I'm pretty sure I'm in general agreement with you. Not sure I understand all the mechanisms you have for paying interest. But I agree you are pushing the system in the right direction.
The hardest thing about monetary policy is that you are optimizing against a hidden variable. Nobody really knows what the break even point is for ENC. Once you have a $/ENC exchange, individual decisions becomes easier (I know what my cost, and immediate return would be). But still if you wanted to know what the system's optimal ENC price should be, there are too many hidden variables to get an accurate calculation.
That's what led me to try and detect what the "human" consensus on the money supply was (too high, just right, too low). Technically, I think you could get away with detecting just two states (too high, too low). In that case the stable (just right) state would be when the system was oscillating between too high and too low. However, in my personal analysis, I always tend to think about the optimal stable state first. Then I look at how the other two differ from optimal.
I'm pretty sure you are working on the same detection issues. It sounds like you are detecting money supply is "too low" by how many coins are minted. Or perhaps a ratio of minted coins/traded coins over a fixed period. Your money supply is "too high" as that ratio tends toward zero.
I'd like to propose is ratio for discussion. (minted coins/trading fees) Where minted coins is the total number of minted coins in a given period. Trading fees is the total number of destroyed coins in the above period. Meaning total number of traded coins times whatever fixed fee you decide on.
(total minted/trading fees) < 1
If this ratio is zero, there is a 100% consensus that there is too much money currently available for circulation.
In this situation, I propose you attempt to do two things.
1. Encourage potential buyers NOT to buy. (Hoard coins until prices recover)
2. Destroy the coins of panicking actual buyers. (Your coin destroying fee)
3. Encourage potential sellers to sell NOW! (Stop hoarding goods)
Psychologically, I suggest charging your *panic* fee ON TOP OF the price the seller is asking. As opposed to requiring the seller to hide that included fee in his price. The former tends to make clear to *panicked* buyers that prices are *already* considered too high. It also makes it clear to sellers that NOW is a great time to actually close the deal. The later tends to encourage sellers to inflate their prices (which is what we are fighting against). And if they think prices are moving higher, they are further encouraged to hoard goods.
I think you are saying, "Instead of actually destroying these coins, they go into a system managed hoard for later re-distribution." If that is what you are saying, then I agree. Hoarding those coins is monetarily indistinguishable from destroying them.
(total minted/trading fees) = 1
If you are minting exactly what it take to replace your fees then there is a 100% consensus that the money supply is "just right".
Who should receive the newly minted coins is NOT a monetary policy decision. It can be adjusted to encourage other behaviors as you see fit.
(total minted/trading fees) > 1
This ratio is unbounded, so it has no way to express 100% consensus that the money supply is "too low". But the farther this ration moves above one, the closer you get to that consensus.
In this situation, you have too many goods trading for the existing amount of coins. So I propose you attempt to do two things.
1. Encourage, hesitant buyers to buy NOW! (Stop hoarding coins)
2. Discourage sellers from panicked selling of goods. (Hoard goods)
As this ration tends above 1, your fixed transaction fee tends to fight against your monetary policy goals. You are destroying coins during a period where everyone is in agreement that more coins need to be minted. The consequences of this should be minimized whenever possible.
This is a good time to re-distribute all fees. Both the system's previously hoarded fees, AND the current transactions fees. Who receives those re-distributed fee coins is NOT a monetary policy decision. It can be adjusted to encourage other behaviors as you see fit.
Merchants get whatever fees that they can back based on how much money they are willing to put on the line. Anyone else just loses their fees. These lost fees get redistributed to people hoarding currency. So in down times, instead of selling, people can hoard and earn interest on those who do sell or trade at inflated prices. No one who buys cheap is going to care that they're getting inflated goods, only people who saved would care. So instead of freaking out, savers can just sit back, earn interest, and wait for the economy to get back.
I think I'm generally agreeing with this, as stated above.
And as an addendum to the other stuff, instead of basing the ENC reduction on time, we could do it based on the number of coins produced. This means if we get to a period where things are too cheap, it will last a shorter amount of time while ENC gets to a new baseline. HOLY SHIT.
I'm not sure I understand this enough to comment.
EDIT: LMAO, I really didn't understand what you meant when I started typing below. (Basing ENC reduction on time.) I thought you were talking about the logarithmic reduction to compensate for increasing CPU efficiency. Now that I read what I wrote, and re-read what you suggested. It seems like I just re-wrote exactly what you said. If that is the case, I guess I do understand it enough to comment!
But I wrestled with a similar sounding conundrum:
If (total minted/trading fees) greater than one, persists for multiple periods in a row. It seem like coins should be easier to mint. That is what I was getting at when I added the +2 level to my system.
If (total minted/trading fees) less than one, persists for multiple periods in a row. It seem like fees should be higher. However, both of these lead to more abrupt final transition states.
I hadn't considered the above ration when I was thinking about that though. Perhaps things could be smoothed by considering the ratio rather than time
Say perhaps, the number of coins awarded per block is in proportion to (total minted/trading fees). Does that tend toward stabilization or toward more dynamic swings?
Fee's are more difficult to adjust because they affect the ratio itself. But you could add a "surcharge" as the ratio moved below one toward zero. Perhaps a surcharge using the inverse ratio (trading fees/total minted) makes sense. (As minting moves to zero, the surcharge moves to infinity.) That would provide a strong disincentive to panicked selling!