🌈 Rainbow Money, a Government's Guide

The Citizen's Guide described the wallet: one number at the grocery store, seven colors underneath, each with one job.

This guide sets a rulebook for each color:

Who may change its rules, how fast, and with how much warning?

A rulebook sounds dull until you notice what it's made of. Every rule in a monetary constitution is a little fence around a future temptation. Somebody, someday, at 4 AM, will want to melt a little faster, mint a little extra, rescue one bank at par, or extend one deadline just this once.

The Rule Gradient

Every color has a way in, a way out and a public fact to check. Rules deserve the same treatment. The interesting fact about a rule is rarely its value today, it's who may move it tomorrow.

Let's start with the panic test:

Wartime governments want larger 🌸 pink allowances. Failing towns want to pay more wages in 🟪 purple. A treasury behind on its bills wants a faster 🟥 red melt. The limits exist for those moments. Those moments, sadly, also produce the best arguments for removing them.

So the rules get a palette of their own, the Rule Gradient:

We'll use a 5th tag: 🧭 Principle.

The gradient tells us how rules move. A 🧭 principle explains what several rules protect.

🟪 Purple's "Rescue people, not paper" will show up as a 🧭 principle later!

There's also going to be placeholders. I don't know every country, I don't know any one country all that well. But frankly 6% is easier to imagine and work with than "a modest melt".

🟥 Red: who sets the melt?

The Government for 🟥 red is split in two:

• The Treasury: Spends! It pays for projects and people doing them.
• The Central Bank: It's 🟥 red's parents, and it wants it to grow healthy tomorrow.

These wants are in tension, so we divide the jobs: The office that spends 🟥 red cannot set its speed. The office that sets its speed cannot spend it.

Rule one: the melt

🟥 Red is spending money. A published fraction disappears continuously, giving every holder a reason to pass it on.

The treasury may replace what melted through ordinary spending. So it wants a fast melt: more disappears, more room to issue. The melt is not revenue, but it does create spending room.

That is why the treasury does not set the melt rate. The central bank picks it inside a published melt-rate band, provisionally 3–10% a year. Moving the band itself takes the slower 🏛️ Amendable process.

PS: Yes, 🟥 red melts inside the treasury and central bank too. An exempt public account would be an unlisted rule.

Rule two: growth

If we Melt 6%, Replace 6%, 🟥 red circulates and encourages spending it. But... we may have a problem as the country grows around it.

Say a village has only two things: 1000$ and bakeries making 100 loaves. Each loaf costs 10$.

Next year, the bakeries got Super Ovens. They now make 200 loaves. Each loaf now costs 5$.

This 10$->5$ is the $ appreciating.

🟥 Red sees this as a problem, because appreciation rewards people sitting on the currency (which would make it we have 🟦 blue at home). 🟥 Red wants to be spent.

The fix is: the treasury may issue a little above the melt. This is the growth allowance, and yes, that part is seigniorage: money made from nothing and spent into circulation. The difference is that 🟥 red has all the numbers for everyone to see.

The central bank picks the allowance inside a published growth band, provisionally 0.5–4% a year. Both ends matter:

• Too little, and 🟥 red may reward hoarding.
• Too much, and ordinary inflation hides behind the visible melt.

There is no perfect rate for either rule. Faster melt may push spending in a slump while hurting people who need liquid savings. More growth may suit a growing country while thinning the 🟥 red already in people's pockets. The central bank chooses, publishes and defends both.

🧭 🟥 Red's growth rate keeps its melt rate honest.

🟦 Blue: the rule that bends

Every rigid rule eventually meets something its authors did not imagine. 🟦 Blue is Government Jazz, allowed and/or encouraged to improvise.

That makes its rulebook short. We can't tell the central bank what surprise is coming or what to do about it. We can offer who gets the judgment, where that judgment stops and what the public gets to see.

Who gets the judgment?

Much like 🟥 red, the Central Bank is also 🟦 blue's caretaker.

The central bank, and only the central bank, may create or contract 🟦 blue. Whatever statutes (laws) should name what assets it may buy, which prices its inflation target measures and what it must publish.

The treasury may collect, borrow and exchange 🟦 blue. It can't order up a fresh batch. Newly created 🟦 blue reaches public finance only through central-bank operations that were already allowed.

🟦 blue doesn't have to only grow. Expansion and contraction are both valid decisions! (Contraction earns a lot more sane cases with 🌈 rainbow, but they usually remain sad.)

