ABMLP-X: A Dynamic System State

At the core of this other state exists a simple government monetary system consisting of institutions and the accounting relationships that bind them. A system with similarities to the evolving English monetary system born in the modern turn.

Present & Future Challenges

ABMLP-X is structured with agents conceptually categorised as rule makers - the institutions of government and central bank - and rule takers; the agents who must behave accordingly. Institutions decide how to organise their society, promoting outcomes in accordance with their strategic desires. A realm of decision making that defines the distribution of both real and financial resources in ABMLP-X society.

Rule makers mandated their simple monetary system a long time ago. However, they more recently seem to have locked themselves into a specific economic path. There is disquiet in the nation. Rule makers feel threatened. Alternative economic paths are debated - but apprehension abounds. Throughout their history rule makers have been primarily concerned for the stability of their monetary system. The short-term (Treasury Bills) and long-term monetary instruments (Bonds) issued by the ABMLP-X government, though integral to the functioning of their private financial sector, are also a potential source of instability. Both the private bank and the fund manager remain highly sensitive to the price of government issued bonds. In short, government and private financial institutions are inextricably linked.

Institutional Tension

Nevertheless, in an era increasingly marked by extreme exogenous events, something must be done: A significant increase in government spending is planned. Rumours swirl that the government and central bank are at odds. Some suggest an end to central bank independence. Such an idea is fanciful. Long held views are hard to shift. But ABMLP-X is not a democracy. Views are held until they're not. But while others even moot the migration to a simpler monetary system¹, the central bank continues to promote its own agenda. Rule makers know the decision to increase spending is a double edged sword - diverse and unequal financial effects will be visited on agents. The question is: Who will feel it most sharply?

Different Kind of Futures

Model logics are captured in historic mode (set_exogenous_fiscal_policy & set_exogenous_monetary_policy) and applied in projection mode (set_endogenous_fiscal_policy & set_endogenous_monetary_policy). Parameter frameworks - the rules of the game - may be refined and adjusted. Of course, all frameworks share many identical parameter settings. Many settings might diverge. For instance, income and corporation taxation rates or indeed the number of state owned enterprises that are allowed to transition to becoming a purely private enterprise via an initial public offering may vary between frameworks.

Calibration Frameworks & Model Run Scenarios

Historic Mode

Historic mode generates macroeconomic and agent-level outcomes not otherwise easily observed by ABMLP-X rule makers. They cannot change the past - the path already taken. But they can, via the careful calibration of frameworks - and an evolving model telemetry - hope to engineer a more precise lens from which to better understand where their system has been.

Historical economic time-series data begins in the year 1694 and ends in the financial year 1954. A model run scenario will proceed, more typically, with quarterly time-series wrangled into a monthly series beginning (at the earliest) in 1955 and ending with the latest available time-series data².

Projection Mode

A projection mode scenario will proceed (step) beyond its historic mode platform. Endogenous model logics are tuned, prior to a model run, on a particular path with which to proceed. Rule makers cannot hope to know their future. They can, however, hope to be better informed in the hard debates that will ensue.

Peruse dynamic system outputs.

Modern Turn

When the visibility of money as a political project faded, the way it had realigned the societies that authored it also disappeared from view. With that disappearance went compelling questions about the consequences of the transformation - including the role of fiscal action in supporting the value of money³.

Reconsidering its creation story suggests that "making money" is a constitutional project. In mediaeval England, silver and gold were only the beginning, not the end, of the story. They furnished the material value upon which the mediaeval world would act out a debate over how to package, pay and circulate value. That effort distributed resources. It shaped nation building. It configured new ways to represent counted value - public debt, circulating credit, and elaborate hierarchies of credit are all part of the story, as are markets, banks, securities and financial crises. The way the English made money shaped and reshaped the way people conceptualised it and the way they conducted monetary policy. As a matter engineered on a fiscal frame, enhanced by the unique cash quality it offered, and expanded for a charge, money has never been neutral⁴.

Bank (of England) notes, like bills, had been blessed from the beginning, or very close to it, by a second constitutional contrivance. Both public officials and individual holders cooperated to institutionalise them as a mode of payment by giving them a unique stature in exchange between the government and its citizens. ... The stature of the Bank's notes again set them apart from their competitors. Specie was not actually "backing" Bank issues in the sense that redemption was a significant part of the functioning system. According to the numbers in circulation, people held Bank notes rather than demanding specie. ... Freed from more laborious work, specie began assuming its modern role. First, it acted, as a kind of security, a default guarantee. If the Bank notes failed as money, people could claim specie as a back-up. Less directly, but more practically, specie was a legitimating device. The Bank's commitment to cash its demand instruments visibly limited the number it could issue. And the image offered of gold or silver in the vault gave those holding paper the sense that an anchor existed - even if the anchor was actually elsewhere, in the sound functioning of the fiscal system⁵.