Quantitative Model on Economics

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present thumbnailKai Neumann (#1) has provided a description of the model with the iMODELER Presenter.

Description

Quantitative model on economical developments

This quantitative model compares the average income and wealth of the people that earn above the average or those who lend money with those below average or those who borrow money.

It includes
  • interest rates
  • initial inequality
  • savings quota
  • money creation (the possibility of banks to lend more than they hold)
  • productivity
The model allows to understand the basic developments and to try scenarios on
  • degrowth, by trying a negative productivity
  • re-coupling of financial and real economy by negative money creation
  • use or harm of interest rates decoupled from productivity 
In order to explore some scenarios I have saved with the model got the the factor "discrepancy" and look in its full view cockpit for the parameters and the scenarios. (click on the "i", then on "Quantitative", then on "Graph", then on "Full Screen". Then click on the ">" to run a scenario.

BTW: If you want to explore a full range of possible scenarios you may change the parameters to range()-functions.

Please discuss the model. If you want the model itself and not just the link let me know: info@ilsa.de (Kai Neumann)

NOTE: the turbulences at the beginning of some scenarios are caused by the initial effect of credits as they start from scratch with 4 years until the first credits are paid back. Actually the scenarios should start with paybacks all the time. Maybe you decide to set the the running time of loans to 1


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Comments (2)

Kai Neumann

Kai Neumann

here is an article arguing like Gladwell in Outliers that to be rich is not just a matter of capability and performance. It points to a meritocracy that manifests inequality: http://m.faz.net/aktuell/wirtschaft/arm-und-reich/erfolg-durch-zufall-der-leistungsmythos-14333152.a....
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Kai Neumann

Kai Neumann

In a recent report from Allianz it says that the wealth of the population has increased so that they could easily (three times) pay for all the government's debts in the world. The problem though remains the discrepancy. What is not shown in this model is that banks are allowed to create money out of nothing that even further increases the wealth of the rich while the poor have to pay interests for their own loans and for the state's as well. If one argues that the state's debts are carried more by the rich who pay more taxes it needs to be acknowledged that it is not paying taxes but also lacking money of public schools, health care etc..
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