Issue too much and 🟦 blue falls against the other colors where everyone can see it. A color with discretion needs a public verdict. The exchange rate supplies one.

Everything else belongs in the central bank's ordinary statute. 🟦 Blue has the shortest table because its job is judgment.

🟩 Green: who gets counted?

🟩 Green is a census that mints. 1 living member = 1 share.

The arithmetic is easy. The word member is where Government gets involved.

The membership office has a mint

Government writes citizenship law, so citizenship law changes the 🟩 green supply. There is no clever rule that makes this power disappear.

There can at least be no fog around it. 🟩 Green needs a member registry with answers for births abroad, naturalization, relinquishment, missing persons and everyone alive on founding day. Citizenship pulls the trigger. Crossing the border does not.

Every change to membership law publishes its effect on the 🟩 green supply beside it. A ministry cannot quietly turn a residency category into money.

The supply rule is 🔒 Locked: one share per living member. The trust transfer is 🔒 Locked too: that entire share goes into the member's trust. The treasury gets none.

Hands off until 18

A child's future 🟩 green cannot be sold, assigned, pledged or used as collateral. A contract that tries is unenforceable.

That is the pre-unlock protection. It stops today's adults from buying tomorrow's share cheap. At 18, the member owns it and may make terrible financial decisions like everyone else.

One share means one share

If one share is not enough, Government may top it up with ordinary spending. Need can change the budget. It cannot change how much 🟩 green one person creates.

Death works the same way in reverse. The estate returns one share's worth, buying it on the market if needed. Settlement may lag the census so a disaster does not cause an instant contraction. If the estate is broke, legislation decides who eats the loss. It does not leave an extra share alive.

Aren't you pricing humans?

At its core, 🟩 Green offers the one color that's grounded to something external to money movement. It touches something that is part of every GDP discussion, actuarial tables and pension plans. Admittedly, it fairly deserves to be challenged on serious moral grounds, particularly about the financialization nature of 🌈 rainbow. The best I can offer is that 🟩 green doesn't discriminate on who your parents are.

🧭 Principle: The state's 🟩 green promise does not change with the identity of the member.

Another PS: We could have a whole other color for space, another contested topic. Probably would need very good terraforming to expand and... make it fungible?

🟨 Yellow: what does fixed supply require?

🟨 Yellow's promise fits in two words: no more.

Every base unit lives on a public ledger, so anyone can check the count. The total supply is 🔒 Locked, can't simpler than that!

Who gets the founding stock?

The Treasury gets all of it on founding, but without another rule, that's just an unfathomable treasure chest.

Technically, this is the only bit of 🌈 rainbow that covers a transition plan. It offers an answer to highlight that solutions can be conceived. Actual statutes could be totally different, preferably simple and fair.

Instead, the stock enters circulation through the 🟨 yellow quarter of ordinary public spending over a release period, provisionally 30 years. Certainly, not an auction.

When the vault is empty, the release worked. The treasury then gets 🟨 yellow through taxes, purchases or borrowing like everyone else. Obviously, don't create more!

What happens to abandoned 🟨 yellow?

Fixed supply means a lost unit cannot simply be replaced. Enough abandoned accounts could slowly remove 🟨 yellow from circulation forever.

Because 🟨 yellow lives on a registered ledger, “lost” really means untouched. After a dormancy period, provisionally 50 years, ordinary unclaimed-property law may return that existing balance to the treasury.

The unit changes hands. No new unit appears. -> Like 🟥 red's stamped cash, the practice is harder than the theory here.

The period is 🏛️ Amendable because both mistakes are real. Too short and long-term saving starts to look like confiscation. Too long and dead accounts become permanent holes in the usable supply. It may need to be 🔒 Locked to avoid government timing a dead-yellow grab in crisis...

Can a bank create fake 🟨 yellow?

Yes, without changing the public ledger at all.

A bank receives one 🟨 yellow, lends it to someone else, then tells the depositor that their original unit remains spendable. The ledger still contains one unit, but two people have been promised one.

The banking rule requires Full-reserve banking for spendable claims called 🟨 yellow. A bank may offer a loan, bond or investment linked to its price. It may not give two people spendable claims to the same fixed unit.

Does 🟨 yellow belong inside 🌈 rainbow?

This is self-doubt about the color, and it's an open question.

The problem is landgrabbing. As time goes on, 🟨 yellow will be more and more important in 🌈 rainbow, making each lever the government has a little less powerful, will need to be used more dramatically, decreasing stability.

