Our economy is a Walled Garden, with a lone security guard who has a gun, sets the rules, and issues vouchers that can be traded for fruits and vegetables. Security is the only entity in the Walled Garden with the power and authority to print and issue these vouchers.
In the Walled Garden, agents produce fruits and vegetables. This Walled Garden houses a bustling marketplace where fruits and vegetables are traded for vouchers handed out by Security. To obtain these vouchers, you must sell your fruits and vegetables to Security. In return, you receive vouchers that can be used to redeem fruits and vegetables from the Walled Garden or to speculate in a marketplace called the Market.
The Market consists of other agents whose sole job is to predict the future value of the Walled Garden and the speculative success of other agents’ ability to harvest fruits and vegetables. The value of the Market rises as more agents add their vouchers and confidence grows. The value of the Market declines when there’s pessimism about the future condition of the Walled Garden.
Those who are closest to Security and sell their fruits and vegetables for vouchers are the first to touch freshly minted vouchers. These new vouchers are highly valued and will eventually circulate through the walled garden, slowly losing value via “voucher inflation”. If too many vouchers are circulating, it tends to reduce their value. Some will eventually find their way into the Market, driving prices and optimism higher.
If optimism wanes, then the value of the Market will decline as speculators sell and redeem their vouchers. Vouchers continue to circulate through the economy. Agents are able to amass more vouchers if they produce more fruits and vegetables and trade them for vouchers from other agents.
The value of the Market can rise ever higher as agents bet and speculate on the future value of the Walled Garden. More vouchers are staked to push the Market value higher. The more Security issues new vouchers, the more the Market can rise on a nominal basis.
As the agents reach a frenzy watching the Market go ever higher, many stop tending to their fruits and vegetables and focus solely on the value of the Market, becoming greedy with the hope that it can never fall. The value of the Market reaches feverish heights and many cannot believe that the Walled Garden could be valued so highly. Many are in awe, many chant that it will go even higher, and many say it’s a Ponzi scheme and a fantasy.
The value of the Market goes ever higher and some go all in. As soon as there’s any crack in the Walled Garden, the speculators’ greed turns into fear and many rush to pull their vouchers out, sending the Market tumbling down. Many are left bankrupt and voucherless. The agents of the Walled Garden must regroup and get back to growing fruits and vegetables, vowing to never touch the Market again.
The End
