Project Chapters

Tenjin Republic Macro 2

Before continuing, read both about tenjinMacro and Tenjin Republic Macro 1.

Following governor Hill’s order to the letter, official republic purchasing had faithfully matched, in every financial quarter, the government expenditure 1 of Earth nation, the United States of America.

Rethinking Republic Expenditure

The republic was slowing down. Hill decided an alternative approach to the republic’s official purchasing was needed. New huts and generators are a priority. Defences to rebuff the advances of ‘less than friendly’ others (should they ever arrive) will be updated. An infrastructure programme would be undertaken.

When to Trigger Programme Expenditure

The governor made a decision regarding purchasing and informed her officials. Republic purchasing on the first day of each financial quarter, she said, will from now on depend on aggregated consumer agent rating of government, as explained in Macro 1. If aggregate ‘disapproval’ of the government is equal to or greater than 55% of the consumer agent population, then official government expenditure will in the following quarter be increased by an amount that is between 20 to 25 percent (randomly decided) of the expenditure in the previous quarter.

Of course, the governor understood the success of her programme was a question of distribution and productive capacity, that is, to whom spending on the real resources (labour, materials, energy) would be allocated. Also, she was aware that some members of the republic (possibly those with the most cash equity in the last quarter), might have misgivings about a rising government deficit. To assuage concern, Hill needed to show the effect her ‘infrastructure boost’ expenditure programme would have on the government fiscal balance. Hill’s model demonstrated the economy would circumvent long-run fiscal balance exponential dynamics because:

  1. There is the ‘Dwelling Security & Protection’ tax (37% of all income).
  2. All consumer agent members pay the tax, without fail.
  3. Money supply is free of interest payments.

Outcomes (Actual and Forecast)

  • Outcome 1 shows the money supply, actual and forecast, made available to the non-government agents of the republic.
  • Outcome 2 shows aggregate consumer agent ‘disapproval’ ratings of the republic’s government.

See the outcomes. Right click link to open in new tab, if required.

End of the Beginning

Some members of the republic are asking for a short-term safe store of value, in effect, they would like a financial portfolio choice. Of course, the republic could broaden monetary system operations. But, with what effect to political economy? How to reason the passions and the interests?

Then, Hill remembered Wynne Godley.

… the world’s problems of which are serious will not be solved by market forces alone nor even principally by them. Something else has to be done. (Wynne Godley: Interview of Wynne Godley - Part 2, 1:03, 2008)

Best plough on.

tenjinMacro by Melondata.

1 Total managed expenditure (quarterly) data source: U.S. Bureau of Economic Analysis, Government total expenditures [W068RCQ027SBEA], retrieved from FRED, Federal Reserve Bank of St. Louis -, April 12, 2019.