Happen Here, in which he detailed the actions that the Federal Reserve would take in case of apparent deflation. Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a 16

determined government can always generate higher spending and hence positive inflation. (Bernanke, 2002) In figure 10 we can see the results of his words translated into actions. The amount of money that the US central bank issued was exceeding all the monetary growth in all the years between 1917 and 2007. The European Central Bank did a similar move, calling it the Stability Fund.

Figure 10: the money supply of the US dollar over time

Has this happened before in history?

"Paper money eventually returns to its intrinsic value - zero." (Voltaire, 1694-1778)

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Figure 12: once you need a logarithmic scale to keep trac of inflation, you are in trouble.

Figure 11: German Children building a pyramid out of worthless paper money

In a recent study of currencies that are no longer in circulation, they found 156 currencies (24% of the total) that were destroyed through hyperinflation. (Hewitt, 2009) Hyperinflation occurs when the government of a country tries to print its way out of its debts and as a consequence the people lose faith in its value. Once people en masse lose the faith in the value of paper money, the rate of inflation can go very rapidly. In the 1920s the German government tried to inflate away its war debts by issuing more money. The reasoning behind it being that a debt of a billion Mark is easier to pay off once a billion Mark is worth less than when it was issued. In figure 12 we can see the result over six years. In Figure 11 we can see the marginal value that people put on Reichsmarks.

A small history of ideas; Ideology versus Logic.

The only thing that we learn from history, is that we never learn anything (German saying) When the value of a life long savings is reduced to zero, when it takes a months salary to buy a piece of bread, strange things happen to society. Historian Adrew Dickson White describes the hyperinflation of the Assignat between 1790 and 1796 in France, and how it broke down the morals of society. The issuing of fiat money led a thrifty population into speculation, chasing fashion, gambling on the value of real estate and stock, and the obliteration of all respect for honest work and savings. At the end, when prices skyrocketed, it led to chaos, thievery, state price controls and eventually The French Revolution and totalitarianism. (White, 1933) Historian James H Billington describes how around the time of the French revolution there was a change of thought throughout Europe. The hyperinflation of the French Assignat not only influenced economic life: the subsequent revolution had a profound impact on the thinking of the time. The thinkers of the age saw all the wrongs that 18

were perpetuated and they decided that it was time for a radical change, for a bold new direction, to cast away the old and to invent something new. They decided to discard Catholicism and proclaim Reason as their Goddess. (Billington, 1980) Many different philosophers tried to invent a rational political order, with laws that would lead men to justice. Two of the most influential of these men were Marx and Hegel. The ideas from this period lead to a pantheon of isms; socialism, communism, fascism, national socialism, and to the political concept of left-wing and rightwing. The Ideologists tried to use their reasoning to define a more fair and better world for humanity. To determine how unevenly shared resources should be distributed, most of them came up with some redistribution mechanism that was to be executed by the state. It that time the field of economics was in its infancy. The then commonly held theory of value was that the value of a commodity lied in its utility value. Amongst others, Marx subscribed to this theory. But that was an incomplete theory, because it did not explain the difference in valuations between, for example, grain and diamonds. Grain has many more utility applications than diamonds, but still people are willing to pay higher prices for diamonds than for grain. In the year 1870 three different men in three different parts of the world all wrote down the same sentence; Value only exists within the minds of men. It was upon this simple revelation that the field of free market economics was founded. One of the men who wrote this down was Carl Menger, who later became the teacher of Ludwig von Mises. In Human Action Ludwig von Mises devoted an entire chapter to the revolt against reason. (Mises, Human Action, 1998)He noticed that when the ideologists who claimed reason as their goddess came across a line of reasoning that did not conform to their worldview, they performed very strange jumps. When they could not find any flaws or contradictions, they suggested that the field of economics was using a different form of logic, that there must be multiple forms of logic. This is analogous to a math student who confronts his teacher with a bad grade, telling him that he is using a different kind of math. After all, why would there be only way of multiplying two numbers? The solution that the ideologists eventually went with, was to resort to statistics. While the vested theories of economics might work for one or two men, when you put a million men together whole other laws apply, they reasoned. The statisticians added all the things that were sold in one country in a year together in one aggregate number and devised theories on how this number was best influenced upwards. From this chapter it appears that Mises could not comprehend that these ideologists were so stubborn in their thinking that when their worldview came across something that logically contradicted it, they chose their ideology over the presented facts. Ideology trumped reason. In the fourth chapter we shall see how during the development process of the game, I became the victim of the same error that Mises accused the ideologists of.

2.2 The Austrian Theory of the Business Cycle.

Friedrich Hayek, one of the main foundation layers of the Austrian Economy, famously said that before you are able to understand how something can go wrong, first you must understand how something possibly can go right. In this paragraph, we will take a closer look at the functional workings of the interest rate as described by the Austrian Theory of the Business Cycle. I owe my understanding of the Business

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Cycle Theory to an excellent presentation from Roger W. Garrison. (Garrison, 2009) If the reader is interested and finds the explanation that follows lacking, I can highly recommend viewing this presentation. (The web address of the presentation can be found in the bibliography) We shall take a look at the function that the interest rate plays in an economy, and along the way compare the theory to Keynesian macroeconomics, to highlight some show discrepancies. Although this paragraph may seem a bit too much economic information, in the next chapter we shall see how the business cycle theory translates into game structure design. The interest rate is not just an arbitrary number, it actually performs a function in an economy. It is the price that arises out of bringing together supply and demand for money, savers and investors. The interest rate is the price of money over time, and in this function it coordinates the time preferences of the different people in the economy. Here we have a supply and demand graph as it is commonly found in a macroeconomics textbook.

What is wrong with this graph? The numbers on the sidelines suggest that economics is a pretty exact science, that we can calculate what the price should be given any quantity. This graph suggests that we have knowledge of the preferences of all the suppliers and demanders in the market for this particular product. In his book Human Action, Ludwig von Mises does not use a single graph to explain his theories. He describes the supply and demand graphs that he is talking about and the reason that he does not use them, with the following words:
It is possible to visualize this interaction by drawing two curves, the demand curve and the supply curve, whose intersection shows the price. It is no less possible to express it in mathematical

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symbols. But it is necessary to comprehend that such pictorial or mathematical modes of representation do not affect the essence of our interpretation and that they do not add a whit to our insight. Furthermore it is important to realize that we do not have any knowledge or experience concerning the shape of such curves. Always, what we know is only market prices-that is, not the curves but only a point which we interpret as the intersection of two hypothetical curves. The drawing of such curves may prove expedient in visualizing the problems for undergraduates. For the real tasks of catallactics [the science of price formation] they are mere byplay. (Mises, Human Action, 1998)

Hence, a graph that visualises the problem of the interaction of supply and demand in line with the theory of Ludwig von Mises would look like this:

In paragraph 2.4 the line of reasoning that led to this graph is discussed. In this graph we see supply and demand for any product, e.g. money, come together in equilibrium through the price: the interest rate; the price of money over time. In order to see how the interest rate affects the larger economy as a whole, we must find out how it relates to the productive capacities of society. Macroeconomics uses the formula from Keynes General Theory of Employment, Interest and Money, which reads as follows. Y = I + U + G + (I E) Where Y = total productivity of an economy (or GDP) I = investments U = Consumption G = Governmental Spending I = Imports E = Exports. For the sake of simplicity, we shall omit import and export, and look at the world as a whole (or a country that does not trade with any other country) Then we get the following formula:

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Y=I+U+G What is the danger of the above depicted formula? In its innocence, it advocates war. The addition of governmental spending to the nations or worlds productive output causes Keynesian economists to advocate war to alleviate the misery of an economic depression. War, being hugely expensive and destructive, is seen as a way to send a depressed economy to higher levels of GDP. In August 2011, economist Paul Krugman wrote in his New York Times column:
World War II is the great natural experiment in the effects of large increases in government spending, and as such has always served as an important positive example for those of us who favor an activist approach to a depressed economy.

The Keynesian position that Krugman depicts here: proclaiming the blessings of destruction, is an example of a mode of thinking that Henry Hazlitt refers to as the Broken Window Fallacy (Hazlitt, 1946) His reasoning is so eloquent that I have taken the liberty to quote a broad passage. Let us begin with the simplest illustration possible: let us, emulating Bastiat, choose a broken pane of glass. A young hoodlum, say, heaves a brick through the window of a bakers shop. The shopkeeper runs out furious, but the boy is gone. A crowd gathers, and begins to stare with quiet satisfaction at the gaping hole in the window and the shattered glass over the breads and pies. After a while the crowd feels the need for philosophic reflection. And several of its members are almost certain to remind each other or the baker that, after all, the misfortune has a bright side. It will make business for some glazier. As they begin to think of this they elaborate upon it. How much does a new plate glass window cost? Fifty dollars? That will be quite a sum. After all, if windows were never broken, what would happen to the glass business? Then of course, the thing is endless. The glazier will have $50 more to spend with other merchants, and these in turn will have $50 more to spend with still other merchants, and so ad infinitum. The smashed window will go on providing money and employment in ever widening circles. The logical conclusion from all this would be, if the crown drew it, that the little hoodlum who threw the brick, far for being a public menace, was a public benefactor. Now let us take another look. The crowd is at least right in its first conclusion. The little act of vandalism will in the first instance mean more business for some glazier. The glazier will be no more unhappy to learn of the incident than an undertaker to learn of a death. But the shopkeeper will be out of $50 that he was planning to spend for a new suit. Because he has to replace a window, he will have to fo without the suit (or some equivalent need or luxury). Instead of having a window and $50 he now merely has a window. Or, as he was planning to buy the suit that very afternoon, instead of having both a window and a suit, he must now be content with the window and no suit. If we think of him as a part of the community, the community has lost a new suit that might otherwise have come into being, and is just that much poorer. The glaziers gain of business, in short, is merely the tailors loss of business. No new employment has been added. The people in the crowd were thinking only of two parties to the transaction, the baker and the glazier. They had forgotten the potential third party involved, the tailor. They forget him precisely because he will not now enter the scene. They will see the new window in the next day or two. They will never

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see the extra suit, precisely because it will never be made. They see only what is immediately visible to the eye. Hazlitt continues to extrapolate the little example to the larger world, and accuses thinkers and intellectuals of his time of falling victim to the broken window fallacy. Though some of them would disdain to say that there are net benefits in small acts of destruction, they see almost endless benefits in enormous acts of destruction. They tell us how much better off economically we all are in war than in peace. They see miracles of production which it requires a war to achieve. And they see a post war world made certainly prosperous by an enormous accumulated or backed-up demand. In Europe they joyously count the houses, the whole cities that have been levelled to the ground and that will have to be replaced. Now having established that the addition of governmental spending is a topic of debate, let us omit it from Keynes formula. We then get: Y=U+I Now what is wrong with this formula? The total output of an economy being equal to the addition of total consumption and total investments does not seem outrageously wrong. Yet the Austrian school of economics objection to this formula is that it hides the fact that there is a trade off taking place. Any amount of money that one uses to consume, one cannot use to invest, and vice versa. To depict the way that consumption relates to investments, economists refer to the Production Possibility Frontier, as depicted below.

Here we can see that there is a trade off taking place. The outer circle depicts the frontier of the productive possibilities of a given economy. Any point on the circle, like F and E, depict a maximised utilisation of the money available. Point A depicts

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zero consumption, point B depicts full consumption and zero savings. From it result an amount of money used for investing in capital goods and an amount of money used for direct consumption. Any point inside the circle, like D, depicts a suboptimal or below maximum utilisation of resources. Any point beyond the circle, like G, depicts a use of resources that is not sustainable. Point G is similar to a man who tries to keep on working for 24 hours a day, 7 days a week; eventually the reserves of his body will be drained and his doctor will tell him to take a long rest. The longer time a man or an economy spends in the area beyond the circle, the longer the time is needed to recover, or in economic terms; the bigger the boom, the bigger the bust. According to Hayeks advancements of von Mises theory of the business cycle; the economy is not an aggregate whole, but subdivides into various stages of production; from raw materials all the way to consumer goods. The picture depicted below depicts the concept know as the Hayekian triangle.

With each step along the way, there is value added to the product, and the end result gains more value; from crude oil to plastic to a Barbie doll. For the economy to grow over time, investments must be made. To allow for investments to be made; money must be set aside, be saved by consumers, and thus consumption must fall. A result of an increase in saving to the size and shape of the Hayekian triangle is depicted below.

In this example the people of a nation or city become more thrifty and choose to consume less and save more. This leaves more resources unsold in the later stages of production, triggering a lower demand for labour and goods in the final stages of development. Or to but in simple terms; if the people of Copenhagen collectively 24

choose to save a bigger portion of their income, a number of bars, restaurants and supermarkets would have to hire less employees. Because of the increased amount of saved capital there is more capital available for lending to the early stages of production. Factories can take out loans more easily to expand. This causes the demand for labour and goods to rise in the early stages of development. In other words: the resources and labour that are released in the early stages of development, can be absorbed by the later stages of development. In this picture depicted below, we see how these three different economic concepts correlate. The interaction between supply and demand of money leads to a price: the interest rate. The interest rate corresponds to a certain trade off between consumption and production. This results in the various stages of production either growing or contracting. Bankruptcies and layoffs are not an inherently bad thing according to Hayek, even though mean tough times for the people involved. Rather: the resources that are released by bankrupt companies can be utilised by entrepreneurs in other stages of the production lifecycle.

This is the economy according to Hayek in a nutshell, under the condition that there is a free market enterprise at work. Now what were to happen if we were to meddle with this? What would happened if, for example, an outside agent artificially sets the interest rate do a lower price than what the market mechanism would set it to? A bit of vector analysis gets us the following graph.

