P J R M I

J O T
R R ´
G S
A
M O R G A N A
To: U.S. Embassy London
B
I T ´ S A B O U T B A L A N C E 33 Nine Elms Lane
U London, SW11 7US
T
United Kingdom
B
A
L
To: The U.S. Ambassador of the United Kingdom Her Excellency Yael Lempert.
A
N Regarding: High Inflation in America.
C
E
Reference Number: PJR 07 01YL 24062021.

Thursday, 24th June 2021.

The rate of inflation has risen to 5% in America, which can cause many economic problems. I
have developed a new school of economic thought 'Morganist Economics' that uses a pension
economic control mechanism by altering pension saving. I have enclosed the article 'Pension
Priming', which increases pension saving to reduce inflation preventing the need to raise the
interest rate. I have also enclosed a paper displaying the successful use of pension economic
control in the United Kingdom over the last decade. If you are interested in my work google
morganist economics for the website and book portfolio. Please forward this letter and the
enclosed documentation to the appropriate official in the American Treasury for their perusal.

Kind Regards.

Peter James Rhys Morgan.

Website: morganisteconomics.blogspot.co.uk 1
Copyright © 2021 Peter James Rhys Morgan.
Pension Priming.
By Peter Morgan.
20:12 13/08/2020. Published By Morganist Economics.

Preparing for the future by contributing into a pension scheme is a good way to ensure
financial security in retirement. There are other advantages of the pension saving process that
benefit the pension contributor and even the wider economy. Strong pension saving is key to
providing provisions for the future of the overall economy not just individual pension savers,
long term rates of consumption can be sustained through maintaining a strong pension pot.

Pension contributions receive income tax relief, any payment into a pension scheme is
exempt from income tax charges. Pension schemes offer a tax efficient investment vehicle
that helps savings to grow. Large pension funds are good for covering the cost of retirement
expenditure and additionally as financing businesses when the savings are invested. When
pension pots are paid into the funds are used elsewhere to generate a return for the investor.

Pension funds are a source of investment for businesses that require capital to expand or to
cover their operating expenses. Elevated pension saving enables an increase in investment
deriving from pension funds, which offers an opportunity for a greater number of businesses
to fund themselves. A higher level of pension investment allows the free market economy to
operate on a larger scale increasing employment and the nation's overall economic output.

Pension saving is effectively a saving mechanism similar to the interest rate mechanism. It
can increase or decrease the availability of investment funds needed to enable the business
capitalisation process. When pension saving increases more funds become available to invest,
conversely less pension saving decreases the funds available for investment. The ability to
alter the rate that pension savers can contribute into a pension makes it a controllable factor.

There are other similarities between pension saving and the interest rate mechanism. Interest
rates are used to control inflation and economic growth. When inflation increases interest
rates rise, conversely when deflation occurs interest rates fall. Pension contributions can be
used in a similar manner. Inflation can be controlled by increasing pension contributions or if
deflation occurs pension contributions can be decreased, the rate of pension saving is altered.

Both saving mechanisms can also be used to control economic growth. When interest rates
are used to stimulate economic growth the interest rate falls to increase borrowing and to
reduce the cost of outstanding loan repayments. Pension contributions can be reduced to
stimulate economic growth, in this case the saving process has diminished to encourage a
greater rate of consumption from the pension saver instead of large pension contributions.

Large pension saving contributions are valuable for funding businesses when invested. The
temporary increases in pension contributions that can be used to control inflation or economic
over stimulation will help to strengthen pension funds for the pension savers' retirements and
business capitalisation. During deflationary periods pension contributions can fall to increase
consumer spending, this is more effective at stimulating growth than business capitalisation.

Website: morganisteconomics.blogspot.co.uk 2
Copyright © 2021 Peter James Rhys Morgan.
The pension saving mechanism increases pension contributions, which I term 'Pension
Priming' to decrease inflation and dampen economic growth. The pension saving mechanism
decreases pension contributions to control deflation and stimulate economic growth. The
saving mechanism process transforms consumer spending into pension fund investment. The
velocity of money or speed of transactions decreases with a greater rate of pension saving.

In addition to the alterations in the velocity of transactions the pension saving process creates
the wide range of alternative investments pension funds offer can also reduce demand by
investing into different less liquid products, for example commodities such as gold or silver.
The pension saving economic control mechanism is less damaging to the overall economy
than the interest rate mechanism, which can impact businesses when the interest rate rises.

