24 October 2011

What is Macro-economic Design?

Contributed by Edward C D Ingram
Macro-economic Design is a new branch of economics that I am pioneering. A number of lecturers have asked if they may teach the subject to their undergraduates. It has a lot of support and offers a new way forward in the management of an economy. It may offer an immediately better way, or a better guideline, for managing the various economic crises that we are currently dealing with. All models of the economy carry inbuilt assumptions. Some of these assumptions can be wrong or they can misguide us if the fundamentals are examined - a different economic structure would not behave in the same faulty ways.

Thus, most economists look at how the economy behaves and less attention is paid to how the design of the structure of the economy governs its dynamics. That is what this science is all about. It is based upon the same principles that an engineer would use to make your car easy to drive and comfortable to ride in over a bumpy road.

Background
I originally asked myself why the Housing Sector is more unsafe than other sectors. And I wanted to know why I was asked to pay a monthly sum for my mortgage that was unstable and may go out of my reach.


When I researched these questions I found no good reason why my mortgage should be designed like that. I found that I could design a better system called the ILS System (Ingram Lending and Savings System) and I was met by a panel of experts that needed to be convinced.

When I finished convincing them that my ILS System would not be so powerful as to disturb the economic balance and put other forms of borrowing in jeopardy because of its power, I made further suggestions to keep everything in balance. In this process I discovered that I had created a whole new model of the economy - a model that was able to adjust much more easily to impacts of various kinds than the one that we have got now.

At this point my panel endorsed my ideas and recommended that they should be tried in practice. I have got many more people interested since then and am trying to write the book, but that is a long and difficult task for which I am not well equipped. In the meantime I have summarised my finding on my blogs and explained the options that it opens up.

Exciting Benefits
I hope that the world will take this new model for economies on board because it will make financial life a whole lot safer, less 'bumpy' and easier to manage. Many of the adjustments that are difficult to make currently would happen automatically in my new model.

Sovereign Debt
In fact, based upon that model I have proposed a solution to the current recession and the Sovereign Debt Crisis that would reverse much current thinking and start by stimulating economic growth right now. It could significantly dilute the desire and the need for a Federal Europe, leaving each nation with the common currency but enough flexibility to manage their own economic growth within the system. The strategy would make use of a restructured Sovereign Debt to stabilise our own wealth and retirement plans rather than repaying the debt. Doing this releases governments to reduce taxes and expand out of the problem.

----------------------------- Reading Links  -----------------------------

All readers wanting to study and learn this new subject should start on the Home page of the macro-economic-design site and work their way through from left to right if they are to get the most out of the two sites.

The Sovereign Debt Solution is given here, but readers need to study the whole subject to ensure that they grasp its power and simplicity.

http://macro-economic-design.blogspot.com/                  Macro-economic Design Blog Home
http://edward-ingram.blogspot.com/                    Practical Outcomes Blog - Home

MACRO-ECONOMIC DESIGN Pages

Practical Outcomes Pages



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