Last Updated: Nov 19th, 2009 - 11:07:39 Newsletters : 2007 Newsletters : 3 August 2007 Thought for the Day In 2003 we set out to determine how New Zealand could get back up to number 2 or 3 in the World Wide Wealth stakes. Economic growth was the answer. If we could grow again like we did a century ago we would then be able to afford a truly first world standard of living. We have learned that the government's perception of economic growth is wildly astray and their legislation and regulation has dropped us another two places down the OECD wealth list. We need small government - the absolute minimum possible. We need strong property rights and an uncorruptable rule of law delivering justice. And we need a sound currency. Human nature will take care of everything else. But, on top of having all the wrong economic settings, the government has the problem of working with a fiat currency. This is a volatile mixture! You might also like to check out what Ron Paul, US Presidential Candidate, has to say about governments' having the power to print money. Try this Youtube page: http://www.youtube.com/watch?v=ji_G0MqAqq8 Aug 3, 2007, 15:28 Newsletters : 2007 Newsletters : 3 August 2007 Confusion Around Inflation Putting Monetary Policy Framework at Risk. We continue our search for the truth about economics and money and how best to run our country. This article by Roger in the Otago Daily Times will help. Aug 3, 2007, 08:14 Newsletters : 2007 Newsletters : 3 August 2007 Too big to fail: Germany rescues subprime lender. And this just to hand. Aug 2, 2007, 12:07 Newsletters : 2007 Newsletters : 3 August 2007 Vanishing Vigilantes Austrian economic theory predicts that when we run with a fiat currency then the economy will become distorted as people seek to maximise their opportunities with the excess money. You will recall that with a fiat currency governments have massive incentives to have "just a little" inflation. But one thing leads to another and before you know it we have derivatives flooding the financial markets to the extent of $400,000,000,000,000 ($400 trillion). Now that's not just loose change. This article from the Economist makes for very interesting reading. Every fiat currency in the past has disappeared. Every last one! Now we have a world of fiat currencies. Are our Central Bankers and politicians clever enough to figure this one out??? Aug 2, 2007, 09:24 Newsletters : 2007 Newsletters : 3 August 2007 How Do You Spell Contagion? D-E-R-I-V-A-T-I-V-E-S Here are some thoughts from a currency man, and New Zealand figures again. It looks like the tide has turned. Are we due for a neap tide or will the spring tide arrive? Time will tell. Aug 1, 2007, 10:23 Newsletters : 2007 Newsletters : 3 August 2007 Markets Dive as Fed Raises Stagflation Fears. It is interesting to observe the actions of Central Banks and the Federal Reserve in particular now that we know that inflation is really caused by governments printing too much money and issuing too much credit (measured by M3). In the 1960s Alan Greenspan wrote a paper on the importance of maintaining a strict gold standard but when he became Chairman of the Fed he explained how it wasn't necessary at all. His actions have produced the current mess in the USA and Ben Bernanke has the unenviable task of keeping control of the uncontrollable. Ben blames inflation on people assuming that there will be inflation - a circular argument if I ever heard of one. He is now defining inflation as only those parts of the economy that aren't inflating too much! He calls this core inflation! When you don't understand what someone is saying then it may not by your fault! Remember that Greenspan famously said that if Congress understood what he was saying then he must have said it wrong. He wanted to be obscure so that "the market" wouldn't rely on what he said. Maybe he was just economically incorrect. Jul 20, 2007, 10:14