2 Stock markets loopholes , 1 weird thing , and 1 bug

[eleaza]

...

so we can just unpause the game and see all those corp falling to bankrupcy very fast , to leave you as the only corp , rich with Billions , and a 500 million debt , easy to repay

good luck

As I suspected, 4.2.11 patch only (partially) fixes the merger loophole, not the wallet exploit.

However fixing it by merely reflecting their cash value will contradict patch 4.2.11, since it hinges on undervalue subs. But there should be a balance where the lowering market value is exactly right, where the merger loophole gives 0 return. And the market value of the wallet exploit will be too high for any long chain nested subs related exploits depending on taking control of the wallet and merger with it cease to be useful.

But even reflecting the right market value isn't enough, since there are other ways for getting all the cash from the wallet corporation, as long as there are ways of moving cash back from any subs within reasonable time frame, exploits like the wallet exploit will exist (this is why when I and Pietro were discussing the exploits in another post, I said it is a giant dynamite waiting to explode, it creates endless loopholes). The true issue is related to the money creation ability current in-game central bank has (default the principal loan, by allowing nested subs go bankrupt wasn't even necessary, if you can make all of these subs survive, even profitable, you will make even more, since this is how subs supposed to function)

In real life the money creation ability from banks is linked to money supply private sector can muster through the financial system. Private banks have reserve requirements so they don't have the ability to create infinite amount of loans. And the central bank constantly monitoring the amount of "real money" and regulated the amount of money in circulation. Even though in theory a central bank can print as many banknotes as it wants, and in history (even today some central banks who still haven't learned their lessons) excessively print money try to affect the whole economy, but this action always results in massive inflation soon after, even hyperinflation to the nation's economy, effectively kills the private sector.

Since we don't have private banks and financial sectors yet, one way of not limiting central bank's ability to print/loan as much cash as possible (there are good reasons to keep central bank's ability to issue money, not limiting it to any arbitrary amount, otherwise there will be serious issues growing a nation's GDP, since deflation is even worse for the economy), and still plugging the wallet loophole, is to reflect the fact there's genuinely a lot of cash been issued, thus the inflation will reflect that accordingly (increased inflation, or hyperinflation depends on how much cash is exploited and being circulated). The more irresponsible the central bank's policy to print money, the less real value each currency has. Once the money is laundering back (in circulation), the billions, even trillions of cash will just worth the same as the starting cash in purchasing power. Everyone gets richer and no one is richer (the only issue of this kind of patch, is when inflation is turned off, it won't have effect. However it could stay as a legacy mode, where exploit can still work, but since it's not realistically simulated an economy anyway, just let this loophole be, and become a lesson about how critical financial system and the central bank's policies/regulations really are).

[eleaza]

No matter if the market cap is lower and lower , you will still be able to make this trick to make money out of public share-holders , it will just be very slow if the market cap is not 125% of capital invested but only 10 % , you will make 5% of 5% of 10% + 10% of 20% of 10% of the cash invested.

It doesn't seems much but late game it means if you have 2 billion cash banked , you can make 56 250 000 $ performing the trick once, once a year , once a month or once a week ? ^^

Or say in other way , if you do 10 times the thing you will end up with 150.91% of what you had in the first place

is it better explained now ?

To completely fix this (even in the late game, this is why I said in an earlier reply, patch 4.2.11 only "partially" fixed the first merger loophole), we will need to make it completely "neutral". The amount gained from public while pause will be exactly the same as you need to pay back (or if you don't pay back, you need to dilute your own share). Overvalue and undervalue will both create loopholes later on (and the "real fair value" is determined by real purchasing power, not nominal amount, while"not pausing". I think the formula of calculating inflation need to be changed if we want this to work)

Another quick and easy (but not complete fix, sine complete fix I mentioned above will not be easy I imagine) will be a hard limit on how much cash can a corporation actually get in IPO, like there's a fix upper limit every time a publicly traded corporation issuing new shares in current game. Thus the IPO option isn't simply a flat 20% to 40%, but percentage according to the actual sum. Combined with 4.2.11 patch will block the real effectiveness of this merger loophole in late game (you can gain some, but only a fixed sum, and not proportional percentage of "cash invested in", every exponential with factor greater than 1 will go into infinity and grow quickly. As they say, compound interest is the most powerful force in the universe)