The new book title to be:


Don't run away - just look at the peer reviews from professors and central bankers among others. Not far below.

What is going on?

Here are the early pages as drafted for 19th November 2017.

Apologies for the disorderly fonts and missing illustrations etc. Working on it.


Front cover by Shirese Malan
Sketches by Tanya Malan
Printing by Chris Malan of ‘Wickwell Trading’, Bulawayo
Tel: +263 772 265 586

BUS039000  BUSINESS & ECONOMICS / Economics / Macroeconomics
BUS001010  BUSINESS & ECONOMICS / Accounting / Financial
BUS045000  BUSINESS & ECONOMICS / Money & Monetary Policy

First Edition under this title: 2017[i]
ISBN - 978-0-7974-8927-1
Registered July 2017
Available from leading bookshops or by contacting the author.
Contact: Skype: edwarding2   Email:


To all our Futures



Economies the world over are far more chaotic than they need to be. We can simplify everything. This book considers the problems which other economists have failed to look at. See the PEER REVIEWS.
It is hoped that ordinary readers can follow the arguments. A significant effort has been made in that direction. They should read the next two or three pages and then move to start reading at the MAIN BOOK.
Some economists are very aware of papers written by Nobel Laureates which appear to contradict what is written herein about free market prices. There is no such contradiction.
It is a matter of clarifying the exact meaning of the words being used. What is meant by free markets and what measures represent inflation and real interest rates are different from what some readers may expect. See the definitions on that.
Less well-read readers will not have this problem. The main text and the meaning of the words used herein is quite clear from the context.

People, businesses, and governments, are all unable to make the kind of financial plans which they should be able to make, and perhaps could make if money had a constant value. Changing value means that:
  • Mortgage costs jump around,
  • Asset prices inflate and deflate excessively,
  • Currency values are all over the place and
  • Interest rates are managed, which they should not be.
Hence the price of credit (the cost of borrowing) is generally wrong, leading to a waste of this huge and most precious national resource.
The overall destruction, both social and economic, is enough to slow the growth of economic / business output by over 1.5% p.a. world-wide.
This book examines the causes, and lays down the principles which must be followed to end the chaos.
Academic readers are fascinated. They have stated that this is a new school of thought – a new way of understanding how economies work.
If the economy was an aircraft, the financial framework would be designed to be stable. After that, it would be easy to fly.
By contrast, almost all of economics so far published and currently being published is about how to fly the unstable aircraft. That is a very complicated thing to try to do. Even with the best and biggest data set, the result is still very uncomfortable for the passengers, is somewhat chaotic, is socially harmful, politically destabilising, and is largely unforecastable.
This book is an update of the original book which was academic in presentation and is called ‘What is the Ingram School of Economics? And Why is it essential?’

Please note that not all of the reviewers have studied the entire book. Some still need to study the proposed currency and management systems. Reviewers who have read fully, include Dr T Chowa, Riekie Cloete, and Timothy Hosking.
Dr T Chowa, Lecturer (Actuarial Science & GSB), writes: This work is an historic achievement. It takes economics, finance, and banking, to a new level.
Riekie Cloete is an experienced macro-economist and past mentor of post-graduate students. She writes, "The Ingram School is the first I have seen which addresses the critical issues head on; and in a sound, academic way."
Dr. Rabi N. Mishra, Economist, and a Chief General Manager, Reserve Bank of India writes: “This book will inspire rethinking on the perimeters of economic thought and theory, and their practical use in policy making. A ‘should-read’ for budding researchers in Financial Economics to expand its horizon.”

Dr. Azam Ali ex Senior Economist Bank of Pakistan writes, “Dear Edward, I am following your endeavours of rewriting the economic framework with great interest and am on the same page with you on almost all the issues you raise from time to time.”

Professor Evelyn Chiloane-Tsoka from the University of South Africa, says, “These ideas will become prescribed reading at universities.”

Alan Gray, Editor-in-Chief, NewsBlaze, writes, “The Macro-economic Design group’s elegant solution is so simple that it has eluded the big economic thinkers of our time, because everyone was looking for a complex solution to a complex problem.” 

Professor Leon Brummer, professor of stock broking at the University of Pretoria, said of the new lending, savings and investment model, “This simplifies everything.”

Professor Daniel Makina from the University of South Africa, professor of finance, risk management and banking writes, “I am fascinated by what you are doing.”
Andrew Pampallis, Retired Head of Banking at the University of Johannesburg, mostly referring to the needed lending reforms, said, These ideas are urgently needed and are critically important.

Timothy Hosking, BSc (Hons 1st class) QS and building economics, the author of a forthcoming book on community breakdown under financial stresses, writes: “No other school of economics resolves these critical social issues”

The acknowledgments tell a story with great insights into how this book came to be written.

