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Top 10 at 10: Gareth Morgan targets RBNZ for reform; Diversify into women and sheep; Dilbert
Here are my Top 10 links from around the Internet at 10am. I welcome your additions and comments below or please email your suggestions for Monday's Top 10 at 10 to bernard.hickey@interest.co.nz 
1. RBNZ partly to blame - Gareth Morgan has written a column in the NZHerald detailing the proposed reforms by the Capital Markets Development Taskforce and the Tax Working Group. He is a member of both. He departs from the script though to place some of the blame for our unbalanced economy and capital markets on the Reserve Bank of New Zealand's rules that encourage bank lending on housing by allowing less capital to be put aside to back those loans. Morgan also criticises trustees and financial advisers for looking after themselves rather than investors. Fair enough.
New Zealand's economic well-being has long suffered from a gross over-investment in property - inspired primarily by strong bias in Reserve Bank rules that incentivise banks to prioritise mortgage lending over all other forms, and supported by inappropriate tax loopholes for that asset class. So long as banks are encouraged by their central banks to favour mortgage lending over all other forms, the barrier to better sustainable economic performance remains formidable. The one taskforce missing in 2009 was one on our Reserve Bank's management of prudential supervision.
2. Who will pay? - The Deputy Governor of the People's Bank of China, Zhu Min, has pointed out in this Reuters article there aren't enough US dollars in circulation outside the United States to allow foreign central banks and investors to buy all the US Treasury bonds being issued to fund the US government's monster deficit. Yet somehow US Treasury yields remain near record lows. We'll see whether that lasts. The pressure is on.
"The United States cannot force foreign governments to increase their holdings of Treasuries," Zhu said, according to an audio recording of his remarks. "Double the holdings? It is definitely impossible." "The U.S. current account deficit is falling as residents' savings increase, so its trade turnover is falling, which means the U.S. is supplying fewer dollars to the rest of the world," he added. "The world does not have so much money to buy more U.S. Treasuries."
3. The global debt picture - The Economist's Buttonwood column has a truly excellent interactive graphic on debt levels globally which can be reached by clicking here. Unfortunately I can't embed it.
4. 'It's not our fault' - The New York Federal Reserve, which is part of the Federal Reserve System, has done a study into why it seems banks are not lending out their reserves. It seems the problem is circular and not the Fed's fault...or anyone's fault...and the massive buildup in reserves won't create inflation...
We argue that the concerns about high levels of reserves are largely unwarranted. Using a series of simple examples, we show how central bank liquidity facilities and other credit programs create"”essentially as a by-product"”a large quantity of reserves. While the level of required reserves may change modestly with changes in bank lending behavior, the vast majority of the newly created reserves will end up being held as excess reserves regardless of how banks react to the new programs. In other words, the substantial buildup of reserves depicted in the chart reflects the large scale of the Federal Reserve's policy initiatives, but says little or nothing about the programs' effects on bank lending or on the economy more broadly. We also argue that a large increase in the quantity of reserves in the banking system need not be inflationary, since the central bank can adjust short-term interest rates independently of the level of reserves by changing the interest rate it pays on reserves.
5. Yet we see this - Vince Veneziani at BusinessInsider reports from some Morgan Stanley research that US bank lending to non-bank corporates has slumped despite steady or growing money supply. The chart tells the story. Morgan Stanley is worried about a W shaped recession.
It is too early to amend our forecast of an anaemic developed economy recovery just yet. However, given trends in money growth and lending we would expect the monetarists to be warning about the risks of a W-shaped recession. With that in mind, there is a danger that markets and authorities become obsessed about the fiscal implications of the crisis at a time when the real worries should still focus on private sector access to credit and money. What is there for Monetarists to worry about? We show below charts of the growth rate (year-on-year) of bank lending to the private sector and broad money for the US, Eurozone, Japan, UK and China (Exhibits 1 to 5). What this shows is a rapid implosion of growth rates of lending from normal to negative in the UK, US and the Eurozone, and declining lending growth in Japan (and very high lending growth in China).
