John Cochrane is a smart banking theorist

He talks about the Fed working paper explaining  overnight reverse repurchases. And he connects the dots and closes the loops.

What does he have when he is done doing the marvelous work? He has a spanning tree with a single currency banker in the center. And, a double entry accounting system that makes liabilities and assets balance. That is also what the financial network ultimately creates.

This tree is ultimately finite, and holds  principal plus interest  due back to the bank over some finite periods.  The only way the currency banker can keep a net money liability spread over the tree is by continually lower lending rates. Hence we got the continual drop in  the ten year rate, after the short inflationary period when Nixon restarted the monetary cycle. When rates are too low, the tree does not have enough currency to cover price variation over its cycle and we eventually get deflation.

Well, this seems like a bonehead system. We  redo the central bank every 40 years?  Who knows that the central banking system is a foul model of fraud and numerical incompetence? At this point, just about everyone. I think the economists have figured this out, the currency banker is supposed to take small gains and losses over short periods. The economists are basically huddling among themselves to find a path forward.