Newsletters : Current Newsletters : 17 May 2013
Thought for the Day

Another year and another budget. Steady as she goes is the watch word and quite rightly so. Our government understands that wealth creation comes from ordinary men and women working at jobs that provide goods and services for which others are willing to pay.

It is that simple.

If they can also save a bit from their hard work then this becomes the capital which forms the base of capitalism. That magic potion that continually creates wealth unless some doctrinaire politicians poke their fingers into the works (with the very best of intentions, of course) and interfere. Then the magic doesn't work so well and may break down entirely.

John Key and Bill English are to be commended for their understanding of reality and for their ability to just keep steadily forging ahead despite the most atrocious head winds in living memory.

These winds are about to get much worse as Japan, the EU, the US and the UK (JEUUSUK) compete to devalue their currencies in the mistaken belief that paper money printed by Central Banks is the same as earned money saved up by ordinary people. This belief - the Keynesian Mistake - will continue to push the world towards the worst disaster that our bankers and politicians have ever seen or heard about.

Even Warren Buffett is beginning to understand what is happening as Fortune magazine reports:

"Warren Buffett has a piece of advice for Ben Bernanke: It's easier to buy than it is to sell.

Buffett, speaking on Saturday at Berkshire Hathaway's annual meeting in Omaha, said he is worried about what will happen when the Federal Reserve tries to wind down its recent efforts to stimulate the economy. Via a program nicknamed QE, short for quantitative easing, the Fed in recent years has bought up over $2 trillion in bonds in order to lower interest rates and promote borrowing and investment.

Some have warned that when the Fed decides to sell its trove of bonds, or even just stops adding to it, stock markets could tank. Rising interest rates could cause banks to lose billions, perhaps igniting another financial crisis. Buffett says we don't know what will happen, but he is concerned.

'QE is like watching a good movie, because I don't know how it will end,' says Buffett. 'Anyone who owns stocks will re-evaluate his hand when it happens, and that will happen very quickly...

'People make different decisions when they can borrow for practically nothing... It's a huge experiment.'

Charlie Munger, Buffett's long-term chief lieutenant, who was also talking at the meeting, says he worries about more than just inflation.

'What has happened in macroeconomics has surprised pretty much everyone,' says Munger. 'Given that history, economists should be more cautious when they print money in massive amounts.'"

Well, those of us who have studied the works of Mises and the other Austrian economists do know what will happen and every day it is becoming more obvious and more people are beginning to see for themselves, "There is no free lunch."

Hopefully all our own politicians and bankers can learn from the examples continually displayed of the disaster starting to rage in the Northern half of the world and they will decide to NOT print money! It will help to continually reduce the size and scope of government as this lessens the load that the ordinary people carry. Thus will more wealth be created and this will create more opportunities for others to join in with the REAL Work Force.

All this is being played out "Up North" but quietly not reported in the standard propaganda distribution system so that we do not become alarmed. It won't matter. Many ordinary workers I have talked to know about and understand the Cyprus Bank Rort and its implications. At some stage confidence will suddenly drain from the current banking system and some countries will be away with the hyper-inflationary phase.

Be prepared.


May 17, 2013, 11:26