System Data Analysis

ModernMoney.studio is a self-directed learning project.

A money system: Exploring within the context of a simple model.

Agent Based Models

Monetary policy decisions: Computational (agent-based) models are adaptations of the government money systems described in Monetary Economics, a book written by Wynne Godley and Marc Lavoie (G&L). Agent-based models solve computationally; not as a system of equations. Models must remain consistent with G&L accounting.

ABMLP

Agent-Based Model Liquidity Preference (ABMLP) is a computational adaptation of the third sectoral system described by G&L.

View a model accounting . A simple code gist of comments outlines model functions.

The Portfolio Decision

The interest rate offered will affect the composition of a household agent's asset portfolio. Model households now have a third financial asset in which to invest. Household agents will choose, based on their expectations and liquidity preferences, to allocate wealth between money, bills and long-term government bonds.

Long-Term Bonds

Mirroring G&L pp133 - 135.

When household agents make their long-term bond decisions, three features matter. First households are concerned with the price that the long-term bond fetches in the current period, for this defines the yield of the asset which will arise in the next period (model step). Second, what also matters is the expected price of the bond in the next period, when it will be possible to sell the bond. These two prices help define what we shall call the pure expected rate of return on bonds. The third factor is the confidence with which households hold their expectations about future bond prices. In a model where there may be a multiplicity of household agent opinions, it is a measure of the weight that households investors attribute to the validity of their expectations.

View a long-term bond framework .

State Money System

The Hugging Face space, abmlp-test , shows test output of agent-based model liquidity preference. Visit the Three Fiscal Systems app for a simple analysis of output from the model as it consumes real-world economic time-series. Spaces and apps may sleep. Please allow them time to wake.

Screen Size

Unfortunately, the screen size of this device is not sufficient to view test apps and spaces. Please view from a device with a larger screen size.

Exploratory Data Analysis

The data analysis part of a self-learning project. Visit studio-data-reports for model and real-world time-series analysis.

For earlier agent-based models, view abmsim and abmpc.

Top

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 money.¹

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 neutral.²

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 system.³

¹ Desan, C. 2015: Making Money: Coin, Currency, and the Coming of Capitalism. Oxford University Press. p. 22.
² See p. 69.
³ See pp. 311 - 319.