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To: House of Commons
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To: The Chief Secretary to the Treasury the Rt Hon Stephen Barclay MP.
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N Regarding: Budget Problems And Solutions.
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Friday, 13th March 2020.

I have enclosed a letter that I have sent to the Chancellor of the Exchequer explaining some
potential problems in the new budget with solutions. I see the largest problem as the limited
source of income the government receives and believe the increase in government borrowing
can be avoided or at least reduced by expanding the number of revenue streams through new
business operations. I also recommend starting a new organisation to control price inflation
through alterations in pension saving made possible through offering new pension products.

I have enclosed a book I have written entitled 'Economic Growth In a Highly Constrained
Environment', which puts forward various solutions to the limitations in economic growth
and control that have arisen as a result of having both high public and private sector debt. The
new techniques and policies I put forward are aimed at giving the government further options
to deal with the difficult economic outlook. I encourage you to raise the suggestions I have
sent to you with the cabinet and in particular to point out the limited income source issue.

I have also enclosed a copy of another economic book that I have written entitled 'Modern
Applied Macroeconomics', which explains how pensions can be used to control inflation and
attain economic targets set by the government. The book includes a letter from the former
Chancellor of the Exchequer the Rt Hon George Osborne, on page 139, thanking me for the
paper and stating his intention to use the work in the future. The book gives evidence of the
success the changes in pensions made, enabling a close adherence to economic targets P135.

Kind Regards.

Peter James Rhys Morgan.

Website: morganisteconomics.blogspot.co.uk
Copyright © 2020 Peter James Rhys Morgan.
P J R M I
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To: 1 Horse Guards Road
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United Kingdom
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To: The Chancellor of the Exchequer the Rt Hon Rishi Sunak MP.
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N Regarding: Budget Problems and Solutions.
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Friday, 13th March 2020.

I am an independent macroeconomist who develops new financial tools and policies to enable
progress. I have some concerns about the latest budget you have made however I believe I
can provide solutions to the problems which might arise. My first concern is the increase in
government borrowing, which I believe can be reduced by expanding the income streams the
government receives. Currently taxation is the primary if not sole source of income for the
government, if the income sources were expanded it could prevent the need for borrowing.

I also have strong concerns that the rate of inflation could rise as a result of the expansion of
government spending. When inflation increases interest rates usually rise to keep aggregate
prices at set targets. The potential risk of higher interest rates and the increase in government
debt payments that it would generate concerns me. There is another mechanism that I have
developed using pension saving to control inflation, which should prevent an interest rate
rise. A new body used to control inflation with pensions could replace interest rates changes.

I have developed new pension saving products which can be used to control pension saving
on a monthly basis and generate an income for the government. By starting a new pension
saving economic organisation using these new tools the government could generate a new
income stream and improve its control of inflation, protecting against the interest rate rise
which would come with higher aggregate prices. I would be interested in a shared business
venture with the government to introduce new pension saving products to control inflation.

I have enclosed an article that I have written which outlines the potential issues an increase in
government borrowing creates. I put forward brief solutions to the problems addressed in the
article where I claim the biggest problem is the limited sources of government income. I
encourage an expansion in the income streams the government receives to help avoid an
increase in government borrowing to pay for the extended expenditure planned. I am very
eager to receive your response to this shared business venture I am offering the government.

Kind Regards.

Peter James Rhys Morgan.

Website: morganisteconomics.blogspot.co.uk
Copyright © 2020 Peter James Rhys Morgan.
Budget Problems And Solutions.

Published at Morganist Economics. 

By Peter Morgan.
17:14 12/03/2020.

On Wednesday 11th March 2020 the new budget was presented by the Chancellor of the
Exchequer the Rt Hon Rishi Sunak. Plans for a further £600 billion of government spending
were outlined to develop national infrastructure and to stabilise the economy throughout the
difficulties generated by the emergence of the Corona Virus. In the budget announcement the
Chancellor made it clear funding would be made available for any requirement the NHS has
whilst dealing with the Corona Virus outbreak, this should help to stabilise financial markets.