6. It's all over now - The US Federal Reserve is ending its special liquidity facilities for US banks because it believes the crisis is over, but this chart from ZeroHedge points out that much of it has been replaced by bond buying/quantitative easing/money printing.
What has been the outcome of this bailout orgy: simple, and you can see it in widening sovereign CDS spreads every day. Essentially the Fed has transferred private market risk for public sector risk. The associated "benefits" with this transaction we all know: a collapsing dollar, surging gold, balooning deficits which will be funded only so long as America agrees to be China's vassal state, increasingly disadvantageous trading terms for America with its key trading partners, and a disappearing middle class. What will be the cost? Nobody knows yet, however tens of trillions of budget shortfalls over the next decade is a sovereign crisis waiting to happen. As America has no hope of every funding these shortfalls organically, it will depend on financing more and more, and in a vicious circle, even more debt will need to be raised merely to fund the ever increasing interest expense, and yes, zero interest rates can only last so long.
7. Basel II with bells on - The Reserve Bank's core funding ratio to force banks to raise more locally and for longer terms looks like it will be adopted by the global coordinator of bank regulators. The Bank for International Settlements' Basel committee on banking supervision has released its proposals to strengthen global banks. They include the introduction of a leverage ratio and a liquidity policy that looks similar to the Reserve Bank's core funding ratio. The devil will be in the details that bankers will be reading closely, but the RBNZ deserves congratulations for leading the pack. Here's the FTAlphaville reportage of the first reaction with some detail.
The numerator of this ratio is roughly equivalent to "core funding", as defined in the Reserve Bank of New Zealand regulations and in our recent note "More important than Tier One?", 27 November.
8. Line in the sand - Talk that Greece, Spain and Ireland could somehow pull out of the euro is exercising minds oop north, but central banks and everyone with official hats on have said 'Nein!' Bruce Krasting at Naked Capitalism says we should all watch Greece because lines in the sand can often become targets.
The Central Banks have drawn a line in the sand for good reason. They do not have a choice. The countries that are at risk have issued mammoth amounts of debt in Euro's. If some form of two-tiered Euro were the result the cost of revaluing the debt for both the public and private sector would be devastating. The flip side is that the countries that are suffering have no policy options available to them. They can't provide a meaningful stimulus because of the Euro link and limitations on budget deficits that the link mandates. At some point this will become untenable. The argument that a two tiered Euro would stimulate both the tourist and industrial economies of Greece, Spain and Ireland (Italy too) becomes compelling. I don't see a soft landing. At an extreme where could this go? It leads to global financial instability, it could be very deflationary. Precisely what the global economy does not need. Greece is a bit like Sub Prime. By itself, it truly was containable. But it exposed other weaknesses. If one was looking for something to upset the applecart, Greece could very well be it.
9. The size of the task - This chart below from Rolfe Winkler at Reuters shows just how much deleveraging has to happen in America has to happen to get back to something like normal. It has only just started. At least 100% of GDP needs to be lopped off. That's over US$16 trillion. That's an awful lot of non-consumption over the next couple of decades. Click on the chart for a bigger version.
10. Congress lifted the US debt ceiling limit a couple of days ago. This cartoon says it all.
11 (bonus). Totally relevant video - Stephen Colbert at The Colbert Report joins up with other right wing talk show hosts to promote gold. It seems you need gold, but you should diversify with investments in women and sheep. They will keep you warm at night and can be eaten, in that order respectively. "Gold is the only investment that will never lose its value because it's gold, but only gold can only take you so far." Sheep's wool keep you warm, their bones can be made into tools and if you run out of women... New Zealand is truly a rich country...
| The Colbert Report | Mon - Thurs 11:30pm / 10:30c | |||
| Prescott Financial Sells Gold, Women & Sheep | ||||
|
||||
165 Comments
#1 Gareth Morgan's comments on
#1
Gareth Morgan's comments on the RBNZ are the first thing I've agreed with him on for some time.