Pension Priming offers the potential to control inflation without the consequences that an
interest rate rise causes. Rather than enduring more business failures, house repossessions and
higher rates of insolvency, which usually accompany an interest rate hike just Pension Prime.
The increase in pension contributions will reduce inflation and boost pension saving. Pension
tax relief costs will rise but public debt payments will be larger if the interest rate increases.

Website: morganisteconomics.blogspot.co.uk 3
Copyright © 2021 Peter James Rhys Morgan.
 The Successful Outcome of The Implementation of
Pension Economic Control.
In 2010 the Conservative and Liberal Democrat coalition government began the utilisation of
intensive Pension Economic Control, which consisted of very extreme reforms to the existing
pension regulations and alterations to the taxation exempt pension saving allowances. These
reforms led to a close adherence to the set economic targets and enabled significant Treasury
cost efficiencies to be achieved. The fall in public spending and the decrease in the size of the
public deficit plus the low interest rates indicate that pension reform is the active control tool.

The interest rate was the same rate for six to seven years during the decade from 2010 - 2019,
which is evidence another economic control mechanism was applied to achieve the economic
targets. The rate of government spending and the annual government deficit both fell during
the decade. This is evidence that both Monetary policy and Fiscal policy were not the active
economic control tools used during this period. The pension saving allowances were altered
extensively over the period especially at the times when large improvements were observed.

Pension saving alterations are less expensive at achieving macroeconomic targets than either
Monetary policy or Fiscal policy, when private or public sector debt is high. If inflation rises
the cost of paying return on government inflation linked debt products (Indexed Linked Gilts)
increases. If the interest rate increases to reduce inflation the cost of the return for new public
debt products increases and the cost of return payments for the private sector variable interest
rate products rises, increasing pension saving even with the tax relief is far less expensive.

In terms of stimulating economic growth when pension saving allowances fall it saves large
sums of money for the Treasury, even if the tax relief is paid at a later date the deferring of
payment reduces the interest instalments on government debt saving money. Lower annual
pension saving allowances create a higher level of disposable income to consume with, which
helps to generate economic growth. Increasing government borrowing to extend government
spending to stimulate economic growth creates higher return payments, which is expensive.

There are governmental cost efficiencies through using pension economic control instead of
Monetary policy or Fiscal policy to either reduce inflation or stimulate economic growth. It
has been proven over the last decade that pension economic control is the superior tool over
interest rate control or governmental spending control in terms of cost efficiencies. It has also
led to an extremely close adherence to the set economic targets over the time period. This is
evidence that pension economic control is an effective and cost efficient economic technique.

A clear example of the effectiveness of pension economic control is in 2012 when the annual
pension contribution taxation exempt allowance reduced to £50,000 from £255,000. The rate
of employment began to rise over the rest of the decade and economic growth was sustained
throughout the same period. As the interest rate was set at the same rate of 0.5% for two years
before and four years after 2012 plus the government spending rate fell continually during the
decade the only policy that could have led to the decrease in unemployment is pension policy.

Website: morganisteconomics.blogspot.co.uk 4
Copyright © 2021 Peter James Rhys Morgan.
The table below displays the taxation exempt annual and lifetime pension saving allowances
from 2010 to 2019. Notice how in 2011-2012 the annual pension saving allowance decreases
to £50,000 from £255,000 the year before. This technique massively reduced the contribution
allowance, which made more funds available for consumption to stimulate economic growth.
The lifetime allowance of £1,800,000 was still possible to reach over a 36 year period, which
enabled savers to obtain the full sum of tax relief by altering how they paid into their pension.

The Pension Tax Relief Reforms since the paper was written and submitted
to the Government in 2006 are below.

Annual Allowance Annual Allowance (AA) for

Tax Year Lifetime Allowance (LTA) £
(AA) £ higher earners £

2006-07 215,000 215,000 1,500,000

2007-08 225,000 225,000 1,600,000

2008-09 235,000 235,000 1,650,000

2009-10 245,000 245,000 1,750,000

2010-11 255,000 255,000 1,800,000

2011-12 50,000 50,000 1,800,000

2012-13 50,000 50,000 1,500,000

2013-14 50,000 50,000 1,500,000

2014-15 40,000 40,000 1,250,000

2015-16 40,000 40,000 1,250,000

2016-17 40,000 10,000 1,000,000

2017-18 40,000 10,000 1,000,000

2018-19 40,000 10,000 1,030,000

2019-20 40,000 10,000 1,055,000

ProfessionalPensions.com, 16th March 2016 / HMRC, 14th June 2020 (Data Source).

