tenjinMacro

The martian republic of Tenjin.

The End of the Beginning

Following governor Hill's order to the letter, official republic purchasing had faithfully matched, in every financial quarter, the government expenditure1 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. Existing huts and generators are old and inefficient. New huts and generators are a priority. Defences to rebuff the advances of 'less than friendly' others (if they ever arrive) will be updated. An infrastructure programme would be proposed.

Proposal to Trigger Programme Expenditure

The governor proposed that republic purchasing on the first day of each financial quarter depend on aggregated consumer agent rating of government, as defined in the middle. If aggregate 'disapproval' of the government is equal to or greater than 50% of the consumer agent population, then official government expenditure will in the following quarter be increased by an amount between (and including) 3 and 5 percent (randomly decided) of of the previous quarter's expenditure.

An engineer before she was an astronaut, the governor understood the success of her programme would be 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 might have misgivings about the fiscal balance effects of a rising government deficit. To assuage concern, Hill needed to demonstrate by model the effect her 'infrastructure boost' programme would have on government finances. 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 - start Q2 2019), made available to the non-government agents of the republic.
  • Outcome 2 shows actual and (forecast - start Q2 2019) aggregate consumer agent 'disapproval' ratings of the republic's government.

See model outcomes.

Monetary System Evolution

Hill contemplated the future of her republic. The legislative council would meet this evening. On the agenda Hill's infrastructure programme and of utmost importance to some, a short-term safe store of value other than cash. In effect, members would like the financial portfolio choice of an asset-based monetary system. Of course, the republic could broaden monetary system operations. But, with what effect to political economy?

Evening inevitably arrived. The eyes and faces all turned to Hill as she stepped into the room. Boisterous chatter turned low murmur.

Next

Decisions are made. See a new dawn.


[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; https://fred.stlouisfed.org/series/W068RCQ027SBEA, April 12, 2019.