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We see here the effects of artificially setting the interest rate to a rate lower that what a sound money market interaction would set it to. Let us analyse this picture, starting in the lower right side. The lower interest rate causes fewer consumers to save, seeing the diminishing returns on their investments, and instead they choose to use that money for consumption instead. The lower rates causes more entrepreneurs to invest in the growth of their companies. The difference between the first and the second intersection is made up with credit expansion: creating additional money out of debt. This leads to what Hayek continuously refers to as the characteristic of every boom: overconsumption and mal-investment. When we plot these points on the production possibilities frontier, we get to points instead of one, and we use vector analysis to see where the virtual point sets. Here we see the We can see now that this point on the PPF graph is outside of the frontier: the economy is starting to overheat itself. The increase in consumer spending causes the later stages of production to expand: more restaurants, hotels, bars and shops open their business. At the same time the increase in investments causes the early stages of production to expand as well: mining operations, oil drilling and refineries expand their operations. A speculative bubble is formed. The rise in investments was not triggered by extra thriftiness of the consumers, in contrary; they are demanding extra goods and services. Now the consumer side of the economy is claiming the same scarce goods and labour that the production side of the economy is trying to use. And a bidding tug-of-war ensues between the early and later stages of production; they both are bidding up scarce labour and goods and thus causing the prices to rise. Also known as inflation. This tug-of-war can be seen in the Hayekian triangle on the right: both consumers and producers are trying to pull the economy in their direction. This state of affairs is of course unsustainable and as can be seen by the arrow in the PPF graph, the economy eventually readjusts, falls into a recession. Nobody likes a hangover, but the hangover process is the bodys way of healing the damage inflicted 26

to the body during a night of heavy drinking. Similarly the bust, when the results of overconsumption and mal-investment come to surface, business ventures that were undertaken during the boom years prove to have been unsustainable and must be aborted. People getting layed off and business going bankrupt is part of the healing process of the economy, releasing the resources of unsustainable ventures and allowing them to flow to more sustainable venues.

Only Austrians understand inflation.

To make sure that I covered both sides of the economical divide, I had an interview with a spokesperson of Danmarks Nationalbanken; the central bank of Denmark. The stated objective of the Nationalbanken is to keep stable prices, which they have defined as inflation below 2%. Their main instrument to do this is the setting of the interest rate. Thus one would thus expect that there is a relation between inflation and the interest rate that the Nationalbanken sets, otherwise it would be a very strange creature. Although the spokesperson did acknowledge that additional money creation adds to the rising of prices and wages, he was not able to explain the way that the interest rate affects inflation. His main explanation of inflation was the wage-price spiral; workers demanding higher wages and therefore forcing manufacturers to charge higher prices. This explanation is lacking in the sense that it does not account in explaining how it is possible that prices rise across the board: where does the money come from? He gave me a book that describes the macroeconomic model upon which the Nationalbanken bases its forecasts. The forecasts were used to set guide policy decisions before it became adherent to the ECBs policy. Their model is depicted below, for the sake of comparison.

He mentioned that their model was extremely complicated and has been worked on for many years. This picture describes the different workings and influences of 27 pages of formulas, full of logarithms, differentials and arbitrary variables. The main difference between this model and the previously discussed model is that the first is 27

descriptive while the latter is prescriptive. If a certain value changes in one area of the economy, the MONA model claims to predict by what time and by how much it will affect all the other areas in the modelled economy. The Austrian theory merely describes a natural equilibrium and the unavoidable effects of deviating from it, but it does not tell by what time frame and with what percentages the effect will manifest itself. The most telling citation from the Nationalbanks publication is stated on page 15: Ensuring fiscal sustainability concerns the long term, and the equation is not part of short-term forecasts. (Danmarks Nationalbank, 2003) One would be compelled to say that long term sustainability of any engineered (man made) system, is its primary concern. This is especially true in the light of economic developments since 2008. There is no use in trying to balance a system that is in the long run unsustainable. Why do smart people make mistakes like the errors shown in the reasoning of the Nationalbankens economists? Hayek wrote that intellectuals tend to overestimate the value of intelligence. (Hayek, 1944) It is a form of intellectual hybris to think that one can simplify to algorithms and formulas something that goes way beyond our mental capacity of understanding. And while we have a lot of fun showing the errors in the reasoning of Keynesian economists, in the fourth chapter we will show where we made similar errors ourselves in the development process of the game. Besides the structure of the games internal economy, there are three main lessons that I took from the theory of the business cycle into the design of the game. 1. This can only be done with paper products The reason that this distortion of a natural equilibrium is possible in the first place, is only since the paper contracts from the goldsmiths were seen equally valuable as the gold itself. Or as it follows out of the Business Cycle theory: the ability of (central) banks to print the difference between supply and demand. The reason that we have this specific disturbance of the money market and not of, say for example, the pear market, is that most people have no use for a paper promise for a pear. People buy pears because they like to eat pears, or more general, according to Mises people perform actions such as buying pears to remove unhappiness (Mises, Human Action, 1998). There is no consumption need that is met by purchasing a promise for pears. The business cycle is made possible by the banks ability to treat a promise to repay money [credit] as money itself. Or put differently: the banks fractional reserve policy is the ailment that allows the business cycle to come into existence in the first place. Fractional reserve storage practices are illegal in any other field of business except in banking. If a grain storage facility loans out grain that their clients deposit without the clients consent and the client comes to claim its grain and finds it missing, the manager is likely to face criminal prosecution. 2. The boom and the bust is the health of the banks. Former American president Jefferson famously said that if the citizens of this country ever allow private banks to issue its currency, first through inflation, then through deflation, the banks will deprive them of everything they have got, until their children wake up homeless on the streets of the continent their fathers conquered. During the boom period of the business cycle the banks extend easy credit; credit that 28

is not backed by savings. This generates a bubble in investing. When the bubble inevitably pops, the borrowers cannot repay their debts and have to default. When they do default, the banks get the ownership of all the property that the borrower posted as a collateral when he made his debt. It is similar to a fisherman, who extends his line (of credit) until he feels a shock (crash) and then reels in the line (of credit) and whatever is on the hook when the line surfaces (businesses, houses, cars, any asset of real value) now belongs to the fisherman (banker). 3. Banks are not inherently evil. They can actually perform a useful function in society: helping society as a whole to grow by connecting savers with investors. This was to me an enormous eye opener. I came across the full definition of the Austrian Business Cycle Theory three months into the process and it had a profound impact on the direction of the game and the research. One of the things that annoyed me about other serious games where game designers intend to show the evilness of a certain business, is that they do not allow the player to do good. They become victim of an effect that Miguel Sicart describes as the banality of evil. (Sicart, 2009) Oligarchy is a perfect example of this. Oligarchy is a persuasive game designed by Molleindustria in which the player runs an oil cooperation. The player starts with some accessible oilfields in Texas and some inaccessible oil fields in Iraq. The only way to get to the inaccessible oil fields of Iraq is to bribe the politicians so that they start a war with Iraq. The player has no possibility of simply bidding a higher price to the Iraqi people for their oil. When the people around the world protest against the pollution that the players oil wells create, the only option the player is given is to violently repress the protestors and corrupt the legislation. There is no possibility, perhaps at a higher cost, to create oil drills that do not pollute. (MolleIndustria, 2009) Also it is not the case that one day people woke up and banking cooperations owned the world; it took an evolution of several hundreds of years for society to get to the point where we find ourselves today. In the next chapter we shall describe how we tried to transfer the understanding gained from the Business Cycle Theory into the game. But before we do so, we shall take a short tour into the fields of rhetoric.

2.3 Persuasion of the impossible

The field of rhetoric and persuasion have been widely studied from the perspectives of a variety of disciplines. Sociologists Sunnstein and Thaler writes about how 'choice architects' can influence the choices that people make. They postulate that the way in which choices are represented greatly influences the choices people make (Thaler & Sunnstein, 2008). The unwritten assumption of Sunnstein and Thaler is that people are interested in making the specific choice, they just need a bit of guidance. Analogous to a customer who has decided that he wants a car and the choice architect, in this case the car salesman, can present the cars in his showroom in different lights to nudge the customer into buying a specific car. Games researcher Ian Bogost has written an extensive book on the application of rhetoric in games. (Bogost, 2007) He writes that the best persuasive games incorporate their core message in the gameplay rules. In page 152 he quotes marketing guru Seth Godin: 'Marketing succeeds when it

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taps into an audience of people who share a worldview... that makes the audience inclined to believe the story the marketer tells.' The underlying assumption that both Bogost and Sunnstein make is that the message is sent to a person who is interested in the message, that the message is one that conforms to the persons currently held beliefs. In describing the process of scientific revolutions, in which the popularly held paradigm from one to another, philosopher Thomas Kuhn coined the term incommensurability. Incommensurability refers to the phenomenon of two paradigms that are incompatible with each other in such a way that they cannot coexist. (Kuhn, 1962) For example: an devoted Christian and an militant atheist have such different views on the universe that they will never be able to figure out who is right and who is wrong using only rational arguments. In personal conversations in the early part of my research I very quickly found out that the message that I wanted to spread through the game was incommensurable with the belief and opinion of many, if not most people. The ideas represent almost two different universes, two extremely different ways of thinking that are incompatible with one another. Most research of persuasion is focussed on how to nudge people into doing or believing something that they were favourable towards in the first place. Incommensurability describes the gap: the inability to convince the other party with examples, theories, arguments, nudges, or fancy marketing tricks. So how does one convince another without using arguments? The old Greek philosopher Socrates was convinced that once a person knew the Truth, they would automatically be inclined to do Good, and thus he found it paramount for every person to find the Truth. The way that he did this was by asking questions rather than supplying answers. He thought that humans already possess all knowledge that there is to know, they only need to remember it. He did this by asking the audience questions and letting them answer, so that their mind starts working and they draw the conclusions by their own doing. The idea behind the Socratic method is that rather than of firing arguments, supplying information and showcasing your expertise to the person that you are trying to convince, you trigger their curiosity and put them to thinking, trusting that they will be able to derive the truth for themselves. An example of the Socratic method of persuasion can be found in a story that the Austrian School uses to clarify the core concept of Marginal Utility. Marginal Utility is the idea that was first penned down by Menger; the idea that value only exists in the human mind. In order to clarify the concept, they tell a little story. Imagine that you are walking through the desert and you are lost. You have not drunk any water for days, you have not bathed for weeks, and your clothes are smelling of sweat. Suddenly you see an oasis in the horizon and you rush towards it. What is the first thing that you do with the water that you find? Most people that get this question asked say they choose to drink it. Then the question is asked; what is the next thing that you do with the water from the oasis? Most people choose to take a bath. Again is asked what the next thing is that they choose to do with the water and most people choose to wash their dirty clothes in it. This demonstrates that the more of a substance is available, the more mundane the task that people are going to use it for. And from that follows that they will be putting a lower value on it. Reasoning further from this line of thought they eventually arrive at the supply and demand curves that are found

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in figure 13. In the next chapter we shall describe how the Socratic method relates to game design.

Lessons from other games.

Ian Bogost advises game makers who wish to create convincing games to embed the message in the core gameplay of the game. One of the examples that he examines extensively is the McDonalds Game, depicted below. (MolleIndustria, 2006). Although the subject of the McDonalds Game is different than the game that we are trying to create, the set-up is the same: a documentary game showing the corrupt nature of a certain business by letting the player be in charge of it. Bogost writes that 'McDonalds videogame mounts a procedural rhetoric about the necessity of corruption in the global fast food business, and the overwhelming temptation of greed, which leads to more corruption. In order to succeed in the long term, the player must use growth hormones, he must coerce banana republics and he must mount PR and lobbying campaigns.' (Bogost, 2007)

While all of this is true, after having played the McDonalds game extensively I believe that the game, similarly to the previously mentioned Oiligarchy, suffers from the banality of evil effect. Miguel Sicart has defined the banality of evil effect as a designed limitation of ethical agency in complex multi-agent hierarchical systems. (Sicart, 2009) He proceeds to list five design principles that game designers should adhere to if they wish to design for ethical gameplay. One of these reads as follows: The game should be open to players creating and implementing their own values. A good ethical game allows the creation of ethical communities that import to the game experience their values. If this principle is indeed correct, it should follow that not adhering to it leads to a lack of ethical gameplay. I have chosen to take a look at the things that I think the designers of the McDonalds video game could have done better or differently so that I could learn from their mistakes. When discussing the things that could be done differently, we shall look through the lens of the principle cited above.

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The McDonalds game offers the player several 'evil' options, ranging from bribing nutritionists to feeding cows sewage waste to demolishing native villages. But to the player these options do not really feel like a bad moral decision, since the choice only affects your revenue positively and any negative side effects can be bribed away. More importantly; the game often does not allow the player any deviating choice. Pictured above is the stable where the cows come to be stuffed before they are processed into hamburgers. When the stable is overpopulated it causes diseases to spread amongst the cows. The player has to respond to this by killing diseased cows. The choice that is not given to the player is to expand size of the stable so that the cows can roam more freely and are not overcrowded. The options that the player has in the headquarters, like advertising campaigns and lobbying do not affect the gameplay except for the players revenue. Although the choices the game offers give the player an insight in the corrupt business practices that McDonalds practices, if the effects are not producing meaningful results, leaving the choice out would not have hampered gameplay too much. Or the choices could be made ethical if they allowed the player to take another path. A good example is the pasture fields. As the player grows, he needs more space for his cows. There is only so much space available though. The player can claim the crop fields of a local village, but only if he corrupts the mayor first. The choice that is not given to the player is to simply offer to pay the villagers a higher price for the use of their lands, so that they may use that money to buy the crops from elsewhere. Since we can see that the choices that are presented in the game do not adhere to the principle of allowing the player to implement his or her own values, it should follow that the game would suffer from the banality of evil effect. This effect is an explanation that is used to describe how it could be that during WWII the Nazi bureaucrats that were responsible for implementing the Endlsung could possibly support the holocaust they were helping to commit. When they were put on trial, they stated that they considered it a duty to follow orders, that they had never considered disobeying their superiors. (Sicart, 2009) I found it indeed to be the case that, after having played the game extensively, I was sympathising more with the McDonalds Company, rather than disliking it. I was optimizing all the factors of production to the rules that the game gave me. The game did not offer me to make more ethical, altruistic choices. The game could for example allow the player the possibility to revise the corporate strategy, raise the prices for hamburgers and only produce organically. In this way, the game could offer the player to make a trade-off between big profits and ethical responsibility. From the information that is presented on Molleindustria it seems that it is not the case that the original intent of the designers of the game was to make the players like McDonalds more. Their intention was quite the opposite. It seems to me that the effect that they unintentionally embedded in their game playing experience follows out of a deliberate design choice of trying to expose McDonalds corrupt business practices, rather than to imagine how McDonalds could be a better company. Or better; to allow the player to imagine how McDonalds could be different. In the next chapter we shall discuss how this lesson translates into the games design.

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Chapter 3: Design Framework.

In this chapter we shall condense the theory that we have learned into design principles. These design principles were not all present at the beginning of development, but gradually appeared over time with the progression of insight. They are grouped here together to depict the current relation of the game to the theory, and to serve as a springboard for future development. The Austrian Business Cycle Theory has been translated into a game structure design. Below a simplified version of the implementation has been depicted. Green lines indicate a trade relationship. The bigger the line, more products and money are exchanged between the two in the game. It should be noted that the implementation displays the current status. Future plans include an economy with bigger depth. As can be seen in the picture, the main mechanic of the player is to mitigate between public savings and business investment loans.

