BOOK SUMMARY




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It is also the university course summary - the course in Macro-economic Design & Management. The world's first ever course in this subject. Three books will cover the entire course. Volume II will cover Module 2 in detail. Volume III will be written later after input from students, to cover new thinking on currency markets and the banking sector and Monetary Policy in greater detail. A lot of research has been done on the banking reforms but none are as simple as this one because the complexity of economic dynamics has never been dealt with by the other researchers.


Timothy Hosking's Expert Review



The following are key economics models taught at universities. They all have some well-considered logic. But when you take into account Behavioural Economics they all contain fatal flaws.

1. Keynesian Economics – an excellent understanding of managing economic cycles. My concern was that the human behaviour has a narrow pattern of normal - going between exuberance and panic and requiring a control tighter than what governments were capable of and politicians willing to react to. An easier, quicker adjusting model, along clearer defined parameters, would be the Ingram Model.

2. Laissez Faire Capitalism – uncontrolled competition consumes wealth with most of the competitors drained and few very well off. Wealth stripping means that the consumer base is impoverished and fewer of the competitors survive. A restricted field would mean more can healthily compete and grow themselves and the economy.  The Ingram Model is not a complete solution but aids the prevention of wealth stripping.

3. Monetarism – The Ingram Model would replace this in a more controlled and less volatile fashion.

4. Marxism – The goal of social sharing of resources was raised during the period of vast wealth differences. Unfortunately, this was only partly resolved by revolution. Behavioural Economics was replaced by desire and ignored the fact that people want more. Marxis­­­m replaced the obstructions of the Nobility with that of their system. By curbing wealth stripping the Ingram Model moves in the right direction.

5. Game Theory, Zero Sum Games – John Nash (Beautiful Mind), John Neuman amongst others. These brilliant models are corrupted in a Macro environment by political interference, slow reaction times and Dualism. In a sense they work when their scope expands to include these interferences but they become less relevant to the problem. The Ingram Model will curb the interferences allowing the Macro Economic scope to be reduced to the immediate problem.



6. Positive Money – This influential UK group is looking at what some people call ‘QE for the people’ whereby money is created and given to the government or the people to spend rather that using the Keynesian ‘borrow and spend’ approach or reducing interest rates. The Ingram Model is significantly better thought out but is little known in the UK. It acts faster, protects small businesses better, has a better balance, better control, is less complicated, and has a damper which automatically protects the economy and savings if too much money is created.

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OTHER REVIEWS


Please note that not all of the reviewers have studied the entire book. That mostly applies to the proposed currency and management systems. Reviewers who have, include Dr T Chowa and Riekie Cloete. Tim Hosking is well on the way. See his additional comments below these reviews.
Dr T Chowa, Lecturer (Actuarial Science & GSB), writes: There is literally no other person who has looked further and seen further with such clarity as Edward Ingram.

Riekie Cloete is an experienced macro-economist and past mentor of post-graduate students. She writes, "This Ingram School is the first I have ever 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 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, wrote, “When people realize what you have done all hell will break loose.”

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”




BOOK SUMMARY
How to End World's Economic and Financial Chaos
And Simplify Everything
A book as intriguing as it sounds - The logic is compelling.
Now everyone can see exactly where their personal and business problems are coming from.

Copyright © IngramSure (UK) Ltd – all rights reserved.

Front cover picture - Edward C D Ingram

BISAC
BUS039000  BUSINESS & ECONOMICS / Economics / Macroeconomics
This book takes macro-economics to the next level
BUS001010  BUSINESS & ECONOMICS / Accounting / Financial
BUS045000  BUSINESS & ECONOMICS / Money & Monetary Policy
POL034000  POLITICAL SCIENCE / Peace

This Second Edition: 2017
ISBN - awaited
First edition Title:
WHAT IS THE INGRAM SCHOOL OF ECONOMICS?
AND WHY IS IT ESSENTIAL?
First edition ISBN 978-0-7974-8870-0

Self-Published – Available by contacting the author.
Contact:
Skype: edwarding2
Email: edward.ingram2009@gmail.com

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I, the author, Edward C D Ingram, assisted by Riekie Cloete and others mentioned in the acknowledgements, are pleased to announce that I have written a book entitled ‘What is the Ingram School of Economics? And Why is it Essential?’

