Keys risen up to eleven refined metal! Oh Noes! The price of keys relative to metal has risen rather steadily over the past couple of years or so. Apparently every time the price goes up by a refined, someone has to make some sort of thread about it. Honestly, I don’t really care that much, dealing with the traders is too much of a pain for me anyway. Nonetheless, I will make an attempt to theorize what is going on in the market of metal as a currency.
In standard macroeconomics there are a couple formulas used to estimate the change in the value of a currency over time. This formula is as follows:
M V = P Q
M refers to the total supply of the money, how much metal in currently in circulation. Naturally, we can likely exclude dead or inactive accounts, and possibly free-to-players that are unable to trade from this total. V is the velocity of the money, or how much people wish to hold on to or save the money as opposed to just spending it. Higher velocity means less saving and more spending.
On the other end of the formula, Q refers to the quantity of purchasable goods with the money, or essentially the supply of those goods. P refers to the price of goods purchasable with the money. P is the dependent part of the formula, that generally changes due to the other parts of the formula rather than on its own.
M effectively grows larger over time due to everyone getting weapon drops each week. On the other hand, M also decreases due to metal being destroyed in crafting. However, this relation has become more unbalanced as people have become more disinterested in crafting. Each weapon only needs to be crafted once, and half of them you get before then as achievements or just drops. Crafting hats is a waste if you want a specific one, as the chances become slimmer as more apparel is introduced. It is also very inefficient and expensive. As M increases, so will P increase to balance the formula, although it may not be in the same proportion.
Changes in V are mostly in terms of expectations. People will save more if they expect value of money to rise, or spend more if they expect value to fall. It is likely that V is relatively stable or steadily increasing. V increasing will also make P rise in some proportion.
Q, for the sake of argument and simplicity, will be the supply of keys in the system. The supply of keys is limited by the price of acquiring them via real money to use or trade, and also the fact that they are used up over time to open boxes. Since they are acquired slower than metal (and at a cost), as well as are more likely to be destroyed in opening crates than metal to craft, I assume that Q is relatively constant. More keys would force the price downward, less keys push the price up. The current drought in new crate series may threaten this balance eventually.
Metal makes for a somewhat poor currency in the sense that it is naturally inflationary. The only real limit in its supply and acquisition is time. The systems in place to drain or remove metal from the system are failing in effectiveness. What we would need are new ways to craft metal or some other way to destroy it for some other benefit.
However, I feel it unlikely to be controlled. A bigger divide between metal and keys probably benefits Valve more. It means people will be encouraged to buy them directly or use the marketplace to trade using real money, both of which profit Valve. Event keys are another example of this, people must buy the special keys in order to get the new stuff. So I feel that while the problem is readily apparent, it will not be fixed by intervention from Valve.