Now let us restate the lessons that we have learned from the Business Cycle theory and see how these translate to game design

Distortions in the business cycle can only be done with paper money.
It should be made clear to the player that there is a difference between a golden coin and a piece of paper that is promised to be redeemable for a golden coin. The fact that the latter can be printed and the former cannot should become clear to the player through the game mechanics.

The boom and the bust is the health of the banks

This modus operandi is important to convey to the players of our game. A possibility is to set a credit policy to either extend (approve all loans, regardless of credit status) conservative (only manually approve any loans) or contract (deny all loans and extensions of credit). The credit policy is part of the future development plans. We must then show to the player that if he plays the fractional reserve banking way, he will end up owning all the property of the game, after many rounds of inflationdeflation. 33

Banks are not necessarily evil.

We shall transmit this principle by adhering to Hayeks motto: before we convey how money can go wrong we will start with explaining how money possibly can go right. We shall start the game with gold as money and sound money banking. In this way the game can run in principle until the end of Time, save for computer crashes. The player will have the ability to connect savers and lenders through the interest rates that the player can set and through the loans that he makes. When the player is running low on money we will offer him the choice to loan out more money than he has in store. If the player chooses to do this, he will have invented fractional reserve banking and make massive profits on money that he does not have. This fractional reserve lending will cause a boom and thereafter a bust, when the player can expand his ownership over the assets in the game. The danger of this approach lies in the fact that it will be very difficult to make sound money banking interesting: a sound money bank does not generate huge profits and therefore does not generate huge advances in monetary possibilities. As we shall see in the next chapter, this danger is very real. But perhaps we can manage to turn this weakness into a strength; showing the player slow but steady growth under sound banking, and chaos and hyperinflation under fractional reserve banking. Thus there should be a clear and distinct difference between sound money banking and fractional reserve banking.

Adhering to ethical design.

We have concluded from the example of the McDonald video game that we have discussed in the previous chapter that a lack of ethically meaningful choice leads to the banality-of-evil-effect. There seems to me no point in making a game that tries to expose the evils of central banking, if all it does is make the players more sympathetic towards central banking. It then follows that we should offer the player the choice if whether or not he wants to follow the business practices that a central bank follows. If we combine this lesson with the goldsmiths tale from the previous chapter and the implication of the Business cycle theory that banks are not evil by necessity, it follows that the most important choice that must be explored in the game design and that must be left to the player is the choice of creating money out of nothing. We shall offer the player the in-game ability of making money in the literal sense of the words. The phenomenon of money making is so central to the games theory and background story, that the game derives its name from it: MoneyMaker Deluxe.

The Socratic Method

In the movies, the Socratic method is known as Show, dont tell. In games this has been translated to Do, dont show. Applying this concept to our game would be a paraphrasing of the principle as stated by Miguel: allow the player to choose whether to create money or not. A second principle that Sicart lists is: The players ethical agency has to be in tension, making the choices collide, or reflect, those that are problematic in the real world (Sicart, 2009) This relates to the design framework in two ways. Firstly: the player must be tempted repeatedly to create money. Temptation can come through the promise of great profits, through the threat of war, through the desire to avert losses or through the desire to avert potential bankruptcy. Secondly: whichever path the player may choose, the game must show the player where his choices will lead to eventually in the long run. The benefit of creating a digital 34

simulation is that an effect that in the real world would take up to forty years to develop can be achieved in a matter of minutes.

The overall structure of the game.

The game starts on the gold standard and without fractional reserve banking. In this way the game can run in principle until the heat death of the Universe, save for computer crashes. The player will be nudged to release the gold standard and to enable fractional reserve banking. Releasing the golden standard and enabling fractional reserve banking leads to widely increased options for the player, and much faster economical growth. The player has a wider pool of money available for investing. As Griffin notes in his monumental book about the origin of the Federal Reserve, fractional reserve money is a transition phase that always ends up with fiat money. The inevitable losses that the central bank (or player) incurs cause him to lower the fractional reserve rate until the only choice left is between fiat money and bankruptcy. Eventually fiat money will lead to hyperinflation. (Griffin, 1994) The structure of the game design is depicted in the picture below:
Game start, Gold money

Print money?

Sound Money

Fractional reserve money

Abandon golden standard?

Bankrupcy

Fiat Money

Hyperinflation

We show to the player where inflation comes from, by making the player the prime instigator of inflation. The player will be the primal investor, creating additional businesses with freshly created money, driving up prices. The concept of inflation is

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part of the future development plans. If the player does not keep up growth, deflation will occur and the players banks will go bankrupt by defaulted loans. If investments turn sour and are not paid back, the player can bail out himself, by lowering the fractional reserve rate. The intended progress of the game is depicted in the picture below.

Language in the game.

In his pivotal work 1984, George Orwell describes a socialist dystopia. One of the terms that originate from this book is Newspeak; a term that means its opposite. The ministry of Truth which was spreading lies and propaganda, the memory hole which function it is to forget things, the ministry of Love who torture people into submission to Big Brother. A similar practice can be seen in news about central banking. Economist Kenneth Galbraith writes that 'the study of money is one in which language is used to conceal the truth, rather than show it.' (Galbraith, 1975) For example: one of the stated objectives of the Danish National Bank is price stability, which they define as an inflation rate of 2%. (Danmarks Nationalbank, 2003)This is an internal contradiction, just as getting 2% heavier every year is not a stable weight, but exponentially growing. A regular person who gets 2 % heavier each year, will eventually not fit through the door of his house. This use of language should also be practiced by the messages from advisors and the newsflashes in the game. To make the player aware of the newspeak, I envision a Newspeak translator that looks like a magic wand. For example, a newsflash might read something like: 'In order to achieve a positive inflation, a central bank can, when it deems it necessary, extend additional liquidity to market parties'. When the player waves the magic wand over this text, it would read: 'whenever we feel like, we print money and give it to our friends.' These two sentences have literally the same meaning, but they read very differently. In the next chapter we shall see how we incorporated language in our game through the use of stories.

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Chapter 4; The development process.

While the previous chapter details the design of the game as it currently stands, the coming chapter will describe how the game got to be at that point. Let us start by reciting the quote from the second chapter. There is no means of avoiding the final collapse of a boom brought about by credit [debt] expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit [debt] expansion, or later as a final and total catastrophe of the currency system involved. (Mises, Theory of Money and Credit, [1912] 1980) The entire development process can be summarized as my attempt to translate the citation quoted above, through the design of a game, all the way down into formal programming language. As a result, the progress during the development process was as much mental progress as a programming progress. During the process of translating the Business Cycle Theory into ActionScript and Flixel, I frequently had to challenge my own assumptions and previously held truths when I came across logical contradictions. It is impossible to program a logical contradiction:
while ( true && false ) { println(this line will never get executed.); }

This means that when one comes across a contradiction, it signifies that there is something wrong in the ideas that led to the programming. The following chapter details the gradual improvements of the game design, as well as the developments in my understanding of money, banking and economic theory. The most unexpected lesson that I have learned from this project is the fact that computers cannot possibly attain free will. This is an necessary implication of the incapability of computers to come to calculate rational prices. These days it seems almost as heresy to proclaim that there is anything that lies outside the realm of possibilities of computers. And I myself as a programmer frequently overestimate my own abilities to translate anything that I can think of into a series of logical statements that a computer can execute. I have been forced to accept this conclusion, as I have tried twice to make a computer program that could come up with rational prices. I have had quite an obsessive focus with trying to implement a system that would by itself calculate prices, which made it all the harder to admit that it is impossible. But before I will explain how I did this, I will explain the why.

An growing obsession
I found that reading about free market economics is extremely addictive and the more I learned about real economics, the more I became convinced of the truths that they contain. The more I read, the more I saw the sheer beauty of the free market, of all the beauty that is produced by people who are cooperating without force. How could these silly socialists possibly be so blinded by their own ideas that they refuted any solid contradictory evidence? I began to develop a growing resentment against collectivism, against state-ism, against any interference in any part of human lives, economically and other. I reasoned how any interference with the interactions of free people always produces results that are contrary to the initial reason for the interference. I saw how subsidies for house rent led to overconsumption and thus

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higher prices, how subsidies for farmers led to overproduction and thus lower prices for farming products. My resentment for the state interference grew so deep, that I even expanded it to the field of games. I proclaimed that Sim-City, Caesar III and other city builder games were all socialistic planning economies, because all of the prices within the game have been set arbitrarily by the designer. I dreamt of programming a self-stabilising system; a multi agent system where agents would consume and produce and out of that interaction prices would arise. The possibility of a game where all of the prices would be determined by the game itself, a game that it would react naturally to money injection, where prices would be subjected to inflation by the conditions of the game overexcited me. I got so excited that I disregarded the warnings from my supervisor and my game designing friends, skipped 324 pages in Human Action and started reading about the price formation process. The simplified version of Mises theory of pricing works as follows. He starts with the axiom that Man had Free Will; he is free in choosing his actions. He explains how from that it follows that a man places different valuations on different things, under different circumstances values some things higher than others. This concept is known in economic terms as Marginal Utility; the usefulness of one extra item. Since all people are different and unique, it follows that also their valuations are unique. When two people meet who have opposite valuations on certain commodities, say a baker with bread and a hungry man with money, they can exchange their commodities and both be better of after the transaction than before. The price of a commodity only exists in the moment of transaction. The force that drives prices forward is the Entrepreneur, seeing opportunity to serve a market. But since it is the Consumer who decides what entrepreneurs get rewarded and what entrepreneurs go out of business, the free market economy as a whole services the needs and desires of the consumer. (Mises, Human Action, 1998) Expressed in modal logic, Mises proof looks like this: FW FW MU MU1 ^ MU2 Pn-1 C E Pn Mises has build this theory from the bottom up. I was under the assumption that starting at the end should also be possible, so I started with only the last two lines of the proof. MU1 ^ MU2 Pn-1 C E Pn In order to make a game about money, there must be a meaningful way of using money, namely prices. I reasoned that it would be best for the understanding of the player if the game stayed as close to Mises theories as possible. Therefor I became obsessed with trying to program a system that would be able to calculate prices in the way that the austrian school tells that prices are calculated. I set forth to try and program a multi agent system, where there are three products and each agent needs to consume, and only one that he can produce. What the agent produces in excess, he

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offers for sale to other agents, and what he does not produce himself he tries to buy from others. Every so often, an agent becomes entrepreneurial and tries to find out if there are more profitable professions out there, and if so, he switches his production to that product. I spent a total of one month on this system, without there being any form of player interaction. It seemed conceptually sound, but the model went from zero to hyperinflation in 20 seconds. After one month of development, the only thing that I could show for was a graph with prices that eventually went to a stable point, and a graph of producers that eventually reached an optimum division, based on the properties of the different products.

A change of plans
The graph depicted above shows the end result that I eventually arrived at. It shows the initial price development through the trading and price adjusting of the agents eventually reaching three distinct stable price levels. I was so delighted that apparently I managed to get stable prices out of the system, that I gladly overlooked the fact that I had to program so many arbitrary assumptions and rules into the agent that I might as well just hard code the prices. At that time there were two influential lessons that caused me to change the path of development. The first was Netlogo. Netlogo is a multi agent engine used for research purposes. (Wilensky, 1999) One of the models that came preloaded with the engine was a fractional reserve model. The user can set the fractional reserve and see the effect that it has on the little agent economy. The agents wander around randomly, and if they meet each other there is a random chance of giving each other 0, 2 or 5 money. At the end of the day, the agents puts his surplus in a deposit account and the agent with a shortage takes out a loan. This is an extremely simplified model for the economy, and one might argue that it is totally unrealistic, but it does work in showing economic

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activity. Also it shows the effect that the fractional reserve has on the society; it begins with a big middle class and a few rich agents, and the higher that one sets the fractional reserve, the bigger the gap between rich an poor. Netlogo demonstrated to me that a simple set of rules can convey the same message much easier.

The other influence was an interview of StrategyInformer with the Cris Beatrice, cretor of Egypt: Children of the Nile. (Beatrice, 2004) Here follows an excerpt from that interview, where Cris explains the main selling point of his city builder game. "First, people in the game take care of their own needs. You dont have to feed them or act as a babysitter for them. You dont select them and order them around, nor do they wander aimlessly. They dont starve if you fail to feed them, and so on. Sure, you can make their lives a lot better, you can capitalize on their natural inclinations, you can exploit their inherent desire for a better life (and this is really your role in the game), but you dont need to spoon-feed them. Thats the they care about themselves part." The creators of Egypt, children of the Nile pride themselves in how all of the citizens have these unique desires and aspirations, and try to satisfy these themselves. While this is very nice, while I was playing the game, I did not notice this the slightest. In fact, I thought that the game was boring and I turned it off pretty quickly. While the same Cris Beatrice was also studio head of the studio that made Caesar III, a game that I have played for hours on end. The development path that they had undertaken produced a less interesting game. And it was the same development path that I was on. So it turned out after all that all the effort that I was doing would probably prove to be a waste.

