This is the first of seven presentations as set out in our online brochure, SEVEN DAYS TO SAVE THE WORLD. Here we explain how inflation is more effectively curbed with a ‘zero’ bank rate that is permanently stable and can cause no shock to the business community in relation to previous borrowings. The new model has a more powerful and more immediate mechanism for controlling inflation, which also averts recessions before they take hold. A side-benefit is that the mechanism facilitates a more competitive exchange rate and can distinguish between the different regional needs within countries and the different national needs of countries as diverse as Greece and Germany.

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THE NEW ECONOMIC MODEL

It’s taken 317 years of evolution - beginning in 1690 - and 23 years of development that ended in 2007 when the Northern Rock went bust. (CLICK)

IMPORTANT DATES IN THE DEVELOPMENT OF THE ENIGMA – get the full presentation if you’d like to know their significance.

1690 1694 1844 18481907 1910 1913 19181929 1936 1944 19491972 1976 1979The jet-engine of economics

2007

This presentation reveals the first fundamental flaw in our existing economic model . . . and the way to eliminate it, at a stroke. (CLICK)

NOTESIn the beginning was the classical economic model. It wasn’t designed, it evolved. Early economists such as Adam Smith then tried to explain the way it functioned. The model was assumed to have just one broad river of money serving the entire economy, opposite. (CLICK)

Keynes’ revolutionary idea is taken further in the Enigma where the two streams become four. This provides more effective control of the money supplied to each stream and greater control of any inflation there. (CLICK)

Then came a revolutionary idea in the Great Depression when Keynes visualised the ‘architecture’ of the economy with not one river of money but two separate streams, serving our separate needs for investment and consumption.

INVESTMENT CONSUMPTIONFA

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FINANCIAL ASSETS

When share prices rise there must be more money flowing in the financial asset stream for transactions to take place at higher prices. That’s inflation, but if you own the assets you celebrate.

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PRODUCTIVE ASSETS

When prices rise for factories and farms there must be more money flowing in the productive asset stream to accommodate the higher prices. That’s inflation but if you own the assets you celebrate.

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DOMESTIC ASSETS

When house prices rise there must be more money flowing in the domestic asset stream for transactions to take place at the higher prices. That’s inflation but if you own the assets you celebrate.

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Assets, assets, assets. Inflation, inflation, inflation. Celebration, celebration, celebration. (CLICK)

CONSUMER GOODS

Only inflation in the consumer stream is targeted by central banks. The way they deal with consumer inflation is a fundamental flaw in our existing economic model – thanks to the intellectual fraud perpetrated by Milton Friedman.

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NOTES

Central banks have only one instrument for curbing inflation in the consumer goods stream - the bank rate.

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Note how the bank rate hovers over all four streams, so it can’t target the consumer stream alone. That’s why economists refer to the bank rate as a “blunt instrument”. It’s blunt also because it’s impact takes up to 18 months to be effective . . . resulting in interest rates being adjusted up or down by small amounts, often at monthly intervals.

Knowing that the instrument is blunt, why not sharpen it? Would a surgeon go into his operating theatre with a blunt instrument? If so, how many lives would he be allowed to ruin before being charged with a criminal offence?

Three lives, or three million?(CLICK)

NOTES

When central banks need to curb inflation they raise the bank rate. The primary way in which this is effective is by its effect on existing mortgage interest payments.

To save the people from paying higher prices in the shops, the banks and building societies are allowed to put their hands in the pockets of home buyers to remove some of the money that they would otherwise spend. It’s a form of state sanctioned theft, and so wicked is this system of theft that it results in people falling into arrears with their mortgage repayments so that their homes are repossessed and entire families are broken by the experience. (CLICK)

A sharpened instrument of monetary control would curb consumer spending without state sanctioned theft and without putting homes at risk of repossession. (CLICK)

%A savings rate regulated by the central bank (SAYE system) curbs spending as each worker accumulates a second pension.(CLICK)

The bank rate is held steady so that mortgage repayments don’t rise and become unaffordable. (CLICK)

The ENIGMA MECHANISM ensures homebuyers save money on their mortgage repayments and accumulate a second pension with the money that would otherwise have been stolen. The deductions by SAYE are credited to their personal account at a new national pension bank and then invested in the PA stream via the FA stream. (CLICK)

“The only cure for inflation is to reduce the rate at which total spending is growing.”

