Macroeconomic Design is
a New Science in Banking,
Economics, and Finance.
I am seeking followers that may contribute to this science.
Read PEER REVIEWS. This is a new school of thought / school of economics. One person has written a COMPARISON between this and other mainstream schools of economics such as Keynsian Economics and Monetary Economics. All are valid work but we come out with significant advantages.
Of 40 schools of economics studied by my colleague Timothy Hosking, no other school deals effectively with financial stability and the removal of consequent behaviour change and unwanted crises.
The principles are listed below in section 5.
EDWARD C D INGRAM, the founder of Macroeconomic Design, may be contacted by email at edward.ingram2009@gmail.com.
DR JOHN PELHAM AT president@bwwsociety.org has another WEBSITE on ideas that may change the world is managed by Dr Pelham and contains an article written by myself entitled 'Replacing Fixed Interest Bonds'.
Since 1st May 2019, a WhatsApp research and development group has been operating. It is NOT a chat shop. There are strict rules - see section 6 below. Members can be anonymous if they need to avoid the appearance of representing their government, university, business, or other organisation.
We are becoming influential and are seeking to add to the current membership consisting of top academics, practitioners, government officials, and students, from around the world.
MANDATORY STUDY
Prospective new members are now required to study this Home page and to view the 22 minute You Tube video entitled "Explaining the ILS Mortgage Model for Housing Finance." Like the Wright Brothers who were the first to fly, they, and we, unlike universities and others, are not funded, so the video is not professionally done but the content is there. It still 'flies', but there are many successful tests that are not shown on the video. A crude test version, re-invented by two Cambridge University academics has been operating in Turkey for two decades.
Finally a six page paper, obtainable from Edward, on 'Replacing Fixed Interest Bonds' and filed as an essay on 'Wealth Bonds' is mandatory pre-membership reading.
The mandatory studies are to bring prospective new members up to speed, and to ensure that members do not waste the time of other members by straying from the current topic.
CURRENT SUCCESS
The ILS Mortgage model, and a variant for commercial loans, together with Wealth Bonds, can remove two root causes of financial instablity. The ILS model can stabilise up to one third of an economy, (the consrtuction sector and related industries), taking out boom and bust that accounts for two thrids of all recessions. Replacing fixed interest bonds with Wealth Bonds can remove over US$50 Trillions worth of financially unsafe and unstable savings, reserves, pension funds, and debt world-wide. Cutting risk cuts costs for all concerned. The provision of safe reserves is essential to an orderly economy.
Governments that borrow using Wealth Bonds will not have to pay a risk premium on their debt unless they are downrated below AAA by the rating agencies; and they will not have to constantly roll over their debts every year. Wealth Bonds can be long term as well as cheap and affordable, but this is not intended to encourage excessive debt sovereign (government) debt. Later in the course, the group will look at a new way to reduce the ratio of 'debt: GDP', both private debt and Sovereign (government) debt. All members can contribute and all need to be critical of any errors that they see in draft papers that are generated, prior to publication.
LIBERATING MONETARY POLICY
Taken together ILS Mortgages and the introduction of Wealth Bonds can remove the biggest obstacles faced by central banks when changing interest rates. The third obstacle is the unwanted effect on the value of currencies. When interest rates are raised to slow an overheating economy it does not mean that the currency needs to rise in value so as to make exporting less profitable and exporters less competitive. But that is what usually happens.
ANONYMOUS
The above (and below) reading is intended to bring you up to speed before joining. Members can be anonymous if they need to avoid the appearance of representing their government, university, business, or other organisation.
==============
Macroeconomic Design
Research and
Development Group
New
Membership’s ‘Need to Know’
CONTACT:
Group
Administrator: Edward C D Ingram
– He has the power to add and to remove members for repeated
violations of the code of conduct.
Admin
WhatsApp call number: +263 772 900 000
Principal
Researcher: As above: E C D
INGRAM.
1.
GROUP OBJECTIVES
2.
SOME KEY POINTS
3.
GROUP METHOD
4.
LIST OF TOPICS
5.
THEOREMS IN USE
6. CODE OF CONDUCT
1. GROUP OBJECTIVES
1.1 To
further develop this new science as a group activity, and to lobby governments to learn and implement any one of the recommended changes. There are nearly 200 governments to choose from. Just one will do to get us started.
1.2 To
teach the
new science to those members that wish to learn rather than to
contribute – but having said that, there is no such thing as a
stupid question. If you did not understand, speak up because you are
likely to be one of many.
1.3 To
create a better world economy by adding this new knowledge for the
benefit of governments and financial institutions. Everyone should be better off
because, in a complex economy /
system doing one thing wrong causes many problems all over the
system. If we can identify the key wrong doing and change
that one thing, many previously intractable problems and unwanted symptoms simply valnish as if they had never existed. Everyone benefits. This is a powerful science.
