M
morganist
Originally published at morganisteconomics.
Copyright © 2021 Peter James Rhys Morgan.
see the link below.
http://morganisteconomics.blogspot.com/2021/07/dealing-with-inflation-in-america.html
The original article has a report in a scribd document below it that displays the successful outcome of pension economic control in the United Kingdom. Look how much the house repossession rate dropped when pension economic control was used.
Dealing with inflation in America.
By Peter Morgan.
11:52 15/07/2021.
The rate of inflation in America rose to 5.4% in June, which is the highest rate since 2008. When inflation increases the cost of living rises, business operating costs appreciate and the purchasing power of investment returns falls. High rates of inflation can lead to poverty and economic downturn. Usually inflation is controlled by using either an interest rate increase or a taxation increase to dampen the demand for goods and services reducing the overall price.
Interest rate increments increase the rate of saving, decrease the rate of borrowing and raise the instalment payments of outstanding loans. This can put pressure on borrowers, businesses and homeowners who may struggle to pay the higher debt instalment payments. Higher rates of taxation can put a similar strain on businesses and private citizens, although it can be more selective than an interest rate increase which can help to reduce the pressure on the economy.
Interest rate alterations are part of Monetary policy, which is the control of the money supply to manage the economy. Taxation alterations are part of Fiscal policy, which is the control of government spending, borrowing and revenue to reach economic targets. Both Monetary policy and Fiscal policy can be damaging to the economy, especially when they are used to control inflation so an alternative method of managing inflation would be extremely valuable.
When public and private debt are high the economy becomes very sensitive to interest rate or taxation alterations. The population is squeezed by the loss of income the interest rate rise or taxation increase creates which can cause insolvency, business failure and the repossession of houses. The consequences of the solutions for inflation may be worse than the inflation itself, but inflation is still a big problem. So can it be managed without Monetary or Fiscal policies?
In the United Kingdom over the past ten to fifteen years the use of pension economic control has led to an ability in attaining the economic targets, that has never been seen before. The increase of pension saving to reduce inflation rather than an interest rate rise or taxation hikes has enabled inflationary control without the consequences, plus pension saving has increased. Reducing the annual pension saving rate also helped to prevent deflation to maintain growth.
Pension saving is a saving mechanism just like the interest mechanism or taxation alterations, which can be used to control inflation and reach other economic targets. Unlike the interest rate mechanism pension saving increases or decreases can be selective and for specific fixed amounts rather than a percentage. This makes pension saving a far more manageable tool for economic control, the money saved is also kept by the pension saver rather than the lender.
Taxation can be selective and also for specific fixed amounts but the money is taken from the person who pays the tax. Increases in pension saving to control inflation which I call 'Pension Priming', enables the population to keep their money in a pension for retirement rather than having it taken away in an effort to control inflation. There is no threat of causing insolvency, business failure or house repossessions, in fact the pension saving increases investment funds.
If there is any risk of encountering consequences due to an increase in pension saving it can easily be avoided by selecting to opt out of the pension contribution increase. In the United Kingdom the annual taxation exempt pension saving allowance was increased to dampen demand and reduce the rate of inflation. Other techniques have been used to reach the same effect, the introduction of mandatory employer pension contributions was introduced in 2012.
I have also put forward some alternative methods of controlling pension saving on a monthly basis in a similar way to how the interest rate is altered on a monthly basis. This would allow superior inflationary and economic control on a monthly basis through the less consequential pension economic control mechanism. There are also cost efficiency savings that support the use of pension economic control in favour of an interest rate rise or an increase in taxation.
When government debt is high any increase in the interest rate will cause the new issuances of government debt to pay a higher rate of return, which will make government debt interest payments much greater. It is much cheaper to increase pension saving marginally to reduce inflation than it is to raise the interest rate, even if there is tax relief on the pension savings. This is just the governmental costs of an interest rate rise, the private sector costs are greater.
If interest rates or taxation rise too much businesses are put under tremendous pressure to be able to make the higher debt interest or taxation payments. This can increase unemployment and cause the economy to enter a recession. Pension saving increases investment funds which can often be used to bail out a corporation or avoid insolvency. Pension funds can be used in certain circumstances to finance corporations and private business entities avoiding defaults.
The evidence of the success of pension economic control in the United Kingdom over the last ten to fifteen years is significant and provides a new avenue for America to pursue to be able to avoid the consequences of an interest rate rise or a taxation hike. The increase in funds the pension schemes would receive from a higher rate of pension saving would support the macro economy and businesses providing further financing, it would also boost retirement income.
