Abnormal Bonds

There may be investment cycles where the amount of calculated QBs issued may exceed that of the weekly tax treasury value and are thus capped to the maximum value of the current week's tax revenues. This scenario presents itself when the previous week's trading volume vastly outweighs the current to an extreme, leading to a moving average greater than the current week's tax revenues (continuing with the example from Issuance and return scenarios from Normal Bond Periods);

Week 4: $20,000 of taxes accrued

• $7,500 of "W-004" QBs issued, maturing after sale of "W-004" assets

Week 5: $100,000 of taxes accrued

• $30,000 of "W-005" QBs issued, maturing after sale of "W-005" assets

• Spillover bonds may be issued

Week 6: $10,000 of taxes accrued

• $27,500 of "W-006" QBs issued, maturing after sale of "W-006" assets

  • $10,000 of "W-006" QBs issued, maturing after sale of "W-006" assets

  • Note, this bond period is abnormal and inflationary risk is heightened

Week 7: $30,000 of taxes accrued

• $10,000 of "W-007" QBs issued, maturing after sale of "W-007" assets

During "Week 6" the value of bonds issued is forced to equal that of the tax treasury. While the potential for inflation is heightened under these cases, higher risk bonds can help to increase or redistribute the supply of $QD.

The example below shows potential divestment results for "Week 6", where abnormal bonds issued are capped equal the tax revenues of $10,000. Repeating the return cases found in Normal Periods of +3.5%, +8%, +1%, and -20%, respectively.

Within an abnormal scenario, the deflationary treasury pool far exceeds the compensatory payout for bond holders. Similarly, within scenario "Net-negative B" where the investment incurs 20% losses, approximately 65% of the combined post-investment treasury value must be used to compensate bond holders, regardless, still contributing to deflation. However, if losses were to exceed -35%, this would constitute the rare occurrence in which $QD becomes net-inflationary for the weekly period, generated to compensate bond holders.