ON THE IMBALANCES OF ECONOMIES
By Edward C D Ingram
There are many imbalances to be found in the world’s economies which can be obvious and long lasting.
In some cases those imbalances can cause a rapid change when they snap. In all cases those imbalances cause concern, uncertainty, risk, and reduced economic output.
This paper investigates how and why the financial framework, customs and methods, used by the world’s economies, are the cause of the major imbalances.
There are ways in which all of the following costs, prices, and values get distorted by the financial framework:
#1 The investment value of debt, and the cost of debt repayments, (both), across all financing sectors including: private, housing, business, and government debt,
#2 Interest rates (a price)
#3 The value of international currencies
Because none of the prices and costs in these three world sectors is free to self-adjust to changing levels of supply and demand, this creates multiples of multiple, inter-locking imbalances across the entire economies of the whole world, adding costs of risk and destruction, and impeding output and employment levels.
The traditional approach to these problems is to use or create an instrument to assist the re-balancing process. But each such intervention creates another imbalance somewhere else. This adds to the uncertainty – what will policy-makers do next? There are not enough instruments to fix the problems. .
The result is excessive slowdowns and a poor business environment which impedes new ventures and the best use of capital. Together these factors may be costing the world between 1% and 2% of its total economic output over a period.
The full paper is being drafted - read it here and should be available shortly for publication in a major academic journal.
Any volunteer editors and peer reviews are welcome.
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