$ cat title.md
MODELING THE
PATH OF MONEY
A Propagation-Based Framework
for Inflation Prediction
Martin Russmann | macropulze.com █
$ diff models.log reality.log
THE PROBLEM
-- What Models Assume
- Shocks hit all sectors at once
- Prices adjust uniformly
- Money is ~neutral
++ What Actually Happens
+ Money enters at specific sectors
+ Assets inflate first, CPI last
+ Dispersion rises before CPI
> Inflation is a wave, not a flood.
$ trace --propagation inflation.wave
THE INFLATION WAVE
ASSET INFLATION
Weeks
Equities, bonds, real estate
PRODUCER INFLATION
Months
Capital goods, machinery
CONSUMER INFLATION
Quarters
CPI, retail, wages
> The lag between stages = early-warning window
$ cat architecture.md
THREE BUILDING BLOCKS
[1] Network W
IO tables + financial flows → W = α · W_IO + (1-α) · W_F
[2] Propagation m_t
m_t = ρ·m_{t-1} + γ·W·m_{t-1} + u_t − diag(δ)·m_{t-1}
[3] Price Response κ
ΔL_t^i = κ_i · m_t^i financial κ≈0.9 | consumer κ≈0.15
$ run three_sector --inject F
THE THREE-SECTOR MODEL
<── θ feedback loop ──>
> No direct F→C channel. Money reaches C only through I.
> Cantillon ordering: Π_F > Π_I > Π_C (always)
$ analyze --emergent-dynamics
EMERGENT DYNAMICS
[1] Sequential Inflation
F → I → C activation order. Timing = network distance from injection.
[2] Cantillon Ordering
Cumulative inflation permanently larger for early recipients.
[3] Dispersion Hump
Cross-sectional dispersion rises, peaks, declines. Rise = early warning.
> None imposed. All emerge from network + injection + κ asymmetry.
$ rpcq --components --formula
RPCQ: EARLY WARNING INDEX
Relative-Price Coordination Pressure
DDispersionSectors inflating at different rates?
CCantillonEarly recipients still outpacing?
LLLead-lagWave following expected path?
HHeterogeneityImpulse responses diverging?
SStabilitySmall shocks → big divergence?
RPCQ = w_D·D + w_C·C + w_LL·(1-LL) + w_H·H + w_S·S
↑ higher = more inflationary pressure building
$ trace --pipeline inflation.predict
THE PREDICTIVE LOGIC
├──── EARLY-WARNING WINDOW ────┤
> By the time CPI moves, RPCQ has been rising for quarters.
$ echo conclusion
Inflation is a wave,
not a flood.
It starts where the money lands and
propagates through the economy's network.
The dispersion it creates on the way is
the early warning aggregate models miss.
macropulze.com █
mrussmann@proton.me