#12.10.1 76

FIGURES – not yet complete

KFPP - Keynes' Floating Platform Paradigm
KFPP - Free Market Floating Platform
MMT - Modern Monetary Theory
ILS Models - Ingram’s Lending and Savings Models

FREE MARKET PRICE – A price which is free to adjust when the balance between supply and demand alters. This was supposed to be the definition, but it has been challenged as outdated by modern economists. This book agrees that most prices, which includes costs and asset values, are not free to adjust in such a way. They could not adjust, even if there was perfect competition. Contracts, regulations, taxes, and market mechanisms get in the way. This is the part of free market pricing that is addressed herein. It is the part of free market pricing which has been largely overlooked in the text books. This lack of freedom to adjust to the falling value of money is the source of most of the world’s major financial instability and related social problems.
THE STOCK OF MONEY – Please note that there are many different, and confusing, definitions of money supply. The ‘stock of money’ refers to the amount of immediately spendable money that is in circulation. ‘Near money’ is excluded. It cannot be spent easily without first exchanging it for spending money.
MONEY IN SPENDING CIRCULATION - Money can lie idle, as in savings, reserves, and money on standby in deposit accounts, for example. Only when it is spent does it buy the national output. There must be enough spending money in circulation for the national output to be buyable in the timeframe available.
THE VALUE OF MONEY - The value of money is whatever it can be exchanged for. To evaluate the entire value of money one would have to know what the entire shopping list of everything would cost, at current prices. Included would be all possible investment assets, the cost of hiring everyone, the cost of paying all loans, and paying dividends and rentals, the cost of all imports and the price of all exports.
THE ECONOMIC MODEL –  How the real economy is designed, regulated, taxed, and managed. Not some simplified mathematical model.
CORE INTEREST, CORE PRICE, CORE COST, CORE VALUE – The element / part of an interest rate, price, cost, or asset value, which adjusts to offset the falling value of money, given that it can, and is free to, adjust. See FREE MARKET PRICE.
The other part of the interest, price, cost, or money value adjusts to real economic factors like supply and demand. The usual inflation index quoted by governments is a nominal figure comprised of both parts of the basket of prices used. It is not the core rate of inflation.
Herein, a proxy core rate of inflation is used, called Average Earnings Growth, AEG% p.a., and based upon an index of National Average Earnings, NAE. See Appendix I.
TRUE INTEREST, COST, OR VALUE – This is the other part of the interest, cost or value, which, added to the core rate, makes up the total, nominal rate of interest, cost, or value. It would be the real rate of interest if the inflation index used was the right one – or in this case a good proxy for that. See Appendix 1.
Not everyone is comfortable with free market rates to preserve the value of savings even though, in the proposed new model for the financial and economic framework, that should be enough protection.
To satisfy the demand for such guarantees, a proxy (imperfect) core rate is used herein, based upon National Average Earnings, NAE, and National Average Earnings Growth, AEG% p.a. Appendix I discusses the merits and demerits.

On the financial framework, this book deals with facts, not opinions, and not political preferences other than the preference of people to be able to make choices and safer financial plans.

The function of politics is different. It is mostly to tax and redistribute wealth, to provide a sound legal framework, and to defend the people it governs.

All of this is easier to do if the financial and economic framework is doing what it is supposed to do – making life easier for everyone with a financial plan, including governments.

This book only briefly touches upon the drift of wealth and income towards the top. Maybe robots should pay taxes. But it also points out that super-low rates of interest is a significant part of this problem. Such low interest rates would not occur in an orderly economy.

Economies consist of people wanting to buy goods and services from one another. They are naturally inclined towards full use of all resources, including full employment up to the level in time and effort at which people are comfortable working. Given the money, and the affordability of credit as needed, the confidence to borrow and to save, economies have a natural tendency to achieve this optimal state.
We don’t have that. We get recessions, financial turmoil, a lack of trust in our savings and loans, and problems with international trade and interest rates. What can be done?
Any government which implements the lessons learned herein will find that their task of:
  • Governing and
  • Making their people happy…
…becomes significantly easier.
Voters will love the reforms to savings and loans and the greater stability of the entire economy which can be achieved through making such changes.


·         New savings contracts which will repay value with interest added instead of repaying money of unknown value plus interest. Unfair distortions will be eliminated.
·         New lending / borrowing contracts. These will be significantly safer and lower in cost as well as being more competitive than the ones on offer today.
·         Essential new taxation and regulations which do not get in the way. These should replace what we have now.
·         How interest rates can, and will, find their own level – removing an eternal worry about what they will do next; and helping savings and loan costs to adjust properly.
·         New pension contracts which will not threaten the companies providing employee pensions with defined benefits. Pension funds will be financially stable, and their value will not change markedly if inflation gets high. This is revolutionary.
·         Why currencies need not jump up and down in price the way they do today.
·         Why property values will be more stable.
·         How commercial loans will become cheaper, bigger, and more effective.
·         How recessions can mostly be avoided.