Here's a good post on the Austrian position on central banks:
http://blog.mises.org/archives/011275.asp
So lets drop the idiot talk of yet more taxes (on taxes on taxes) to 'fix' this imbalance. Just dump the RBNZ, move to sound money and laissez-faire.
Oh, and of course the
Oh, and of course the von Mises quote:
Now we are seeing all
Now we are seeing all the dots being connected....US in depression (yes the "d" word)
less USD outflows, so less USD inflows into treasuries...(that's what big lender China says)
Then we have the Big Spenders...Greece (PIGS countries), not to mention our very own NZ.....all needing to borrow to pay for their spendtrift ways....
There is only one way to round this square peg....either interest rates goes up (which we sure are seeing now) or Goverment prints money...(some already are but trying very hard to hide).
The final result?...low growth (when goverment borrowing forced business to slow investment/hiring), or even continuous recession .....aka Japan Lost Decade.
The decades of credit fuel growth is over....
#1 - Morgan's comments on
#1 - Morgan's comments on the RBNZ are possibly merited. But didn't we have one of his infometrics lackeys on here last week telling us that we couldn't possibly mess with the RBNZ without bringing everything crashing down about our ears? Do you think GM actually reads any of the copious volumes of claptrap his employees produce?
Mark, surely you are not
Mark, surely you are not saying the Central Planning Committee (aka Federal Reserve of USA) got it wrong are you? Careful comrade, walls have ears you know.
It's at times like these I'm glad I live in NZ!
Good chart from the Economist
Good chart from the Economist Bernard. Pity it only shows public debt. I find the Economist difficult, I mean they don't still think private debt doesn't matter do they? Er, do they?
Surely total foreign debt is the crucial variable.
Roger - I think that
Roger - I think that is the point Steve Keen has been trying to make for years. Most economists ignore the role of private debt and the cost of servicing it. Mind you most kiwis now see debt (sorry credit) as only beneficial and nothing to worry about
I assume Morgans comments relate
I assume Morgans comments relate to the level of risk weighting on residential mortgages ? In this respect 1/. these are standard rules utilised globally - mostly set by the Basel accord 2/. the purpose of these risk weights is to protect against bank failues (of which it has been (mostly) successful) and not to stimulate capital markets.
@ Curtis - the article's
@ Curtis - the article's a bit oblique but yes thats appears to be the thrust. As #7 shows Basel isn't the route to perfection and there is scope for further refinement both at the national and international level. Raising the risk weighting on housing won't make the banks any less safe and might have a number of positive benefits (reducing asset bubble inflation, better control of momney supply etc.). Given how many other working groups are throwing out concept ideas at the moment there can't be any harm in at least looking at this one before dismissing it....
#1 - GM is being too timid.
#1 - GM is being too timid. System, and policy reform is what we need, as discussed in this thread:
http://www.interest.co.nz/news/special-report-why-nz-needs-bipartisan-gr...
@ Chris B - Scary
@ Chris B - Scary stuff having the RBNZ focus on providing both a stable banking system and charged with promoting capital markets. Especially if you consider a potential outcome of banks withdrawling from the market because of onerous capital requirements ?
@ Curtis, I sincerely hope
@ Curtis, I sincerely hope that noone's suggesting the RBNZ should be targeting promoting capital markets! That wouldn't be so much scary as terrifyingly stupid. :-)
But I wouldn't mind seeing some proper analysis on the likely impact and feasibility of targeting credit supply via tightening bank capital ratios. I'm rather of the view that the RBNZ spends a lot of time pushing on a string with its one lever, OCR policy. The large amount of offshore NZ$ brought about by recent credit growth (mainly housing) appears to have broken the expected orthodox feedback link between interest rates, trade balance, exchange rates and hence tradables inflation. At the moment interest rates impact the economy almost exclusively through feedback from domestic mortgage holders rather than actual business investment loans. This means significant collateral damage has to occur to consumers during a tightening cycle. politicians don't like this (which makes tightening at all very difficult as we have seen)...!
