Foundation for Economic Growth - Newsletter

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Last Updated: Nov 14th, 2008 - 10:12:29

Newsletters : 2008 Newsletters : 10 October 2008
Thought for the Day

At this time of the election cycle Treasury writes a paper on the economy so that the incoming government can see what is happening. If you are interested you can find this paper here:

http://www.treasury.govt.nz/budget/forecasts/prefu2008

In this paper they show a graph of GDP for the last few years and a forecast for the next few years. This graph shows that for 2008 the expected GDP growth is 2%. It then goes down to touch zero in March 2009 before accelerating away to 2% to 3% in the next few years.

Since we have been in recession for the first three quarters of calendar year 2008 this graph seems to be a trifle disingenuous.

When we see what is happening overseas it also seems to be rather optimistic. Is the information supplied to an incoming government to be relied upon?

I suspect that things are much nastier than our economic friends' computer models show. They may be in for a big surprise - on the downside!


Oct 10, 2008, 11:43

 Newsletters : 2008 Newsletters : 10 October 2008
U.S. Considers Taking Ownership Stake In Banks

It is beginning to look as if events are starting to overtake the politicians, the bankers and the economists.

Governments are now taking over and nationalizing banks and other financial entities. This puts the politicians and the bankers into the same pot. This pot not only prints the money but also controls its distribution.

For how much longer will this money be worth anything?


Oct 10, 2008, 11:36

 Newsletters : 2008 Newsletters : 10 October 2008
Who Will Bail Out The Euro?

The paper money system is showing more problems by the day. We are now talking trillions of dollars as a normal course of events when a few years ago lowly billions seemed enormous.

The USA is one country where the Federal Reserve can make decisions stick for the whole country. Unfortunately the EU is a bunch of different countries, each jealous of their autonomy and the separate Central Banks are going to have a devil of a job holding everything together while they "solve" the paper money problems.

But we still seem to be cruising along. For how much longer?


Oct 10, 2008, 11:24

 Newsletters : 2008 Newsletters : 10 October 2008
Financial Crisis: So Much For Tirades Against American Greed

Ambrose Evans-Pritchard says it is ironic that European banks have turned out to be deeper in debt than their US counterparts.

Out here in New Zealand we are toddling along in happy ignorance of the unhappy forces in play across the financial centres of the world. However it turns out will not be a good thing for us.

The theory was that Central Banks could solve any bank liquidity problem by just supplying more cash and since they had the printing licence that would not be a problem. But what if the illiquid banks are also insolvent? Will more cash solve this problem too?

Time will tell.


Oct 9, 2008, 17:22

 Newsletters : 2008 Newsletters : 10 October 2008
Central Banks All But Stop Lending Gold

Are Central Banks now beginning to understand the REAL value of REAL money?


Oct 8, 2008, 14:30

 Newsletters : 2008 Newsletters : 10 October 2008
No One Can Believe in the Omniscience of Central Bankers Anymore

As you will have noticed in our newsletters over the last year or two we are concerned about our paper money system. It depends on people believing that it retains the value that the bankers say it has.

More and more we are seeing articles calling this faith into question. The truth does not matter at this point. It becomes what people believe.

When people lose faith in the US dollar - what then?


Oct 8, 2008, 12:32

 Newsletters : 2008 Newsletters : 10 October 2008
Is the Fed the Root of All Economic Evil?

This is a little bit of background for those of you who have joined our readership more recently. Bankers have always desired the power of being able to print money from nothing.

I am sure you would like to have this power, too, but unfortunately if you try this little trick they call you a counterfeiter and put you in jail for a long time.

That is the only difference between you and the banker.


Oct 7, 2008, 12:46

 Newsletters : 2008 Newsletters : 10 October 2008
Financial Crisis and Recession

As I have been saying for some time now our problem is too much paper money. This is referred to by the Austrian Academics as "the reckless policy of artificial credit expansion that central banks have permitted and orchestrated . . ." but I still think that "printing too much paper money" says it better!

Never mind the result is the same. Read what one of our very distinguished professors has to say about our current situation. You will then understand why I think that things are going to get worse before they get better.


Oct 7, 2008, 12:00

 Newsletters : 2008 Newsletters : 10 October 2008
Is Gold Money?

Once upon a time gold was money. Occasionally someone would try to substitute paper for gold and would then inevitably print too much paper. People would discover this and lose confidence in the value of the paper money and demand their gold back.

This has happened many times - each time with the same result. Out with paper - back with gold.

It will happen again. The only question is when.

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Sep 6, 2008, 13:01

 Newsletters : 2008 Newsletters : 10 October 2008
Quote for the Week

"An election cannot give a country a firm sense of direction if it has two or more national parties which merely have different names but are as alike in their principles and aims as two peas in the same pod".

- Franklin D. Roosevelt (American 32nd US President (1933-45), cousin of Theodore Roosevelt, 26th US president 1882-1945)).


Jul 8, 2008, 14:11

Can we fix it?