Last Updated: Mar 25th, 2013 - 16:46:15 Newsletters : 2011 Newsletters : 9 September 2011 Thought for the Day And now the Rugby World Cup challenge begins. How can we think about economics and elections while the fate of nations hangs in the balance? Only with great difficulty! So this week we continue with our efforts to demonstrate that wealth is created by all those who work in private enterprise, whether as owners, managers or as those who actually do the work. If we can save some of the income we make each week this becomes useful as capital for growing businesses either directly or indirectly. Governments slow down this process by taking this money - or some of it - and using it for other purposes. They also slow down this wealth creation by passing legislation and regulation which constricts business and costs time and money before any work may be begun. Our economy has grown so large and complex that this wealth killing aspect of government is not seen by most people. It is only when it gets to extreme levels that people start to feel that something is wrong but most are not sure just what. Then we realise that on top of everything else we are trying to create wealth when the world's money system is breaking down. We are so accustomed to thinking that our unit of money measure has a stable value that the fact that it is devaluing by around 10% year in year out is totally lost to us. Especially when all currencies are being devalued at around the same rate. We will need to re-orient our thinking during the next few years if we are to preserve what wealth we have created and saved so far. It will not be easy. So, "Go the All Blacks!" Sep 9, 2011, 14:46 Newsletters : 2011 Newsletters : 9 September 2011 ACT's Twenty Point Plan Last election the ACT Party developed a 20 point plan which, if followed, they estimated would obtain an extra 5% growth for the nation. ACT is in power with National and the Maori Party and Peter Dunne and so far we have not really seen much movement towards the stated goal. Mind you, the world economy was dropped off a cliff in September 2008 when the American money market fell apart and the labour governments had left us a big hole in the treasury bucket from 2007 so the tide had definitely turned against us. But regardless, we have no option but to continue swimming so we might as well swim in the right direction! First Point The first point of the plan concerns government waste and I think we can see that our government is making progress in this direction. ACT's recent efforts to restrict regulations should make a significant difference over time. We notice that government departments are shrinking in number and staff numbers are being reduced. This is a good thing as we will only succeed when we have a small government and a large private sector left alone to devote itself to creating wealth. It is this entrepreneurial activity which produces jobs, exports and wealth for those involved. We are making a start but we have a long way to go. Second Point The second point on the plan is to reduce taxation and to flatten out the personal tax regime. We have made a micro step in that direction with the last change reducing income tax but we have INCREASED GST to make up for the shortfall and that was not the idea at all. As Churchill said, "For a nation to tax itself into prosperity is as for a man to raise himself up by standing in a bucket and pulling on the handle." But we are borrowing $380m per week so we are in a difficult position. How much time do we have before we cannot borrow any more? Third Point The third point wants to limit local government to core activities. I haven't seen any evidence that this aim is even on the radar! We are living beyond our means and we are better to stop doing so sooner rather than later. How much time have we got? Have a look at the other twenty points and you will see that overall our efforts have not yet shown much result. People are beginning to notice that prices are rising and they are being more frugal, borrowing less and paying off debt. Please try and find a political candidate who can give a sensible answer to the question, "What are you doing to help our nation create wealth?" [ Visit Website ] Sep 9, 2011, 15:04 Newsletters : 2011 Newsletters : 9 September 2011 Wealth Creation Our country is slowly coming to the realisation that to improve our well-being we need to create wealth. The study of this wealth creation process is called economics and is best described by the Austrian economists. The process of creating wealth is by starting and running a business. This involves entrepreneurial and managerial skills. Fortunately this process also creates jobs as business people need help in their enterprises. Governments do not create wealth. They take wealth from those that generate it and distribute it to others. Politics is all about this process. Too much taking and our collective wealth disappears. The politicians have this tendency to kill the golden goose that is creating the wealth that we all need to continue living this wonderful life. So to help us all talk to our politicians and explain to them that they can help or hinder wealth creation I thought we could examine it in more detail. Here is an interesting article by Paul Graham about wealth creation from his practical perspective and interestingly it contains much of general economic good sense. [ Visit Website ] Sep 9, 2011, 11:21 Newsletters : 2011 Newsletters : 9 September 2011 German Court Makes EU Survival More Difficult The laws of any land are there for the survival of the incumbent rulers, and as the Germans are now showing are "adjustable" to suit any situation. So much for "Rule of Law". The EU is now in more serious trouble and it looks like it may break apart before they succumb to hyper-inflation or long slow deflation which are the other alternatives. [ Visit Website ] Sep 9, 2011, 08:49 Newsletters : 2011 Newsletters : 9 September 2011 IMF: Global Economy Faces a 'threatening downward spiral' The IMF is hardly an alarmist organisation. However I find it alarming to hear them advocating creating more paper money to solve the problem of creating too much paper money in the first place. Issuing debt, borrowing money and printing paper money inspires a moral hazard that is overtaking the politicians and bankers ruling the major western powers. Europe is in trouble. Germany is the last hope and it is being sold down the river even as it is exhorted to save Europe. This will end badly. [ Visit Website ] Sep 8, 2011, 18:58 Newsletters : 2011 Newsletters : 9 September 2011 German Endgame for EMU Draws Ever Nearer The options are that either Germany funds everyone else and political control passes completely to unelected bureaucrats in Brussels or the EMU breaks down and the nation states go their own separate ways. Is there a circuit breaker in sight? [ Visit Website ] Sep 8, 2011, 18:16 Newsletters : 2011 Newsletters : 9 September 2011 Fiat Money: The Root Cause of Our Financial Disaster Gold is money and nothing else. One of the necessary ingredients for a sound economy is sound money. Paper money leads to the problems we are having right now around the world as country after country struggles with increasing debts. It is possible to move back to gold. [ Visit Website ] Sep 6, 2011, 17:12 Newsletters : 2011 Newsletters : 9 September 2011 A Story Missing From our Media: Iceland's On-going Revolution Here is a lesson for all small countries in the world - including New Zealand. Just remember this when our time comes! [ Visit Website ] Sep 6, 2011, 14:45 Newsletters : 2011 Newsletters : 9 September 2011 More Beijing Embassy Cables Show China Sees Gold as Central in Currency War America had a cold war with the USSR for many years from after the second world war to 1989 and now seems to have an economic war on the go with China. Who will win this one? And how will the rest of the world fare? Chris Powell of GATA explains. (Click the Headline). Sep 6, 2011, 14:02 Newsletters : 2011 Newsletters : 9 September 2011 Quote for the Week "How many Catholic schools do you think teach the students to question the authority of the Pope? Do you believe Christian schools teach students to question or challenge the authority of Jesus Christ? Do military schools teach the cadets to challenge the authority of superior officers? Well, why should we then expect government schools to teach children to question the authority of government?" Neal Boortz (1945- ) Radio talk show host, columnist. "It is worthy of remark that a belief constantly inculcated during the early years of life, whilst the brain is impressible, appears to acquire almost the nature of an instinct; and the very essence of an instinct is that it is followed independently of reason." Charles Darwin, The Descent of Man, 1871 Sep 5, 2011, 14:22