Welcome to Buoyant Economies 

Many economies are experiencing slow rates of economic growth, high unemployment, rising domestic and foreign debt and high rates of inflation.  

This site seeks to diagnose the cause of the problem and present remedies.  It is based upon the author's experience as an economist. This is a work in progress. 

The following is a summary of the material on this site together with links to the pages:

• Overview considers the basic monetary principles related to economic growth and foreign debt.

• An brief anatomy of the economy uses the computer as an analogy for the structure of  economies.

• Money: a means of recording entitlements and obligations considers the traditional forms of money and explains the role of money in recording entitlements and obligations.

• The quality of money explains how the way money is created has an effect upon the economy. This helps us understand some of the problems in our economies.

• Money and Inflation derives an equation for inflation that links the money supply to real output in the economy;

• Australia: Money and Inflation considers the relationship between monetary growth and inflation in Australia.

• Technicalities of the Monetary System discusses the theoretical explanation for why bank credit causes current account deficits and why the solutions presented in the Optimum exchange rate system and the Guided exchange rate system bring about current account balances.

• Formula for the current account balance explains mathematically and diagrammatically how the current account balance is determined.

• Money and unsustainable debt considers monetary growth and the associated domestic and foreign debt and compares it to the relatively slower growing national income, to reveal that eventually an economy may not be able to service its debt levels and so experience a financial crisis.

• Impact of the floating exchange rate system on debt analyses how and why the floating the exchange rate system came into being and led to an increase in foreign debt amongst many economies.

• Impact of the floating exchange rate system on employment and growth considers how the floating exchange rate system has affected wages, unemployment, exports and imports.

• The Growth of Debt and Loss of Income in America considers the relationship between bank credit, the exchange rate, foreign debt, slow economic growth and high unemployment.

• Bank credit, interest rates and debt considers the effectiveness of interest rates as the economy becomes saturated with debt.

• The Great Financial Injustice compares impact of deregulating the exchange rate and floating the exchange rate with the fraud that led to the global financial crisis.

• The Free Market Monetary Crisis considers the economic factors that have brought about the monetary crisis among "free market" economies.

• Globalization of Trade uses an analogy to explain the effects of globalization on industries supplying the domestic economy.

• The Demise of Australian Industry provides links to articles about Australian businesses that are suffering because the exchange rate system is delivering inappropriate import prices.

• Alleviating poverty with economic growth describes policies for sustainably raising the circulating money to raise incomes to alleviate poverty. 

• "Safe mode" for the economy proposes a series of steps that can be taken during a monetary crisis to put an economy onto a stable and sustainable footing.

• The guided exchange rate and liquidity system provides an outline of a variable exchange rate system that ensures balance of payments stability and allows the central bank to influence the exchange rate and the growth of liquidity to provide exchange rate stability and economic growth.

• Macro-economic model provides a simple macro-economic model that can be downloaded and demonstrates the effect of the floating exchange rate system and the optimum exchange rate system on the economy.

• A new European Monetary Union proposes a monetary model for economic stability and full employment for Europe.

• Eine Neue Europäische Währungsunion schlägt einen monetären Modell für die wirtschaftliche Stabilität und Vollbeschäftigung für Europa.

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  The causes of the 2008 credit crisis considers the economic history that led to that financial and economic disaster.

• Free trade considers the effect of protection of the monetary system on the manufacturing.

• Understanding the float explains the monetary effect of the floating exchange rate system on debt and the performance of the economy.

• Economic power and military power considers the use of economic policies as a military weapon.

  

• Stock Market Pressure Index identifies a relationship between monetary growth and the current account deficit which provides an indication of the level of investment in the stock market.

• On the psychology of economic incompetence considers the difficulty that people have in dealing with unexpected information.

• Community currency describes a monetary system for a small community.

• Letters provides copies of letters to the editor of the Australian Financial Review and to Ian McNamara on Australia All Over.

• Australian GDP per capita - chart

PAPERS IN PDF FORMAT

The following is a list of papers available in PDF and word format. The first 3 were presented at the Australian Economic Society Conference in Adelaide in 1995. (Note that these are large files and they may take a while to download.)

1.     The failings of monetary policy in Australia (pdf 720 KB)

2.     The failings of the floating exchange rate system (pdf 624 KB)

3.     An introduction to the optimum exchange rate system (pdf 243 KB)

The following paper was presented  at the Australian Economic Society Conference in Canberra in 1996.

4.     Floating exchange rates and sunken economies (pdf 693 KB)

The following paper was presented to a conference of Post Keynesian Economists in 1999 in Knoxville Tennessee.

5.     Generating balance demand and supply to achieve full employment and price stability (pdf 167KB)

Other papers of interest include:

6.     Submission from Buoyant Economies to the Financial System Inquiry (pdf 107 KB)

7.     Submission to the Industrial Relations Commission regarding the ACTU Living Wage Case (pdf 352 KB)

8.     Rising foreign debt, slow economic growth and high unemployment (pdf 173 KB): A brief explanation of their cause in Australia and how to overcome them. The updated graph of relative exports and imports is available here. The updated graph of the current account deficit and money is available here.

9.      Submission to the NZ Inquiry into the future monetary framework (MS Word 293 KB):          The causes of inflation and an approach to reducing inflation and managing foreign debt.

10.    Submission to the Australian Senate inquiry into Competition within the Australian banking sector.  Considers the difference between banks and non-bank financial institutions and the environment required for healthy competition.

11.    Submission to the New Zealand Savings Group. Considers different forms of saving and discusses the US response in 1973 to the growth of bank credit and declining foreign reserves. Recommends an approach to manage bank lending according to national savings.   

12.    International Monetary Alliance (MS Word 45 KB):  An international institution for mutual support of currencies to provide balance of payments stability and exchange rate stability suitable for economies with fixed and variable exchange rates.

13.  Mining Investment Boom: A Double Edge Sword for the Australian Economy (pdf 211 KB) This article was first published by Finsia in its inFinance magazine in August 2011.  

 

Last update: 15 January 2012

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