Sunday, November 1, 2015

Take frequent flyer miles, for example

How do they work in the world of pure money smart cards?

Airlines and passengers buy and sell frequent flyer miles on the market.  Airlines put up a promise to deliver the airline  mile.  Everyone involved in airline flights gets the virtual frequent flyer card, written in Python by a bunch of bankers. Miles have a savings and loan betting tree.  An airline unexpectedly sees a passenger shortage. It borrows miles, and uses these to lower prices.  But total passenger flow is transmitted most efficiently because the debt taken was miles, not dollars, so there is no secondary pricing to match inventory stock and flow.  But miles are in short supply, only rarely do folks save up enough miles for a trip.  One pure money smart card runs the savings and loans. Everyone has the tamper proof pure money device.

Not all miles are equal? Banker bot can solve that one  if airlines are good are dollar pricing. The high demand miles, having mutual entropy, end up on  the same branch of the savings and loan tree. Eventually deposit and loan rates for the more exotic locales will be sufficiently compressed, in the Shannon sense (more borrowers than lenders makes Poisson stats I think).

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