Inside the recipe: 🟨 yellow gives the measuring unit a fixed-supply component. It also lets demand for one scarce asset move the ruler used by every salary, lease and pension. Foreign demand for 🟨 yellow would then reach domestic prices written in 🌈 rainbow.

Outside the recipe: 🟨 yellow could remain part of saving, taxes and public payments without becoming part of the ruler. More specifically, it dodges 🟨 yellow landgrabbing shares of 🌈 rainbow's value over time.

🟨 Yellow's offer to savers works either way.

This guide carries the inside version for its rules so the rest of the system stays concrete.

🟪 Purple: who grades City Hall?

🟪 Purple lets City Hall spend some of next year's taxes this year.

Useful! Towns know their citizens and their problems better than the state! Also, easier to abuse (even accidentally) by smaller bodies than the central bank.

Every town gets to issue 🟪 purple, but doesn't write the rules that restrain it.

Before anything goes wrong

The issuance cap is provisionally 30% of annual tax revenue. And no, City Hall cannot hide another pile in the transit board, school district or parking authority. If controlled by the town and redeemable for town taxes or services, it counts. We already do this pretty well with corporate assets when we want.

Just like 🟤 brown sometimes holding lovely names like Target2, calling 🟪 purple "TransitFunBux" changes nothing.

Local obligations remain denominated in 🌈 rainbow. A stressed town can't rewrite wages, contracts and bills in the money it prints, then make everyone else eat the exchange-rate loss.

The wage exposure rule caps 🟪 purple at 20% of a paycheck by its current 🌈 rainbow value. Pensions get 0%! A town does not fix its balance sheet by stapling it to people who can't easily leave.

🟪 Purple's market price is a smoke alarm, not really a grade for the mayoral cabinet. A tiny market can be manipulated. Ideally, publish the price beside issuance, tax revenue, trading volume, large positions and audited accounts.

When something does go wrong

At the town's own tax window, one 🟪 purple counts for its stated 🌈 rainbow value. Nowhere else promises par. Not the province. Not the national Government.

If the town fails, rescue residents in national colors: keep services running, support incomes, replace the administration. Do not rescue 🟪 purple at par. (That pays the speculator who bought it cheap while betting on a bailout, then tells every town its local paper is secretly national money.)

If the town disappears, its tax window disappears too. 🟪 Purple becomes a tax credit against the successor jurisdiction at a dissolution conversion written beforehand. The placeholder uses the trailing 12-month market price and stops the clock before dissolution begins. The final panic does not get to choose the payout.

🧭 Principle: Rescue people and services, not the face value of the paper.

We talked about towns, but you could have 🌈 Goonswarm with each corp's 🟪 purple. You'd get a dissolution test real quick and see every rule in this guide vanish.

🌸 Pink: break glass, print money

Most emergencies arrive with somebody saying, "Just this once."

🌸 Pink takes them literally. One event, one amount, one date, one promise. Put each in its own glass box where everyone can count it, call that a vintage, 🌸 Covid19 or 🌸 TARP.

Before we break the glass

Every vintage needs its own legislative authorization, provisionally a two-thirds vote. The vote picks:

• A cute name
• The event it's covering
• Permitted uses
• Repayment source
• Exact vintage size
• Exact maturity

❗ We're not trying to write an eternal definition of emergency. Lawyers and legislators can have fun with that... 🌸 Pink is defined by its shape instead: closed-end and tied to one named event.

Building a flood barrier can be funded through 🟦 blue and 🟪 purple, but you may need a 🌸 Katrina vintage to rebuild it and the town behind.

The Government chooses size and maturity because a flood and a war are different. But it chooses inside 📐 Bounded rules: provisionally no more than 10% of annual GDP and 3–15 years. Let's be honest, a 200-year emergency is a little silly. For this case, I have to double-down on provisional, I'm sure plenty of people will raise an eye-brow at 10% for some types of war.

Government may still issue bonds, and the central bank still has 🟦 blue. But 🌸 pink is new money, spent directly into the emergency. That gets a named vote.

After we break the glass

The box locks behind us. No refill, no extension, no merging five vintages into one mystery blob. More money means another vote.

The event binding is 🔒 Locked after issuance. So is redemption: on the printed date, one 🌸 pink becomes national colors worth one 🌈 rainbow. Moving the date is a default. Calling it an extension does not help.

If 🌸 pink redeems 🌈 rainbow all at once, it'll create a price shock. That's why the treasury should publish a repayment schedule when the vintage is born, then report its provisioning against that schedule. In other words, the Government should prepare for repayment in advance, little by little. If the Government still cannot pay, at least the paper tells us exactly when it broke its word.