MILTON FRIEDMAN

The Enigma reduces the rate at which spending is growing but simultaneously increases investment to increase the rate at which total supplies are growing, which is the right way to curb inflation. (CLICK)

WORKERS’ MONTHLY SAVINGS circulate from the National Pension Bank (NPB) into the FA stream and then into the PA stream to provide capital for the expansion of supplies, so that all savings are deployed to create new jobs . . . commensurate with the removal of spending from the CG stream.

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As inflation is now curbed by savings the bank rate can be reduced to the rate at which money loses value due to inflation . . . REAL-ZERO. Savers can deposit funds with the NPB and enjoy liquidity and an interest rate based on the dividends received by the NPB from its investments. (CLICK)

REAL ZERO

AND NOW . . . THE HOLY GRAILOF ECONOMICSRECESSIONS ARE AVERTED by regulating the ‘effective’ money supply, in the first instance by reducing the rate of saving, to zero if necessary, to increase consumer spending. (CLICK)

If the threat of a recession persists even when the rate of monthly saving is reduced to zero the system can be thrown into reverse. A refund rate can then be applied, to boost consumer spending.

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Note that the refund rate can apply to new workers who have not yet accumulated any savings against which to draw. They will probably be at the start of their working life and will have time enough to offset current refunds against future savings. (CLICK)

Savings and refunds are both managed by the SAYE system and are based on payrolls. It means that different rates can apply regionally, according to regional needs. For example, refunds in northeast England could operate simultaneously with a savings rate in southeast England. Likewise, Greece and Germany could apply the rates appropriate to their national needs. (CLICK)

%THE FIRST ENIGMA PRESENTATION

Please pause to fully absorb all the information on this slide before going to the final slides. (CLICK)

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%REAL ZERO

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THE NATIONAL PENSION BANK (NPB) is now seen to be the means by which the ‘effective money supply’ (what people spend) is regulated to “reduce the rate at which total spending is growing” – as prescribed by Friedman. Simultaneously, the reduction in consumer spending is transferred into investment spending, to boost supplies by improving productivity. The ‘effective money supply’ is thereby stabilised and the trend towards full employment proceeds uninterrupted. As labour becomes scarce wages are driven up, but are also more affordable due to the rising levels of investment in labour saving technology. (CLICK)

The levers of economic control now shift from the banking industry to the pensions industry; from the money lenders to the money savers; from the banks that steal to the people who save.

A powerful new institution is now able to flex its muscles for employment and industry, operating in the private sector yet with a different ethos in its strategy.

And so, the great mass of working people become by sheer weight of numbers the largest group of shareholders, together owning and controlling more and more of the nation’s industries and receiving their rightful share of the profits into their pension funds.

Second pensions and early retirement now beckon for all – an added force in our quest for full employment and high wages, driven by high savings and high investment.(CLICK)

In 2010 the workforce in Britain is 30 million strong with some five million more likely to take up employment when well paid jobs become available. Our goal must be 35 million workers, all highly paid due to labour scarcity and high productivity – which means an end to immigration in order to maintain labour scarcity. (CLICK)

HIGH WAGES, driven by labour scarcity, will be made affordable by high investment in labour-saving technology, which in turn will be made possible by an abundance of savings and a steady bank rate at real-zero. The high savings will be all the higher for the mortgage interest rate being so much lower. Taken together, there’s no reason why annual savings shouldn’t be around £3000 per worker . . . delivering some £90 billion per year into the new National Pension Bank.

From this virtuous circle of high wages, high productivity and high savings the workers of the world become capitalists one and all. As they also get to own and control the fate of their industries, the ‘public ownership’ of the means of production, distribution and exchange is given new meaning . . . and Karl Marx will smile in his grave as Friedman’s nonsense is now made meaningful.

And finally, the money lenders whose shares are also traded on the stock exchanges will find their gambling days ended, not by regulation but by the millions from whom they’ve been stealing, with impunity, for so long. Everything will unfold as it should.

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AND THE BEST NEWS OF ALL . . .

Project Messiah is a plan to deploy ‘elegant intellect’ to lift the burden of all sovereign debts, at a stroke on Christmas Day.

No forgiveness of debt will be required and all outstanding interest will be paid.

Every country is being invited to a conference in Rio de Janeiro in December 2010 where the plan will be revealed for the delegates to endorse.

On Christmas Eve 2010 THE RIO DECLARATION will give out the good news and in the morning the world will awake with its burdens lifted, as a gift to every child on Christmas Day.

This too is the EnigmaFor more information please email colin@projectmessiah.org.uk