Gareth Morgan makes a tidy
Gareth Morgan makes a tidy living out of investors. All he is trying to do is scare investors away from other institutes and into his own pocket.
That's bullshit shorts. The guy
That's bullshit shorts. The guy is loaded and has no need to chase your money. On a funny note, anyone noticed how the moon has turned into cheese and the US Dollar is rising while gold falls...even though a top ranking Beijing banker has point blank said the Dollar will fall more. Talk about a mugs rally. My bet is the Fed is behind the buying in an effort to prop up the Dollar.
It annoys me when people
It annoys me when people defend GM like he is Jesus or something. I dont agree with shorts, nor do I with you Wally. I would be bored and looking for new energy outlets too if I didnt need to make money any more. No one would care what he has to say if it wasn't for that piggy-bank he has amassed. Never been impressed myself.
About time we read more
About time we read more about "The Elephant in the Room" this incentivisation of banks to lend on property makes it very difficult for small business to raise the funds they need. They can't create the SME's our country needs to create jobs and wealth. What little lending is available goes to home loans and continues to starve entrepreneurs of much needed funds. No wonder they keep jumping on planes to other places!
I understand the higher risk that SME's present to banks vs the safety of residential housing but surely all these giant financial brains in the taskforce could come up with a model which tips the playing field more to the favour of channeling much needed extra funds to SME's.
If they are serious about catching up with Australia they would look at this more closely.
On related themes to many
On related themes to many in this thread. Peter Schiff explains how Bernanke printing press could sink the US economy into a South America like hyperinflation - a must listen:
http://ow.ly/16aPrN
You need to go to the link then scroll down (by the way, the link is from a Warren Buffet tweet).
'Anyone holding US dollars is going to go broke. The currency could start going down at 5% a day ...'
@ Luke - Im far
@ Luke - Im far from impressed - i think hes a plonker. He has said the most ridiculous things in the past but I guess it makes good press.
Sorry David but expecting govt
Sorry David but expecting govt and the RBNZ to end the property madness, is doomed to failure. Too many mps with too much to lose.
@ Curtis. Its the regurgitation
@ Curtis. Its the regurgitation of his ideas by those who have read his book (in the most part this is were their econ education starts and finishes), and their infuriating blind agreement which gets me! Just another main-stream dog barking away with no bite.
@ MH. Hopefully this does not become Peter Schiffs story if he cannot topple ol' Dudd in Connecticut. His close proximity to Fox News, in particular Glenn Beck is dangerous in my view.
@ Luke, Curtis agree. GMK,
@ Luke, Curtis agree. GMK, the worst performing Kiwisaver on the market currently. Think about that, the Thinking persons Kiwisaver.
Watching Fox doesn't actually change
Watching Fox doesn't actually change the reality of economic theory and practice Luke.
@ Mark This guys written
@ Mark
This guys written a book to debunk Schiff and the goldbugs (Coff Wally Coff Coff)
http://hyperinflation-us.com/90_percent_rule_recs.htm
Understatement MH. But PS constant
Understatement MH. But PS constant appearances and buddy-buddy agreements with those lunatics wont see him elected to Senate. In my view he alienates his campaign supporters further by doing it. Neo-liberals dont fit in with modern republicans.
And what reasons do you
And what reasons do you give for the Fox presenters being, quote, 'lunatics'? Or Neo-Liberals?
I have to work today
I have to work today im afraid MH - cannot give you an essay - but are you serious? Glenn Beck - what reasons do you give for him and the like not being 'lunatics'? Fox presenters are 'modern republicans', and PS a libertarian. PS campaign supporters are not Fox viewers.
My point: Having such a presence on Fox will be detrimental to PS's campaign.
Colbert = gold.
Colbert = gold.