In summary, people and businesses will be able to plan their financial lives, and governments will be better able to direct their economies.

This is for economists, not for the general reader.
For the past century or more, the whole economic community seems to have overlooked the fact that all prices, costs, and values, have two component parts, not one. And that all prices must include the maturity value of bonds, the cost of monthly payments of every kind, and the value of the currency, for example.

If the one part, referred to herein as the ‘core’ part of the price, adjusts and is free to adjust to offset the falling value of money, then the other part, referred to herein as ‘the real economic price’ is hopefully free to balance supply with demand in the real economy.

Both parts of every price, cost, and value, not one part, need to be free market prices/costs/values in the sense that they can and do adjust when there is a change in the supply or in the demand. That includes:

  • The price of credit, (interest rates),
  • The cost, and the value of all financial, debt-based contracts,
  • All asset values,
  • The value of currencies for trading purposes and
  • Separately, the price of the currency for investment purposes. There are arbitrage issues to confront here.
If the core part of any of these prices fails to rise when money is falling in value, then that item becomes relatively cheap. If there is a free market as defied above, in most cases, the demand should rise, and the price should adjust upwards.

For example, loans should be designed to repay value plus interest, with the core capital value being adjusted for the falling value of money. Interest rates should make the necessary adjustment on their own, without being managed.

The usual inflation measurements do not measure core price increases. They are the sum of the core price and the real economic price of a selected basket of goods and services. Rising supply and efficiency tends to lower those indices.

Simplification: This book explains the design principles which are needed to revolutionise the way the world’s economies work, simplifying almost everything.

The Complex Systems Theorem explains why a significant reduction in financial and economic complexity will come from each, and every individual, proposed, design change.

One day, people will not remember how the current world economies work, but they will remember how complicated and confusing they were.

This speaker put it nicely:
We are going to win because the power of the people is so much stronger than the people in power -  TED talk by Bono -

As a financial adviser arranging mortgages, giving financial advice and managing investments, Edward Ingram became outraged by the way in which building societies were behaving in the UK, in the 1970s.
As inflation took off, interest rates constantly rose, but real interest rates fell, reducing the value owed. But the building society regulations forced lenders to demand and borrowers to pay more rather than less. The homes of too many creditworthy clients, and thousands of others, were repossessed. He decided that something must be done, and he set about doing it. That research led to more and more discoveries about what is wrong with the legal and other structures of the world’s entire financial framework.
Until that exercise had been completed it was too difficult to demonstrate to skeptics what really needs to be done. Now, after decades of trying to pinpoint the real issues, he has finally established the basic principles which must be followed to design a relatively simple and orderly economy.
This has now become a whole new school of economics.
Besides this, Edward regularly made headlines for his financial innovations in the UK and his new management methods for investment portfolios created a new industry called ‘Broker Bonds’.
In fact, recently, he has found that the best, balanced, investment portfolios and guidelines on offer today, do not seem to be performing better than Edward’s investment performance. That was also true in the past.

As a result, he is proposing to offer his services to a financial institution and set up a new Ingram Managed Fund. Interested institutions should contact him at

Figure 3 Sunday Times Letter

Figure 4 BBC CEEFAX cover letter to Ted (Edward) Ingram
There are more cuttings, background, and publications and investment performance data to be found by searching the internet for

#3.1.1 Volume I, this book, is a general overview for everyone to read. It sets out the reforms needed as an agenda as well as the principles to be followed along with the proofs. It is aimed at the general reader as well as the high-powered graduate and policy makers.
#3.1.2 It contains a lot of fascinating information about what is wrong with economies, how to manage them, and how the world of finance will change to protect everyone better.
#3.1.3 Volume II goes into the technical details of new lending and savings models which will revolutionise the financial services industry and allow all those nice new savings and lending contracts to operate in a user-friendly way. Volume II is for the practitioners such as regulators, financial institutions, and financial advisers. It is for the university courses, now on offer through covering every module.
#3.1.4 Volume III will be the outcome of discussions held between all participants during the university course, and during the series of debates about these proposals, which is to be held on National Television in Zimbabwe, politics permitting. Currenty, almost no one wants to participate.

