Wow, that is an awesome read. Comparing it to the economics in the World of Warcraft is also interesting. I particularly like the discussion of 'drains' vs 'closed circuits' there is a lot of interesting questions about building virtual economies where those are implemented in various ways. In particular comparing them to 'drains' in the physical world like fashion changes or upgrade cycles.
... and it's not just about virtual economies, either. The section "Hoarding and The Failure of the Closed Economy" is basically a lesson on the so-called Paradox of Thrift and the virtue of government deficits:
In the closed system, the "pumping up" of resources from the bottom of the top was done by the game administrators, and is very much akin to a government that spends exactly what it taxes.
In the open system, the "drain" at the bottom is still government taxation, while the "faucet" at the top is still government spending.
What the developers of UO learned is that those need to be tuned independently of each other to get a well working economy. If only people understood this about the real economy!