The second version, in order to appeal to a wider audience  may be named as below:

HOW TO END THE WORLD'S ECONOMIC AND FINANCIAL CHAOS
Based on the Ingram School of Economics - A New Macroeconomic Design

It is, according to readers, a new school of thinking - a new insight into what is wrong with economies and how their management can be significantly simplified.
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Economists, please note that you may need to change your idea of what free markets are. Joseph Stiglitz, got a Nobel Prize by proving that they do not, and maybe cannot, exist. That proof and that paper has NOTHING to do with what is written below. Professor Stiglitz used his own definition of free market prices. It is a matter of using the right definitions. Each to his own.

Herein we say a price is free to adjust if it responds to changes in supply and demand. It is a simple concept and one which most people feel comfortable with. It is not whether there are monopolies controlling prices. That is a different subject but also a worthy one to study.

We will be looking at which prices, costs, and values, are ABLE to change when the value of money falls, and which of them cannot. It makes a difference if prices can adjust to offset the falling value of money. For example, if an investment in government debt, treasuries, bonds – call them what you like, protected your savings from the falling value of money then the maturity (end) value would need to be in some way linked to the falling value of money. What usually happens is that you get your devalued money back. Guaranteed. A lot of boooks say that is a risk free investment! More like a guaranteed loss in most cases.

Alternatively, if you buy an index-linked bond, you may get your capital back adjusted for inflation as measured by a retail prices index or a similar index.

As we will find, when we look at the component parts of pricing adjustments, that is a wrong index to use. Prices, costs, and values, have two adjustments to make, not one. When money falls in value people want their value back. It costs no value for the borrower to repay the value borrowed. Read on because we will go into that. 

THE NATURE OF AN ECONOMY

In any economy, there is always a trend towards full employment. There is a reson for that.

Without money, economies would just consist of people wanting to help one another by providing goods and services to each other. They would be naturally inclined towards full use of all resources including full employment up to the level that people were comfortable working.

In today's real economies, that trend keeps on being sent off course. We get recessions, and depressions, and we get booms and busts. In the process a high proportion of the population lose savings, homes, and businesses, through no fault of their own.

The reason for this is that there are savings and loans and there are currencies, all doing things which spoil the best of plans. All of them involve money. If there was enough money and there were no savings and loans and no imports and exports, maybe there would always be full employment. 

For example, take an economy of two people using money. Both are fully employed helping each other. Then one starts to save. The income of the other falls and that one cannot employ the other one fully any more. Or one buys some imports. Same outcome.

Take an economy where people borrow less and repay more. Spending falls.

Given access to money without having to wait to be paid, and given its affordability when a loan is warranted, people will tend to achieve the fullest level of employment and output. The reason why we have money is because it can be exchanged for anything. It speeds transactions. It is also a good unit of account for accounting and it is a nice store of value.

We want to know why there are recessions, shortages of money, booms and busts, and what can be done about this.

Sometimes it is a lack of money in circulation forcing people to wait to be paid. 

Sometimes there is too much money in circulation raising prices and causing inflation.

SCOPE
On the financial framework, this book only deals with the dynamics of prices, which also includes earnings, costs and asset values, all of which may must be aid for by some entity or person. All of these prices may be affected by the changing value of money.

It is not concerned with most other things which may have an impact on prices such as monopolies and politics.

On the management side it deals with the management of the stock of money in circulation, and explains the instruments needed to manage that. 

The target to aim at is to have the maximum level of output by enabling the entire national output to be bought. No recessions if possible, and no excessive booms or high levels of inflation.

PRINCIPLES APPLIED ON THE FRAMEWORK SIDE

The book identifies a theoretical platform called KFPP which stands for Keynes’ Floating Platform Paradigm. It is an imaginary pricing platform, taken from a paper entitled ‘A Tract on Monetary Reform.’ (JM Keynes, Macmillan, 1923). Keynes wrote in words to the effect that, if money halved in value, and all prices and incomes, asset values, and costs, along with all forms of revenues / incomes were to double, people would be wholly unaffected.

