Last Updated: Oct 22nd, 2010 - 15:35:08 Newsletters : 2010 Newsletters : 23 July 2010 Thought for the Day In the statistics section of our web site - http://www.economicgrowth.org.nz/artman/publish/statistics.shtml - we have a link to the Reserve Bank money supply figures. Since 1988 they have been keeping track of the amount of money and money equivalent in our economy. The broadest measure of this is known as M3. Since then the figures show that our money supply has been expanding every year - sometimes at single digit rates and sometimes at double digit rates. The highest rate being 21.2% in September 2001. Very occasionally there would be a drop in supply of usually around -0.1% or about the margin of error for measuring these things. This changed in November 2009 when the money supply dropped by 1.8% and in the next months up to May 2010 it dropped at an average annual rate of: 1.1%, 4.5%, 5.1%, 3.5%, 3.6%,and 3.1%. This strong negative change has never happened before since these figures have been collected. REAL Economics explains that a contraction of the money supply will lead to price deflation. As the amount of money in the economy reduces so its value increases and the price of goods it can be exchanged for reduces. This is the opposite of price inflation which has been the case previously. It will take a while for this phenomenon to work its way around the economy but price deflation is coming. Funny how most economists are predicting price inflation of 1%, 2%, 3% etc and none are thinking of deflation. Time will tell. Jul 23, 2010, 12:50 Newsletters : 2010 Newsletters : 23 July 2010 Central Bankers to Prick Bubbles REAL Economics shows that fiat currency run by a central banking system leads inevitably to printing too much money and issuing too much credit. Experience shows that it has always done so in the past so my conclusion is that it will continue to do so. The Central banks have unfortunately now got themselves "in synch" and are all experiencing the aftermath of bubbles simultaneously. This is dangerous for the world and the IMF and the BIS are coming to the rescue. Will this solve the basic problem? [ Visit Website ] Jul 23, 2010, 12:10 Newsletters : 2010 Newsletters : 23 July 2010 Inflating War Central banking and militarism are intimately linked. Thomas DiLorenzo is professor of economics at Loyola University Maryland and the author of How Capitalism Saved America, The Real Lincoln, Lincoln Unmasked, and Hamilton’s Curse. Read this and you will understand a great deal about the REAL World. And why using gold and silver for money is a good thing. [ Visit Website ] Jul 19, 2010, 18:26 Newsletters : 2010 Newsletters : 23 July 2010 Fed's Volte Face Sends The Dollar Tumbling The Americans are about to face the truth. [ Visit Website ] Jul 19, 2010, 17:06 Newsletters : 2010 Newsletters : 23 July 2010 The Self-Defeat of the Keynesian Cross All our world seems to be balancing on the Keynesian knife edge. Keynes assures us that not only can governments interfere in the economy but that they are essential in providing the necessary balance between boom and bust. His basic model does not seem to have any research showing exactly how it works in practice. It seems to be postulated out of thin air. No experimentation. No measurements. No observations. Quite unlike other fields of applied mathematics. But then his theory showing that government intervention is necessary is shown now to have an internal contradiction. Hazlett wrote a complete book about all the things that were incorrect about Keynes' theories. But Keynes suits the current way of running the world - so it is politically correct. [ Visit Website ] Jul 16, 2010, 10:58 Newsletters : 2010 Newsletters : 23 July 2010 Will the Dollar Crisis Spawn Chaos? In all the history of mankind the use of fiat currency caused financial disaster and the participants went back to using gold or silver. This is happening to us. It is interesting to note that China is now the largest producer of gold in the world and is storing it all. They have also opened retail outlets for the sale of (imported?) gold and silver to the population at large and encourage them with TV advertising about the benefits of owning gold. Russia is now talking about selling oil and gas for "gold rubles". That is rubles backed by gold. Essentially meaning that buyers will be paying in gold for the Russian natural resources. Russia, too, is mining gold as fast as it can and storing it all in its Central Bank. The Western powers with their paper money seem to be in terminal decline. [ Visit Website ] Jul 15, 2010, 10:51 Newsletters : 2010 Newsletters : 23 July 2010 China Ratings Agency Downgrades US Debt From Moody's, S&P's, and Fitch's AAA Rating Last century we had two world wars and then the cold wars - America versus communism. Now we are starting the "paper war". How quaint! [ Visit Website ] Jul 14, 2010, 18:56 Newsletters : 2010 Newsletters : 23 July 2010 Ten Economic Blunders from History The world is currently suffering from the egregious economic error of using paper and digital currency as money. The end result is inevitable. Here are some other errors from history. Note the fate of most perpetrators! [ Visit Website ] Jul 12, 2010, 13:34 Newsletters : 2010 Newsletters : 23 July 2010 Quote for the Week The only freedom deserving the name, is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it. Each is the proper guardian of his own health, whether bodily, or mental and spiritual. Mankind are greater gainers by suffering each other to live as seems good to themselves, than by compelling each to live as seems good to the rest. John Stuart Mill (1806-1873) English philosopher and economist - Source: On Liberty, 1859 Jul 10, 2010, 12:38