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Finally: Player Action

At that point I decided to put the price system development that I was working on in the fridge, and focus on the part that makes games fun; Player Interaction. Or Human Action. I went searching for core mechanics to convey the central banking modus operandi. A article by Hans Herman Hoppe that discussed the difference between print & loan and print & spend banking policy. (Hoppe, 2001) the line of reasoning he employs goes as follows. Imagine that you have the legal right to print as much money as you wish. What would you do with this freshly created money? The first incentive that people usually get, is to buy a lot of stuff or start a lot of new business ventures. But when you buy things, the money is gone, and when you start a new business it can go bankrupt and you will need to sell it at a loss. So after a while what bankers started doing was loaning out the freshly created money to entrepreneurs. Who paid back the debt with interest. And if they could not pay back the debt, the assets that were backing the loan; the entrepreneurs land or capital goods, were given to the banker. These two actions, lending and buying, became the main interactions of the game. The ability to buy (spend) things into existence was also essential because of a factor of game structure design. When the player can only lend out money, there will inevitably come a point in time when through interest he has confiscated the larger part of the game economy's money and nobody will be able to take out any extra loans. At this point, while there are still loans being paid back, the money available in the economy will contract, causing deflation and bankruptcies. If the player does not have the ability of inflating the money supply, there will follow a bust and a reset to normal conditions. When the player has the possibility of spending money into the economy, he can keep the economy artificially inflated, in order to increase the magnitude of the boom and to postpone the inevitable collapse of the game's economy. To make these actions possible, I developed the backdrop of a little economy. A number of buildings who all produce their own products. An agent, who does the work, the buying and selling and makes the choices, inhabits each building. I have been making a simple way in which the agents can trade together and an economically rational way to choose between borrowing and saving. The structure of the game economy is shown in the previous chapter. The working of the agents is roughly as follows. Every x updates, every agent produces his product. Every y updates, an agent goes buying v products for u money. Each agent requires a set of products every update, depending on what he is. He will randomly approach an agent who makes the product that he is looking for with u money. If that agent has run out of products, the buying agent increases his price with the inflation rate. If there is overproduction, there needs to be a way for prices to come down as well, perhaps the suppliers can bring down prices with the deflation rate when they do not sell out in a long time. This interaction will lead to a set of monthly income and expenses. The Austrian School of economics says that in a sound money market, the interest rate reflects the individual's time preferences. The savers balance the discomfort of setting aside money against the comfort of the extra generated income later. Austrians say that people do not save just for saving; saving is not fun, it is more fun to use your money. People save up for something; to be able to buy a new car, to start a new business venture or other things that the individual cares about. I decided to import this concept into the game as well, in the following way.

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If the agents expenses are greater than his income, he will eat into his cash savings, take out a loan, or try to produce something more profitable instead. Each agents primary goal is to advance; to upgrade the productive capabilities of the building that he inhabits. They calculate their time preference for choosing whether to save or to borrow. If their income exceeds expenses, they calculate how much time they will need to save, given the player set interest rate on savings, to purchase the next level upgrade of their building. Then they calculate how many months they will be repaying a loan for buying the next level upgrade, given their current surplus and the player set interest rate. If they are sold out the past 6 months, they will think that there is great demand for their product and they will use future production to calculate the repayment terms of the loan. Now the agent has two time terms. It will see which term is the shortest and try to go for that: set up savings in the players bank or request a loan. Once the loan is initiated or the savings are big enough to purchase the next level upgrade, the money will flow from this agent to other agents, either immediately or over time. Regular consumption patterns flow to consumption goods producing agents (housing, food, etc) next level upgrade money flows to industrious agents (industry, power plants, etc). The system should be able to provide with savers and lenders, it is then up to the actions of the player to put those two together. At the end of next iteration, agents should be able to get entrepreneurial, and players should be able to facilitate them with money. the system has a money flow between agents. agents have a set amount of cash. In a later iteration of the model, the cash of the agents can easily be converted into deposits. Once that is done, agents can also make an overdraft more easily; having less than zero cash in their accounts, generating interest for the player. It seems that all that time spent on the multi agent system was not lost after all. I made a trading system amongst the agents working in the buildings that worked analogous to the previous system. The agents could not switch their production and only the entrepreneurs could change their prices. The consumers were always looking for the cheapest seller. The producers tried to optimise their prices to their production; in such a way that they were not overproducing or underselling. But still this model led to hyperinflation in less than 30 seconds. I decided to take out my previous model out of the fridge and figure out how I used the agents to calculate prices. But there appeared to be something wrong. After a little while I figured out that the system that I had conceived never ever reached stable prices; it just went on until there was no more trading happening. And at that point there was no more changes in the price.

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A change of mind
This catastrophic development forced me to rethink my assumptions. When we follow the logical proof of Mises that Free Will leads to Prices, it follows from there that we cannot let something calculate prices that does not have free will. In the final chapter we shall further detail how this discovery would lead to the proof of why computers can never possess free will. I knew from the beginning that translating Human Action into ActionScript would be extremely difficult, but I wanted it to happen so badly that I overlooked the logical impossibilities. I had committed the very same error that Mises accused the collectivists of; I let my ideology triumph over reason. The solution to this demise was quickly found: arbitrarily setting the prices of the commodities in the game. Just like in Sim City, Causar III and all the other socialistic planning economies I so despised.

Putting action into a world

The next biggest hurdle to take was the context of the actions. Just as Mario's double jump needs the character Mario to do the jumping in order to give his action meaning, the lending and spending needs something to do the spending and lending. My initial instinct was to mimic the banking reality as it currently stands. I wanted to start with gold as sound money, and gradually change from fractional reserve money to fiat money. I wanted to have a deposit bank where the agents store their gold, an investment bank where the player does his spending from, a savings and loans bank, where the agents set aside their money and take out loans, and a central bank, so that the player can bail himself out when he gets into trouble. This approach was very difficult to pursue, as it led to a lot of conceptual trouble and designing difficulty; would the player have to give money to himself in order not to go bankrupt? This trouble caused me to go back into banking history, and to model the bank after the Bank of England, as it initially was set up.

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The Bank of England was all of these different types of banks in one. It invested, secured peoples deposits, lent out peoples savings and printed the paper contracts, giving the holder claim to a certain amount of gold. It was founded in 1694 with the purpose of funding the war fleet for King William III. It was a joint venture between the King and a number of bankers. Its opening charter states 'The bank of England hath the benefit of interest on all moneys which it createth out of nothing.' Quite a decent business venture indeed.

The banality of banking

This model is actually also more representative of the current state of affairs. The difference between central banks and other kinds of banks is merely a smokescreen to keep away nosey people. It is now publicly known that the Federal Reserve handed out several trillion dollar to the six biggest wall street banks during the height of the 2008 crisis. It was handed out, since the money was given at 0% interest rate and has not been returned. Citigroup: $2.5 trillion ($2,500,000,000,000) Morgan Stanley: $2.04 trillion ($2,040,000,000,000) Merrill Lynch: $1.949 trillion ($1,949,000,000,000) Bank of America: $1.344 trillion ($1,344,000,000,000) Bear Sterns: $853 billion ($853,000,000,000) Goldman Sachs: $814 billion ($814,000,000,000) (Also numerous European banks received billions in handouts.) (US Government Accountability Office, 2011) What makes these figures more interesting is the fact that these six banks are among the main stockowners of the Federal Reserve. If we look behind the formalities of the names of the banks, and look at the actions of the owners, we do not see the Federal Reserve giving money to Banks. We see the left hand inventing 16 trillion dollars and giving it to the right hand of the same body. Here we see an example of the banality of evil in action in the world of today. Perhaps a more fitting name would be compartmentalisation of evil, as an act that would immediately be recognised as counterfeiting if it were performed by a single body, gains an air of legitimacy when it is performed by what appears to be two different bodies. The fact that the act was carried out outside of the regularly published balance sheet of the Federal Reserve and the fact that it took an external audit to reveal these figures, implies that the agents involved in the process were well aware of the moral implications of their actions. When this was decided, it quickly became time to playtest. This is an excerpt from the developer diary. Tuesday 3rd. Yesterday evening I have had my first playtesting session with Sune. It helped a lot to get the priorities straight. Basically I should focus more on the GUI and less on the game system at the moment. Also I have tested the story on him. While the ending titles were well received, the opening titles were less understood. I think that I want to focus more on the link between gold & money, and let the player consciously break the link. This will require some extra explaining. () (To speed up the testing process,) I made a story on paper, describing the evolution from gold as money to paper as money in a few short key moments. I have tried this

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story on a number of people and revised the story accordingly: adding more detail and more moments of choice. () The first iteration of the story only had the opening sequence and the ending sequence. The disconnect between the two proved to be too large, so I added a number of intermediary events that explain how the story progresses between the opening and the ending. The story I finally arrived at made all the people understand the connection between the beginning and the end. This story can be found in Appendix 1. There are a number of concepts that I found important in the story: 1) Gold. And the link between gold and paper money. In order to make the player able to understand how it came to be that some people ended up with having the power in their hands to print money, we must start with the situation beforehand, when people traded products with little coins made of precious metals. 2) Choice. There are two possible endings for the game's ending, when the player 'retires'. Either he is a sound money banker and grows slowly but surely, or he decides to print money and become filty rich. It is important that either of these destinies are dependant on the player choice. It starts quite simply with the choice of printing money. Once the player is on this path, his choices become limited to either fiat money (no more link between gold and money) and bankrupcy. But whichever way the player goes, he ends up at the place where he is because of his own choice. 3) Language. In the world of money, language plays an important role. It can be used to disguise reality from curious onlookers. Or it can be used to clarify things. For example: the introduction states 'every time that you give out a loan or take in a deposit, you give out a paper contract, while the gold stays safely in the vault.' Throughout the story, paper money is never referred to as 'banknotes' but as 'paper contract', a slight change from the common word, to make the player realise that something is different, to make him pay attention to the difference. As Sunnstein noted before, the use of language is also important in the presentation of choices. (Thaler & Sunnstein, 2008) The use of language is modelled after the historical debates around the printing of money. No central bank or government ever started abandoning the golden standard by saying "We should print massive amounts of money! like there is no tomorrow!". Whether we look at the rationale used by the French assembly in 1789 printing their county to hyperinflation, president Nixon taking the world off the golden standard in 1971, or the arguments used by the ECB to buy government debt in 2011, it is always presented as limited, temporary, under control. It is often described as an easy medicine to a difficult problem to outsiders, while to insiders as hugely profitable. When the player is offered the choice of creating a fractional reserve, the choice states: 'what is we just print a couple of extra paper contracts? Just this once? Nobody will notice if we print just a limited amount of extra paper contracts!'

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4) Fate versus Destiny. Or choice and consequence. In order to try to sidestep the banality of evil effect, it is important to show the consequences of actions. It is of importance to show the player where his decisions lead to, if they were conducted in reality. If the player abides the golden standard and refuses to print more paper contracts than he has in store (he will be tempted 5-6 times) then his bank will grow less fast, but when he retires, the ending titles say that 'the people of the city have erected a statue for you'. If the player strays from the golden path, his bank will end up being filthy rich, but when he retires, hw sees a picture of a guillotine and the ending titles say 'the price of bread has jumped from $0.2 to $28.902,55 and 73% of the people cannot afford bread, nor cake, and they have decided to cut your head off.' 5) Humour. I have found it to be the case that people are much more willing to accept the truth from a clown who pokes fun at the absurdity of the situation, rather than from the doom prophet who points at the immorality of the situation. The link between the game and reality is also easiest show with a good dose of irony. For example: some time after the player decides to go off the golden standard entirely, the game shows him the following: "Fun Fact: the only people who do not go to jail for printing money are central bankers. Luckily they are always Wise Men who know exactly how much money all of the people in the country need. My goodness, can you imagine what would happen if they were less wise and tried to fix a debt bubble by creating more debt?" Here follows another excerpt from the developer diary: Monday 14th of November. The game was finally up to a playable state, So I have had it tested it as it stands. Testing was as per usual a quite humiliating experience. I asked the tester whether he knew what the fractional reserve system means, and both before and after he could not answer the question. Also, the fractional reserve is not properly implemented into the game system as of yet. I found a number of bugs, and also a number of things that need improving. The player did not know what to do in the beginning. Therefore we need a proper set of tutorial pictures explaining the mechanics. Thereafter, there was not enough feedback in the system; the player did not know how well he was doing. He suggested to add some graphs that show progress. () Gameplay wise the player thought it would be cool if the city was evolving also without the players input, like SimCity also does. Also the agents now constantly ask for the same question when applying for a loan. The player suggested that it would be more interesting if they said different things, as to gauge the riskiness of the loan. Also, the gameplay of loaning out money is constantly the same action. The player suggested that this could be automated by having a loaning policy button. Since expanding the money supply is one of the main showcases of this game, this is not a bad idea. But loaning out money is one of the two main actions that the player can take, so we could also work on more visual ways to make loaning out money look more awesome.

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An example of a game mechanics solution to make the lending of funds more interesting, is to make the player negotiate the return on every loan, rather than steadily setting the interest rate. Risky ventures could offer higher returns while safe investments have lower returns. This will be the implemented in future development. This is the final entry in the developer diary: Tuesday 15th of November. Since one of the main things that was missing in the playtest yesterday was any educational or persuasive content, this was the first thing that I have focussed on. I have taken a number of pieces from the story that I have made, and turned them into screens with beautiful programmer art. Mads will turn the programmer art into something more beautiful.(Note, lest we forget, Nils will add nice sounds as well) Today I will work to put the educational content in the game. There is an opening sequence explaining to the player what he is to do, a sequence that poses the question to transition to fractional reserve money, a sequence to transition to fiat money(or face bankruptcy at that point). The full developer diary can be found in Appendix 2.

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Chapter 5: Evaluation
After a bit over a month of development time we were forced to stop implementing features and start testing. There were a great many features that I deemed necessary that were not yet implemented, but at the time when the choice arose between foregoing the deadline or testing a half finished game, I chose the last. The features that were not yet implemented were a multitude: inflation, the setting of the fractional reserve rate, the administrative figures feedback, the game's ending and the balancing of the economy. With these deficiancies, the game was tested on players and I asked for their reaction inquired into what they had learned. When I tested the game on players, I asked them whether they knew what the term Fractional Reserve meant, and whether they thought that gold was a form of money. These questions were asked to gauge the players current understanding of money and banking. Then the players were asked to play the game and talk aloud what they were thinking while playing. After the playsession I asked more questions, first regarding the game, then regarding the money system to see whether their understanding had increased. Below is a condensed recap of the findings; first the playtesting reactions, then the player learning experience. The two playtesters are referred to as 'player', as to preserve their anonymity.

Playtesting reactions.
The flaws of the game model clearly impairs on the game experience. Players mentioned in the beginning that they did not know what to do. They understood that they were a bank, but they did not see what their available actions were. One player never build a building, it apparently did not occur to him that funding buildings was an option. A player mentioned that a tutorial in the beginning that would explain the possible actions would be appreciated. I noticed that the agents asking for enterprising loans were asking them far too quickly and also redacted them too quickly. The players asked me who is this pepe guy?' as all of the agents are currently named pepe. The first player said that it would be beneficial to him if he could see an overview of the loan given once he hands out a loan, or once he checks out on a loan. He would like to see the amount, the running time and the interest rate. The players noted that there was generally too little of an overview of the game status. One of the players suggested a visual que to display the income versus expenses, as to easily see the current status and what possible actions to undertake: to expand or contract outstanding loans. The players would like to have better feedback regarding their reserves. One of the players assumed that there were good credit borrowers and bad credit borrowers, and he would like a visual cue as of these, to signal high risk/reward and low risk/reward projects for funding. When the players had lend out all their money (somehow they could keep buying still, a bug that needs to be looked into) the game asked them if they wanted to print more paper contracts. The players understood that it was a bad thing to do; an immoral choice. They did not opt to do create extra money. One of the players mentioned that there was too little pressure to make him opt to create money; he was making more than enough money already and was not limited in his actions by sticking to gold as money. An other player thought it was a bad idea to issue more contracts because 'that

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is just like Enron. When people come asking for their money it is not there.' The players chose to play the safe way. Which says good things about their character, but the message that the game is trying to spread is based on what happens when people choose to play the fraudulent way.