Website: morganisteconomics.blogspot.co.uk 5
Copyright © 2021 Peter James Rhys Morgan.
After the sharp fall in the annual pension saving allowance in 2012 the rate of unemployment
started to decline for the rest of the decade. The graph below displays the unemployment rate
over the decade, which continued to decrease as the annual pension saving allowance reduced
in subsequent years. Many cost efficiencies were achieved through cutting the pension saving
rates over the period of 2010 to 2019, even if the full lifetime pension saving allowance was
achieved deferring the pension tax relief payments reduced the public debt return instalments.

Historical Unemployment Rates for the United Kingdom 2009 - 2019.

UK Unemployment Rates 2009 - 2019

9.0% 8.1% 8.0%
7.6% 7.9% 7.6%
8.0%
Unemployment Rate %

7.0% 6.2%
6.0% 5.4%
4.9%
5.0% 4.4%
4.1% 3.8%
4.0%
3.0%
2.0%
1.0%
0.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Year
Unemployment Rate %

TradingEconomics.com, 7th March 2019 (Data Source).

In 2012 the unemployment rate fell from the previous year and continued to fall from 8% to
3.8% by the end of the decade. The continued reductions in the annual pension allowance and
the lifetime pension allowance helped to sustain a low rate of unemployment plus it enabled
economic prosperity. It is important to note that the full lifetime allowance was still attainable
over a working lifetime. This enabled the maximum amount of tax relief to be achieved by
altering pension saving payments preventing pension savers from losing out on full tax relief.

Although the lifetime pension saving allowance was reduced over the decade the same macro
economic targets could have been achieved solely by altering the annual pension saving rates.
The technique of reducing the lifetime pension saving allowance will decrease the overall
cost to the Treasury from lost taxation income. Although the alteration of the lifetime pension
saving allowance can be used as an economic control tool and has proven effective over the
period from 2010 - 2019, the same results can be achieved with annual contribution changes.

Website: morganisteconomics.blogspot.co.uk 6
Copyright © 2021 Peter James Rhys Morgan.
Changing the lifetime pension saving allowance has been an effective cost saving tool, which
has been used to reduce the rate of public spending. The annual pension saving allowance and
the lifetime pension saving allowance were both reduced significantly throughout the decade,
which made enormous Treasury cost efficiencies. The graph below displays the government's
rate of spending over the period of 2010 - 2019. There is a continual decline in the spending
rate of the government that indicates the cost efficiencies from pension reform were effective.

Historical Rates of Government Spending to GDP 2010 - 2019 in Percent.

UK Public Sector Total Spending to GDP

50
46.3 45.8
44.7 44.2
45 42.5 42 41 40.4 40.2 39.5
40

35
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

UK Public Sector Total Spending to GDP

TradingEconomics.com, 5th June 2021 (Data Source).

The rate of public sector spending fell from 46.3% of GDP in 2010 to 39.5% of GDP in 2019,
this is a 6.8% fall over the decade. This is a reasonable decrease in the rate of public spending
over the period and also indicates that any macroeconomic stimulus did not originate with a
greater rate of government expenditure. In addition to the reduction to the decrease in the rate
of public sector spending the government deficit also declined steadily from 2010 - 2019. The
graph below displays the fall in the annual public deficit when the pension reforms occurred.

Historical Rates of UK Annual Public Spending Deficits 2010 -2019.

UK Annual Public Spending Deficits 2010 - 2019

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
0
-2
-4 -1.8
-2.6 -2.6
-6 -4.1
-5.8 -5.1
-8 -7.2
-8.6 -7.3
-10 -10.1
-12

UK Annual Public Spending Deficits 2010 - 2019

TradingEconomics.com, 5th June 2021 (Data Source).

Website: morganisteconomics.blogspot.co.uk 7
Copyright © 2021 Peter James Rhys Morgan.
The annual government spending deficit was -10.1 in 2010 and fell dramatically over the ten
year period to -1.8 in 2019, which is a reduction of 8.3 over the decade. This is a significant
improvement in the management of government revenue and expenditure. It also shows the
use of fiscal stimulus declined over the decade indicating another macroeconomic control
tool was used in its place. This provides further evidence pension policy was the active tool
used to generate economic growth during the period, which proves its effective application.

Monetary policy is the other policy used to control economic growth through alterations in
the base rate of interest. Although the interest rate was low throughout the decade, it stayed at
the same rate of 0.5% for the first six to seven years. This would stimulate economic growth
but there is no continual change, which is required to control inflation and manage economic
growth. The period when economic growth started to rise and unemployment started to fall in
2012 did not coincide with lower interest rates, it was the annual pension saving rate that fell.

Historical Bank of England Base Rates of Interest 2009 - 2019.