Spidy Sense..I'm not a gold
Spidy Sense..I'm not a gold bug OK...I am a copper bug!...and having read most of the link I find there are caveats to his predictions, that make me laugh. I ask myself a few simple question: Is the Fed on a path that will devalue the Dollar?...the answer is surely..yes. Does the decline of the Dollar since late 08 explain the rise in commodity prices..yes but not entirely. Will the US be able to magic away its trillions in deficit..NO. Can they afford to fund the deficit..NO. Are they likely to go on devaluing the Dollar to wash away the debts..Yes. Will this not force up commodity prices..Yes. Should I go long the USDollar and US Tbills..NO. In which case, where should I park my wealth if I want to preserve it?..what do you think SS?
And what's wrong with Libertarians
And what's wrong with Libertarians then? (This carries the caveat I don't watch Beck anymore, his emoting annoys me, but I am a Libertarian.)
Sorry about that Wally I
Sorry about that Wally I was coughing and accidentally typed your name in there (note to self, Wally is a copper bug)
I agree, what the US and co are doing is OTT and it's pretty obvious there are going to be extreme consequences down the track.
P.S I like the look of PNA, any thoughts on GDO??
What's GDO?...the shares have dropped
What's GDO?...the shares have dropped today on heavy trade but that's par for the course considering the scare mongering rubbish about gold in the media..good buying level!
Your too sensitive MH. I
Your too sensitive MH. I am also a libertarian, although that doesnt mean other libertarians should not be exempt from my criticism.
Well you haven't actually told
Well you haven't actually told me about the source of your criticism, vis a vis Fox, luke.
A fresh installment of the
A fresh installment of the Global Europe Anticipation Bulletin is out and it aint pretty......
"LEAP/E2020 believes that the global systemic crisis will experience a new tipping point from Spring 2010"
http://www.leap2020.eu/English_r25.html
Doing anything but removing the
Doing anything but removing the cancerous tumor that is the compounding interest that has to be found to keep up repayment on excessive loans of created credit issued by the privately owned central bankers, is doing little more than paying for repeated expensive surgery to the greedy doctor to address the gangrenous symptoms of the cancerous tumor, when all the while both you and the doctor are aware the tumor is there and is the cause, but I quess we just like being the Sheoples, herded and harvested. I know some of you folks out there are clever, but I am afraid if a number of others don't soon start to take note of the ever mounting evidence and the sizable public credit reform campaigns that are going to occur in US and Britain in the new year, I am going to label you either fools or liars:
http://www.chrismartenson.com/forum/total-debt-growth-vs-gdp/22972
http://www.wealthmoney.org/documents/8thWonderWorld.pdf
http://ips.ac.nz/events/downloads/2008/Bertram.pdf
http://www.wealthmoney.org/documents/SomethingWrong.pdf
"May 28 "“ New Zealand will increase its bond sales by 55% this year as the shrinking economy erodes tax revenue, forcing the government to fund its operations via debt.
The New Zealand Debt Management Office will sell up to NZ$8.5 billion of bonds this financial year, up from NZ$5.5 billion the previous year, with a further NZ$11.5 billion forecast next year, and $15 billion in each of the following two years. The DMO's weekly sales will rise to between NZ$150 million and NZ$200 million per week, up from a NZ$75 million average in previous years."
http://www.scoop.co.nz/stories/BU0905/S00784.htm
"Momentum is building behind the establishment of a Local Government Bond Bank to help councils finance $30 billion of planned infrastructure spending over the next 10 years."
http://www.stuff.co.nz/business/industries/2392852/Council-bond-bank-pla...
You can trust us private bankers, were nice people, of course well let you pay it back over 4000 years at 4 odd %, well never again foreclose on you and make you sell all your necessities of life to our subsidiary transnational corporations and by the way, all those other countries who are starting legal action against us for predatory lending practices, they are just silly, you can trust us we have sent one of our best men down there in Mr John "the smiling assassin" Key, just dont you worry Sheoples, oops, I mean Peoples, just put on the card and have a very merry spend up, oops, I mean Christmas.