Distance learning
#3.2.1 This book is for Module 1 of the online, interactive, (webinar), university course in the whole subject.[1]
The course is available from this website:
Look under ‘Professional Courses for the one called ‘MACRO-ECONOMIC DESIGN & MANAGEMENT’
To be sure that your interest in this course is taken up and does not slip through the administration, please email the writer, Edward C D Ingram. He maintains a list of interested people to notify when each new course is being planned. Here is the contact address:
Many people from all walks of life are interested in this course, and may get a lot of insights which will help them in their lives. But the main reason for the course is to help governments, policy-makers, and the financial services industry, to get a grip on it all while providing a platform for national and international debate.
#3.2.4 For those who do not like to learn using the internet, please contact the writer to see what can be done in that regard. Use the same email address:, or check out the Seminars option below.
#3.2.5 The course will also generate numerous opportunities for ground-breaking doctoral papers. Some MSc papers have already been written under the mentorship of Dr T Chowa.
The modules are:
MODULE 1: Basic economic principles, proofs, and the Complex Systems Theorem.
MODULE 2: Safer Savings and Lending contracts paradigm
MODULE 3: The new credit markets conformance framework
MODULE 4: The new currency markets conformance framework
MODULE 5: Treasury and Monetary Policy dynamics
MODULE 6: Comparison with other Schools of Economics.
#3.2.7 Should it be called a workshop? It is the equivalent of a working paper which is alive with people working on it. Go to for registration and more details.
Currently it has been decided to slash the cost to next to nothing for those wanting the cheapest possible way to do the course more or less privately with Edward using Skype or Google Hangout. The University has agreed to offer examinations and a graduation certificate at the end of that process.

Thought leaders, including policy makers at the National Treasury, Central Bankers, business people, and academics in economics, banking, risk management, finance, business, and accounting, are invited to join this three-month-long, weekly and inter-active webinar workshop, with tutorials, homework, opportunities to create new doctoral and other papers, and a graded university graduation certificate.

#3.2.9 Attendees will learn that for almost every financial contract, related regulations, and for some key market sectors involving currencies, interest rates, and monetary policy, major structural changes are needed. They will learn the practical details of what is needed and how to do it.

#3.2.10 As in any paradigm shift, it is better to be a part of the process and help to drive it forward, rather than desperately struggling to catch up later.

#3.2.11 Graduates from this course will be needed to steer the process of change at every level. Subsequently, thousands of practitioners may need to be trained. Many other universities may decide to include this course as a part of their own syllabus.

#3.2.12 Graduates will also be likely to form the top tier of advisers, teachers, consultants, financial managers, product creators, and decision-makers.


#3.3.1 Currently, Zimbabwe is a nation in economic crisis. It has far too little currency in circulation. The13-week discussion series on ZBC, the national TV Service was proposed, following a review of the earlier book on the same subject, entitled, ‘WHAT IS THE INGRAM SCHOOL OF ECONOMICS?’. The series was scheduled to commence in October 2017. But unfortunately, the atmosphere of fear of the government in Zimbabwe has prevented us from gathering together the key people needed for such a discussion forum. If and when it takes place:

#3.3.2 It will be called ‘Jewel of Africa’, it will explore how the principles used herein may be applied, not only around the world, but also to help the Zimbabwean economy to take off and maximise the use of its very considerable resources. Watch out the rest of Africa! The resources of skills, education, and minerals are all generally recognised to be among the best in Africa.

#3.4.1 Conferences and seminars can also be arranged at your own venue. These can be live events with our team as the presenters, or they can be done in the same way that it is done on television news: with cameras at both ends transmitting everything to both ends.
#3.4.2 You watch the big screen and talk back and forth with the presenters. The software needed is freely available online.
#3.4.3 CONTACT: Johan Christiaan Van Der Walt, B. Comm
Email: Cell: +27 81 718 6449

The main book has two parts and an overall summary:

A multi-page, shortened version of the book, can be found in Appendix IV.

#4 part 1 - ANALYSIS
#1.1 This is a major shift in economic theory and a revolution for the financial services industry. It is based upon well-established free market pricing principles dating back to David Hume in the 1770s, and re-stated by Adam Smith.  These have not been incorporated into to the design of key parts of the economic framework of nations, including financial services, regulations, and legislation.
#1.2 Free market pricing:
  1. Optimizes the use of the resource in question.
  2. Simplifies the behaviour of an economy by orders of magnitude.
  3. Cuts out a significant amount of financial, social, community damage, and consequent political risk.
  4. Removes the need for many worrisome interventions.
  5. Creates new policy options which must be explored.

What has been overlooked is that market prices have two parts. They must adjust to offset the falling value of money first before they can effectively adjust to balance the real market forces within the economy.
If this first adjustment takes place, then everything will perform as if money had remained unchanged in value. Only prices and incomes will have risen along with savings, asset prices, and costs.

#2.1 The number of problems which the resulting proposed changes can solve, appears at first sight, to be far beyond reasonable expectations. Even when it is clear why this happens, many high-ranking economists don't feel comfortable.

That was the experience of a second high-level review panel of just the first part of this overall study in 2004 whose membership is given in the acknowledgements; but they finally agreed that no one could find any fault. It was then accepted. Other economists realise that there are fundamental flaws being addressed, and they get increasingly excited the more they read.
There is a theorem which explains the simplifications which are generated. The author calls it ‘The Complex Systems Theorem.’