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Bank of England, bankofengland.co.uk, 8th March 2019 (Data Source).

Economic growth was sustained throughout the period from 2010 - 2019 and adhered very
closely to the 2% of real GDP target. The reduced rate of government spending and the same
interest rate of 0.5% for over six years indicates the active mechanism used to stimulate new
economic growth is pension policy, especially alterations in the rate of pension saving. The
graph below displays the annual economic growth rates for the decade, which shows an
increase in economic growth in 2012 after the annual pension saving allowance decreased.

Website: morganisteconomics.blogspot.co.uk 8
Copyright © 2021 Peter James Rhys Morgan.
 The Economic Growth Rates Over the Last Decade.

UK Economic Growth Rates 2009 - 2019

4.0% 2.9%
3.0% 2.1% 2.2% 2.4% 1.7% 1.7%
1.3% 1.4% 1.3% 1.3%
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
-4.0% -4.1%
-5.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Year

Economic Growth Rate

TradingEconomics.com, 7th March 2019 (Data Source).

The graph below displays the annual rate of inflation from 1989 - 2019, which shows the rate
of inflation remained within acceptable boundaries between 2010 - 2019. The rate of inflation
between 2010 - 2019 stayed within a 2.5% margin away from the 2% inflation target all the
way through the decade and the mean average rate of inflation over the ten year period was
2.24%. This provides evidence that pension economic control is effective at managing the
rate of inflation, this creates Treasury cost efficiencies by reducing Index Linked Gilt returns.

The Historic UK Annual Rates of Inflation 1989 to 2019.

UK Annual Rates Of Inflation 1989 to 2019

8

7
Rate of Inflation in Percent %

4 Inflation
3 Target

0
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019

RateInflation.com, 5th June 2021 (Data Source).

Website: morganisteconomics.blogspot.co.uk 9
Copyright © 2021 Peter James Rhys Morgan.
 The graph below displays the annual number of house repossessions in the United Kingdom
between 1989 and 2019. The number of house repossessions decreased during the ten year
period from 38,500 in 2010 to 4,580 in 2019. The use of pension economic control prevented
the interest rate from rising when inflation was high and the reduction in the annual pension
saving allowance stimulated economic growth in the deflationary period. Maintaining a low
interest rate and sustaining economic growth helped to keep the house repossession rate low.

Historic Annual UK House Repossession Rates 1989 to 2019.

Annual Number of UK Mortgage Repossessions

1989 - 2019
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0 2011

2014

2017
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010

2012
2013

2015
2016

2018
2019
Annual Number of UK Mortgage Repossessions 1989 - 2019

Ticfinance.co.uk, 15th June 2021/ Gov.uk, 15th June 2021 (Data Source).

Website: morganisteconomics.blogspot.co.uk 10
Copyright © 2021 Peter James Rhys Morgan.
References.

Bank of England, bankofengland.co.uk, 8th March 2019,

https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp. (accessed 8th March
2019).

Gov.uk [Online] // www.gov.uk. - June 15, 2021. (accessed- June 15, 2021). -
https://www.gov.uk/government/collections/mortgage-and-landlord-possession-statistics.

HMRC[Online] //www.gov.uk. - June 14, 2020. (accessed- June 14, 2020). -

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief.

ProfessionalPensions.com, 16th March 2016,

https://www.professionalpensions.com/professional-pensions/analysis/2316994/pension-tax-
relief-cuts-a-brief-history. (accessed 7th March 2019).

RateInflation.com, 5th June 2021,

https://www.rateinflation.com/inflation-rate/uk-historical-inflation-rate/. (accessed 5th June
2021).

Ticfinance.co.uk [Online] // www.ticfinance.co.uk. - June 15, 2021. (accessed- June 15,

2021). - https://www.ticfinance.co.uk/stats/.

TradingEconomics.com, 5th June 2021,

https://tradingeconomics.com/united-kingdom/government-budget. (accessed 5th June 2021).

TradingEconomics.com, 5th June 2021,

https://tradingeconomics.com/united-kingdom/government-spending-to-gdp. (accessed 5th
June 2021).

TradingEconomics.com, 7th March 2019,

https://tradingeconomics.com/united-kingdom/gdp-growth. (accessed 7th March 2019).

TradingEconomics.com, 7th March 2019,

https://tradingeconomics.com/united-kingdom/unemployment-rate. (accessed June 6, 2020).

Contains Parliamentary information licensed under the Open Parliament Licence v3.0.

Contains public sector information licensed under the Open Government Licencev3.0.

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Copyright © 2021 Peter James Rhys Morgan.