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Modern Turn

The Modern Turn in England​

A United Kingdom of Great Britain and Northern Ireland (UK-GB) perspective.

A Modern Money System

In 1694, the recently formed Bank of England gathered together 1268 individuals to subscribe to buy 1.2 million pounds of stock yielding 8%, designed to fund King William's war with France. The bonds became known as Gilts because the certificates had gilt edges to them. In conventional gilts, the Government will pay the holder a coupon, or cash payment, every six months until maturity.

Model Contexts​

Model Government and Central Bank agents consume real-world UK expenditure and interest rate data respectively.

ABMPC​

Early Modern System​

"In contrast to the centuries during which it had charged for the money, the (English) government now paid for the currency it enabled."

— DESAN, C. (2015). Making Money: Coin, Currency, and the Coming of Capitalism. Oxford University Press. p. 296

Model Run Parameters​

UK economic time-series data from the beginning of the financial year 1698 to 1974.

  • Government Expenditure (Yearly): Millennium Dataset: Sheet A27. Central Government Revenue and Expenditure: Great Britain 1688-1801, United Kingdom 1801-2016. (Total Expenditure 'TME' minus interest payments.)
  • Taxation Rate: 37%
  • Interest Rate 0%
    • For reference, if running with interest rates. BoE: Rate on Interest Bearing Government money Issued: Millennium Dataset: Sheet A31. Nominal and real interest rates, asset prices and yields.
  • Coupon Rate: 0%

Military Events​

Perrett, B. (2007) British Military History For Dummies. Chichester: John Wiley & Sons. ISBN: 9780470032138

EMS Data App

Visit the early modern system data app.

ABMLP-X​

A simple analysis of the velocity and acceleration of a Government money system - the new bills issued - alongside UK Gilt yield dynamics from the second quarter of 1974 through to the fourth quarter of 2023.

velocity_acceleration.py
"""
Velocity & Acceleration of Model Bills Issued:

Change in bills issued, from one period to the next,
as percentage of national income.
"""
import numpy as np

velocity_bills = np.diff(df["bills_issued"])
df["velocity_bills_issued"] = ((abs(velocity_bills)
                                / df["national_income"])
                                * 100)

acceleration_bills = np.diff(df["velocity_bills_issued"])

1. The Velocity and Acceleration of Supply: New Bills Issued (Quarterly)​

Model Run Parameter Inputs​

A model run free from interest payments on Government money.

  • Model: ABMLP-X
  • Government Expenditure: See Model Input: Expenditures from the resource page.
  • Taxation rate: 37% (Flat rate; all household agents)
  • Bond (Consol) Coupon Rate: 0%
  • Interest Rate: 0%
Model Run Charts
  1. View the velocity of model bills issued.
  2. View the acceleration of model bills issued.

The velocity plot shows two periods, among others, where the velocity of model bills leads to a similar reaction in the real-world Gilt yield. The period between July 1997 and July 2003, however, shows the trend velocity of model bills issued increasing while the trend Gilt yield is decreasing. When we look at the acceleration of model bills issued, we see that across the same period there is actually a negative acceleration trend occurring. The velocity of bills issued may be increasing, but the system is experiencing negative acceleration - to which Gilt yields may be reacting.

2. The Velocity and Acceleration of Supply: New Bills Issued at Interest (Quarterly)​

A model run that includes interest payments on Government money assets.

Model Run Parameter Inputs​
  • Model: ABMLP-X
  • Government Expenditure: See Model Input: Expenditures from the resource page.
  • Taxation rate: 37% (Flat rate; all household agents)
  • Bond (Consol) Coupon Rate: 1%
  • Interest (Base) Rate: See Model Input: Interest Rates from the resource page.
Model Run Charts
  1. The velocity of Government bills issued.
  2. The acceleration of Government bills issued.
  3. The model bond price.
  4. The model bond yield

3. The Velocity of Supply: New Bills Issued at Interest (Monthly)​

Showing a calculated rolling average (window=3) velocity of a Government money system - the new bills issued - alongside UK Gilt yield dynamics from March 1974 through to the May of 2024. The coupon rate on bonds (consols) are now calculated as the average of the Central Bank base rate set across the previous 3 steps.

government-methods.py
def get_coupon_rate(self, central_bank):
    """
    Set the coupon rate on consols (bonds) to the average of
    the Central Bank base rate set across the previous 3 steps.
    """

    # Add the latest base rate to the list.
    self.cb_rates_list.append(central_bank.current_base_rate)

    def get_averages(sample):
        return st.mean(sample)

    mean_rate = get_averages(self.cb_rates_list[-3:])

    return mean_rate
Model Run Parameter Inputs​
  • Model: ABMLP-X
  • Government Expenditure: See Model Input: Expenditures from the resource page.
  • Taxation rate: 37% (Flat rate; all household agents)
  • Bond (Consol) Coupon Rate: (See the get_coupon_rate function).
  • Interest (Base) Rate: See Model Input: Interest Rates from the resource page.
Model Run Charts
  1. The rolling average velocity of Government bills issued.