Can't I just spam 🟦 blue to pay for my 🌸 pinks?

Yesn't.

We add another rule: the 🟦 blue firewall forbids the central bank from buying 🌸 pink or lending against it. Otherwise tomorrow's promise becomes 🟦 blue today, and 🌸 pink's price turns into theatre.

It's fine if the governement uses its ordinary powers during the emergency. That pressure belongs on 🟦 blue's price, where its caretaker has to own it.

Why not just spam 🌸 vintages?

Go ahead.

The vintage cap limits one issue, not the stack. We could cap total live exposure, or leave it uncapped and make every new vote show all live vintages and their repayment plans.

A Government carrying twelve emergencies should look like one. If abused, discrete events are easier to historically measure, it's a little like Executive Orders in that sense.

🟧 Orange: how much quiet?

🧭 Principle: Some part of ordinary payment must remain off the ledger.

The Citizen's Guide gave 🟧 orange its job: cash.

Government gets the less romantic question. How much?

Too much anonymous cash makes hiding truckloads easy. Too little, too awkward or too suspicious to use, and money pretends to enforce morals, which is justice's job.

How does cash stay cash?

🟧 Orange is coins and notes. Banks and post offices may exchange it at a counter. They cannot hold 🟧 orange deposits, make institutional 🟧 orange loans or issue account claims called 🟧 orange.

Keep in mind a sensible difference: A bank can own 🟧 orange in its till, it can't accept deposits of it from customers. Easy test: If the building or mattress burns, who eats the loss?

Every unit is the thing itself. No IOU version, no balance hiding behind a password, no insurance contracts, no swaps with 🟧 orange.

Damn, my state is now the Lumeris!

First, we have a supply cap at provisionally 3% of the national money stock. Tracking that stock is left to the readers.

Second, the largest note is 50 🌈 rainbow, which makes filling a truck plain annoying.

Notes wear out, so every series gets a rotation like casino chips, provisionally every 20 years. The calendar is published decades ahead. "Maintenance" cannot suddenly become "bring us your cash by Friday."

These rules are 🏛️ Amendable because the size of private payment is a rights choice, not office maintenance.

Access and trees among a forest

We have a few rules that purposefully widen how 🟧 orange is accessed AND given back to the Government.

Every adult has an access right: each month, they may exchange other colors for about 2% of median monthly income in 🟧 orange. Unused months bank for up to five years. The right does not override the supply cap.

I've once traveled to Japan, and the Yens I brought back are a nice souvenir, but nobody really wants it around here. So every household and shop owes a small 🟧 orange sliver of national taxes. The shop wants it. The customer can spend it. Nobody needs a suspicious little sign in the window.

That tax sliver is part of 🌈 rainbow's 🔒 Locked tax basket. Government cannot starve 🟧 orange by quietly setting demand to zero.

The tax credit belongs to each adult too. Unused entitlement may cover that adult's household 🟧 orange share, so someone who cannot reach a window does not have to buy cash at a premium. The exact collection method is an ordinary ⚙️ Setting.

🟧 Orange blocks automatic logging. It does not defeat a warrant. The details of what a window may record, and what happens to cash lost in a wall, belong in ordinary law.

Clear and 🟤 Brown: the midnight test

Clear is useful at lunch and dangerous at midnight.

During the day, banks owe each other money while payments cancel. At close, only the remainder settles in actual colors. Keep that score overnight and it stops being plumbing. It becomes money that only banks can hold.

That is 🟤 brown, whatever name somebody puts on the spreadsheet.

One wonderfully boring rule

No balance survives the close.

The overnight balance is 🔒 Locked at zero and published every evening. Not small. Not "within tolerance." Zero. Nada. Niet. Null. Not 1. Rien. Still zero.

My banks keep making it!

Clear obligations need collateral until they settle, that's fair. Its value is measured in 🌈 rainbow, but the collateral composition may be any mix of colors.

Clear's access terms stay open to any licensed settlement institution at near cost. Your banks don't follow the rules? Throw them out and have them compete on Clear against the ones that do.

But ordinary debt is still allowed, right?

Yes. We only care when debt starts doing money's job (cause then 🌈 rainbow's ideas get bypassed).

If a claim is transferable, stays near par and pays on demand, presume it is money-like. If a "loan" rolls night after night, presume it is a balance. The institution that invented the ambiguous thing gets to explain itself.

