This program models the creation of money in an economy
through a private banking system. As most of the money 
in the economy is kept in banks but only little of it needs
to be used (i.e. in cash form) at any one time, the banks need
only keep a small portion of their savings on-hand for those
transactions. This portion of the total savings is known
as the banks' reserves. The banks are then able to loan out
the rest of their savings. The government (the user in this case)
sets a reserve ratio mandating how much of the banks'
holdings must be kept in reserve at a given time. One
'super-bank' is used in this model to represent all banks 
in an economy. As this model demonstrates, the reserve ratio
is the key determiner of how much money is created in the system. 

	In each round, people (represented by turtles) interact 
with each other to simulate everyday economic activity. Given 
a randomly selected number, when a person is on the same patch 
as someone else it will either give the person two or five dollars,
or no money at all. After this, people must then sort out the
balance of their wallet with the bank. People will put a
positive wallet balance in savings, or pay off a negative
balance from funds already in savings. If the savings
account is empty and the wallet has a negative balance, a
person will take out a loan from the bank if funds are
available to borrow (if bank-to-loan > 0). Otherwise the person
maintains the negative balance until the next round. Lastly,
if someone has money in savings and money borrowed from the
bank, that person will pay off as much of the loan as
possible using the savings.


  	The RESERVES slider sets the banking reserve ratio 
(the percentage of money that a bank must keep in reserve at a
given time). The PEOPLE slider sets the number of people
that will be created in the model when the SETUP button is
pressed. The SETUP button resets the model: it redistributes
the patch colors, creates PEOPLE people and initializes all
stored values. The GO button starts and stops the running
of the model and the plotter.

	There are numerous display windows in the interface to
help the user see where money in the economy is concentrated
at a given time. SAVINGS-TOTAL indicates the total amount of
money currently being kept in savings (and thus, in the
banking system). The bank must then allocate this money among 
three accounts: LOANS-TOTAL is the amount the bank has lent out, 
BANK-TO-LOAN is the amount that the bank has available for loan, 
and BANK-RESERVES is the amount the bank has been mandated to keep
in reserve. When the bank must recall loans (i.e. after the
reserve ratio has been raised) BANK-TO-LOAN will read a
negative amount until enough of the lent money has been
paid off. WALLETS-TOTAL gives an indication of the total amount
of money kept in the peoples' wallets. This figure may also
be negative at times when the bank has no more money to loan
(the turtle will maintain a negative wallet balance until a
loan is possible). MONEY-TOTAL indicates the total-amount of
money currently in the economy (SAVINGS-TOTAL + WALLETS-TOTAL).  
Because WALLETS-TOTAL is generally kept at 0 in this model
(we are assuming that everyone desposits all they can in
savings), MONEY-TOTAL and SAVINGS TOTAL tend to be the the 

A person's color tells us whether it has money in savings
(green) or is in debt (red).



  Note how much money is in MONEY-TOTAL after pressing
  SETUP, but before pressing GO. The total amount of money
  that can be created will be this figure (the initial money
  in the system) * (1 / RESERVES). If the RESERVES remains
  constant through the run of the model, notice how the plot
  levels off at this value. Why is this equation descriptive
  of the system?

  Once the amount of money in the system has hit the maximum
  (as calculated be the above equation), watch what happens
  when the RESERVES slider is set to 100. Now try setting
  the RESERVES slider back. Why does this happen?

  The three monitors on the left of the interface (LOANS-TOTAL,
  BANK-TO-LOAN and RESERVES) represent the distribution of
  the bank's money at a given time. Try and track this
  distribution against SAVINGS-TOTAL, WALLETS-TOTAL and
  MONEY-TOTAL to understand fluctuations of money in the
  system as they happen.

  What effect does an increase in RESERVES generally have

  Why do SAVINGS-TOTAL (yellow), LOANS-TOTAL (red) and
  MONEY-TOTAL (green) tend to rise and fall proportionately
  on the plot?

  What happens to TOTAL-MONEY when the reserve ratio is 
  initially set to 100 percent? Why?


  Vary the RESERVES rate as the model runs, and watch
  the effect this has on MONEY-TOTAL.

  Set RESERVES initially to 100, and watch the effect
  on TOTAL-MONEY. Now try lowering RESERVES.

  Try setting the reserve rate to 0. What would happen if
  this were done in a real economy?


Try extending the model to include payments of interest in
the banking system. People with money deposited in savings 
should be credited with interest on their account (at a 
certain rate) from the bank from time to time. People with
money on loan should make interest payments on their account
to the bank from time to time.

This model has turtles interact in a very simple way to have
money change hands (and create a need for loans). Try
changing the model so that money moves around the system in
a different way.

Income Distribution looks at how the reserve ratio affects the distribution of wealth.