One of the players found that it would be necessary to take a persons property when they could not repay their loans. This had not been implemented yet. Players all would like more information regarding all the aspects of the game. How many terms a borrower has repaid, what markets are getting big profits and what markets are performing less, the borrowers revenue, the way that suppliers and buyers connect and all these things. Although none of the players adjusted the interest rate, they did notice that they were a bank and that interest was their income.

Viewing reaction
From the way that the players played the game, it appears as though time is moving too fast in the game. At least the entrepreneurs are asking too easily for a loan and retracting it too fast. The flying numbers and goods are extremely unclear, especially when the player has a lot of properties. I think that it would be better for the game if not all transactions were visible, but only monthly transactions that directly influence the players balance; income from interest and profit, expenses from losses. And even better if they were stationary; simply hovering above the property that the player invested in or lend to. There overall seems to be a lack of feedback that tells the player whether he is performing well or not so well. A player noted that the bugs and missing features, like the taking of property of lacking borrowers, prevented him to relate the game to his understanding of how a bank works. He missed the ability to see what is going on in the game; how trade is conducted, how profit and loss is arrived at. He suggested to

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use tooltips for all things in the game, that you would not have to click on something to see what it is. One of the players mentioned that he lacked any goals. He suggested that it would be better if there were some targets, like for example an expensive project or war where there would be a lot of money needed for. The player did not experience a learning curve for the duration of the game; he did not get feedback from the game that he could use to play better. He said that it would be nice if there was a monthly overview of income and expenses, to show the game's progress over time. Also he would like to see demographic information; the amount of citizens in the country and seeing them grow more if he invested wisely. As well he noted the desirable addition of unlockable possibilities, that all businesses are not open from the get go, but that some unlock others.

Learning experience.
Both players did not choose to leave the golden standard. One of the players noted that it would make the prices go up. He noted that he liked the idea of the game that it gave him a sense of looking at the economy, of what it is and how it works. The other player still gave the price-wage-spiral theory as an explanation for inflation. But the same player did say after being asked that he thought the golden standard was a good idea, because he could still make a very decent profit. It was noted by one of the players that leaving the golden standard was not tempting enough, there should be something going on to make the player more tempted to switch to overprinting money, like a big ambitious and profitable project, or a war. Perhaps a loan can go bad and the player has to choose between taking a loss (i.e. paying for the loss out of his own pocket) or printing a couple of extra moneys. The addition of naval trade and warfare would be beneficial to the game; sailing the high seas is treacherous and when the ship is lost, all is lost. But when the trade is returned or the sea battle is won, it can become very profitable. Either the prospect of great profit or the averse of a great loss can be used to tempt the player to leave the golden standard.

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I noted that both players became very profitable very quickly and never really ran out of funds. Hence, the returns of the game should be slower over time, so that if the player interacts in a normal way, he will have lent out or spent his funds rather quickly and needs to wait a long time before they are returned. The possibilities of the player should be more restricted under the golden standard, there should be lower returns and ambitious projects that the player cannot undertake due to lack of funds. So that in this way he will be desiring greater possibilities and when the choice is offered to expand his possibilities by changing the rules of the game in his advantage, he will be more tempted to take it. When one earlier player did make the switch off the golden standard, and there was a little economic downturn after a while; many borrowers could not repay their funding. But the player did not notice the connection, as these bankruptcies also occurred before he made the switch. Thus the relationship between money printing and the business cycle has not fully been conveyed in the game.

It should be noted that even though the basic game would benefit greatly from future development, a number of its main messages do get delivered throughout the game. The difference between gold as money and paper as money, and more importantly the workings of fractional reserve banking do get transmitted in the game. The players do not necessarily remember the term fractional reserve banking, but they do recognise it for what it is: fraud. It has also been shown that the players are perfectly capable of morally judging that this is a bad thing to do, without the game telling them that it is evil. There are numerous things that future development could add to the current version of the game; the origin of inflation, the boom and bust cycle, the eventual transition from fractional reserve money to fiat money, the eventual failure of fiat money through hyperinflation. But all the players have understood the core mechanic of banking.

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I think that we should take a clue from this. It is not necessary for a player to delve into banker lingo, to remember the term fractional reserve banking. The money makers are excellent word smiths; designing phrases to make something that is a crime look complex but innocent. If the word fractional reserve lending goes out of fashion, they will be more likely to invent a new name than to abolish the practice.

Or, to make it more relevant to todays terms; when the fiat currencies will go out of fashion, as they inevitably will, the solution proposed will not be to abolish the fiat money monopoly, but rather to switch to a 'basket of currencies'. Because obviously, as the IMF implies with their ambition of a global SDR, a basket full of paper promises is worth more than a single paper promise. Thus: when we will expand the game further, trying to demonstrate more of the wicked principles and nasty results of money making, fiat money and (hyper)inflation, we should not focus on educating certain words, because new words will come. Rather we should focus on educating the wicked principles and showing what they lead to. It is more important is to show the principle: the creation of something out of nothing. The lending out of something that you do not possess. It is more valuable to make the player think for himself, rather than to transmit the meaning of a word.

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Chapter 6: Conclusion
A list of things that I have learned during the creation of this game.

1.Computers will never have Free Will.

This conclusion came rather as a surprise, since I did not expect to find it during the development. Rather, I was working to try and make the opposite happen. For Mises shows that free will is an essential axiom before we can to get to price formation. My failure put my preconceived notions to the test. Of course it is a valid argument to say that absence of evidence is no evidence of absence. Perhaps there would be a way to impart free will to a computer, perhaps I just was implementing the wrong algorithms. Hence, to make this case more convincingly we shall take a look at two other cases. Mises wrote that Human Action, which is a visible outcome of free will, implies purposeful behaviour. He wrote further that the purpose of human action is the removal of unhappiness. Man acts so he can get from the state that he is in to a more desirable state. This also implies Judgement: the ability to predict which choice will lead man to the more desirable state. In July 2005 the Wall Street Journal ran an article titled 'Lessons from the Brain Damaged Investor', in which a team of 'neuroeconomists' presented their results that brain damaged people were better at making investment decisions. The article ends with a most telling quote: "A lot of the mechanisms that drive our emotions aren't really that well adapted to modern life". The unwritten assumption of this statement is that it is better to change 'the mechanisms that drive our emotions' than to change modern life. After this article had been published, Wall Street Banks proceeded to hire autistic, or 'emotionally challenged' people, because they concluded that they were less hampered by emotions and thus could make better investment decisions and make them a whole lot of money. In 2009 70% of all the trades that were happening on the stock exchanges in the NYSE were fully executed by computers, by algorithms. Armies of programmers who have the vast wealth of the money printers at their disposal had worked tirelessly to make the computer calculate rational prices. Yet in the autumn of 2009 a flash crash happened. A minicrash where the values of the stock exchange dropped 10% and rose back again in no longer than five minutes. A documentary showed what had caused the crash; one of the trading computers was dumping their stock at ever low prices. This caused a chain reaction in the other computers, and all of the sudden they began selling their stock at irrational prices; Apple stock that traded for over 100 dollars ten minutes earlier suddenly got sold for 10 cents. Apparently the armies of programmers with the vast resources of the banks had not managed to make the computer be able to calculate rational prices. This means that they could not impart free will into a computer, for if they could, they would have computers trading at the speed of light without making irrational decisions.

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Still, this is more evidence of absence, not absence of evidence. Perhaps the programmers were well funded but could not come up with the right idea. Perhaps if we just try harder, some more unorthodox methods, we might finally succeed in bringing computers to have the same free will as humans do. I think that the question that is then more important is not the how, but the why. What purpose would it serve? There are those people in the well known 'Singularity Movement' that tell of the unfathomable blessings that will be bestowed upon mankind, once Man merges with Technology. Imagine, they say, the calculating power of IBM's deep blue wired to your brain as you play a game of chess. Imagine a facial recognition camera wired to your eye, linked to facebook, youll never ever have to experience that awkward 'ehm, what was your name again?' moment again. Imagine that all you know is stored on a hard drive, you l never forget your car keys anymore! While this is very fancy and all, when we take a look at the impact of the actions of 'emotionally challenged' bankers armed with mega calculators on this world, it causes me to wonder whether the merging of man with technology will truly lead mankind to Utopia. Or might the merging with technology cause us to lose the very thing that makes us human?

2. Applying the principles of ethics creates an ethical game experience.

The principles of ethical game design that Sicart wrote down were not something that I started out with during development. Rather the opposite, it was the development of the game that led me to apply these principles unknowingly. When after development I read the 'Banality of Simulated Evil', it seemed to me that Sicart had managed to put into words what was to me only a hunch. Also these principles had explanatory power: they could explain what effect not adhering to them would lead to, and this effect was indeed noted, as the examination of the McDonalds video game showed. If there is one thing that I learned from the development of this game, it results from the players reaction to the screenshot that is depicted in page 46: the question that is posed to the player to create money. All players that I tested this on, recognised this as an immoral choice to make. The two final playtesters did not choose to make it, which I found very interesting. After all, it is nothing but a game. There is no real world penalty for choosing to do so, or not to do so. The players all intuitively understood that this choice was unethical and even though it was just a game, they chose not to make it. I think that future development of this game will focus on the game experience of the choice of creating money, to try to tempt the players as much as possible. And to show to the player the destructive path that money creation leads to. And to pull this statement to the more general field of documentary games; is seems to me that us game designers are just starting to learn the tools of the medium. When I want to learn how something works, I can read a book about it or watch a movie, yet there are very few games that I can play to gain insight about a certain topic. Games are not yet working to simulate reality in a way that does right both to the expressive power of the medium and to the reality upon which it is based. It seems to me like game designers are just beginning to grasp the expressive power of games. I think that it requires as game designer a deep understanding of the subject that you are trying to translate into a game, and the willingness to not make the choice for the player, but to allow the player to choose for himself whether to do good or evil. And furthermore,

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especially when communicating something that you consider evil, it requires the imagination to see how it possibly can be good.

3. Obsessive focus with translating reality impairs the game design eye.
Of all of my motivations the one that held back development the most was the focus on translating how the real world works into a game. Whether it was the pricing system or the banking system, trying to copy these realities into the game took away any form of fun in the game. When I look at the final result, it is without any doubt the most boring game that I have ever made. One of the players said that it reminded him of his 9 to 5 bank job that he used to have, and that is perhaps the best description of the playing experience. It is not a compliment. The guiding urge that should be on the top of any game designers mind is 'how can we make the player navigate this universe in an interesting way?'. My obsessive focus with trying to translate reality turned that around; the guiding urge became not how to provide the most interesting experience, but how to stick as close to reality as possible. In this process, the game suffered.

Final Conclusion
To bring the thesis to its proper conclusion, let us restate the questions that were posed in the beginning. How can we create a documentary video game that can educate people to understand the central banking system? How close can we stick to reality of the banking system while keeping the game entertaining and interesting? And let us try to bring these questions to an answer both at once, armed with the insights that we have learned so far. People are storytelling creatures. Stories is how we relate to each other, how we gain understanding from the world around us. The story that has more than anything sharpened my insight about the central banking system was the Goldsmiths Tale from chapter 1. It in this very story that our current banking system finds its origin. Once you understand this story, it is very easy to understand how a central bank works. This story was present in al lot of the different books and movies about banking, both from insiders and from protesting outsiders. It is very tempting once you develop something to focus on transmitting the meaning of words. Words like 'central banking system', 'fractional reserve' and 'fiat money'. It has proven to be much more fruitful to focus on the transmitting of ideas, of concepts. It is helpful to put these words in the game, but only to put a name on the action that the player has taken. Henry Hazlitt wrote that 'the art of economics is not only seeing what can be seen, but also seeing what cannot be seen.' I think a similar thought applies to ethical game design. The art of translation of a certain reality into a game requires not only the vision of the current reality, but also the dream of how this reality can be.

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Bibliography
Bastiat, C. F. (2007). The Bastiat Collection. Auburn, Alabama: Ludwig von Mises Institute. Beatrice, C. (2004). Children of the Nile Interview. (S. Informer, Interviewer) Bernanke, B. (2002). Remarks by Governor Ben S. Bernanke. National Economists Club (p. 1). Washington D.C.: Federal Reserve. Billington, J. H. (1980). Fire in the Minds of Men, Origins of the Revolutionary Faith. New York: Basic Books Publishers. Bogost, I. (2007). Persuasive Games. Cambridge: Massechutes Institute of Technology. Brown, E. H. (2007). Web of Debt. New York: Third Millenium Press. Cialdini, R. (1984). Influence. New York: HarperCollins. Danmarks Nationalbank. (2003). MONA - A quarterly model of the Danish Economy . Copenhagen: Danmarks Nationalbank. Federal Reserve Bank of Chicago. (1961). Modern Money Mechanics. Federal Reserve, Chicago. Chicago: Public Information Center. Galbraith, J. K. (1975). Money: Whence it came, where it went. London: Deutsch. Garrison, R. W. (2009, july 27). Austrian Theory of the Trace Cycle. Retrieved 10 15, 2011 from Mises.org: http://www.youtube.com/watch?v=zhoFOyy7rbo Griffin, G. E. (1994). The Creature From Jekyll Island. Westlake Village, California: American Media. Hayek, F. (1944). The Road to Serfdom. Chicago: University of Chicago. Hazlitt, H. (1946). Economics in One Lesson. New York: Harper & Brothers Publishers. Hewitt, M. (2009, January 7). The Fate of Paper Money. Retrieved June 9, 2011 from DollarDaze: http://dollardaze.org/blog/?post_id=00405 Hoppe, H.-H. (2001, October 13). Why the State Demands Control of Money. Mises Daily . Huizinga, J. (1938). Homo Ludens. Leiden: Athenaeum Boekhandel Canon. Huizinga, J. (1950). Homo Ludens, Proeve eener bepaling van het spel-element der cultuur. Amsterdam: Amsterdam University Press. International Monetary Fund. (2010). Reserve Accumulation and International Monetary Stability. IMF, Strategy, Policy and Review Department. New York: IMF. Kuhn, T. (1962). The Structure of Scientific Revolutions. Chicago: University of Chicago Press. Middelkoop, W. (2009). Overleef de Kredietcrisis . Amsterdam: Nieuw Amsterdam Uitgevers. Mises, L. v. (1998). Human Action. Auburn, Alabama: Ludwig von Mises Institute. Mises, L. v. ([1912] 1980). Theory of Money and Credit. (H. Batson, Trans.) Indianapolis: Liberty Classics. MolleIndustria. (2006, January 1). McDonalds the videogame. Rome, Rome, Italy. MolleIndustria. (2009, January 1). Oiligarchy. Rome, Italy, Italy. Sicart, M. (2009). The banality of simulated evil: designing ethical gameplay. Ethics and Information Technology , 11 (3), 191-202. Tacitus. (2011, Februari 09). Guestpost: De komende vlucht uit valuta - Deel II - De architectuur van het huidige monetaire systeem. Retrieved June 08, 2011 from Goud.com:

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http://goud.com/index.php?option=com_content&view=article&id=260:guestpost-dekomende-vlucht-uit-valuta-deel-ii-de-architectuur-van-het-huidige-monetairesysteem&catid=1:nieuws&Itemid=50 Thaler, R., & Sunnstein, C. (2008). Nudge. London, England: Penguin Books. US Government Accountability Office. (2011). Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance. Audit Report, Federal Reserve System, Washington. White, A. D. (1933). Fiat Money Inflation In France, How It Came, What It Brought, and How It Ended. New York: D. Appleton-Century Company. Wilensky, U. (1999). Netlogo. Evanston, IL, US.