The planned increase in government spending into capital investment is the correct form of
investment to support the economy. A stronger infrastructure and transportation network will
help to enable efficiencies for businesses and open up new opportunities for trade. The main
concern I have is the method of funding the capital investment projects, which is a proposed
increase in government borrowing. There is already a high level of government debt, further
debt might deter foreign investment in the country reducing private funding from overseas.

The increased borrowing will also generate greater government debt interest payments, which
will have to be paid in regular instalments elevating the annual government expenditure. If
interest rates rise the cost of repaying the outstanding debt will appreciate causing an even
greater annual government expense. Interest rates tend to rise when inflation occurs, central
banks are expected and often obliged to increase the interest rate as a mechanism to control
inflation. Interest rates rise in commercial lending to offset the lost return caused by inflation.

When government spending increases it is usually accompanied by a higher rate of inflation,

which in turn puts pressure on interest rates to rise. The expansion of government expenditure
is likely to increase inflation causing a subsequent interest rate rise, increasing repayments for
the even greater government debt. The costs of government debt interest payments could
spiral out of control if inflation is allowed to rise. There is however another mechanism that
can be used to manage inflation taking an interest rate rise out of the inflation control process.

Pension saving and pension reform have been used over the last decade to control economic
outcomes. Alterations in pension saving allowances, pension regulations, types of pension
schemes, pension fund investment criteria and an expansion in the methods of saving for a
pension have enabled a closer adherence to the set economic targets than any other period of
time I am aware of. This has been achieved when interest rates have been at constantly low
levels, providing evidence that alterations in pension saving have been the active mechanism.

Over the last decade the pension saving lifetime allowance and annual allowance have been
change significantly. There has been an increase in corporate bond availability to make fixed
return and secure investments a greater proportion of pension fund investment portfolios.
There has been an expansion in the required pension provisions within the country with the
introduction of the mandatory employer pension scheme. There has been an overhaul of the
pension regulation manual, which was so vast that it was renamed the Pension Tax Manual.

Website: morganisteconomics.blogspot.co.uk
Copyright © 2020 Peter James Rhys Morgan.
Pension saving has become the economic control mechanism of choice and it works. This
tool can be used to control inflation preventing a rise in interest that will increase government
debt repayments. The main problem is that reforms are currently only made annually rather
than monthly, which would be more effective. If the government was to set up a new body to
control pension saving on a monthly basis it could be used to manage inflation instead of the
central bank, alternatively it could be used in unison with the central bank to hit set targets.

The other problem with the government's spending plan is the expectation for the taxpayer to
solely provide the money needed to pay off the proposed increased government debt. The
government has made taxation income the primary, if not, sole method of generating revenue.
There are many other ways governments can fund themselves, for example new government
business operations could make money to prevent the need to borrow funds to pay for capital
investment. Many new business initiatives are only possible if the government enables them.

The pension economic control mechanism could be developed by producing new pension
products that manage financial functions to hit the targets set by the government. These
products would generate revenue for the government, which would avoid the need to borrow
further funds for its capital investment projects. The plan of capital investment is a good idea
to improve the country and support trade, but it does not have to be funded with government
debt. The government can become a part of the wealth generation process in the economy.

The expansion of business revenue to pay for government spending can be drawn from other
countries too. The government can only tax its domestic population, but it can trade with
other countries around the world. Seeing taxation as the sole or at least primary revenue
generation stream reduces potential government income and puts tremendous strain on
taxpayers. By introducing additional income streams through new product development and
international commerce the government can reach its new agenda without the expected costs.

Capital investment is a good way forward to develop the country and economy. It is a proven
strategy to improve national economic output and living standards. The questions are more,
where will the funding come from? Or, why does government borrowing have to increase to
pay for spending if the government can make money? This might be the larger problem and it
may have been this way for a long time causing the high government debt to occur in the first
place. Put simply, the sources of government revenue have been limited but can be expanded.

Website: morganisteconomics.blogspot.co.uk
Copyright © 2020 Peter James Rhys Morgan.