We have a prefunded process that loses money over a bounded operator. It runs sequentially after the pit boss. The pit boss maintains S to L balance and declares its risk fund, indicating the current balance. The default process then runs and aligns its own s to L according to the board, but also erases some small proportion of both. So, this process appears as a combination of free money and sudden bankptcies. The balance toward the later.
It is called the Right to Coin fee imposed on the Fed. Investors avoid this fee by making deposits slightly more congested, a tricky business. Tax avoidance becomes universal, mainly by working from cash accounting to get the third variable. Most large accounts better off playing deposits in the Fed account. But contract renewal requires many coin tosses in the Fed accounts and that means productivity gains for a counter. The independence is the cure for shadow banking. The Fed becomes the least costly path to tax equilibrium, the optimal long term bet for measuring government blunders.
Technology. The Fed needs to get one percent off the ATM fee, essentially. Technology along with entry and exit gets them there, it is reducing ATM fees by one half. But Fed banks are no longer bound to regulation beyond the 15 year contract, and the tax is now fairly apportioned, the productivity should improve their sheets.
The solution hints at its own volatility, the ultimate congestion point, small states. The senate is in a predicament. Each incremental default is an incremental increase in government liquidity. But if debt increases, they will pay a higher rice than usual, but under conditions of higher productivity. And the contract renewal comes into play, the optimum time to increase debt is just prior to renewal. This is a good 15 year deal for the Senate. Brings stability to small state capitals. Small states take their share of the surplus and hold their grievances until contract renewal.
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