Copyright © 2021 Peter James Rhys Morgan.
see the link below.
http://morganisteconomics.blogspot.com/2021/07/dealing-with-inflation-in-america.html
The original article has a report in a scribd document below it that displays the successful outcome of pension economic control in the United Kingdom. Look how much the house repossession rate dropped when pension economic control was used.
Dealing with inflation in America.
By Peter Morgan.
11:52 15/07/2021.
The rate of inflation in America rose to 5.4% in June, which is the highest rate since 2008. When inflation increases the cost of living rises, business operating costs appreciate and the purchasing power of investment returns falls. High rates of inflation can lead to poverty and economic downturn. Usually inflation is controlled by using either an interest rate increase or a taxation increase to dampen the demand for goods and services reducing the overall price.
Interest rate increments increase the rate of saving, decrease the rate of borrowing and raise the instalment payments of outstanding loans. This can put pressure on borrowers, businesses and homeowners who may struggle to pay the higher debt instalment payments. Higher rates of taxation can put a similar strain on businesses and private citizens, although it can be more selective than an interest rate increase which can help to reduce the pressure on the economy.
Interest rate alterations are part of Monetary policy, which is the control of the money supply to manage the economy. Taxation alterations are part of Fiscal policy, which is the control of government spending, borrowing and revenue to reach economic targets. Both Monetary policy and Fiscal policy can be damaging to the economy, especially when they are used to control inflation so an alternative method of managing inflation would be extremely valuable.
When public and private debt are high the economy becomes very sensitive to interest rate or taxation alterations. The population is squeezed by the loss of income the interest rate rise or taxation increase creates which can cause insolvency, business failure and the repossession of houses. The consequences of the solutions for inflation may be worse than the inflation itself, but inflation is still a big problem. So can it be managed without Monetary or Fiscal policies?
In the United Kingdom over the past ten to fifteen years the use of pension economic control has led to an ability in attaining the economic targets, that has never been seen before. The increase of pension saving to reduce inflation rather than an interest rate rise or taxation hikes has enabled inflationary control without the consequences, plus pension saving has increased. Reducing the annual pension saving rate also helped to prevent deflation to maintain growth.
Pension saving is a saving mechanism just like the interest mechanism or taxation alterations, which can be used to control inflation and reach other economic targets. Unlike the interest rate mechanism pension saving increases or decreases can be selective and for specific fixed amounts rather than a percentage. This makes pension saving a far more manageable tool for economic control, the money saved is also kept by the pension saver rather than the lender.
Taxation can be selective and also for specific fixed amounts but the money is taken from the person who pays the tax. Increases in pension saving to control inflation which I call 'Pension Priming', enables the population to keep their money in a pension for retirement rather than having it taken away in an effort to control inflation. There is no threat of causing insolvency, business failure or house repossessions, in fact the pension saving increases investment funds.
If there is any risk of encountering consequences due to an increase in pension saving it can easily be avoided by selecting to opt out of the pension contribution increase. In the United Kingdom the annual taxation exempt pension saving allowance was increased to dampen demand and reduce the rate of inflation. Other techniques have been used to reach the same effect, the introduction of mandatory employer pension contributions was introduced in 2012.
I have also put forward some alternative methods of controlling pension saving on a monthly basis in a similar way to how the interest rate is altered on a monthly basis. This would allow superior inflationary and economic control on a monthly basis through the less consequential pension economic control mechanism. There are also cost efficiency savings that support the use of pension economic control in favour of an interest rate rise or an increase in taxation.
When government debt is high any increase in the interest rate will cause the new issuances of government debt to pay a higher rate of return, which will make government debt interest payments much greater. It is much cheaper to increase pension saving marginally to reduce inflation than it is to raise the interest rate, even if there is tax relief on the pension savings. This is just the governmental costs of an interest rate rise, the private sector costs are greater.
If interest rates or taxation rise too much businesses are put under tremendous pressure to be able to make the higher debt interest or taxation payments. This can increase unemployment and cause the economy to enter a recession. Pension saving increases investment funds which can often be used to bail out a corporation or avoid insolvency. Pension funds can be used in certain circumstances to finance corporations and private business entities avoiding defaults.
The evidence of the success of pension economic control in the United Kingdom over the last ten to fifteen years is significant and provides a new avenue for America to pursue to be able to avoid the consequences of an interest rate rise or a taxation hike. The increase in funds the pension schemes would receive from a higher rate of pension saving would support the macro economy and businesses providing further financing, it would also boost retirement income.