“Remove the source of a problem in a complex system, and generations of knock-on effects disappear. Multiple problems which had always appeared to be intractable, simply vanish as if they had never existed.”

First identify the source problem, (in this case a lack of free market pricing), and then remove it. Allow free market pricing to operate. The benefits are mind-bending. This analysis, that of the Ingram School of Economics, demonstrates that the need to do this is financially, economically, and politically compelling, because the social cost of doing nothing is too great.

#2.3 Try looking at this the other way around. We allow one thing to be priced incorrectly, like the cost of home loan repayments which jump around, and we get all kinds of problems.
There are problems with house prices, home repossessions, collateral security, bank viability…and then we get interventions which draw funds from ‘here’ and put them ‘there’ causing more uncertainty to those who lose out. The political ramifications go on and on. Elections are lost over such things.
Then add another wrong pricing mechanism and you get another cascade of confusion and complexity. In this paper, we identify up to five things like this, five wrong forks in the road taken by economics.
How complicated do we want the economy, and the associated human behaviour in self-defence, to be?
All of five these source problems can be addressed.

#2.4 “The difficulty lies not so much in developing new ideas as in escaping from old ones.” - J M Keynes

#4.2 It was J M Keynes who wrote, in his "A tract on Monetary Reform", (Macmillan 1923), in words to the effect that, if money were to halve in value and everyone got paid twice as much and had assets worth twice as much, and they paid twice as much for all assets and for all satisfactions, they would be wholly unaffected.
If all the relevant prices, costs, and values were to adjust to offset the falling value of money (in addition to the real economy price changes), then it would be as if the entire economy had been placed upon a floating platform – one which floats on the ups and downs of inflation as a ship floats on water. The real economics and various transactions taking place on the platform, or on board the ship, would not be much concerned about how the platform (or ship) was moving as long as all of the economic activity taking place was doing so on board the same platform. All prices concerned with supply and demand and all innovations and so forth would continue to operate and to interact as if the platform was standing still; as if there was no fall, or change, in the value of money.
Remember, every price adjustment has two parts, the Core prices adjustment, and the other supply and demand pricing adjustments of the real economy.
#4.3 KFPP
Let's call this floating platform Keynes' Floating Platform Paradigm, KFPP –  a platform which, if created, can enable economies to perform well despite money constantly changing in value.
Any price which does not rise when the value of money has fallen becomes relatively cheap. Then there is an increased demand for that good, service, or asset. In most cases this will adjust the price upwards, putting it back on the platform and restoring order. If free market forces are free to act on our savings and loans and every asset and price, then this can happen. The practical outcome is not perfect – there are delays and not all prices respond in what economists call an ‘elastic’ manner – that is, proportionately and quickly. But enabling this process to take place wherever possible can change the world of economics and make life much easier for everyone.
Would making this change encourage inflation by removing the pain? No. It would remove most of the re-distribution of wealth, the confusion, the destruction of wealth, of financial plans, and the political fall-out which goes on.
It would simplify everything and reduce the tasks given to governments and it would reduce the complexity of managing the economy to a manageable level.

Inflation cannot be sustained if new money is not constantly created at a sufficiently fast pace. There will always be some rate of inflation, but it does not have to become hyper-inflation.
As prices rise a little to absorb any excess money in circulation, keeping everything on the KFPP platform, the excess money becomes no longer excess money, but the money needed to continue economic activity at the then current, higher price, level.
#4.5.2 The economy mops up the excess money with inflated prices as the KFPP Platform is rising.
The bigger / more inflated economy, then needs the additional spending money to keep moving.

To create this KFPP floating platform, (for otherwise people would be affected by the price changes), all the following core prices, costs, and asset values, need to be free market prices and able to adjust to the falling value of money:
1)      Savings, Pensions, and Lending Contracts: Their cost per month and the value of the contracts including annuity payments, bond maturity values, the monthly cost of home loan repayments, and that of commercial debt repayments.
2)      Interest rates – this is the cost (price) of credit and the means to restore the value of savings and loan accounts. The core part of the interest rate needs to keep savings and loans on the KFPP platform. The other part of the interest, which the writer has called the ‘true interest’,[2] is supposed to be a part of the income for savers, and the expenses for borrowers. The true interest is supposed to balance supply with demand. It is a part of the real economy, not a part of the adjustment.
3)      Incomes - the cost (price) of hiring people.

4)      The cost (price) of imports and the value of exports - a free market in the trading currency is needed to balance trade, and thereby to adjust the value of the currency to the falling value of money. This is also needed to optimize the use of the international resources to produce goods and services. See NOTES below…
5)      The price of international capital: There must be a balance between the demand by nationals to exchange their local capital currency for foreign capital currency coming from other countries, and the demand by foreign entities to exchange their currencies for the local / national currency. The market price must adjust to create that balance. There must be a separate market in international capital. One market is needed for trade and another one for capital. There is no such thing as 'one currency price fits both markets.' This will give rise to what is called ‘arbitrage pressures’ which need to be confronted without causing undue harm or delays to international trade and transactions. Such pressures arise when people try to buy the currency in the cheaper market and sell it in the higher priced market. See the next page on this.