If that happened, there would be twice as much money in circulation and the value of money would have halved. Everything which money could be exchanged for would have doubled in price, value, or cost. The question to ask is not “will that happen?” or how long does it take for money to halve in value, but how can that happen? How can we ensure that all prices, costs, and values would rise together in harmony rather than having some of them left behind and others shooting ahead as happens today?

And what would the advantages be if it did happen?

The most obvious advantage would be that savings like bonds, asset prices, and costs, would rise as incomes and dividends and rentals rose, preserving their value, all offsetting the falling value of money.

Financial plans would not be disturbed and mortgage repayment costs would not lea around. Property values would be relatively stable. The value of the curency would be relatively stable. It would adjust.

All of these price rises would in effect mop up the excess money in circulation. It might also be excess spending rather than excess money, for example if people had been saving but then they start spending those savings.

PRICES HAVE TWO COMPONENTS
But with regard to price changes that is not the entire story. Please note this carefully:

There are two components to price adjustments, not just one.

We will call them

·        The 'core' adjustments which are the same for everything. Core price adjustments affect all prices, costs, earnings, and values. These are the price and cost etc. adjustments to which Keynes was referring. These are the ones which must rise together at the same time and by the same proportions if people are to be ‘wholly unaffected.’ In that way they will all offset the falling value of money at the same time and in the same proportion. You say “Why doesn’t this happen?” For one thing the maturity value of bonds / treasuries cannot adjust. There is a list of such things. We are coming to that.

and there are

·        The 'real economic' adjustments to prices, costs, values, incomes, etc., which can balance supply with demand regardless of what the core price (properly adjusted) is doing. 

In the ideal scenario we should get something like this:

THE KFPP PLATFORM IN A PICTURE

Artist: Tanya Malan, 2017

All of the economic activity is taking place on a rising platform. The core price adjustmemts are raising all of the core prices by the same amount, so no one is really affected by the falling value of money. Not savings, not lending, not costs, not earnings. Not even the value of the currency – we hope.

Can this be achieved?

We think it can – almost. But we cannot make all prices and incomes of every kind rise every minute of every day. Some rise annually, like most wages do. Some rise before others.

Some prices do not rise easily – they are said to be ‘sticky’.

Given that, it is best that the rate of devaluation of money is not too fast. Inflation of prices should be low.

What could make a price rise and so stay on this KFPP Platform? Here is one observation to consider:

Any price which does not rise that fast will be relatively cheap.

What happens when a price is cheap? Demand rises. What happens then is that either the price rises to rebalance supply with demand, or output rises. Mostly output does not rise – output was already supplying the demand. People choose the mixture of goods and services that they want to buy. Buying more of one thing leads to less of another thing being bought. If people are satisfied with how their money is spent, then an increased supply of something which they do not really want more of will only be temporary because the price is relatively chaep for the moment. So in reality the chances are good that the price of something which is relatively cheap will not lead to increased supply, but rather the price will rise and everything will stay on the KFPP Platform, or close to it.

FREE MARKET PRICES OPTIMISE THE USE OF RESOURCES
What is more, when there are free market prices, when prices are able to adjust, the optimum use is made of the resources in question. Those buyers with the best use for a resource which is in limited supply, will pay the market price. Those who do not have such a good use for it will not afford to pay that price. Think of a manufacturer wanting to buy an ingredient so that the final items which are being produced can be produced. The buying public is prepared to pay the cost of that manufacturing process plus profits etc., because they want those goods enough to pay that price. So when there are free market prices, (able to adjust to balance supply with demand), we get the things we want at the prices we are prepared to pay for them. There is neither too much nor too little of any one thing, good, or service. The nation / the world produces what we have the resources to produce and that output goes to those willing to pay the price.

