IF FAQ Entry

1.3. Is the supply of money in the market constant?

No, money is added whenever a new trader is registered. This includes the case where an automatic market maker is created to handle a newly created claim. I hope that a majority of the money in the market will be introduced via traders who are wiser than the automatic market makers taking money from those market makers.

Money can also be created if traders achieve a negative account value (such accounts become inactive, possibly permanently).

Money can be removed from the market if traders lose money to the automatic market makers, or if traders have their accounts suspended (e.g. for creating multiple accounts used by a single trader, or for colluding with other traders in such a way as to make a trader's performance misleading).

Also, note that, because the automatic market makers will often lose money, the typical trader in this market will have a positive return on investment.

Edit this entry / Log info / Last changed on Thu Dec 16 14:02:01 1999 by Peter McCluskey

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