The Village Credit Economy

Taler doesn't exist outside the village and EUR doesn't exist inside it, so nothing is ever actually converted at the junction — there's no exchange rate being quoted, no swap happening. What the central bank actually holds are two separate tanks, EUR reserve and Taler reservoir, and each one just fills and drains on its own side. The EUR tank fills from exports and drains through imports; the Taler tank drains as the central bank prints reserves for the banking system and, net of tax revenue, for roads. Private debt is farm-to-bank loans plus farm-to-farm trade credit run up when a buyer can't pay in full at time of trade. Government sits at the center of the diagram for exactly this reason: it's the only node with two independent flows attached to farms rather than one. It taxes a share of what each farm earns from exports — skimmed in Taler the moment the export converts, so a farm never has to find cash it doesn't have to pay it — and spends a fixed roads budget every period regardless of how much tax came in. Government debt only grows by the shortfall between the two; a period where tax revenue outruns the roads budget pays debt back down instead of doing nothing.

Each tank drains or fills through its own valve, and a valve is a rate limiter, not a smoothing trick: it caps how much can flow per period regardless of how full the tank is, which is what actually stops one lump-sum transaction — a tractor purchase, a bumper harvest — from draining or filling a tank in a single instant. On the EUR side, the valve's gate leaves close and its pressure gauge needle swings in direct proportion to 1−fillRatio, the exact number that gated that period's imports. Push the EUR tank hard enough under rationing and it stops at zero, full stop; flip to accommodate and it's allowed to run negative up to the credit line instead — and a negative EUR reserve is not a chart quirk, it's the central bank literally in debt to the outside EUR world, tracked as its own number rather than read off an axis. The Taler side works the same way: if credit creation grows bank deposits faster than the Taler valve lets the central bank print matching reserves, the banking system falls behind the legal reserve requirement — that gap is the reserve shortfall stat. Reserves are held per bank, not pooled, and the two banks don't necessarily need the same amount at the same time: after the CB prints, whichever bank still holds more than its own requirement deposits the excess with whichever bank is still short, over the direct interbank pipe between them, rather than the short bank just waiting on the next print. That reallocation carries forward as a running balance between the two banks (accruing at the policy rate, same as a real interbank rate) instead of settling instantly, so a bank can spend a while owing the other one Taler.

Each bank box carries three small bars: deposits and loans against a shared scale, so a bank lending out most of what it holds shows two bars of nearly equal length; and below those, reserve against its own scale, with a tick mark for that bank's current requirement instead of a second bar — here the two numbers really are a fill-vs-threshold pair, not two independent sizes, so a bar that hasn't reached the tick is a bank that's short. The same read appears again down in the pipe system itself: each bank's interbank leg carries a small tank — its own reserve as the water level, a dashed line for its own requirement — so a shortfall is visible right on the pipe that would carry a deposit in to fix it, not just in the numbers above. Each farm's circle carries a split ring in the same spirit — the right half fills green for its deposit, the left half fills red for its bank loan, each independently against a shared scale across all five farms, so a farm with a small cash balance reads as a mostly-empty ring rather than a misleadingly "full" one. Every connection money actually moves along — farm to bank, bank to the central bank's Taler tank, the central bank's EUR tank to the outside, government to farms — is drawn as a pipe, not a plain line.

The extra stats push past the three debt totals into indicators that would matter to someone actually worried about this setup's fragility: import cover (how many periods of imports the EUR tank could still fund at the current drawdown rate — the same "months of reserves" number real central banks report), credit / real output (private debt growing faster than the real economy is a classic leading indicator of financial instability, not just a bigger number), and wealth spread across the five farms (this model has no redistribution mechanism at all, so once a farm gets stuck at its bank's lending ceiling, nothing in here ever lets it catch back up).

Farms start completely debt-free and hold no claim on one another beyond ordinary trade credit; nothing here lets a farm be bought, sold, leased or rented — each keeps its own separate balance sheet precisely so that a landlord or rent-extraction layer could be added later without restructuring the debts already tracked here.

Taler	the village's own currency; all internal trade and wages settle in it
EUR	the outside world's currency, held only by the central bank
Junction	the central bank's two tanks — nothing is converted, each just fills and drains on its own side
Credit creation	a bank loan and its matching deposit are created together; this is where new Taler enters circulation
Input adequacy	a farm's access to fertilizer & working equipment; erodes without imports, drags production down with it
Valve (R)	a per-period flow-rate cap on a tank's drain or fill pipe — what actually buffers a lump-sum shock, not a smoothed reading
CB external debt	max(0, −EUR reserve): the central bank's own debt to the outside EUR world under an accommodating regime
Export tax	skimmed off each farm's export earnings at the moment they convert; the only tax in this model, and government's only revenue