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Contact:
Foundation for Economic Growth,
P.O. Box 10-282,
Wellington, N.Z.
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The Foundation for Economic Growth is a group of like-minded individuals who have decided to act rather than accept New Zealand's continuing poor economic performance. The Foundation is not affiliated with any political party. Add Your Comments here.

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Most recent update: Dec 15th, 2014 - 12:22:26

Newsletters : Current Newsletters : 15 December 2014
Thought for the Day

I thought I would start this Xmas message with a short quote from John Maynard Keynes:

"We will not have any more crashes in our time." - John Maynard Keynes, 1927.

You will notice that the date is 1927 just two years before the Great Crash of Wall St.

I cannot help but look at the world through the scientific lens. This approach was well taught to me in 1955 in the 4th form at Southland Boys' High School by my Physics teacher. It was written about by Karl Popper who was a Philosopher, teaching at Canterbury University in the 1930s. It has become known as the Null Hypothesis and is the basis for all correct thinking in science.

I say "correct thinking" because there is a lot of incorrect thinking going on in the science world which entirely ignores this basic principle, and the search for connections between cause and effect, and considers that statistics is science. Some of these statistical "experts" contort and distort the numbers they produce until they have reduced their "scientific thinking" down to the level of common propaganda.

The Null Hypothesis postulates that any hypothesis developed by a researcher should be tested by seeing if its predictions come true. If one prediction does not come true then the hypothesis should be rejected because if it is not true then it does not reflect reality. It doesn't matter if 10 predictions come true - it only takes one wrong one and the hypothesis is false and is discarded by REAL Scientists.

If our hypothesis withstands rigorous testing for a while we can elevate it to the status of Theory.

BUT all theories are continuously subjected to testing of their predictions and if one prediction is found to be wrong then the theory must be discarded - no matter the amount of money spent on trying to show it is true.

This is the way that scientists slowly and carefully pick their way through the facts that they turn up in their various investigations.

Statistics is not science. Statistics is just a means of giving us some idea about what a large number of results mean. It cannot show cause and effect and cannot form the basis of any scientific theory. The numbers may show us some interesting relationships between things but these are not necessarily anything but coincidences.

And so I continue to subject all economic theories to the Null Hypothesis test.

This is particularly interesting at this point in time for the development of economies around the world.

Keynesianism predicts that if a nation gets into a recession then the way to solve that problem is to expand the money supply. Modern economists predict that if that doesn't show results immediately then the problem is that the money supply was not expanded enough.

So these modern Keynesians are solving the problem of faltering economies by printing up great amounts of government paper money.

They predict a great prosperity for all.

Many people have examined Keynes' work and many books have been written showing how his theories are false. His first major prediction quoted above was wrong. That is all I need.

My theory is that this paper money system will lead to a great catastrophe for the world and that the people running the current paper money system will persuade everyone that the solution is to have a universal world paper money system just like Keynes suggested back in the 1930s. This paper money will be backed up by the full faith and credit of all the nations who currently have failing paper money systems.

It is no wonder then that ordinary people with a modicum of common sense are becoming a little suspicious about the ability of their leaders to understand the problem and to solve it.

But never mind the logic, the people in charge of the current regime are determined to press ahead and they are calling this new approach the "New World Order". Paper money from the IMF. Controlled by a New World Order of banking bureaucracy. I have listened to Gordon Brown speak of this on Youtube and Lord King speak to a group of Wellington economists about this New World Order.

May I wish you all a very Merry Xmas and a happy and prosperous New Year.


Dec 15, 2014, 11:08