#5.1.6. Currency trading is an issue to discuss to the extent that it has an impact on volatility and liquidity.

#5.2.1 The difficulty of creating two markets for currency, each with a different price, is that people find ways of buying cheaply in one market and selling at a profit in the other market. This is called ‘arbitrage’ and the end-result is a single price for both markets with extraordinary profits for dealers from arbitrage operations.
#5.2.2. However difficult it may be to limit arbitrage between the two currency markets, the cost of doing so will be significantly less than the cost of not separating the two markets. Approximately one half of all business prices have an element of the currency price included in them. See Figure 5, The world has changed a lot.
Figure 5 A third of world output is exported by some businesses; and that third is imported by some businesses. Maybe half of all business transactions are involved.
#5.2.3 Allowing price instability to continue on this international trading front, has a cost which exceeds any imaginable cost of regulating these two currency markets to limit arbitrage -  and by use of free market pricing, to maximize the use of the world’s production resources.
#5.3 In fact, the regulations needed may be relatively cheap and easy to impose without slowing international transactions in the process. This is explored in the interactive workshops in Module 4 of the course. Volume III of this book series will report back to readers.
#5.4 Very little currency gets exported or imported in either of these currency markets. For the most part, each currency would be spent on the output of the nation to which it belongs.

SCOPE: Please remember that this book is looking at free market principles, facts, and theory, not the political interface. No matter which political party may be in power, the writer believes that politics and vote-getting will be easier for the ruling party, if the facts have been taken on board and used to create a better economy.

NOTES: Rapid changes in the pricing of things caused by the implementation of these ideas can be destructive. Politicians and their advisers must decide how much change seems to be a good idea at the time and how best to soften any wealth re-distribution and hardships involved in the process of change.
a)      As the world adjusts over time, it will become easier - less destructive, to allow free trade / free competition internationally, as more and more nations find their niche products and as the cost of labour and skills becomes more uniform between nations.
b)      This is not to ignore the need for the defence industries to be independent of the goodwill of other nations wherever that is practical.

#6.1 Wherever there is a free market price for any resource, this optimizes the use of the resource in question.
#6.2 It does this by raising the price until only those with the greatest need or the most profitable use for the resource can afford it. This works as a market force because the greater the demand for an output, a good or a service, which gets produced with the help of the resource in question, the more profitable it can be to pay for the use of that resource. If there is a free market pricing mechanism in place, the producers of those outputs which are in greatest demand (and for which end users will most happily pay), and which need a particular resource, will be the ones best able to afford the price and so acquire the use of that resource.
#6.2.1 As always, if demand rises and the supply does not increase, then the free market price rises to choke off excess demand.

#6.3.1 Remember #2.2 – the complex systems theorem. Any part of a complex system which (in this case does not adjust to offset the falling value of money), creates a generation of knock-on effects in other parts of the system, (the economy).
#6.3.2 Looking at the above list #5.1.1 – #5.1.5 inclusive, where the pricing mechanisms are not operating as they need to, there are too many prices which do not adjust to offset the falling value of money in almost all the key units of the economy. These include:
  • Financial contracts,
  • Interest rates,
  • Asset prices, and
  • Currency pricing.
#6.3.3 It is not only bonds and housing finance, and commercial finance, which are wrongly priced.  These wrong prices ruin budgets, they result in the repossession of homes, they destroy businesses, and they re-distribute wealth. In that way, they produce a constant stream of other wrong prices, leading to crises and problems. These prices clearly do not optimize the use of their related resources.
#6.4 Remember, every wrong price creates a cascade of problems in the complex system which is an economy. There are currently at least four groups of wrong pricing mechanisms built into the framework of the world’s economies as listed above. Should we do nothing?  How complex do we want our economies to be?
#6.5 In addition to the economic framework problems, there is at least one more problem area in the management system. We will be looking at new policy / management instruments for managing the stock of money in circulation, and the need to keep spending in the economy well balanced so that all sectors including small businesses participate in any stimulus to increase spending.
An effective and efficient management system cannot be created without first creating a simple, stable, and well-designed economic / financial framework.

When using the Free Market Floating Platform Paradigm, or KFPP, so that people are unaffected by the falling value of money, a clear definition of what is a price and what is not a price is required.
If something must be paid for then there is a price, or a cost, to pay, and that price has to adjust. In that sense:
a)      Costs are a form of price
b)      Asset values including the value of bonds, are a form of price
c)      The price of goods and services are prices
d)      The cost of hiring people (incomes) is a price
e)      The cost of a currency exchange is a price.
#7.1 These all cost money.
For any price to stay on the KFPP platform, its core price must adjust to offset the falling value of money.

