admin
Prosper Ndlovu Business Editor
BULAWAYO-based macro-economic design expert and ex-financial advisor, Edward Ingram, says the country needs to redesign its economic architecture to achieve growth.
Like all other economies, he said, the country’s model is fundamentally flawed and believes some of his proposals could change Zimbabwe’s banking industry and the performance of the economy in general.
His book “Restarting Economics — With New Financial Architecture”, to be published soon, captures some of his propositions in detail.
Ingram said the economic architecture, (the way things are done by convention and by law), is interfering with the ability of economies all over the world to adjust, and to keep things humming along nicely. He said while Zimbabwe had a bad reputation on money printing, this does not mean that the present system should be allowed to continue.
“Every nation has a problem with it. The bad practice of allowing banks to create almost unlimited amounts of money has to end. Then interest rates would be free to find their own market level,’’ he told Business Chronicle.
“The stock of money used in exchange for goods and services should be managed centrally by a money supply authority so as to keep the money stock for lending and for transactions under firm control and to ensure that the nation always has enough.”
Ingram said he has shared some of his suggestions about money creation with students from the National University of Science and Technology and these have also been discussed in the UK parliament.
“The way that banks lend and recoup their loans, and the way that taxation interferes is unsafe not only for borrowers but for lenders and property values as well,” he said.
The 75-year-old economic analyst said the Ingram Lending and Savings (ILS) Model, named after himself, would control the rate of wealth transfer between lender and borrower, making every participant safe.
He said a similar model if used for government borrowing, would safeguard the wealth (not the money) in savings and pension funds among other things.
“Doing that is the cheapest way to borrow”.
Ingram also said the way that the stock of money is allowed to alter when foreign investors buy shares and bonds also creates a lot of instability.
“Foreign investors should buy into our finite stock of money and leave their own stock of money unchanged,” he said, adding this could be done by a swop.
“They get some of ours and we get some of theirs. We will not create more money just for them. That is the source of a great deal of imported instability in the stock of money, and in the exchange rate of all currencies. It’s extremely expensive to try to stabilise such currencies when this system is used. And it’s the cause of currency price wars,” he said.
Ingram said: “If these fundamentally important changes are made, it will enable the economy to self-adjust. The economy will be financially stable without any significant management.”
Ingram invented all of these ideas but he is no longer alone.
“Two of them are now being proposed by others and the money creation idea was debated in the UK Parliament last Thursday. It was much liked,” he said.Excerpts of the book are already generating a lot of interest online among economics’ scholars and are being reviewed by academics at reputable institutions.
onlinemedia
derick.khumalo