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Appendix
1. Testing Story.

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2. Developer Diary
Design Framework [notes] The idea is to build a free market economy based on a multi agent system. agents are autonomous units that need multiple resources to survive but can produce only one. what they produce in excess of their own need, they trade with other agents for money. The idea is that out of this, some form of market prices will emerge, that I may use for the purpose of inflation. however, the harsh reality is that it is impossible to give an agent an idea of value. Mises foretold that this task is something that somehow only the human mind is capable of doing. to an algorithm, 2 is just as fine a price as 2E200. I need to come with an answer quickly; time is running out, and this is a very inder-the-hood-part of the model of my game, no player will ever see it. Today I have played with a multi agent system called netlogo, and it contained two multi agent banking simulations. One elaborate one showing the relation between the fractional reserve rate and the income distribution. It had little agents running around, randomly giving each other money to simulate economic activity. Would a simple model like this suffice? A central question that is bugging me today: how would agents calculate prices? Cost/benefit? profit/loss? utilitarian value? September 6th. Regarding the question noted above: solved! Agent now have a little checkbooks to keep track of their expenses and balance it with their income. Our of this are rolling stable prices. The starting values need to be adjusted to reflect a more realisting price/product relation. But the basics are there, and more importantly, are expandable ad infinitum. [based on the cobweb model of economics] September 7th: Land, buildings and capital goods. The time has come to extend the model to include capital goods. The creation of capital goods is the prime reason for saving and investing, and thus deserves a place in our little aget economy. I have not yet fully setteled on he 'how' of the implementation, but it will be something like the following. 1) let us build a connecting network of land, buildings, capital goods & resources. 2)Agent is the owner of a building, keeping its administration of income & expenses. Agent tries to maximize profit, profit is owneragent's income. 3) building buildings and capital goods requires labour (workhours) and resources. 4)enterprizing agents will produce demanded resources if the priceOffered will lead to a bigger income than the current income. 5)labouring agents will work if the salaryOffered is bigger than the current income. accuiring of capital goods works the following. Capitalgoods/machines reduce the time required. an enterprizing

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agent sets its priceoffered for a capital good to such a level that the good will pay itself back in a 1/x portion of its lifespan. or in formula: marginalIncreaseValue = currentPrice/currentTimeRequired currentPrice/capitalGoodTimeRequired; priceOffered = 1/factor * CapitalLifeSpan*marginalIncrease; Buildings/land increase production capacity. Their priceOffered is calculated the same way. To make this work; the amount of land must be limited. The truth is seldom heard, most often seen. how the environment changed, from inception of the idea untill development of the game; from scepsism to acceptance, more people were more knowledgable, started buying gold themselves. September 14th. just have been reading Economics in One Lesson from Hazlitt. Beautiful in its simplicity. 'Economics is the art of seeing the unseen' 'the art of economics is seeing the result of a certain act or policy, not for just a few but for all people, not just in the near term but on the long term as well.' 'a little pholosophy leads men to atheism, a deep philosophy leads men's mind back to religion.'[Bacon] september 15th: As we are liberated from our own fear, our presence automatically liberates others. [Mandela] Restarted smoking. There is no coding without smoking. Forgive me God. And on top of that, did not finish programming land. Starting smoking did not help in the coding epartment after all. Going to bed now, to save some coding skills for tomorrow. I hickupped at programming the land. Slowly getting closer, and yet it is so far away. Do not know whether I need more economic skills or faster programming. probably both. stealing ideas from other games. the way that everything should interrelate is not clear at this moment in time. September 18th. After one month of pursuing the game on a linear thread, with the only result to show for a little application showing stabilizing prices, it is time to reconsider. Time for a plan B. I have put up next week the deadline for a first prototype with userinteraction. the current application needs (in order) Land, buildings, a connecting network of buildings, a labour market, a resource market, banking and investmentbanking before we can even think of user interaction. Since all this will take five times as much time than I have thought of beforehand, it is wise to reconsider the options. While it is extremely appealing to translate the lessons from Austrian Economics one on one to the digital world, it mounts into recreating the creation. Which I will not be able to complete in a lifetime, let alone six months. Let alone the two and a half that are left. instead, let us focus again on the core message that the game is trying to spread. 'There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.' Time to start a new project from the

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user experience, and take it from there. A nice where the user can invest, make a lot of loans, fractional reserve, make loans go bust, get the bailout the user, and see the whole simcitycity hyperinflation.

simcity city crack up the central bank to burst in to

So.. let us begin. I see, in the inner vision of my eyes, A little city that one can add to. Each added building is an investment. Prices rise and fall, based on player actions and pre game determined stuff. If the player invests correctly; on producing facilities that are rising in price, his loans will be paid back. If the player invests poorly and his loans go bust, he will need to bailout himself. Wednesday 21st. I have been writing in my book a number of ideas. It will come to go prototyping soon. but first a number of reasons why not to pursue the path I was on (for later citation in the thesis) Supervisor and friendly gamedesigners advised against it. recreating the economy in a model is impossible, like Ludwig von Mises announced. the creators of Egypt, children of the Nile talked about how all of the citizens have these unique desires, aspicions and try to satisfy these themselves. While this is very nice and all, while I was playing the game, i did not notice this the slightest. So it turned out after all that all the effort that I was doing would probably prove to be a waste. still, does not mean that it is all a waste; little things can be used an learned from it. As example the little multiagentsystem from EUIII[ref needed] that demonstrated that a fractional reserve leads to a gap in rich and poor. While there might be some objections against the agents logic vs. the economic reality, the effect that the system shows is intrigueing. Thursday 22nd. Today I had some nice sketches of the game, the idea is fleshing out more all the time. The player can do two things: invest things into existence, and give out loans to people who ask for this. The player can do this in two ways: with money he has(or has been entrusted onto him) or with money that he creates (which leads to a boom and then a bust, chaos, anarchy and despair). Then I tried entering Flixel. Which proved a bit more complicated. With enough patience, eventually I will succeed. I think that it is attractive to program the project in flixel, because it has a lot of features that I would need to build anyway, and Nils' game was also made in it. It might take me longer to start up in it, but it might accelerate the process in the long run. I promised myself to have a playable prototype this week, I am afraid that I will not be able to finish that before the end of tomorrow. tuesday 27th september. I am learning Flixel now. It is not going very fast, but I think that it will spurr my progress in the end. Whether this holds true, we shall see shortly. I have today two hours of programming left. --two hours later-- Did zero programming, but i read a lot of small reference projects. It works a lot better to read small example projects that do just one thing, rather than large & bloated prjects that span in all directions at once. I now know

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how to create & modify a tilemap, create a camera with a strange angle, createa little HUD. Tomorrow I will combine this knowledge into a primitive prototype. Wednesday 28th september. Created first prototype. Wednesday 5th october. Trying out a mapeditor DAME that appears to have Flixel integration built in from the get go. It looks very promising, allthough I should remain focussed on the task at hand, and not deviate from the course for too much time. I managed to get DAME working with Flixel. Tomorrow we are going to try to get the isometric map working with flixel, if that works out, I am a happy man. Friday 7th october. Flixel is able to load a level from DAME. Now it is time to try out the isometric perspective. Monday 10th october. It is a new dawn, it is a new day, it is time to try out the stacked iso tilemap and moving around w/ the camera. It appears as though the staggered ISOmap does not even work properly whitin DAME. I ll try to implement the diamond shape in a staggered way instead, as this seems entirely possible. Tuesday 11th october/ implementing the scrollable isometric map is quite difficult: now i see why Guido and Gabi advised against the use of libraries. Allthough they help you in the start, it is infinitly more difficult to figure out how they work than if you create something yourself. Tomorrow at 14 I have an appointment with Miguel. Instead of focussing on the fancy visuals, I am going to focus on the banking system instead. As described in the notes further up. I have transferred all the working thongs into one big MoneyMaker project, this will be the new build. And by tghe looks of it, it shall be reasonably stable from here on after. At this moment, I am trying to implement the adding of buildings. Thursday 13th of october; I showed the progress to Miguel yesterday, and he gave a set of deadlines. Now I have four weeks of programming the game left, and three weeks of thesis writing. It is doable, but I cannot make the game extremly fancy. Which is also a plus, I must stay focussed and boild the game down to its core. A great inspiratino if flOw, a game that was made as part of a thesis. When it came out as a flash game, it had a minimalistic set of features, but the features that it had were extremely well excecuted. This is also the direction that my game needs to take. I have a great many different set of ideas that all tell a little about the reality of central banking, but in order to make it as clear as possible, i should stay as close as I can to the Mandrake Mechanism. The first idea that I had was that the bank could also initiate loans, since this would allow for players initiating action, instead of only reacting to game prompts. It should be noted

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however, that nobody can be enforced to take on a loan. Only the government can infinitly expand lending practices. so perhaps the player can only build governemental buildings? Now the programming has started, the governement and the central bank has to be part of the programming from the start, so that they will merge into the whole naturally. Miguel also said that in order to make the game more interesting and less like manipulating a spreadsheet (which is essentially what all games are) all actions that the player can take must look juicy and have meaning. Hence, it is a good idea to have fewer available actions, and the actions that the player take must affect the game world in an interesting sense. with colors and magic and stuff. I had a conceptual problem with the initiation of the loans: in the real world nobody can be forced to take out a loan. Then I read a mises institute article called 'Why the government demands monopoly over credit creation'. that talked about the difference between print&loan and print&spend banking policy. Which is essentially what I am doing also. The trick is to let the player do print&spend as much as he likes, but make the print&loan have (significantly) better returns. If the loans go bad the player owns the property, hence the end result of the two banking policies is the same. Linda like playing Monopoly as the bank. Friday 14th of october; I think that the difference between print&spend and print&loan should be subtly also in the sense that loaning out will make you grow more business, whilst print and spend will cause a more ideaological change; the banker can spend statues and parks into existence, as well as schools of economics, socialistic housing, etcetera. And there should be a big XML file with the text that these proposals have to clarify to the player. Today we should work out how the principles of finance that we have learned so far translate to the language of actionscript. Monday 17th of october; every day it is getting more real. Flixel proves to be an extremely flexible engine, and I get to learn to code better. Today we shall try to include the loan mechanic, if there is time left, also the build mechanic. The correct solvability of all the moneys is set after that. First we wanna see the stuff on the screen, later we ll make sure that the correct things start happening. Also, we need a fire&forget animation system, that you can feed a text or graphic, and a start and end position, and that will by itself handle all the rest. I have refound one of my favourite pixel editing tools: Pixen. Since i will be the main visual artist for this project, better learn how to make fancy graphics. Tuesday 18th of october; I should know by now that knowing how to implement something does not mean that it is done. I wrote down a total of nine points that need to be done to fullfill the two main modes of interaction. I thought at first that it would merely take me half a day, but only two have been done now. we will get there, but it will take time. Now: first the print & spend, then the print & loan.