Very good new site here:
Very good new site here:
http://www.wealthmoney.org/
Great vids here:
http://www.youtube.com/user/thebyrondalechannel
In the midst of the
In the midst of the rubbish being written about the US Dollar "rebounding" to become a strong player among all the rolls of toilet paper, this report stands out:
http://www.marketwatch.com/story/conditions-for-gold-rally-could-crush-o...
Wally, partook of a taxi
Wally,
partook of a taxi ride yesterday. Taxi Driver tuned into one of those talkback stations that airs spruikers advertorials.
Advertorial that caught my attention was an ad for leveraged Gold.
If Gold, as a leveraged, speculative play, is being advertised on talkback radio, then I'm starting to think its a bit bubbleiscous
Its a punt that might come off. But I would be a little nervous about gold at the moment.
Then again, Gold could go down in USD terms, and NZ gold investors may be up in real terms if the NZD crashed.
I understand you may be well up on Copper. Have you considered taking some money off the roulette table?
Mish has a recent post at
http://globaleconomicanalysis.blogspot.com/2009/12/china-faces-crash-sce...
And he posts links that would give anyone, who has bet the farm on copper, reason to consider how to hedge their investment.
http://www.bloomberg.com/apps/news?pid=20601080&sid=aPnN0QMZrodk
http://www.bloomberg.com/apps/news?pid=20601109&sid=a1B_ZBQfii8Q
and
http://www.kitco.com/ind/Cook/nov112009.html
The thing is Gibber, nothing
The thing is Gibber, nothing is secure. I hold the shares in the face of the screaming demand for a collapse here and a bubble there...this constant barrage of 'well meaning' comment is worthless beyond being 'entertaining'. Where were the gold anti bugs when it was less than $300?..how many of them advised readers to buy property!..if they knew so much why did they get it so wrong...All I know is the US Dollar has been losing value every year..as has the Kiwi..paper money is always being devalued by thieving govts..The question then is, how much capital do I commit to metals knowing the share price will fluctuate as the market corruption takes place!..I lose if the growth in the BRICA nations does not happen..but then I win big when the market wakes up to the demise of the toilet paper in western economies..ditto as the demand for copper continues to grow..even better when Pan Aust finally stops pissing about and reports a mine go ahead at BanHo where the gold deposit is. I just have to wait..If Bernanke screws up, gold will shoot up. If he gets it right, demand for copper will shoot up. I hold both cards in this hand. If he prints yet more loot, both go up!
Wally – The top ranking
Wally "“ The top ranking Beijing banker is not the only one claiming the dollar will fall.
"The US dollar has failed. We need to delink," said Nahed Taher, chief executive of Bahrain's Gulf One Investment Bank.
The "Gulfo"?
http://www.telegraph.co.uk/finance/economics/6819136/Gulf-petro-powers-t...
Haha the Colbert report video
Haha the Colbert report video is a classic, no doubt some people like him, but from what I've seen of him Glenn Beck is one of the biggest right wing idiots out there.
NZ wide open to massive
NZ wide open to massive land grab
http://www.greens.org.nz/press-releases/nz-wide-open-massive-land-grab
Rates woes hit Christmas rush
Rates woes hit Christmas rush hour
http://www.stuff.co.nz/manawatu-standard/news/3174758/Rates-woes-hit-Chr...
1999 the threshold for foreign
1999 the threshold for foreign invstment to be investigated as to its being in the national interest of wider society was $10 million dollars, last Labour Govt increased it to $100 million, new National Govt about to increase it to $470 million. What is this going to mean for private central bankers financing dip shits into projects that they know will fall into debt repayment crisis and foreclosing on them to drive the real assets into the hands of the financiers subsidiaries?
