# Advanced Economics These are the more advanced and complex economic concepts one might use during the game. You don't have to use them, but doing so will let you go a lot further then not using them. ## Credit, Assets, Loans, and the Bank These are all scary words in real life. They're scary in the game too. They're also extremely helpful for building a powerful nation. Credit, assets, and loans are all handled by the Bank. Come talk to the GM about them. ### Assets Assets are the things your empire owns. They are the resources you have, the systems you control, the fleets under your command, any loans you own, any loans you've taken out, any investments you have, etc. The total value of your assets can be considered the total value of your nation. Assets matter because they're the basics of what is used to determining your credit rating, and underpinning loans, which are essential for investments and expanding your nation. Having a solid understanding of the value of your assets allows you to leverage them into massive growth - if you play your cards right. ### Loans Loans are fairly simple, you are loaned resources now on the promise to repay the amount + more. In game this is divided into two parts, written on the loan agreement as the principle and the repayment cost. The repayment cost is set by the lender (the person giving the principle resources for the loan) Loans are helpful to get resources _now_ that you need to survive or expand, knowing that you can repay them later. However, be warned. The bank is free to sell your loan to whoever they'd like, and unless specified in the notes, they don't have to tell you that they've done so. This means that the person you're about to be invaded by is who you're going to have to pay back for the pleasure of defeating you. Loans can be for anything, the bank doesn't really care, though it generally wants to know and will write it in the notes section. Loans can be more complex then the loan form makes them out to be, see the section on getting a loan for more. #### The Loan Form The loan agreement specifies what the principle is. This is how much the lender is to give to the borrower right now. The Loan agreement also specifies the total repayment cost of the loan. The round the loan was issued on, the round it is to be repaid on, and the total length of the loan. The loan agreement also asks for the lender and borrowers names, signatures, and the time the loan was created at. #### Getting a Loan To get a loan, meet with the Game Master. The two of you will discuss how much you want to be loaned, how much you believe is right to repay, and when you should repay by. Repaying early will boost your credit score. The game master will then consider the loan and based on your credit score decide to issue it or not. If you don't want a loan from the bank, you're free to sign a loan agreement with other players. It doesn't have to be from the game master. The loan also doesn't have to be for resources. If you want to do something more complex, feel free to talk about it with the game master. There are always interesting things that can be done, and the bank links finding ways to turn a profit. #### Futures Futures represent the value of projected future growth. In effect its saying: 'next round I will earn 50 credits worth of food, therefore, I'm going to ask the bank for a loan based on that _future_ projected value now.' Of course, that projected value can be way in the future, and the value of the future is truly based on your expected ability to repay it, which is tied to your credit rating. Another type of future is a future to get something now. Lets say you need a high quality military ship *NOW*. Then you can go to the bank and get a future on building one later, have the bank buy you one now, which you get to use on the promise that you'll pay it plus a generally reduced cost to build it back at a later date. With that built back cost being the banks profit. An important thing to note about futures is that they're essentially a type of loan in this game. You're asking for money now based on a promise to pay it in the future. The banks goal is to try and capitalize on that by hoping for higher agri prices in the future, or by using the value of that future to derive profit on another future investment. This might look like using your future as an asset for a loan on a future warship, where the bank loans food now to fulfil that ship order, knowing it will get the food back from you, and later the ship from whoever bought it now, along with some more profit based on the resources paid by its builder. Of course the bank risks the ship being destroyed or the loan not being repaid, but that is a separate issue. #### Failure to Repay Loans Okay, you've taken out a nice fat loan. But why should you repay it? Well, it makes your credit score look good, which means you can take out a bigger loan for more resources and really boom your economy. But you also want to repay it because failing to repay it makes for a real good reason to go to war. Loans often serve as investment vehicles for nations, or their populations, and failing to repay the angers investors! If the bank holds your loan, they may offer reduced rates to other factions to get them to attack you so that the bank might get its resources. If your loan is held by another player, then as said before, it makes for a really good - and just - reason for a war. Few would oppose a war fought for repay of a loan, which might cost you land, resources, or your control all together. ### Credit (Rating) Your credit is how much the bank trusts you to repay loans and service your debts/obligations like paying for fleet upkeep. If you don't pay for fleet upkeep, can't repay loans, etc, your credit will decrease and it will become harder and more costly to secure loans of lower values, to outright impossible. Keeping a good credit rating is essential to access the more complex economic tools available in the game. Credit rating is ranked on a scale from 1-10, with 1 being horrible and 10 being amazing. All players start at a 5 on the scale. Failing to pay your fleet reduces your credit rating by 1, failing to repay a loan decreases it by 3, outright defaulting on a loan reduces it by 5. Paying for your fleets increases your credit rating by 1, repaying a loan increases it by 3, and repaying it early increases it by 5. #### Credit Ratings 1. F - No selling _on_ bank market. No getting monetary or resource loans. 2. C - May sell on market. Access to very low monetary or resource loans with very high total costs. 3. CC - May sell on market. Access to low monetary or resource loans with high total costs. 4. CCC - May sell on market. Access to monetary or resource loans with high total costs. 5. B - May sell on market. Access to monetary or resource loans with reasonable total costs. 6. BB - May sell on market. Access to high monetary and resource loans with high total costs. 7. BBB - May sell on market. Access to high monetary and resource loans with reasonable total costs. 8. A - May Sell on market. May access high monetary and resource loans with low total costs. 9. AA - May sell on market. May Access high monetary and resource loans with low total costs. Access to specialized economic tools. 10. AAA - May sell on market with reduced fee to 1 credit. May access Extremely high monetary and resource loans with low total cost. Access to specialized economic tools. ### Investments Investments are a great vehicle to make money! Wana profit when the bank makes a loan? Or want some of the money you spend on food? Maybe you're desiring a seat on the board of the red cross? Maybe you just want to buy a bit of the profit on someones loan. Point is, there are lots of ways to profit off of investments, and you're free to take any of em! When you make a loan, the bank may choose to turn it into an investment. What this looks like is the bank offering shares at a set price of resources or credits, in exchange for an equal percentage of the pay out. People are free to trade their shares on the market for various prices if they so choose. Investments also exist into most international organizations. These may pay out a dividend, or offer the investor a chance to control the organization, this depends on the organizations investment contract, specified in its founding treaty.