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Wednesday 19th of october; Four out of nine points done. I hope to be ready with the functional prototype this week. then add visuals and feedback. Thursday 20th of october; Today I managed to get half way through the tasks that i have set at the beginning of the sprint. I finally found out how to make the tilemap listen only to when the user clicks on it, managed to get the correct tile and place a CIM object next to it when the user clicks on it, and managed to speed up the framerate (by modifying the standard camera instead of adding a new one). The more I learn Flixel, the more i see its beauty. And it helps to keep my code clean, which is a big plus. I have realized that the Context Interaction Menu is actually a big task; it has eight different possible states. The most important ones are the Entrepreneurial, Insolvable and BuyThis? CIM's. As it is a part of the print&loan mechanic, I am thinking of writing a XML usecase file, with little usecases for each of the eight cases, that will be spawned by the system. There are, after today, a total of four programming days left, before I need to go testing and send in the test results. So I need to spend my time wisely. Monday 24th of october; Had an unexcpectedly soon weekendvisitor over, which was a lot of fun, but took out one programming day. A good Thing was that after spending one weekend with me, he was totally convinced of the insolvability of the financial system. Today, I had to spend most of the time on the UXP assignment, so i could not spend a lot of time on the programming. Fixed one bug today. I hope that I am able to implement the build mechanic, that would be nice. Also, I have thought of an extremely ingenious system of how to handle savings and loans in the fake economy. After the two core mechanics are implemented, it is time to implement the savings and loans. There after we can set in the interest setting and fractional reserve setting mechanic. Tuesday 25th October Netlogo and the return of the multi agent system. I have been playing around with Netlogo, a multi agent engine. One of the models that came preloaded with the engine was a fractional reserve model. The user can set the fractional reserve and see the effect that it has on the little agent economy. The agents wander around randomly, and if they meet each other there is a random chance of giving each other 0, 2 or 5 money. At the end of the day, the agents puts his surplus in a deposit account and the agent with a shortage takes out a loan. This is an extremely simplified model for the economy, and one might argue that it is totally unrealistic, but it does work in showing economic activity. Also it shows the effect that the fractional reserve has on the society; it begins with a big middle class and a few rich agents, and the higher that one sets the fractional reserve, the bigger the gap between rich an poor. I have been making a simple way in which the agents can trade toghether and an economically rational way to choose between borrowing and saving. Every x updates, every agent produces his product. Every y updates, an agent goes buying v products for u money. Each agent requires a set of products every update,

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depending on what he is. He will randomly approach an agent who makes the product that he is looking for with u money. If that agent has run out of products, the buying agent increases his price with the inflation rate. If there is overproduction, there needs to be a way for prices to come down as well, perhaps the suppliers can bring down prices witgh the deflation rate when they do not sell out in a long time. This interaction will lead to a set of monthly income and expenses. If the agents expenses are greater than his income, he will eat into his cash savings, take out a loan, or try to produce something more profitable instead. Each agents primary goal is to advance. They calculate their time preference for choosing whether to save or to borrow. If their income exeeds expenses, they calculate how much time they will need to save, given the player set interest rate on savings, to purchase the next level upgrade of their building. Then they calculate how many months they will be repaying a loan for buying the next level upgrade, given their current surplus and the player set interest rate. If they are sold out the past z months, they will think that there is great demand for their product and they will use future production to calculate pricingthe repayment terms of the loan. Now the agent has two time terms. It will see which term is the shortest and try to go for that: set up savings in the players bank or request a loan. Once the loan is initiated or the savings are big enough to purchase the next level upgrade, the money will flow from this agent to other agents, either immediately or over time. Regular consumption patterns flow to consumption goods producting agents (housing, food, etc) next level upgrade money flows to industrious agents (industry, powerplants, oil, etc). The choice that I am had at this moment is whether to implement a faked prtint&spend and print&loan mechanic, or whether to implement the (roots of) this system as described first. The argument for implementing the player imput before this system is that we want to go testing latest tomorrow. On the other hand, if we implement this system first, it will be easier to integrate with the building mechanic, and we will be deleting less code. Or to put it in Miguel's terms: we should make every action mean something. The question is wether to start with the meaning or with the action. -update late at nightThe answer is to start with the meaning. It is easier to attach action to meaning than meaning to action. programming wise anyway. I have written out the previously described system in detail. Tomorrow I will put it in practice. it even provides nice hooks for inflation and thriftyness. The system should be able to provide with savers and lenders, it is then up to the actions of the player to put those two toghether. At the end of next iteration, agents should be able to get entrepreneurial, and players should be able to facilitate them with money. the system has a money flow between agents. agents have a set amount of cash. In a later iteration of the model, the cash of the agents can easily be converted into deposits. Once that is done, agents can also make an overdraft more easily; having less than zero cash in their accounts, generating interest for the player. It

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seems that all that time spent on the multi agent system was not lost after all. Wednesday 26th-two more weeks of programming left. So much to do, so little time. I should stick to the core of the core of what I am planning. I have convinces Mads to make my graphics in exchange for cold hard cash. this money thing turns to be actually usefull. I have also started testing, and it shos its usefullness right away. The first comment was on the dimensions of the game: it should be more 16:9 rather than 1:1, especialy since the sidebar at the side. This is implemented now. I really wanna give up today, just to play starcraft. But I promised Miguel today a working prototype, to demonstrate my readyness for testing. That means that there is a lot of stuff yet to be implemented. Inter-Agent-trading, loan paying and savings, investors and dividends. We ll see how far we get today. If I can get the loan and build mechanic implemented, i am a happy man. even without the fractional reserve. Off record: found this little gem in the original monopoly rules: The Bank "never goes broke." If the Bank runs out of money, the Banker may issue as much as needed by writing on any ordinary paper. The programming of buildings gives me all kinds of ideas for special rules that can influence gameplay; advertising agencies can help to bring down the thriftyness of the people, churches can bring it up, governement can steal profit from the people and let the player use this money for building schools and roads, taxationlawyerfirms can reduce the taxes that the player himself plays. Paying taxes is for peasants I have heard numerous stories from people who used to be able to get credit, who now cannot. These people or businesses have not changed, so that means that the credit policy has changed. Banking is like fishing. Like a fisherman, the line of credit is extended until a shock is felt. Then the line of credit is reeled in, and the fish, the prize, the valuable assets, belong to the fisherman. or banker. There could be a credit/deposit bank at play in the game, that has a simple input; extend credit or not. Extending will increase deposits and the fractional reserve will allow the player to extend additional credit. Not extending credit will grant the player ownership over all the agents that cannot pay off their debts. Awesome playing power, at the touch of one (1!) button. Thursday 27th. I did not manage to complete the user interaction and send a playable demo to miguel. There is still some under the hood mechanics that need to be fixed before the player action can take on meaning. In the mean time, I think that it is wise to introduce rich people in the game: investors who invest in your company and who live of the dividend yields that you offer them. ideas for a later time: An agent should be able to fire his workers if his business is making a loss, or of his business is bankrupt. Then the agent becomes unemployed: starts looking for jobs. This means that an agent will work for another company. that means that every agents

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should add his amount of work to the production total. This is how it is currently implemented: 1 agent does 1 production every cycle; 2 agents do 2 production cycles. This also means that a player building a new investment will not automatically get an accompanying agent, but only if there are unemployed agents, they will work there. Unemployed agents can ask fellow agents for charity. Or there can be a church where all the profit making agents send some money, and all the unemployed agents ask from. Then later on, the player can research socialism (or pay money to politicians to implement socialism) that they will levy taxes and give out welfare. The addition of worker peasants will mean that there can be more than one agent working on a tile in the beginning. They start out being this agricultural society and turn more industrial later on, after a lot of player investment. I also like the idea of buying political power in order to research new possibilities. Instead of researching 'fractional reserve lending' or 'let go of the golden standard', the player can shower the parlement with money. If he showers enough, they will pass him a law that gives the player new possibilities. This must be clearly communicated. for the player to understand. I also like the idea of a newspeak translator: a button that when clicked translates all the comments from the game system from 'politically correct newspeak' to plain english. Translates 'the tax attorney office aides you in the various rules and regulations regarding taxes and staying compliant with the law.' to 'Paying taxes is for peasants. You are not a peasant, are you?' with a gradient shader; so it looks more secretive. At this moment agents buy their personal consumption and business needs in the same function. If we seperate these, we can introduce the concept of wages. This will lead to the possibility of workers saving up for enterprizing and the income tax. But then we are (1) close to reprogramming the world in a game and (2) making political points that will go against the players beliefs, which will in the end hurt out primary aim. But designing this game does lead me to the inescapable conclusion: the end of the game will entail that the player controls the world in a feudalistic fashion: owns all means of production, syphoning off the effort of all the workers without doing any effort. If the assumptions that the game is based on are correctly grounded in our current reality, this will be the end state of the world. Unless we the people realize our slavery and break free. Time to work harder; there are millions of slaves out there that need freeing. The more I am working on the MOneyMakerDeluxe internal trading system, the more I realize that all the time spent creating the multi agent system was not in vain after all. The fact that I am working now with visuals and interactivity means that I have to think more properly on how stuff will relate to the player, which is a good thing. The more I am working on it, the more I see the beauty of economics and the free market system. Still, if we wish to hand in on time (yes we do) than we must restrain the urge of recreating the free market system in all of its glory and focus ourselves on the core of the system that is needed for the interactivity with the player.

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TODO: (after player interaction) we should have a utilities class with all sorts of standard array stuff: averaging numbers, iterating over a bunch of needs and all that jazz. I am following the modus operandi of Friederich Hayek: before you can understand how something goes wrong, you must first understand how something can go right. The first iteration of testing will not allow for the creation of money: it will all be sound money flowing through the veins of the economy. After that, fractional reserve banking and breaking the golden standard will be added. At this moment there is an extremely simple price discovery method: all buyers try to find the cheapest deal, all sellers charge a price that covers their expenses and makes sure that their sales are in line with their production. (eg: no overproduction or underproduction) I really wonder how this system reacts to added money: would this mechanic in itself will be enough to show rising prices? I would so much love so, but the proof of the pudding is in the eating. TODO:found a mayor flaw in my model: as of now agents can work in an infinity amount of buildings. which would make them extremely productive, working 17 jobs without complaining. I need to fix this, after player interaction has been fixed. They should just be able to work in 0 or 1 buildings. Also: trading should better be done with buildings, not with workers. this would mean that the stock and the price is set in the building and that the buyers come to the building to trade their stuff. Friday 28th. the system is slowly tying toghether. Allthough I have not tried to compile in three days and the list of things-that-i-need-to-do only seems to be getting longer, not shorter. TODO: gather needs & production data from XML. add different prtoductive parts of society and add rich people. who live in villas. kings and capitalists and noblemen. saturday 29th. Slowly but surely we are getting there. There are a million things that i would love to put in here. But the ones that I really need to focus on now, are the UI stuffs. I am falling for an old triick. i am going to play starcraft instead of working. Take that, you thesis! Monday 31th. Today is the IGF deadline, at 24.00+6.00. I hope that I can manage to finish off a playable demo before it ends. The time when I will be able to build stuff is getting nearer and nearer. Somehow, i am afraid of compiling. Still, the proof of the pudding is in the compiling. I have come to believe that it is exactly this lack of compiling that causes a lack of engagement. Compiling means seeing progress. Not compiling means not seeing progress. Not seeing progress is deadly for a programmer, especially if programming a whole lot in a sequence whitout knowing if it works or not. Another sideeffect of coding too much and chaining a lot, is that you totally lose track of what stuff actually does. My guess is that there is a big truth in the programmers adagium: make it work, them make it right. 4 in the morning, and finally we have compiled. the planning for the rest of the week: Debug (1 day) and test, Implement savings & loans(2 days) implement deposit&credit&fractional reserve(3 days) implement golden standard (what ever time is left). furthermore: see how our system simulates inflation.

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Tuesday 1st november; yesterday night we compiled fort the first time in a number of days. 53 errors. This means that I should take the adagium of compiling frequently, even though there might not be a lot of stuff to see, it is still good to test whether the stuff that I have been making actually works. There is only one week of programming time left, so I should spend it wisely. Today I will bugfix and make the build function working, and do a little tiny test on that. wednesday and thursday I will make the savings & loans function. Thereafter I will introduce the deposits & credit, fractional reserve banking and the breaking of the golden standard. those two last ones sound kinda far off, but it is of a paramount importance that there is some form of money creation in the game. Another possibility might be to keep it with the savings and loans, and simply loan out more money that you have. This in itself should be enough to cause a boom and a bust. end of the day: Building stuff works ! only there is a bad overlap between buildings and agents. Sadly, I belive that the best way forward is untying the gordian know between workers and their buildings. I belive that the best way forward programming wise is sticking to real world concepts: seeing buildings as buildings, with physical production in store, and physical cash in the physical cashiers, and agents as the little people who work there. I think that in order to go forward, it is best to make this clear division, or it will cut me in the fingers later on. especially with all the markets & stuff. Also a nice addition at this time might be to show with som esweet ass effects tghe trading that goes on in the little economy. Wednesday 2nd. Today I have stuff working. Tonight I will do my first proper playtest. I have but five hours left to complete the game to a playable level. I really wish that I could keep on perfecting the game before I have to playtest it, but if I keep pushing it off, I will never learn and all of the playtesting will prove to be useless. tuesday 3rd. Yesterday evening I have had my first playtesting session with Sune. It helped a lot to get the priorities straight. Basically I should focus more on the GUI and less on the game system at the moment. Also I have tested the story on him. While the ending titles were well received, the opening titles were less understood. I think that I want to focus more on the link between gold & money, and let the player conciously break the link. This will require some extra explaining. I hjave written some short stories with 3 key events: fractional reserve banking, fiat money and gold price manipulation. They appear in that order. Fractional reserve banking will introduce a slider that will be set by the player, that starts at 98%. Oncethe players go fractional reserve banking, inflation starts. After a little while, the agents demand their gold and the player gets pressured to face bankrupcy or declare fiat money. This will introduce the goldprice meter. (gold price meter may be a totally seperate system) Gold price goes up with inflation (the amount of money that the player creates out of nothing. At this point in time, there will be no extra gold added to the players vaults. If inflation goes up, so does the gold price. The player is then presented with the choice to sell off some of his gold, to keep the price low. This will be a seperate minigame, that will last

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as long as there is gold in the players vaults. The gold price intervention will be a long shot to implement before the deadline. But on the other hand, it will make the whole game come full circle and provide closure. The one mechanic that definetly needs to be introduced is fractional reserve banking. It would be nice to introduce fiat money. If that works, the gold price manipulation will make a nice addition. Also, I have added the concepts of war debt and bailout debt, both forms of state debts. for state debt to function, we require working taxation. This will also be a long shot to get done before the nearing deadline, but it is a sweet idea to keep in mind for future development. I am currently working on the division of responsibilities between Agents and Buildings. I am considering implementing Taxes, to facilitate State Debt, War and Bailout. However, I have written a sentence in by notes that I should adhere to, especially after the playtesting; 'it is not about all the cool & funky stuff that the agents can do, but all the cool & funky stuff that the Player can do.' Friday 4th. Finally! trade! I am extremely excited to find that the system that I have conceived in my minds eye appears to be working as desired. The simplest rules are often the best. The system works simply as following: All agents (people, families) have consumption needs. They all work in Buildings that can produce stuff. Some productive buildings do not require other produce (raw materials; farms) Whenever an agent goes buying, he tries to find the cheapest option available. The owners of the buildings adjust their prices to this mechanic: whenever they are sold out of resources, or their income (sales) does not cover their expenses (wages (=consumptionneeds) and productionneeds) they raise prices. Whenever their stock grows bigger than their productive capacities, they overproduce and they lower prices to attract more customers. Now it works, we can make it right; making a more proper production network: A set of buildings that roughly corresponds to 18th~19th century Europe, with some steampunk buildings, a setting up and finetuning the economic relationships between buildings. Also we need the graphical display of trade and the profit/loss that the players buildings make. Then the loans need to be facilitated, makeing the player able to give out loans in the loan system. Lots of work to do, lets go at it, one job at a time. Now it is time for the graphical effects of trade, so we can see it a whole lot more clearly. A little foundational advice on prices by the prophet of economics Hayek: "Fundamentally, in a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to cordinate the separate actions of different people in the same way as subjective values help the individual to cordinate the parts of his plan." From: http://mises.org/daily/5615/The-Use-of-Knowledge-in-Society [one of his final essays, full of little pearls of wisdom] My euphoria has died slowly; the system goes to hyperinflation way too fast. This is probably because the current system does not allow the economy to grow or expand, which means continuous micromanagement. The system needs to allow for easy exmansion,

