How Can Goodomy Control Inflation Better than the Federal Reserve?

Sep 09

Goodomy is unique in the way that it allows users some control over inflation using simple mechanisms. Like the Federal Reserve, there are basically three ways that Goodomy controls inflation within its economy.

The first tool at the Federal Reserve's disposal is contractionary monetary policy. This is when the money supply is reduced within an economy by decreasing bond prices and increasing interest rates. Goodomy's method allows each businesses to perform this function by having control over the percentages they offer for their Sales (which control 'bond prices') and Bonuses (which control 'interest rates'). You can think of a Sale transaction as a business borrowing Goodomy from the network, and a Bonus transaction as a business lending Goodomy to the network. The rate at which Goodomy is borrowed or lent is set by each business. A consensus evolves over the entire economy, which helps to balance the levels of Goodomy in circulation at any one time.

As a seller increases the discount percentage for a product, more Goodomy is required to help purchase it, As a seller decreases the bonus percentage for a product, the buyer receives less Goodomy with their purchase. It is important to note that, since a seller has control over these levels, the seller also acts as a kind of quasi-central banking authority as Goodomy flows to and from the seller.

Both methods help to take Goodomy out of circulation by requiring more fiat currency to go along with each transaction. In this way, the self-interest of each quasi-central bank can be trusted to maintain a reasonable control of Goodomy supply.

The second way the Federal Reserve controls inflation is through determining the amount of money banks are legally required to keep on hand to cover withdrawals. Goodomy's method for reserve requirements is by setting the minimum amount of Goodomy a seller requires in their account before they can offer Bonus listings. If the minimum reserve requirement is set to $1,000 and a business only has $50 in their account, for example, they will need to obtain $950 more Goodomy before their Bonus listings can be seen again. The business may then to create more Sale listings to try to get more Goodomy, or obtain and exchange more GOOD tokens.

In future, this value can be determined for each account rather than using the same number across the board.

The third method of the Federal Reserve is to directly or indirectly reduce the money supply through policy. Goodomy does this by modifying reward levels. If the rate of inflation is increasing more than it should, reward levels can be lowered. This means, for example, changing the reward for each 'like' from $5.00 to $4.00 or even $0.50. If the level of Goodomy in circulation is trending downward the value of any reward can be increased.

Otherwise, you end up with this: