|Last Updated: Mar 25th, 2013 - 16:46:15
Thought for the Day
Economies are naturally occuring phenomena. Governments didn't create them but they have destroyed them. Mugabe is destroying Zimbabwe's economy right now.
The natural economy uses gold and/or silver as its money. People know that these are valuable because of their scarcity. They know that gold coins hold their value. That is why they are useful as a medium of exchange.
Now that the Government (Reserve Bank) and the commercial banks are working together to control the money supply using paper money we find that we are in trouble. The value of our money continually devalues because the government continues to supply more and more of it. This is inflation and causes distortion in the economy. Zimbabwe is the extreme example at the moment but the Western World is heading in the same direction at varying rates. Last year we increased our money (M3) by 16.5%. Nowhere near Zimbabwe's 2000% (figures are hazy) but the distortions arrive.
The inevitable result is a contraction in the economy. When and how it will happen is not possible to predict. Theory as espoused by the Austrian school of economists shows this and in every case where governments have used money not backed by gold the (fiat) currency has eventually disappeared.
Jun 1, 2007, 08:31
Even Tigers Get Tired
During Labour's eight year reign our economy has gone off the boil. Our economic growth rate used to be 4% to 5% but it has now declined to 1% according to this morning's newspaper. Not only that but our recent productivity growth has dropped to 0.4% - the lowest ever.
If you would like to know how that compares with our competitors then read this article from the Economist. The author castigates ASEAN for having a mediocre productivity growth rate of "only" 2.9% - only half that of China.
Read on . . .
May 24, 2007, 09:39
Venezuelan Bluster? - Hugo Chávez threatens to seize banks and a steel-maker.
One of the interesting things about today's world is that we can watch economic/political theories in practice.
Australia has privatised Telstra and is reducing the tax burden on the population at a steady and continuing pace. As a result of this approach to the economy, the workers who were earning 30% more than their Kiwi counterparts are now expected to be 40% better off. Aussie, Aussie, Aussie - Oi, Oi, Oi!
On the other hand, in Venezuela we have President Chavez nationalizing sectors of the economy and growing the public service just as we are doing. New Zealand's GDP growth has been in a nose-dive from around 5% to 1% now. The Venezuelan GDP has slowed to 5.8% this year and forecast to be 3.2% next year.
Who is going to hit rock bottom first?
May 10, 2007, 09:26
The War the Government Cannot Win
I have come to the conclusion that governments create problems for us and do not solve the problems that they insist they will fix - instead they make those problems worse.
The bigger and stronger the government - the bigger the mess!
High level economic thinking applied to The War on Terrorism provides us with some interesting insights. This article is long but shows how economic common sense explains the colossal disaster President Bush has imposed on himself and the American people not to mention the Iraqi people. We must seek ways to limit our governments capabilities, to make them small and weak so that we can just run our own lives and in so doing benefit our fellow citizens.
Dogooders and other assorted politians should just stick to doing good for their own family and for charity with their own money and leave everybody else alone.
Apr 10, 2007, 10:11