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and its initial conditions need to be set properly. In a more long shot, we can set an initial arbitrary set of (production and consumptionn) needs, and let the system itself figure out the proper weights of the different productive buildings. Also: the prices move up very quickly. I think that perhaps that will be different using longer production periods. I am going to get a smoke for some inspiration. Ok, the systemsdoctor has confronted a diagnose. There is nothing wrong with strange prices, but we are trying to get at stable prices. The fact of the matter is that this seems not yet the case. there are a number of things that I have not accounted for: both cash and prices can go negative. This is bad. also, the buying function does not work entirely properly. perhaps I should reched my old project, because that had gotten me stable prices. Seems like my old multi agent system might come in handy after all. I have been backtracking my development, thank God for backups. Anyhow: the reason that my first prototype had stable prices, was because agents could switch jobs; if an agent lost money on his job, he would reconsider his life and do a different profession. It would perhaps be extremely cool if it were to be possible to enter the stats of my current project into my old project and see how much of the different buildings we need to at least get some stable prices in the beginning. because stability is nice. And it is good to build an economy on. Why do we think that 15 kroners for a bread is a reasonable price, and 150 way too expensive? Why would we buy a vertain house for a certain price but not for an other price? Why is the price of wine in some countries different than in others? Prices are not random, just as the amount of producers producing a certain commodity are not random. in fact: these two are interrelates to a very fine extent. Prices are signals in the economy. If there is a lot of money to be made in a certain commodity in a certain place, more entrepreneurs will step in and try to move that commodity to that place, on order to sell it at a profit. Prices signal to the people what economic activity is demanded and what is not, so that the things that people wish to have a lot of gets produced in abundance, and the things that people do not wish anymore gets out of production. My goodness, it seems I have been fooling myself all this time. The prototype that I produced does not calculate stable prices; the price stabilized because no more trade was done. Which was the reason for the price line stabilizing at a certain price. At this point in time, so short before the deadline, i do not think that I will be able to invent and implement a working price system. I think that the economic development is left to my arbitrarily setting prices, and adjusting them with inflation. Which is also a bonus in itself; it is a lot easier to design and control. It will be a lot harder to prevent the agents from constantly going into debt or great riches. I think that the economic system I will converge to will look more like the Netlogo system; arbitrary prescripted prices, resulting something that looks like an economy. Monday 7th of November. According to my planning, I should be ready with the game at this moment. In reality, I am far from it. So it is time for a recap.

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One of the things that has held me back is the market system. I think that it is time for me to realize that I acnowledge the truth in Ludwig von Mises works, that the free market is an eventual outcome of rational human action. And human action is something which we can up to the date of writing not program into a computer. And even if we could, the system that we would create would become uncontrollable and unpredictable, which would go in contrast to our goal of making a persuasive game. Because if we, the designer, have no way of controlling the system that we create, how can we expect a player to control the system? The objection that I had against other sim builder games was that they were socialistic planning economies: things cost X because the designer say that they cost X. This is the problem that I tried to circumvent with the multi agent market system. By making a system that tried to find a natural equilibrium, there would be natural prices arising, and out of that would flow profit and loss, savings and investment. However, it proved to be a feat above my intellectual capacity to program rational Human Action into a computer. For an computer agent, paying 1 for a bread is just as fine as paying 100.000.000.000: the computer notion of a value is very different from the human notion of value. [TODO: find relevant quote from Mises to support this] Because there is no proper room for implementing it in the game yet, I made a story on paper, describing the evolution from gold as money to paper as money in a few short key moments. I have tried this story on a number of people and revised the story accordingly: adding more detail and more moments of choice. One thing that is paramount to the structure of the game is that all the main choices to abandon gold as money are left to the player. The player should be askled to print an extra amount of paper contracts above the amount of gold that he has available. He will be asked to do this several times, promised great riches if he does so. Probably the player should be scared with the prospect of losses if he does not print paper money. Once the player has conciously decided to print money, he will create a boom and thereafter a bust. Once the player is off the track of gold money, he is off the track forgood; his only options are deviating further or facing bankrupcy. since there are minus few days left for prigramming, it is paramount that we arrive at a playable solution shortly, despite the many shortcuts that we undoubtly have to take. Also, I contracted Mads for visuals and Nils for sounds, and these brave men need their input in order to start working. We will have to design a new pricing system, implement it, and create the user input accordingly. As of now, there is a working building mechanic, and a not working savings and loans mechanic. The pricing system will include one variable for inflation. There will be sectorial inflation, based on what the player chooses to invest in, which will affect the sector first. The inflation will hit with a slight delay, the sector that the player creates money in will be hit first, the other sectors will follow. All of the price calculations will have the inflation calculator built in. There will also be a thriftyness factor, which will mitigate the agents expenses between saving and spending. The more inflation, the less thrifty people become, the more they will spend in the here and now.

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One of the fallacies of Macro Economics, as invented by Keynes, lies in the formula Y = C + I. The aggregate economical Output equals Consumption plus Investment. But this disguises the fact that in order for a unit of money to be invested, it cannot be consumed. There is a trade off taking place, in the individual, choosing between current enjoyment or future enjoyment. The concept of the Production Possibility Frontier describes this tradeoff much clearer. Despite the austrian disdain of charts and graphs, adding them to the explanation will make things a lot more clearer. Since there is little time left, we should reverse our reasoning. We will start from the minimum amount of a conveying game, that transmits the minimum idea of hyperinflation, and work backwards from there, to the point where we are now. Then try to connect the two with the minimum amount of dots. And work with that. Tuesday 8th of November My goodness, this reverse reasoning works like a charm. We are going for GUI-first-implementation, which is of course the fastest ways of getting quickly to a playabvle prototype. It is about time. Also, writing down the story sepeeratly proved to be a good idea: I have made adjustments to the story and the events, calrifying concepts more, making sure that the people I show the story to understand the concepts that they come across. Also, adding humour adds to the funnness of the game, and to ridiculizing the whole money system. It works better than going the all-serious-route, that I tried before in personal conversations. Wednesday 9th of november. The GUI-first-approach is looking fine: at last there is stuff to be seen on the screen. It is two days past the time that I should send stuff to Miguel. So let us begin with some findings of the teting of the story. Having an agent setting arbitrary prices is like cursing in the Holy Church of Austrian Economics. This is the reason why I tried two times with different methods to develop a system where consuming and producing agents would come toghether and decide on prices independently. However, this allways introduced more problems than it solved. Mises said that the prices arise out of concious human action, rational people who are trying to remove unhappiness. It proved to be impossible to translate rational human thought this to a multi agent system. The computer notion of a value is a dimension different from the human value notion of value. In the Austrian economics view of pricing (callatics as its scientific name is called) a price only exsist the moment that a buyer and a seller agree on the transaction. If I bake bread and sell them at a price of several trillion kroners, I will have a hard time finding buyers. For a computer paying several trillion kroners is just as reasonable as paying three. I have recently lost focus and time by spending a number of days on trying to make a free market system in my computer. I have accepted defeat and will make a nice little socialistic pricing system, where all the prices of the commodities are set on the outside, by yours truly, rendering greater control over the price development and inflation. But because of these lost days of development, the game was not in a fully playable state, where

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the two main interactions were developed. But because I still needed to test the conveyance of my ideas, i went the good old pen & paper way. I put on paper a series of events in the sequence that they were to happend in the game. The first iteration of the story only had the opening sequence and the ending sequence. the disconnect between the two proved to be too large, so I added a number of intermediary events that explain how the story progresses between the opening and the ending. The story I finally arrived at made all the people understand the connection between the beginning and the end. There are a number of concepts that I found important in the story: 1) Gold. And the link between gold and paper money. In order to make the player able to understand how it came to be that some people ended up with having the power in their hands to print money, we must start with the situation beforehand, when people traded products with little coins made of precious metals. 2) Choice. There are two poeeible endings for the game's ending, when the player 'retires'. Either he is a sound money banker and grows slowly but surely, or he decides to print money and become filty rich. It is important that either of these destinies are dependant on the player choice. It starts quite simply with the choice of printing money. Once the player is on this path, his choices become limited to either fiat money (no more link between gold and money) and bankrupcy. But whichever way the player goes, he ends up at the place where he is because of his own choice. 3) Language. In the world of money, language plays an important role. It can be used to disguise reality from curious onlookers. Or it can be used to clarify things. For example: the introduction states 'every time that you give out a loan or take in a deposit, you give out a paper contract, while the gold stays safely in the vault.' Throughout the story, paper money is never referred to as 'banknotes' but as 'paper contract', a slight change from the common word, to make the player realise that something is different, to make him pay attention to the difference. The use of language is also important in the presentation of choices. This is modeled after the historical debates around the printing of money. No central bank or government ever started abandoning the golden standard by saying "We should print massive amounts of money! like there is no tomorrow!". Whether we look at the rationale used by the french assembly in 1789 printing their county to hyperinflation, president Nixon taking the world off the golden standard in 1971, or the agruments used by the ECB to buy government debt in 2011, it is always presented as limited, temporary, under control. And to the insiders as a easy medicine to a difficult problem, or as hugely profitable. When the player is offered the choice of creating a fractional reserve, the choice states: 'what is we just print a couple of extra paper contracts? Just this once? Nobody will notice if we print just a limited amount of extra paper contracts!' 4)Fate/Destiny. Or choice and concequence. In order to try to sidestep the 'monopoly effect', where players like playing a banker, it is important to show the concequences of actions. It is of importance to show the player where his descisions lead to, if they were conducted in reality. If the player abides the golden standard and refuses to print more paper contracts than he

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has in store (he will be tempted 3 - 7 times) then his bank will grow less fast, but when he retires, the ending titles say that 'the people of the city have erected a statue for you'. If the player strays from the golden path, his bank will end up being filty rich, but when he retires, hw sees a picture of a guillotine and the ending titles say 'the price of bread has jumped from $0.2 to $28.902,55 and 73% of the people cannot afford bread, nor cake, and they have decided to cut your head off.' [true story, actually happened] 5) Humour. I have found it to be the case that people are much more willing to accept the truth from a clown who pokes fun at the absurdity of the situation, rather than from the doom prophet who points at the immorality of the situation. The link between the game and reality is also easiest show with a good dose of irony. For example: some time after the player decides to go off the golden standard entirely, the game shows him the following: "Fun Fact: the only people who do not go to jail for printing money are central bankers. Luckily they are always Wise Men who knoe exactly how much money all of the people in the country need. My goodness, can you imagine what would happend if they were less wise and tried to fix a debt bubble by creating more debt?" Monday 14th of November. The game was finally up to a playable state, So I have had it tested it as it stands. Testing was as per usual a quite humiliating experience. I asked the tester whether he knew what the fractional reserve system means, and both before and after he could not answer the question. Also, the fractional reserve is not properly implemented into the game system as of yet. I found a number of bugs, and also a number of things that need improving. The player did not know what to do in the beginning. Therefor we need a proper set of tutorial pictures explaining the mechanics. Therafter, there was not enough feedback in the system; the player did not know how well he was doing. He suggested to add some graphs that show progress. There were numerous little annoying bugs; firstly; the player is able to make an overdraft on his account and spend more money than he has. This should only be possible when going into fractional reserve banking. When the player builds a building that cannot be completed, it displayer [object Need] instead of the name of the needed object that is missing from completing the building. One semi-bug was that after creating a lot of money in overdraft (basically expanding the money supply by a big amount) after a while, trade came to a standstill: all the money was usurped by the player. This means that the system works, but the feedback showing this to the player is lacking. This is related to two bugs; the wages that workers of the buildings of the player consume, are not demanding wages when there is nothing available to buy. The wages should be stable to buy all the workers needs, regardless of availability. Furthermore: in the current version of the system, agents are constantly asking for loans. This overrides all the insolvancy on the display. The bust caused by credit contraction should look like a sea of insolvancies, not as a sea of people asking for loans which it looks like now. There were numerous GUI bugs that need to be adressed as well. The buttons did not look like buttons to the player. They need to

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be revised to have a button-y look. Luckily Mads is doing the graphics, so I ll leave that up to him. Also the speedbuttons did not show clearly which speed currently was selected. And the player suggested that it would be cooler to have Icons instead of Buttons, especially for the build icons. The slider controls were behaving a bit buggy; the mouse jumped as the player was manipulating the sliders. The dimensions wherein the slider sits should probably be bigger as well as visually clear. The sliders snapping to the center were not clear, it would be better if they remained in their posistion. We should think of a more intuitive way of changing small values. The way that the ECB's game works that out is quite decent, allthough the control that they use is quite huge. Gameplay wise the player thought it would be cool if the city was evolving also whitout the players input, like SimCity also does. Also the agents now constantly ask for the same question when applying for a loan. The player suggested that it would be more interesting if they said different things, also to gauge the riskyness of the loan. Also, the gameplay of loaning out money is constantly the same action. The player suggested that this could be automated by having a loaning policy button. Since expanding the money supply is one of the main showcases of this game, this is not a bad idea. But loaning out money is one of the two main actions that the player can take, so we could also work on more visual ways to make loaning out money look more awesome. because of the system-first development track that i was on, it appears that there is too little feedback for the player. This should be our first priority to make anything clear. We probably should reduce the number of fields in the balance report, and only include the really important ones, and make those work. Once the player makes an overdraft, it should be asked whether he wishes to loan out more money than he has available. This would introduce fractional reserve banking. As the game stands, the agents also expand their business without the players involvement. This is not bad, but it would be more interesting if there was more player involvement in all business expansions. Also; expanding the economy is a dead end, since the agents and their consumption needs do not expand with it. there are two viable options to fix this; either introduce new agents, representing new families who immigrate to the players city, or expand the agents consumption needs, representing a growth in the families. It would definetly be nice if the loans that the player hands out, carry more visual significance; displaying the upgrade being buildt somehow. Tuesday 15th of November. Since one of the main things that was missing in the playtest yesterday was any educational or persuasive content, this was the first thing that I have focussed on. I have taken a number of pieces from the story that I have made, and turned them into screens with beautiful programmer art. Mads will turn the programmer art into something more beautifull. Today I will work to put the educational content in the game. There is an opening sequence explaining to the player what he is to do, a sequence that poses the question to transition to fractional reserve

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money, a sequence to transition to fiat money(or face bankrupcy at that point).

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