Are they, in fact, the same fiat? Food stamps only work for food stores, however, if the main constituent user of food stamps shops for food, in the same proportion as do dollar food shoppers. Then in the context of the food sector, the two are equivalent at the register.
If I take food stamps just outside the store they suffer a huge discount in the trade for dollars. The food stamp yield curve is steeper than the dollar yield curve in the middle. The discount is due to different bandwidths of the dollar holder and stamp holder. The stamp holder cannot refill until next month, the dollar holder can refill on a weekly basis, and thus dollar holders have a liquidity advantage in the trade.
What is a food stamp fiat bond? It is the food stamp budget item in DC, seen as a paper asset (a fiat with in large denomination). The budget item has stable returns measured over five year periods because the Senate gets hammered if the flow is volatile. Hence, the food stamp fiat bond trades equitably with the interest expense budget item, the fiats are on par at G.
So, when the complete 'yield' curves of both papers are compared, they differ in the monthly middle, but typically remain proportional over periods longer than five years. They co-integrate reasonably well, mathematicians would say.
But, the difference matters in terms of grocery store efficiency, as any small grocer will tell you. For some reason, the food stamp cycles appear monthly, and small grocers will deliberately stock up with an extra monthly cycle. This is because toward the end of the month, stamps have less discount compared to dollars, they will be refilled soon. The cycle cost cannot be dismissed by using random due dates on the food stamp cards. When the stamps come in aperiodically, the grocer needs just a bit more excess inventory, over all.
The grocer fed balances the food fed and the dollar fed; and has to cover increased inventory expense.
How to the fiat discounts compare over the month?
If stamps are in a surplus, relative to the holders portfolio, and about to be refilled, the holder has more options. If he is minimizing transactions, he will make the largest transaction he can, trading stamps for a dollar denomination that covers him until the middle of the month, he can even promise to deliver some stamps after the transaction. With this norm, the system ends up with a cross denominational fiat set, a virtual currency, whose denominations have a monthly transaction size, so the balance trader can trade once a month to offset the cycle.
If he is minimizing volatility, then a range of virtual fiat cross denominations are used, the trend in exchange rates looks like a smooth random walk, and the continuous approximation is appropriate, which is great news for computation. But it is the former norm that is valid; the tendency of grocery deliveries is to actually create container sizes to match, hence the losses.
Wait, you say, there is not enough stamps to dollars trade to cover the spread, the induced cycle. Yes, but there is some grey trade, sufficient to determine the discount, and there is trading food stamps for expenses in shared housing, and there is usually a secondary income so some work to leisure trade. But, likely there is not enough stamps to dollars trade to cover the spread, and the grocer food deliveries adjust to cover the residual.
So, we can expense out any contradictions.
The net cost is mostly in the adjustments needed for grocery delivery. a more robust delivery system than needed otherwise. The cost is apparent in the difference in yield curves between stamps and dollars. If the net result, an expansion of the food network is good, then the dollar fiat does a lousy job. Except the dollar fiat is a monopoly of government.
