spoon-discuss: economic musings

[Joel Uckelman <uckelman@xxxxxxxxxxx>]

I thought about this some today, and this as an idea:

We might consider imposing the following restraint on expenditures and 
income. (I hope this displays correctly for everyone---it's hard to 
represent equations in plain text.)

(1) e <= i 
     n    n+1

(The "n" and "n+1" are subscripts that are nweek numbers.) Well, duh. Of 
course we want the bank to avoid running a deficit. Trying to balance 
expenditures and income for the same nweek would be very difficult, 
however, so one nweek's income would be used to replenish the amount spent 
last nweek, when the extent of the expenditures are already in the past and 
thus fixed.

(2) i  = f  + t  + m
     n    n    n    n

So, a nweek's income would be the sum of fees (f), minting of new points 
(m), and taxes (t). So, we already have fees and minting, but what are 
taxes?

(3) t  = rp     
     n     total

This tax would be a property tax, automatically levied against the total 
points in circulation (p), at whatever rate (r) is necessary to make up a 
shortfall from fees. A further consideration is that the bank could still 
go bankrupt under this scheme in the event that a nweek's expenditures 
exceeded its income by more than the Bank had on hand. This too could be 
made up by the property tax, by adding the restriction that the bank (b) 
cannot end a nweek in debt:

(4) b >= 0

To offer further flexibility, we could modify the original restriction (1) 
by including a savings rate (s) to require the Bank to require an increase 
or allow a decrease in Bank holdings:

(5) e (1 + s) <= i
     n            n+1

For example, if the savings rate is 0.05, then this nweek's income must be 
greater than or equal to 105% of last nweek's expenditures, whereas if the 
savings rate is -0.10, this nweek's income needs be only 90% of last week's 
expenditures.

So, what I'm suggesting is adopting the system outlined in (2) - (5). The 
Banker would still do the same job, but would not control the savings rate. 
Instead, we could set the savings rate nweekly by some sort of referendum 
or something.

Thoughts?

-- 
J.