Last Updated: Nov 19th, 2009 - 11:07:39 Newsletters : 2007 Newsletters : 11 May 2007 Thought for the Day The reason that banks cannot go bust these days is that they are supported by the "Central Banks" who will just print and supply more money when a bank is threatened. This Central Bank is owned and operated by the Government which puts Governments and Central Banks in cahouts with commercial banks in running our money system. As we have seen this now means that governments are able to print money at will and since their main aim in life is to get elected they print a "little more" money to get a "little bit of" inflation into the economy and buy a few more votes and get a "feel good" compliant population. This works fine for a while but unfortunately this excess of money leads to a boom somewhere (or everywhere) in the economy and prices and values get distorted. The inevitable result is that the boom leads on to a bust with all its unfortunate consequences. Free money like this (called a fiat currency as it is not backed by anything of worth like gold or silver) will always lead to this boom-bust cycle until the booms become too much as the government attempts to avoid the (election losing) bust and the economy subsides into serious deflation or rockets skyward into hyper-inflation. All paper monies which have not been tied to a gold standard have ended up destroying themselves and bringing hardship to the population involved. We had a big bust after Muldoon's "Command and Control" economy. We will have a big bust after Clark's "Command and Control Boom Times" if it is allowed to go on long enough. Apr 27, 2007, 17:43 Newsletters : 2007 Newsletters : 11 May 2007 The Engines of Inflation If you understand this you will know why sensible New Zealanders did not follow Don Brash's advice when he was Reserve Bank Governor to rent a house. No! We bought one instead and preserved the purchasing power of our money. ie We preserved our wealth. The Daily Reckoning PRESENTS: If inflation is such a menace for society, why do the central banks continue with their inflationary program? And why do they claim that they are fighting inflation? Puru Saxena explores... May 11, 2007, 17:57 Newsletters : 2007 Newsletters : 11 May 2007 Panama Has No Central Bank In Panama there is no government-forced fiat currency and no central bank. The absence of high inflation is working well in this small country. Panama had a GDP growth rate recently of over 7%. There is a lesson here for New Zealand. May 10, 2007, 17:40 Newsletters : 2007 Newsletters : 11 May 2007 The Federal Reserve Monopoly Over Money Fortunately, since Muldoon's time, we have not been funding our welfare state with deficit spending. That "borrow and hope" policy combined with think big spelt Rob's death knell and the beginning of free market policies to open up the economy to the world and for all of us to adjust to reality. Thanks to the Lange government introducing market forces into our economy we have been enjoying strong economic growth from the early 1990s to around 2004. Dr. Cullen's policy of running a large surplus may place a heavier than necessary burden on current taxpayers but at least our country is not building up unsustainable debts as is America. Here are some thoughts from Congressman Ron Paul who obviously has a good idea of the inner workings of the USA government. Our question is, "What will happen to our economy if America, the world's engine of growth, falls into recession in the near future?" May 8, 2007, 09:50