To create a better intuition - here 2 graphs that show the money policy of Circles:
First lets look at the (time) Circles balance of a user over time:
As a new user joins the system they continuously generate 1 CRC per hour or 8760 per year. So In the very beginning the amount of Circles of that person almost grows linear at this rate over time. However - continously also 7% of all existing Circles get “destroyed” (demurrage). So eventually those 2 forces will cancel each other out. When 7% of x == 8760 demurrage and issuance are equal. (x = 125,142 CRC) Once a person dies (here assuming at age 80) the person will stop issuing. From this moment on only the 7% force will remain and all Circles of that person will gradually disappear from the overall system.
The second graph shows the “effective tax rate” for a person holding Circles. While the amount of Circles that can exist from each person individually is capped at ~125,000 CRC (as discussed previously) one can of course still hold more than 130k Circles by holding Circles from many people.
If you do that the 7% (can be seen as a tax) will be greater than the amount of Circles you issue per year. If your balance goes towards infinity your “effective tax rate” will converge towards 7% as the issuance becomes irrelevant compared to you tax. If on the other head you hold less than ~130k your issuance is greater than the 7% you pay and thus you have effectively a “negative tax rate”.
Please note: all of this is only true for “people” in they system. Cooperations/ AI agents/ “org-accounts” all don’t have issuance and thus always only just pay the 7% - regardless of their balance.
