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| Last Updated: Aug 15th, 2008 - 11:26:43 |
Newsletters
:
2007 Newsletters
:
13 July 2007
Thought for the Day
The basic laws of economics show that if a country runs a fiat currency (no gold backing) then life will be a series of booms and busts. To become wealthy we should therefore borrow as much as possible to buy properties as soon as the boom phase kicks in and JUST before the bust we should sell everything and keep the money in the bank. Then buy property again when it is cheap.
The only problem is that the government and the Reserve Bank can postpone a bust by pumping more money into the system. Every government has a strong incentive to do this as they want to be elected next time and don't wish to have the bust during their reign. This will likely make for an even bigger boom.
Our only question then is WHEN will the bust begin?
Jul 5, 2007, 11:39
Newsletters
:
2007 Newsletters
:
13 July 2007
Money Meltdown
Our leaders are concerned about inflation and what causes it. So are a lot of other people. The more you know the more concerned you will get.
Jul 9, 2007, 18:48
Newsletters
:
2007 Newsletters
:
13 July 2007
The Lever of Riches
Roger Kerr, explains how productivity works to enrich us all. How sad that our Labour government has managed to reduce high productivity obtained during the 90s to the lowest level ever recorded in New Zealand this past year.
Will Labour transform our economy even further down the OECD wealth table? What should we do to preserve our future?
Roger's article explains this well.
Jun 29, 2007, 17:05
Newsletters
:
2007 Newsletters
:
13 July 2007
The Principle of Sound Money
This is a rather academic explanation of money and how moving away from the gold standard which the world has done since 1971 has led to greater instability in national economies.
Worth reading and you can skip over the graphs without losing the sense of the article.
Starting from the original definition of inflation Professor Polleit shows the effect of fiat currency on the economy. One thing leads to another until the booms produced by easy money turn to busts of various magnitudes. The tendency when there is easy money is to borrow (mortgages, et al) and the continual increase in the money supply reduces the debt (one's mortgage becomes smaller in comparison to the worth of the house under the new value of money - much depreciated). This means that debtors gain at the expense of savers.
Small wonder that we have become a nation of debtors. The money system makes it so.
Unfortunately the bust is inevitable and those with debts at the time of the bust will suffer a loss in asset.
So we have a game of musical chairs, everybody! Just make sure you get a seat when the music stops.
[ Visit Website ]
Jun 11, 2007, 12:03
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