2. SOME KEY POINTS
2.1 It
has been observed that the world’s economies are unsafe for savings
and for borrowing / lending and that there are other financial
instabilities that cause concern not only to this group but to the
general population of economists, policy makers, and other practitioners.
2.2 With
that in mind we seek to find root causes and ways to remove them
regardless of the impediments that may lie in the way. There are a number of financially destabilising traditional
practices, rules and regulations, and taxation
practices. All of these are man made. Any of them can be changed.
3. GROUP METHOD
3.1 It
is important to have a list of topics for research and discussion and
to avoid wasting the time of participants by dealing with unlisted
topics or topics that are not on the current agenda.
3.1.1
Exceptions are made when there is a particular problem being
experienced in a particular nation and where the knowledge that we
have so far gained as a group that might currently
be used
by
that nation.
3.2
Topics will be dealt with one topic at a time in
the order given in #4.
3.3 When
a topic has been completed or taken far enough to be completed /
tidied up later by practitioners, a paper on that topic will be
circulated to all members that have subscribed to the Newsletter. At
present we are waiting for the IT skills needed to issue a
Newsletter. Offers are needed. For
example:
3.3.1
There are some technical problems to understand on how to create the
Newsletter so as to avoid being spammed, and to allow members to
subscribe and to unsubscribe. If you know what needs to be done
please let Mr. Ingram know.
It’s
a New Science in Economics, Banking, and Finance
4. LIST OF TOPICS
1
“Explaining the ILS Mortgage Model for Housing Finance” –
completed as a You Tube Video of 22
minutes. It is available through a search for that title on You Tube.
It is not professionally created but the information is there. The
key facts are seen at the end.
2 Wealth
Bonds – Replacing Fixed Interest Bonds – completed as a six page
document. This is available on request.
Prospective new members need to make themselves familiar with the
topics already covered. Namely, the above topics1
and 2.
Between
them these two topics / proposed solutions can clear away much of the conflicting
signals faced by central banks when they are managing interest rates.
The usual pile of damage to businesses, to lenders, to savings, and
the behaviour change caused by that damage and that usually further damages the economy will be almost insignificant. That leaves the currency instability issue which
we are currently discussing.
3
Explaining how the above two changes can facilitate Monetary Policy.
This is fairly obvious. No paper has
been issued on this.
One may be issued later. On request we can assist any government with steps to take if their goal is to implement these proposals or to normalise interest rates. See this link for further information on dealing with super-low interest rates.
4
Currency Stability – can we
include the
use of market prices to automate the best use of resources? See
principle #5.1
below.
MANAGEMENT INSTRUMENTS
Here we borrow from well understood principles used by engineers that design stable and well managed complex systems like aircraft for example.
5 Money
is created by Central Banks
6
Central Bank customers are National Treasury and Commercial Banks
7
Commercial Banks can multiply deposits putting new money into circulation. Bad idea.
8 Lend
deposits only once – Now there’s a shortage of money.
9 Hold
Deposit auctions to fill the gap – Optimise the use of credit using
market rates.
MANAGING
THE ECONOMY
10 The
right amount of money – manages inflation.
11 Where
to release new money – Banks lend it – People spend it –
Governments spend it.
12
Manage the Debt / GDP Ratio.
13 Have
the right amount of Forex.
FRAUD
AND MONEY LAUNDERING
14 NICHe
– National Investment Clearing House: Enabling secure, fast, free,
money transfers. Minimal administration. No fraud. Once in, no
further repeat money laundering questions are needed. The source and
the destination of the investment monies are both known. This can
save the world a few trillions p.a. in administrative costs, fraud,
and delays.
NOTE:
Most of the research work has been done on the above-listed topics.
But the ideas need to be
examined and accepted or modified by the group. The most
under-researched topic is the currency instability one.
5. THEOREMS IN USE
5.1
OPTIMISING THE USE OF A RESOURCE
Using
free market clearing prices. The clearing price is the price at which
the supply is just enough to satisfy the demand. No resources are
wasted making more, and no one is kept waiting. When there is a
limited quantity of something, for example credit, or minerals,
people (which includes business people) compete for the use of it.
Those that can provide end products that are in great demand can sell
those end products at a price that is profitable. Those are the
suppliers that are the
most able to pay the market price for the credit and minerals or the
scarce component parts that they need. Then they are able to provide
the world’s consumers with the devices, food, and services and
other end products that they most want to spend their money on. Those
others that do not wish to, or cannot afford the market price, will
not acquire much, if any, of the resource in question.