As noted in #2 above, (complex systems theorem), the number of problems solved by the proposed changes may appear, at first sight, to be beyond reasonable expectations, but they are not. By removing the source problems:
  1. Wealth re-distribution, financial hazards, confusion, and loss of confidence, all minimize.
  2. Generations of economic and financial complexity disappear as if they had never existed.
  3. Significant amounts of currently generated social and political turmoil disappear.
  4. The practical thesis for financial contracts and currency markets is that ‘‘Safer' is simpler, less costly, more competitive, builds confidence, and significantly boosts investment, employment, and economic growth.’
  5. The use of national resources of every kind, including savings and credit, the construction sector, including the provision of housing, the level of employment, and foreign direct investment, all optimize.
  6. Management of Monetary Policy simplifies significantly.
  7. Economic modelling to predict the future becomes relatively simple and significantly more reliable.

#9.1 As a subject, economics has taken three, maybe four, or even five, wrong forks in the road.
#9.2.1 The first wrong fork was taken in 1923 by J M Keynes when he noted that fixed interest bonds re-distribute wealth. His mistake was to do nothing about it. He, and others since then, did not ask what should be done about these failures to adjust core prices.
#9.2.2 The result has been a chaotic response of many key prices to all changes in the value of money. The value and cost of financial contracts like savings and loans, currency prices, rates of interest (another price), have all become victims.
#9.2.3 Monetary Policy is also a victim. Monetary policy does not have enough instruments available to address all of the consequences. Nor should it, because every intervention aimed at countering a distorted price, cost, or value, creates its own unwanted wealth re-distribution effects as resources are taken from ‘here’ and placed ‘there’.
The solution is to prevent / eliminate the problem.

#9.3 Remember, a free market price which can balance supply with demand optimizes the use of the resource in question without any need for an intervention. At the market price, given a limited supply, only those with the greatest need, or having the most profitable use for the resource in question, willingly pay the price needed to acquire the use of it.
#9.4 Remember, if any one price does not adjust upwards when money falls in value, then it becomes relatively cheap. In most cases this increases demand and restores the market price. It takes time and not all prices adjust easily, so it is important to have a low rate of devaluation of money to minimize these problems.
#9.5 Instead, Keynes and his followers have mostly concentrated on trying to prevent money from falling in value at any significant speed - which is also important.
#9.5.1 But any such intervention moves wealth and resources from some people to others. It destroys some people’s expectations and even their plans / businesses.

#9.5.2 Interventions are still needed to create enough money for an economy to operate efficiently. New money always adds to spending. When those interventions are made, they must try not to change the balance of spending across the various sectors of the economy. As far as possible, spending increases should occur everywhere at the same time.

#9.6.1 It is not so important to reduce inflation and the rate at which money may be falling in value when we find that, contrary to normal expectations, the lower the level of inflation gets, the more unstable the economies of nations become. This happens because of the distortions which have been built into prices in the current economic framework. It will not happen in the proposed new framework. Here is the problem:

#9.6.2 Inflated, unsafe, and unstable finances and asset values such as bonds, property, and equity prices, become more inflated and more unsafe as inflation falls towards zero. All prices, costs, and values, are not able to stay on, or in some cases, even close to, staying on the KFPP platform.
#9.6.3 The writer has dubbed this the LOW INFLATION TRAP. See #9.8 below, and Appendix 1 for more on the LOW INFLATION TRAP. This trap is created by dis-allowing free market pricing. The problem can be removed. When that has been done, lower inflation rates will be safer, and they will be more productive.

#9.7.1 As just stated, Keynes, and his followers ever since, took the other route and tried to minimise changes in the value of money as best they could whilst ignoring the instability issues and the related wealth re-distribution issues.
#9.7.2 He (and they) should have taken both routes because:
#9.7.3 A safer financial framework reduces social and political damage to a nation.
#9.7.4 It optimizes the use of all resources.
#9.7.5 What makes changing over to free market pricing an essential exercise is that the rate of inflation can then be low without the complications and instabilities which are currently created in these conditions.
This is to say that the LOW INFLATION TRAP described below, and in Appendix I, can be eliminated if we put proper market forces and financial contracts etc., in place.

#9.8.1 It should be noted that monetary policy in those developed economies which are facing the greatest difficulties today are those with the lowest rates of inflation. This is not a co-incidence.
#9.8.2 The cause is not hidden from sight. It is right there in the mathematics of the financial contracts being used, combined with their low rate of incomes growth. After home-loan monthly repayment costs have leaped upwards and bond values have tumbled, after any rise in interest rates, there are problems.
#9.8.3 A 2% rise in interest rates, made to adjust for a faster rate of inflation, and needed for interest rates to keep savings and loans on the KFPP platform, can cause a leap of up to 28%, (or quite a lot less), in the monthly cost of a home loan. The amount depends upon the then lowest rate of interest. See Figure 6 below. That highly geared response knocks everything linked to property finance off the KFPP platform.
Figure 6 –  The unstable cost of housing finance.