Those classification criteria are 🏛️ Amendable. Applying them to one instrument is a published, appealable instrument classification. There is no magic sentence that separates debt from money forever. Best we can do is make the crossing visible and charge money-like costs: backing, Clear settlement and haircuts. Hardline stances involve other things than money...

The 4 AM boardroom

A run begins. Somewhere, a 4 AM boardroom says every claim must be paid at par before breakfast or the sky falls.

The central bank may lend 🟦 blue against good collateral at published haircuts. Government may honor insurance priced in advance or use 🌸 pink to keep public functions alive.

PS: Which colors may have bank deposits, what backs them and what insurance protects them is a banking post of its own. I'm not a banking expert, so I can't do more here.

🧭 Principle: Rescue people and functions, never unauthorized paper at par.

🌈 Rainbow: leave the ruler alone

🧭 Principle: No public office sets the exchange rates.

🌈 Rainbow has one boring job: measure.

Government maintains the price feed, because somebody has to keep the ruler legible. It does not choose the prices. It also does not get to stretch the ruler in three quieter ways.

"Let's rebalance the recipe"

At founding, one 🌈 rainbow contains fixed amounts of 🟥 red, 🟦 blue, 🟩 green and 🟨 yellow. Each starts at 25% of its value.

Then prices move. The shares stop being equal. That's fine!

Rebalancing them would change the unit underneath every salary, lease and pension. The recipe is 🔒 Locked after founding. A metre does not get shorter because wood became expensive.

"Let's tune what taxes need"

Taxes give every color a customer. Raise one color's share and its holders win by decree. Set 🟧 orange to zero and Government can kill private cash without ever banning it.

So the tax basket is 🔒 Locked: provisionally 1% 🟧 orange and 24.75% each 🟥🟦🟩🟨. It covers every compulsory payment to the national Government: taxes, tariffs, fines, tolls, mandatory fees, whatever synonyms can be conjured. (sorry, orange makes the numbers a little crooked)

Keep the formula plain, don't start off putting super smart functions in the recipe. A clever equation just hides the same political choices where fewer people can argue with them.

Another tip, foreign payers may settle at 🌈 rainbow value and let the treasury find the colors.

"We'll average public pay at year end"

Great. Pay doctors in appreciating 🟨 yellow, nurses in melting 🟥 red, then announce the annual mix was perfectly equal.

The equal quarters rule applies to every ordinary salary, pension, invoice and transfer: 25% each 🟥🟦🟩🟨 by current 🌈 rainbow value. The public payroll becomes the customer no national color can lose.

To dodge a little recursion, the rule applies to the payment, not a market trade made to assemble it. The swap needs no quarters. The salary does.

🧭 Principle: Government does not create monetary castes.

Can the government still run a deficit?

Sure! The treasury may tax, borrow and issue bonds. It just cannot create 🟦 blue, exceed 🟥 red's issuance ceiling, invent a 🟩 green member or reopen the 🟨 yellow mint.

If spending exceeds receipts, the treasury buys the missing colors on the market. Fresh 🟦 blue may still arrive through central-bank operations, with the pressure visible in 🟦 blue's exchange rate.

New money still exists, and some of it is seigniorage. We label every pipe: 🟥 red gets its published growth allowance, 🟨 yellow distributes an existing pile, 🟩 green mints into the member's trust, and 🟦 blue belongs to the central bank.

Founding day is a group project

The starting 🟨 yellow stock, the population-sized 🟩 green count, the opening 🟥 red and 🟦 blue supplies, the 🌈 rainbow recipe and the tax basket all push on one another. All these rules are inter-dependent, so they have to be chosen together.

🌸 Pink is another package. Its vote, cap, maturity, provisioning and total live exposure hold or weaken the same promise.

What the rulebook is for

Publishing everything is not the entire point. 🌸 Pink stays outside the price unit so a crisis does not become the bread price. 🟪 Purple exposure is capped so workers do not carry an unlimited market verdict. 🟧 Orange exists because universal payment logging is itself a risk.

The difference is, the public should be able to recognize a monetary promise and identify its breach. A rule understood by twelve specialists across 3 think tanks doesn't really cut it.

Minting extra 🟨 yellow, rescuing 🟪 purple at par, paying unprotected 🟤 brown at par, monetizing 🌸 pink into 🟦 blue, extending 🌸 pink past its printed date and carrying Clear overnight are specific acts. They can be named as breaches instead of hidden as adjustments.

Again, any number before here is placeholder. What matters to run a 🌈 rainbow state is your citizens being able to pinpoint:

Who may change its rules, by what procedure, and with how much warning?