KFPP HAS THREE MAJOR BENEFITS
In short, free market pricing is a good thing.
And in theory, it can be the means to keep all prices, costs and values, including incomes (which must be paid for by some entity), on the KFPP Platform. We win both ways: 

1. We get what we most want and 
2. Our savings and loans and other financial plans are protected. 

And there is another way in which we win n this case:

3. When there is too much spending or too much money in circulation, we get price inflation. Core prices rise. As core prices rise, more money is needed by the economy. In effect, the surplus money which was causing the inflation gets mopped up automatically in higher prices all round. Then inflation stops. No government intervention is needed. No one gets hurt. Pensions continue to deliver value and costs and earnings all adjust. The cost of mortgage repayments adjusts. The value of the currency adjusts. Interest rates adjust to offset the fallinng value of money. They also balance the supply of credit with the demand for it. What we need to do is to regulate the supply.

THE PROBLEM

The problem with this is that the KFPP Platform which we envisaged does not happen. All prices are not adjusting in that kind of way.

People and businesses get hurt. Homes get repossessed and businesses get destroyed as interest rates and costs keep on changing differently from that. Cuurency changes put many a good business in jeopardy.

If all prices, incomes, assets and costs, were to be placed upon this KFPP platform, (let’s ignore grammar and call it the KFPP platform), then there would not be the kind of wealth redistribution, confusion, costs, postponed investments, destroyed financial plans, destroyed businesses and homes, lack of confidence and the distrust which affects almost every financial plan being made today. All prices would adjust to offset the falling value of money before adjusting to their various other market forces. 

THE GOOD NEWS
The good news is that we can get close to that. We CAN have a whole new era in macro-economic theory and financial stability. We CAN have safe savings, pensions, and many much safer financial plans for our home purchases and for our businesses. Even government finance will be cheaper and safer.

So that is something really worthwhile to aim at.

WHY HAS THIS NEVER BEEN TRIED?

If an engineer is asked to design an aeroplane the first thing he/she designs is the airframe. Care is taken to ensure that it can fly on its own through the up and down drafts, like a paper dart does, ot like a toy glider does, without having a pilot on board.

Getting that right makes the task of flying it much simpler and training the pilot is a lot easier. The controls will be fewer, simpler, and more effective.

It is the same with macro-economic design.

But have economists ever tried to create the KFPP Platform to allow the economy to ‘fly by itself’? Not really.

Keynes himself wasted no time in saying that this does not happen. He was focussed on reducing the up and down drafts of fixing or managing the changing value of money and changing rates of spending, not on adjusting to them.

When that side is ignored, eveything becomes very complicated. Every wrong price affects many things and those many things fo on to affect other things. Coping with that is like tring to have a hundred hands on the economy dealting with all of the symptoms.

And economists ever since have followed that lead.

This is why Alan Gray wrote:

“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.”

Yes, by doing that and solving that KFPP adjustment problem, we are making a huge difference to the entire subject. As Professor of Stockbroking Leon Brummer, said about the proposed changes for the financial sector: “That simplifies everything.”

As Timothy Hosking wrote in his peer reviews, in words tantamount to this: “No other mainstream school of economics solves the essential social and behavioural issues as well as the Ingram School does.” See the Home page on that. He goes into some detail.

TAKING OUT NEEDLESS CIVIL WARS
Many people are afraid that if these changes are not brought about in time, there will be revolutions all over the world. Governments will fall to extremists. That is already happening. There may be more wars and more civil wars.

This is the main reason why I never stopped trying to get this research finished and presented to the world. I feel disturbed when I see that millions of families are suffering financially, splitting up in consequence, and good businesses are being destroyed when there is no need for that. Recessions may bankrupt the less useful businesses, which some economists call creative destruction because it releases resources for better ones, but they also destroy good upcoming new ones. 