5.2
INTERFACE WITH GOVERNMENT
The role
of governments is to pass laws and regulations that get them elected,
having decided what resources they need to capture and how much
revenue they need in order to do so. This is their role. They may
interfere with market forces but there is always a price. That is why
they hire experts to advise them on cost-effective governance.
5.3
COMPLEX SYSTEMS THEOREM
5.3.1 In
any complex system such as an economy, an aeroplane, a production
line, or a human body, if any one part of the system is causing
problems, the entire system is at risk and may be affected. Symptoms
can occur in many places. Addressing the symptoms can produce a new
set of problems. It is important to remove the root cause so that all
of the many unwanted and harmful symptoms just disappear as if they
had never existed. This is what we
are doing. It explains why people are frequently astonished at the
benefits.
5.3.2
Where policy makers go wrong is that they fear to deal with the root
cause because they do not know what it is; and they are afraid of the
social and political fall-out that is happening from the symptoms.
They need to be seen to be dealing with those symptoms even if it
means taking from ‘here’ and giving help ‘there.’ This is
costly because it leaves the source
problems in place and it creates
more uncertainty than there was before among those most likely to be
the losers from government interventions.
5.3.3
Our task as a group is to identify the root causes and to assist
governments with getting the needed changes implemented. There are
two main problems: a) depth of knowledge b) the courage to make such
changes. Try small steps or small experiments.
5.4
CONFIDENCE
Making
the best use of a nation’s resources requires investment
in production. Investors are looking to make profits, often some
years ahead, after the initial
investment has been made. They need
financial stability so that they can have the confidence needed to
invest. It is the same with people: if their savings and jobs are at
risk they change to self protection mode. They save more and they
spend less. Providers lose the profits they were hoping for. Everyone
is worse off. Financial stability is what we are aiming to create.
5.5
DESIGN PRINCIPLES
When
engineers are asked to create an aeroplane the first task they face
is to design the airframe in such a way that it can more or less
automate its responses to changing wind and other atmospheric
conditions. Trainee pilots are told, “If you are scared and do not
know what to do, let go of the controls.” The plane will usually
correct itself. That is not always the case but it is the way that
the airframes are designed to behave as far as possible. This is also
the way that we think about macroeconomic design. If the financial
framework is right there will be little left for the ‘pilots’
(managers of the economy) to do. Most responses will be automated, as
happens when market forces decide who should get the use of scarce
resources, but always allowing government to intervene when there is
a social need involved.
5.6
ACTING LIKE CIVIL SERVANTS
As a
research group we must stay out of politics and work as if we are
civil servants, acting to advise governments on the best way to go.
5.7 One
way to gain the confidence needed is to bring government officials
and ministers into this WhatsApp Group in their private capacity.
They may do so anonymously if that helps.
6. CODE OF CONDUCT
6.0
The most common problem we have is that a minority of members treat
this as a chat group. It is not a chat group. It is for organised
researches, teaching, and learning. So STAY ON TOPIC. Treat it as a
classroom where you may both learn and contribute. As in any
classroom, topics are taken in the same order as the text book – in
this case in the order of the list of topics given above in #4. The
aim is to create a new model or new options for the structure of the
world’s economies. Such new models inevitably behave differently
from economies with which we are all familiar because they have new
rules, regulations, and taxes, and sometimes new structures. If we
have done our job, all of these will be designed scientifically,
based on well accepted principles, and in ways that aim to create
optimum output, minimal risk to participants, and a minimum need for
interventions.
6.1
GOVERNMENT INTERFACE
6.1.1This
is a research and development group. It does not interfere in any way
with government functions or rights. When a government decides to do
something else, that is their choice. As already stated, we stay out
of politics. We do not deal with corruption.
6.1.2
The group works in the same way that civil servants do. Our
members include civil servants. We are there to fact-find and to draw
the attention of the world’s governments to what matters through
our members and our publications.
STAY
ON TOPIC
6.3
Members that repeatedly deviate far away from the topic under
discussion or repeatedly change the topic waste time. That irritates
key members of the group. Because of this, offenders may be removed
from the group by administration. We have some highly respected
academics and others in this group. They cannot afford to waste their
time. We need to keep them.
6.3.1
A CHAT GROUP - The
suggestion has been made to create a separate chat group for those
members that want to chatter on the sidelines.
Those that are interested in this idea may ask Edward to form that
group for members.
6.4
Be Polite.
6.6
Explain any abbreviations that you use such as IMF – International
Monetary Fund.
6.7
Provide evidence for any assertions that you make.
6.8
Try not to make multiple points or address more than one issue in a
single sentence or even in a single paragraph. Members
will get confused and the discussion that follows will be less
productive.
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