Saturday, November 26, 2016

Red/greern money from Nick, I like it

Worthwhile Canadians: In the green world people use positively-valued green money as the medium of exchange. If I buy something I give the seller my green money in exchange. Green money flows in the opposite direction from all other goods and financial assets. I am not allowed to take green money from someone without their consent. Only the issuer of green money is allowed to create green money. The borrower of green money undertakes an obligation to give green money to the lender at some future date.
In the red world people use negatively-valued red money as the medium of exchange. If I buy something the seller gives me his red money in exchange. Red money flows in the samedirection as goods and financial assets. I am not allowed to give red money to someone without their consent. Only the issuer of red money is allowed to destroy red money. The lender of red money undertakes an obligation to accept red money from the borrower at some future date.
He then goes through a proof that demonstrates red money must have bounds.  Geay, let's set the bounds ex post.  The red/green imbalance, is bound by contract, loans may be partially recalled to maintain the balance at any time.

Now, ared member banks takes out a humongous loan, the pit boss runs next, and immediately recalls part of those digits.  If the red banker takes a smaller loan, the pit boss is OK but the graph is leaning a bit.  Depositers expect further imalance, and drop green money in, hoping to grab some ex-post loan recalls.

In this model, the central banker (pit boss), has tom compress the deposits and loans, quantize down, as needed, to make the matching offsets, and that requantization is what triggers the loan recall.  Nick has rediscovered the network congestion problem, and he has rediscovered the old truth about network protocols, there has to be events that force the deal to close, the transaction to complete.

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