Mr Malcolm James Baker
42 Spencer Avenue
Maketu 3189
Minister of Finance
Hon. Bill English MP
Parliament Buildings
Wellington
26th March 2014
Dear Sir,
INTEREST RATES
Here is my suggestion subtracted from my thesis on global economics. In another letter I have suggested that Spain and Portugal withdraw from the Euro, and adopt their own currencies, while the Euro zone limit itself to 10 nations, which I stipulate.
As far as China is concerned, with 50% savings, and a lack of investment possibilities, my suggestion is that they invest in British pounds at a rate of 3%. This would enable them to continue to pay 2% on domestic accountts, and to gamble on increasing exchange rates between their own currency and the pound.
As already suggested to you, you borrow from the Bank of England to pay for the government deficit, (and to repay other lenders) at a rate of 5%. That you borrow from the Bank of England at 4% to fund local government debt at 5%, and you borrow from the BoE at 8% to offer additional funds to private (retail banks) and Kiwibank, rather than issue bonds at 4.75% for this, as it will cause inflation to rise when you are lending at 2.5-2.75% (through the Reserve Bank to private retail banks).
MJ Baker.
copies, Prime Minister of UK
President Obama
Bank of England.