Equilibrium system model based on government currency and central bank bonds
Summary
- A summary
This white paper defines the current government bond-dependent system as an “unbalanced structure”,
We propose an institutional transition to a “equilibrium structure” using government currencies and central bank bonds.
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- Definition of function
The function of the system in this discussion is defined below.
A state in which there is no distortion (life hardship and excessive burden): It is functioning
State in which distortion exists: not working
Formula definition:
F = 1 ⇔ D = 0
F = 0 ⇔ D ≠ 0
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- Definition of distortion
Distortion D is a synthesis of the following elements.
D = T + L + C
T: Tax burden
L: Living burden
C: Future burden (government bonds and interest payments)
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- Structure of the current system (unbalanced)
The current system is a structure that depends on government bonds B.
C = rB + ΔB
Therefore, the distortion is
D_current = T + L + rB + ΔB
At this time
D_current > 0
Is established permanently.
Therefore
F_current = 0
In other words, the current system does not work.
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- Definition of unsoundness
The structure in which the country unilaterally makes debt is defined as unhealthy.
Reason:
Postponing future burdens
Accumulation of interest payment burden
The occurrence of tax increase pressure
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- The structure of the new system
The new system introduces the following two elements.
Government currency G (supply)
Central Bank Bonds CB (Absorption)
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- Redefinition of distortion
D = T + L + C - G - CB
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- Equilibrium condition
G + CB = T + L + C
At this time
D_new = 0
Therefore
F_new = 1
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- The essence of the system
Current system:
Burden > Supply (unbalanced)
New system:
Burden = Supply (balance)
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- System transition
D_current > 0 → D_new = 0
This means a transition from imbalance to equilibrium.
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- Conclusion
This system meets the following requirements.
Zero distortion (D = 0)
Breaking away from dependence on government bonds
Internal control of supply and absorption
Therefore, this system is defined as a “functional system”.
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- Final condition
The conditions for the establishment of this system are summarized below.
G + CB = T + L + C
As long as this balance is maintained, the system will continue to function.
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That’s it.