             Source: Edward C D Ingram Spreadsheets based on a 25-year Level Payments Mortgage Schedule paid at annual intervals.
What should happen is that the cost of repayments should rise by 2% p.a. faster than they were rising previously. In fact they may have been falling previously under the new model being proposed. The ‘real economic cost’ of monthly payments needs to start high and end low so as to prevent what is called payments fatigue and a high level of arrears. That would happen on the KFPP platform and it would happen if money were not falling in value and incomes were not rising on average. Here is an illustration of how that might look:
Figure xxx
A close up of text on a white background

Description generated with very high confidence
If incomes were rising at 9% p.a., then the figures change like this:
Figure xxx

A screenshot of text

Description generated with very high confidence
The ‘% of income’ cost figures shown are almost the same, both ending at just over 11% in year 25. The tables are simplified to annual payments made at year’s end by which time money will have fallen in value and incomes will have risen. This avoids the need to show 300 rows of monthly data.
The tables also assume a fixed true rate of interest, this being the rate above the core rate in each illustration. The nominal rate of interest and the core rate may vary to offset the changing value of money, but the real rate, called the ‘true rate’ herein, does not vary in this particular contract.

Going back to how things work now…
#9.9.1 In these circumstances of high gearing, rapid incomes growth is needed after an interest rate increase to restore order and affordability for borrowers. In addition, bond values are also distorted, but are less affected if inflation rates are higher to start with. Wrong currency pricing activity also adds complexity. Instinctively, people expect financial stability to increase as the rate of inflation falls. This clearly contrary outcome is explained in more detail in Appendix I.
#9.9.2 Those economies with higher rates of inflation and incomes growth have smaller problems of this kind and recover faster. But they have smaller home loans and less access to business finance. Like the advanced economies, they still have significant problems with wrong pricing mechanisms in all four key units of their economies.

#9.10.1 If all prices, including the maturity value of bonds, the cost of monthly loan servicing payments, the cost of imports, and the rate of interest, could adjust simultaneously to the changing value of money, the economy and its people would be wholly unaffected by the falling value of money.
Please note that the value of money is whatever it can be exchanged for. To evaluate the entire value of money one would have to know what the entire shopping list of everything would cost, at current prices. Included in the list would be: all investment assets including land, property, bonds, and equities, other complex investments, the cost of hiring everyone, the cost of paying all loans, the cost of dividends and rentals, the cost of imports and the price of exports.

#9.10.3 Having all prices, costs, and values able to adjust to the changing value of money, would be like moving the entire economy onto a moving KFPP platform, or a ship, which rises and falls on the water, without the water level, or the KFPP platform’s level, having any effect on the activity taking place on board.

#9.10.4 Unfortunately, as things are, there are significant disruptions and distortions being created in asset prices, the cost of finance, interest rates, and currency values. Each disruption has multiple knock-on effects on other prices. The way in which money changes in value is made somewhat chaotic. It is not easy to measure, but after making the necessary reforms, most core prices will adjust at the same or similar rates. Everything will become a great deal simpler.

#9.10.5 We all know that as things stand, as they are at present, there are chaotic social consequences of disorderly prices, including unemployment, loss of family homes, and loss of businesses, can affect the outcome of elections, and the formation of extremist groups - and worse.

# The behaviour of the economy always features high up in any election agenda.

# It can be concluded that governments are at risk. They have a choice if they want to stay in power. They can either:
  • Invest in more internal security and political half-truths and worse. But there is no guarantee of avoiding some level of discontent, violent opposition, uprisings, civil war, and trade wars by that route.
  • They can invest in making these changes which are needed to remove the problems. That way they can take credit for making everything safer for their people.

This speaker put it nicely:
We are going to win because the power of the people is so much stronger than the people in power -  TED talk by Bono -

[1] A Webinar is a way of bringing the teacher into your office or home. You may submit questions during the lessons, and you can watch a recording of the lessons as well ore instead.
[2] TRUE INTEREST – This is the other part of the interest, which, added to the core rate, makes up the total, nominal rate of interest. This is not the same as the ‘real’ rate of interest, as explained in Appendix II.

[i] A shorter edition of this book was previously published in a limited print run 120 copies wire bound and 8 copies professionally printed and bound under the title: ‘WHAT IS THE INGRAM SCHOOL OF ECONOMICS?’ And Why is it Essential?’ ISBN 978-0-7974-8870-0. Registered May 2017. Zimbabwe National Archives has two copies.

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