for each Merit you receive , you get 0.5 sMerit
but you can only use the Smerit when it's a real number (1,2,3,4,5,6,,etc)you can't send 3.5 Smerits ! .
so if you receive 1 Merit, you will have 0.5 Smerit in your account, but you can't see it/use it.
when you get another 1 which is total of 2 Merit received, you will have another 0.5 sMerit to be added to your previous 0.5 sMerit and you will end up with 1
complete sMerit that you can send to somebody. and your 1 sMerit will give that person 0.5 sMerit.
so if there is no newly generated merits " which there is" the sMerit on the whole forum will eventually finish.
What you said all is correct but in the end you said if their is no newly smerits generated then this whole forum will finish that is false as forum will be living but the merit system will come to halt and who ever is holding what rank will be stuck in that rank and their wont be any upgradation. So smerit are normally generating and the smerit source are receiving it to distribute it.