9 MANAGEMENT OF THE ECONOMY

COMMISSION OF ENQUIRY

World-wide

A new structure for financial stability

Proposed Agenda 2013

Drafted in Collaboration with

Graham D Hollick FCIS FIBSA CeMAP and others

By The Proposer And Chief Researcher

Edward C D Ingram

DISCUSSION TOPIC F

MANAGEMENT OF THE ECONOMY

1.1. A list of guidelines has been drawn up for any interventions that are to be contemplated based upon systems control engineering. These include that: 

1.1.1. Any intervention should not unbalance spending or wealth distribution, making either, or both unstable. 

1.1.2. The same applies to any proposed economic recovery plan. 

1.1.3. There has to be one instrument or variable available for one function. 

1.1.4. Money supply should be managed in such as way as to ‘grope’ for a best policy along the lines proposed by Professor Friedman and independently proposed by the writer before he had heard of that proposal. The reason why governments and central banks have not opted to do so is thought to be due to the constant distortions and instabilities which are inherent in all of the above listed factors, forcing the central banks to look at, and respond to, the politics of unemployment which these economic instabilities generate and then enlarge. The wealth effect on spending, caused by unstable wealth, enlarges business cycles in both directions, up and down. 

1.1.5. The resulting enlarged economic / business cycles, caused by distortions and a strong ‘wealth effect’ as the asset-based wealth in the economy alternately inflates and deflates, should not be enlarged in these ways in future because the major part of a nation’s wealth and spending patterns will remain stable throughout a business cycle. Thus, unemployment should not be a serious cyclical issue, and then that steady money creation policy can be tested without the political input. 

1.1.6. A balanced intervention to slow an economy can be created by increasing the tax on sales. 

1.1.7. A balanced intervention to increase aggregate demand, for example to support an economic recovery, can be created by reducing the tax on sales, or by providing a negative tax on sales if necessary. People love a ‘sale’ and will ‘buy while stocks last’. The effect will be to boost spending and that boost will boost confidence and create more spending. This will only happen if people feel that their wealth and their budgets are secure, otherwise the benefits of that boost can be lost afterwards. 

1.1.8. This is what appears to have happened after the Obama package failed, not because the package was too small but because the package was not underpinned with safe wealth and higher interest rates that could be trusted not to rise. This is still the case today and it is opposing the supposed benefits of QE. 

1.1.9. Economics is about human behaviour. If you set the scene well then there is nothing to stop employment from rising. 

1.1.10. Stimulation should NOT be tried, as it has been recently, when there is an unsupported asset price bubble and fear of interest rate increases bursting the bubble and creating massive arrears on debt. First, a foundation of confidence needs to be built; so that problem needs to be addressed first. It can be addressed even in a distorted economy with asset prices inflated as is the case now, by adopting the above listed new structures, and the stretched ILS Mortgages as will be explained with illustrations (see the end of this page) that have been prepared and which were originally offered in 2008 and recommended by an Actuarial Analyst who had this to say about them: 

To Whom It may Concern, 

I have met with Mr. Edward Ingram on several occasions and discussed his theoretical proposals regarding models to solve numerous financial crises that the global economy [has] been faced with. 

I can conclude without doubt that these models are credible and academically sound. The logic behind the construct of the results of these models is clear and comprehensive. 

I fully support and pledge my assistance in the venture put forward by Mr. Ingram. 

Best Regards, 

Actuarial Analyst 

Actuarial & Insurance Solutions 

This suggestion was lost in the ‘noise’. 

1.2. The commission of enquiry will be invited to build on the above mentioned solution and try to adapt it to the current situation, which is now much worse in some ways than it was when originally proposed in September 2008, due to lower reserves and over-borrowing by governments. But the situation now is better in many other respects. 

1.3. The current hope of policy makers, according to Dr. Stals and others, is that slowly, the present policies will see economic recovery take hold, (presumably as incomes rise to underpin current asset values). The worry is that an easing of QE will burst the asset price bubble, interest rates will rise, and arrears will become a major issue once more. Such a scenario would herald a new recession and a lot more social and political backlash. The best hope of this strategy is for a very protracted and painful recovery. 

INTERIM SUMMARY 

VALUE FOR MONEY 

The overall picture that the commission of enquiry is asked to look at is optimistic and based upon sound and in-depth studies already done and discussed and altered many times in small details until it is now believed to represent a thorough and well grounded work, worthy of the time and money needed to form and carry out the commission of enquiry.

ALL READERS AND COLLABORATORS

Your feedback is important. You may email Edward Ingram with suggestions on the anything...whatever comes to mind.
eingram@ingramsure.com

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