THE LIST OF ACTIONS TO TAKE
Here is the list of prices, (a word which in this case includes all costs and values), which we need to free up so that they can all be placed on, or close to, the KFPP Platform so as not to distort the economy, or waste people’s savings, or waste a nation’s economic resources through wrong pricing:

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. We look at that in Module 2 of the course at www.nustcce.com. This is the major part of the entire course.
2.   Interest rates – this is the cost (price) of credit and the means to restore the value of savings and loan accounts. We look at that in Modules 3 and 5. Module 3 is about the framework needed. Module 5 is about monetary policy.
3.   Incomes - the cost (price) of hiring people. These mostly adjust without too much obstruction. Only that there is today a whole lot of automation and cheap labour which hits the value of some previously well paid people in the developed world particularly hard. But that is the real economic pricing adjustment, not the core pricing adjustment. The core part of incomes prices probably rise relatively easily.
4.  The cost (price) of imports - 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 of goods and services. This is looked at in Module 4 of the course. There is a lot to discuss in that module where the knowledge and expertise of the students may bring out some important issues that may have been overlooked in the scripts.
5.   The price of international capital - there has to 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 price must adjust to create that balance. This has to be a separate market in currency. There is no such thing as 'one price fits both trade and capital markets.' Again, this is Module 4. Again, the input of the students will be very helpful.

THIS IS THE PROBLEM

    We need to look at how arbitrage operations can be limited by enough to make this work and save a huge amount of losses which come from currency pricing instabilities. Currency prices affect around half of all world economic output.

    Here is how we know: 



One third of world output is exported by companies. One third is importeed by companies. That is two thirds of all companies, but we are counting some of them twice. Some import just to export. So say half of all companies have a problem with unstable currency pricing. The world has changed a lot in the last decades.

Currency trading is an issue
to discuss to the extent that it 
has an impact on volatility and liquidity in the currency markets.
Bitcoins and other crypto-currencies are another issue. They facilitate cross currency payments but as a store of value they are very uncertain. Do they affect the stock of money in circulation? They have some characteristics in common with money so this is something to watch. But mostly it is said that Bitcoins are a bit like gold – you can buy them with real money and you can sell them with real money. Can they, like real money, be exchanged for anything? Currently, only for some things. It’s up to the regulators of this world how far this may be allowed to go. If it goes too far, might it disrupt monetary policy? Maybe. Something to consider.
Finally in Module 6 we will look at what others are saying. See how this new ‘Ingram School’ as it is being called, compares with other schools of economics. A School of economics is a way of thinking – it is not a place where people go to learn.
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IS IT TOO GOOD TO BE TRUE?
The number of problems which the resulting proposed changes can solve, appears, at first sight, to be far beyond reasonable expectations. But economies are complex systems. If you remove one instability which should not e there, you remove many.

Even when it is clear why this huge simplification happens many high-ranking economists don't feel comfortable. That was the experience of a high-level review panel of just the first part of this overall study in 2004 whose membership is given in the acknowledgements of the book, Reputations were at stake. 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.

If you want to know more of the background, the story is told in the acknowledgements. It is exciting stuff. All of this is in the book.
Here is the reason why all this is not too good to be true:
There is a well understood theorem which explains the simplifications which are generated. I call this the Complex Systems Theorem. It is well understood by medics, some engineers involved with complex systems, and social services.
“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 adjustable core prices), and then remove the problem. Allow free market pricing to operate. The benefits are mind-bending. This analysis, that of the Ingram School, demonstrates that the need to do this is financially, economically, and politically compelling because the cost of doing nothing is too great.
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 government 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. 

Then add another wrong pricing mechanism and you get another cascade of confusion and complexity. 

In this analysis, we identify up to five things like this, five wrong forks in the road taken by economic text books and wrong processes and traditions which are taking place in the world’s real economies. All of them can be addressed. 

Why do we not address them? How complicated do we want the economy, and the associated human behaviour changes in self-defence, to be?


MANAGEMENT ISSUES

In order to have a free market price of credit, the banking system needs to be changed. The book, and the university course at NUST-CCE, explains that this will leave management with the task of creating the right amount of money in spending circulation. There needs to be the right amount of debt-based money (for lending) which then goes into circulation as it gets spent, and the right amount of debt-free money for government spending or for donating into the economy, for immediate spending by everyone.

No economy should be as dependent upon debt-based money. People and governments being in debt as much as the are today is not a good social or a good management state of affairs. You cannot hike spending by lowering interest rates when people are already fully borrowed. But you can give them more money to spend. Both are ways to get more money into circulation and to stimulate more spending. A growing economy always needs more money. When that gets mopped u in slightly higher prices or when people start to save more, import more, repay more, and spend less the economy needs another puff of new spending money into its sails. The economic ship moves forward for a while and them slows again as all core prices rise.

