THE INGRAM SCHOOL OF ECONOMICS
By Edward C D Ingram
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Updated 22nd March 2017
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There are two key parts to the Ingram School's model for the real economy:
#1 The financial and economic framework creates enormous instability, scares people, re-distributes wealth, complicates everything, and makes it impossible to manage the economy in a simple and effective way which otherwise can be done.
#2 The management of the economy through collaboration between government, monetary policy, and treasury taxation after the size and various roles of the government sector has been decided.
After they had seen some cruder but related ideas experimentally working in Turkey, I was approached by Old Mutual on the recommendation of Graham Hollick, their ex CEO, to make a start on this using my latest refined lending and savings models. The venture was not started due to the regulatory and taxation issues. But it could have transformed all of their financial products from pensions to managed funds and home loans and commercial debt, making them all safer, cheaper to administer, and easier to market. Safety sells.
We need thousands of people to be trained in understanding this and made fit and ready to implement the necessary changes at ground level. And we need to train policy-makers at the highest levels in the theory so that it can be seen to be academically sound, fully practical and set up working committees on the practicality of implementation. At the same time those attending the course will help to shape it and to be a part of the developments which will shape the future. They will be proud to have made that contribution to the welfare of mankind. This is not a one-way exchange of information.
The key prices in all fours of the major units of the world's economies (A to D below), are not being allowed to adjust to offset the falling value of money. If they could adjust, that would optimise the use of all of the resources in all of these key units of the economies of nations. Only goods and services seem to be relatively free to respond to all market forces, and only then when monopoly power is sufficiently restricted.
A. Financial savings and loan contracts are sheltered from market forces, as in fixed interest maturity values and loan servicing cost; or made to behave differently by the formulae used to calculate home loan repayment costs, for example. The same applies to commercial loans. Everything is unsafe and unstable.
B. Currency markets are unsafe because they cannot separate the value of the currency for trading purposes from
C. The prices for international capital exchanges should take the volatility without affecting the value of the currency for trading purposes. Little work has been done on regulations which could separate the two markets in currency by minimizing arbitrage. This damages half of world's pricing studies, abruptly ruins multi-billion investment plans, and heightens international tensions.
D. Interest rates are manipulated by central banks. Instead the stock of credit should be managed.
#1 When prices are not able to respond to market forces, rising as the value of money falls as well as adjusting to all of the usual things, they become too cheap and unable to balance supply with demand: Optimum use of the resources involved cannot be achieved and harmony between the four units of the economy gets destroyed.
#2 It re-distributes wealth and destroys good financial plans bringing about a loss of confidence, reduced investment, and behaviour changes. It can undermine the safety of governments and their leaders in person.
#3 It generates complexity - a generation of pricing and demand instabilities, each generation of instabilities creating the next generation in a cascade which includes new legislation and other interventions which also have adverse effects as well as benefits.
#4 It becomes extremely difficult for the best economists to create reliable economic models, to prove what is causing what, and to find reliable correlations, or to agree in any way about how to get a grip on the management of the economy.
#5 The Gini index rises as knowledgeable people with power take advantage.
TO REPEAT WHAT WAS WRITTEN EARLIER: The Ingram School has been set up in order to create an international working study group of policy-makers and practical people at every level with all of their diverse experience where everyone can contribute ideas and challenges and end up with a university certificate at the end of the course. This was agreed after the university in question had become familiar with many of the ideas over a period of years, starting in 2007/8.
PART 2 OF THE COURSE on the management of the economy is contained in Modules 3 and 5 which deal with the collaboration needed between government in setting the goals of the government, the treasury in collecting revenues, and the central bank or other body charged with exercising control over monetary policy.
The proposals put forward for the discussion, and subject to change as a result of proposals from the participants, benefit from Mr. Ingram's in-depth thought experiments and extensive reading of the work of very influential other economists including the very latest theories being circulated and discussed. Extreme care has been taken over the formulation of the assumptions and the logic which follows from that.
Lerner and J M Keynes, David Hume and Adam Smith, Warren Mosler, Richard Werner, Lord Turner, Bill Mitchell, the Monetary School, The Austrian School, Robert Shiller, along with other famous economists and their schools of thought.
In addition to this Mr. Ingram studied the dynamics of systems and systems control as an engineer, so that knowledge is forms a part of the course.
He also warned people at the Bank of England and the USA about the forthcoming financial crisis from around 2004 onwards. He warned Zimbabwe about the coming hyper-inflation and was privileged to witness that experiment at first hand. He saw how Old Mutual and others including the asset management arm of Kingdom Holdings which he had personally created, managed to survive. He has incorporated lessons learned into the proposed financial contracts for institutions. Few people get that kind of insight at close quarters.
Mr. Ingram is not employed by a university with the pressures to publish multiple papers per annum. He has been able to study all of the areas concerned in depth and in discussions with others both on the internet and in high powered review groups face to face over a period of decades. It has been found that it is necessary to cover all units of the economy before people are satisfied because each interacts with the others. Creating such insight, including the need for a unifying theory which brings everything together, is not something which other academics have the resources of time and energy and the unstinting persistence without reward or payment, to do.