Foundation for Economic Growth - Newsletter

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Last Updated: Aug 15th, 2008 - 11:26:43

Newsletters : 2007 Newsletters : 5 October 2007
Thought for the Day

If you glance back at newsletters you will see how we have developed our conclusions that the elements of a healthy and thriving economy are; Small government, Low taxes, No corruption, Sound institutions, Maximum freedom for the individual and Sound money.

This last aspect is now coming to the fore as we are beginning to see the results of the world running fiat currencies since 1971, backed by nothing but the word of politicians.

Not only will this help us to vote for politicians who are able to understand this aspect of economics but an understanding of what is happening will help us preserve our wealth as our economy lurches to dangerous levels of inflation or deflation in the very near future.

We can say what will happen - it is the timing that eludes us!


Oct 4, 2007, 13:01

 Newsletters : 2007 Newsletters : 5 October 2007
High Rise Investments Continue To Fall To Earth

As our theory predicts - after the boom comes the bust.

Our fiat currency of paper money has allowed the government to print too much money (ie. 16.5% increase in 2006) and as a result lending practices have been too loose. Just as theory predicts.

Our theory also predicts that this money that was produced out of thin air will go back to thin air. How does this happen? It happens in the bust. The Auckland apartment industry which fourished under easy money is now busting. When the expected selling price for apartments drops by 25% then we see that one quarter of the value of the total market has disappeared. If we have 50,000 apartments dropping in value by $50,000 then the money that has disappeared amounts to $2,500,000,000 - gone back into thin air!

Easy paper money is great fun until the bust.

Read the article here. . .

 [ Visit Website ]
Oct 4, 2007, 12:18

 Newsletters : 2007 Newsletters : 5 October 2007
Confidence Trick

The problems involved in stopping a bank run.


Oct 3, 2007, 18:31

 Newsletters : 2007 Newsletters : 5 October 2007
Citi Group Reignites Gold Manipulation Debate

The plot thickens. Are the Central Banks manipulating the price of gold? If they are; why are they doing it?

Visit this web site. . .

 [ Visit Website ]
Oct 2, 2007, 19:20

 Newsletters : 2007 Newsletters : 5 October 2007
Dollar Crunch Puts Gold Centre Stage.

Not only has the current government managed to lower our wealth per capita down the OECD by two more places, they have placed us in a dangerous position ready for the global paper money melt-down.

The only solution that is politically acceptable for Central Banks to solve the Credit Crunch with, is more of what caused the problem in the first place - print more paper money.

We sure live in interesting times!


Oct 1, 2007, 14:31

 Newsletters : 2007 Newsletters : 5 October 2007
Time to Shine

As we have discovered we are able to predict the future only to the extent that every boom is followed by a bust and that every fiat currency that has ever existed in the world disappeared to nothingness which is where it arose.

The bust that is looming will either be a defalationary one like Japan's over the last 15 years or a hyper-inflationary one like Zimbabwe. It just depends how the politicians interfere in the economy.

We know that people follow incentives and so we can get some idea of which option politicians are likely to take by understanding the incentive - "What's in it for me?" - from the politicians' point of view.

As all politicians know the main objective of the exercise is to "get elected next time" and as we saw in the last election it is no holds barred and legality doesn't enter into it.

So, would politicians prefer a recession with everybody feeling poorer and blaming them or would they prefer a bit more inflation which most people think is making them richer and just let the future take care of itself. After all, they may not be around when hyper-inflation hits.

One advantage of understanding basics in economics and politics is that it will give you a better idea of what may be a good investment and what might be a disaster. We do not purport to be investment advisors and my experience in this area is very limited but you may find this article interesting.


Sep 26, 2007, 11:42

 Newsletters : 2007 Newsletters : 5 October 2007
Why Bother Investing in Gold If the Price Is Manipulated?

One of the advantages of reading Austrian Economics is that it gives a true perspective of how economies work and what is happening in the world today.

Not only has the Labour government reduced our wealth relative to other countries they also have no idea of problems caused by loose money policies. In 2006 they increased our money supply by 16.5% and now they are holding an enquiry into the cause of inflation!

So, they are not alone. Most governments these days cling to power by printing money to keep the masses (you and me) happy. But the consequences are made clear from a study of Austrian Economics. Money that is created from fresh air will return from whence it came. Bear Searns learned about this in the current credit crunch when about $2.5 billion of asset disappeared.

Current thinking amongst the geniuses running Central Banks is that the solution is to print more money. Austrian economists will know that this may put off the evil day but that eventually the Day of Reckoning will come. Unfortunately I think that the longer it takes to get people back to earth and using real money the bigger the dislocation will be when it occurs. At the moment it looks like the countries of the world are slowly moving to synchronise themselves to all meet the wall at the same time.

Meanwhile the powers that be distract us with "Peak Oil" and "Climate Change".

And as Shakespeare's, Lord Polonius commented in Hamlet, 1603:

Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.


Sep 26, 2007, 10:08

Can we fix it?