Money gets put into spending circulation when banks lend it. But when people have borrowed enough, and an economy slows, and a recession threatens, lowering the interest rate or borrowing more money is not the only option. If people do not want to borrow, it can be like pushing on a string. Reducing interest rates to zero may not help. And it will do a lot of damage. That is what policymakers have been doing in the developed countries.

And anyway, a managed rate of interest is not a free market rate. It does not optimise the use of the credit available. Managing interest rates wastes huge amounts of an economy’s credit resources as we have recently seen: 



  • When there are low rates of interest, money is borrowed by bad managers to take over companies run by good managers. The profits of the good managers repay the loan. 
  • Money is borrowed for investment in property causing prices to inflate. The rentals repay the loan.
  • The same goes for equities. The dividends repay the loan.
  • With inflated prices, money looks desperately for places where a good return on the investment can be earned. 
  • New equity issues in almost anything mop up surplus lending almost regardless of the likely profitability of the enterprise.

THE CAUSES OF THE UNDULATIONS IN ECONOMIC ACTIVITY

Let's go over this once more.

Freedom of choice allows people to vary:
1.     ·         How much they save / spend down from savings
2.     ·         How much they borrow /repay
3.     ·         How much they import / export

All of these choices vary over time. They cause undulations in the aggregate level of spending, the level of spending in some sectors, and the stock of spendable money in circulation. When people put money on standby, they stop spending to that extent. Another person's income falls. They cannot spend as much...

The management function is to step aside and allow these undulations to take place within limits. The limit / boundary is hit when there is a threat of a downwards spiral as the reduced spending raises unemployment which reduces spending further and affects the government’s revenues and expenditure.

Two responses are needed, both being aimed at maintaining or adding to the stock of spending money in circulation and at maintaining or restoring the level of spending as far as is practical in every sector. This can be done by:
  • Providing more credit based (debt-based) money can reduce interest rates, and assist the credit-dependent (borrowing) sectors
  • Providing more spending (debt-free) money and giving it to everyone to spend can help all SMEs (all small businesses) as well as all other busineeses. 
More money may be needed anyway because that is what a growing economy needs. And it is probable that the slowdown either created a shortage of money as savings increased and debts were paid down, or the shortage of money slowed spending and led to this situation.

Big data analysis is not very important in making the decisions about how much additional spending power to provide. That is because any excess spending money created will be mopped up in higher prices, costs, and values without doing great damage, re-distributing wealth, or causing confusion. That is the role of the KFPP platfom.

After the puff of new money into the sails of the economic ship, this will slow it once more. Why allow the ship to go backwards into a recession by failing to provide this stimulus?

Governments do not have to borrow and spend to get the economy moving. Tax-payers do not have to pick up the tab of repaying that debt. But many schools of economics say this is what should be done and many governments believe ths.

When the economy slows all that is needed is a puff of new money into both sails of the economic ship, As the economy grows and more money is needed, the ship slows and another puff is needed.

In Module 5 we will look at how a reduction in VAT may be funded by new debt-free money and how that can stilumate spending on all small businesses and even most large ones. The effect is almost immediate. Everyone is able to spend more on what they want. 

This may overlook the lending and borrowing sectors, so a little more money can be created for lenders to lend as well. Interest rates have have risen due to a shortage. Now they will come back again.

How is that done? Module 3 goes into that. Banks will cease creating new money. Only the central bank will do that. Lenders will bid for deposits at auctions held by the central bank and the free market rate of interest will prevail. Optimum use of the national credit resource will be achieved. But there is more to it than that. There are liquidity issues, regulations, and bank falures to deal with.

Treasury will propose the new money creation plan and a Monetary Policy Committee elected by the community, and not by the government, will approve the plan provided that not too much money will be created. They will have taken this course in Macro-EconomicDesign and Management so they will know how to do that. 

They will have a mandate to follow so that they do not interfere in politics but they do prevent excessive inflation. As members of the community they will want the economy to grow, but they will not want too much inflation.

END OF SUMMARY



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