"Currently that threshold is $100 million (above which all foreign investors have to get their applications rubber stamped by the Overseas Investment Office). The new threshold will be $477m. Considering that it was $10m until 1999, this represents a nearly 5,000% increase in only ten years!"
http://canterbury.cyberplace.co.nz/community/CAFCA/OIReview/Media24Aug09...
http://canterbury.cyberplace.co.nz/community/CAFCA/OIReview/OIReview2009...
We will all to soon know the motives of Frank Bainimarama if the central banker co-operatives are allowed to continue to ram their back-pocket agenda through at break neck speed. It will be all to late by the time races and religions realise they were focussed on the wrong foe, and we are all destined to be sweat shop labour in the leisure economy of an elitist class.
Does any one know what
Does any one know what 'fractional reserve lending ratio' the RBNZ uses in New Zealand.
i.e. put simply, how many multiples can the banks legally create (out of thin air) as a ratio of their deposits.
e.g. $10 billion of investments-deposits, at a 10 to 1 ratio (which is my guess !!!) allows them to create out of thin air, $90 billion extra to loan to NZ'ers (i.e 90+10 = 100, which is 10 times the deposits); which invariably means extra money being lent for mortgages to buy houses.
If this ratio was a more sensible two or three multiple, which the USA and UK etc had until about the second world war, rather than the ten to twenty fold ration they've been running over the last 10 or so years, then house price inflation wouldn't have happened.
It's NOT house shortages pushing up prices, it's the easy availability of credit, that's created out of thin air, that's caused 0-5% deposits etc and allowed prices to become so stupidly high.
Does any know the ratio?
Bernard perhaps?
Cheers
Moody’s warns of 'social unrest’
Moody's warns of 'social unrest'
http://www.telegraph.co.uk/finance/economics/6819470/Moodys-warns-of-soc...
Worship of Kiwi celebrities a
Worship of Kiwi celebrities a 'false idolatry'
http://www.stuff.co.nz/science/3155697/Worship-of-Kiwi-celebrities-a-fal...
As usual, good links, Iain
As usual, good links, Iain
Here's another:
http://canterbury.cyberplace.co.nz/community/CAFCA/OIC.html
@Kevin 2.06pm. "New Zealand banks
@Kevin 2.06pm.
"New Zealand banks do not practice fractional reserve banking. In accordance with Reserve Bank regulations all Trading Banks must hold the equivalent value of all their lending in both cash or Government stocks and bonds."
I assume this is why NZ needs to borrow the amount of capital it does.
http://www.businessdoctors.co.nz/Text/18/M2-Magazine-May-2009.html
The most valuable asset NZ
The most valuable asset NZ has to offer is prime agricultural land and water. Overseas buyers will be very keen to buy large parts of it. More forestry and farm lands are going to be the sold to overseas investors.
<blockquote>Update: November 2, 2009 --
ROFL LOl ROFL.
That says all I need to know about that article :)
Try this one then Jon
Try this one then
Jon Stewart from the daily show on Glenn Beck & Gold
http://www.thedailyshow.com/watch/thu-december-10-2009/beck---not-so-mel...
Nicholas Arrand The Reserve Bank,
Nicholas Arrand
The Reserve Bank, private sector banks and the creation of money and credit
http://www.rbnz.govt.nz/research/bulletin/2007_2011/2008mar71_1lawrence.pdf
Care urged over Dubai farm
Care urged over Dubai farm deal
http://www.stuff.co.nz/business/3178263/Care-urged-over-Dubai-farm-deal
To scare the copper out
To scare the copper out of you,,
http://globaleconomicanalysis.blogspot.com/2009/12/china-faces-crash-sce...
Inflating our way out?
http://www.telegraph.co.uk/finance/comment/edmundconway/6830938/Theres-o...
This is one of the
This is one of the most lucid analysis of where we are and where we're going IMO.
Edward Harrison
"Right now, if you listen to what President Obama is likely to do, you know that the government prop for the economy is going to be taken away. Get ready because the second dip will occur. It will be nasty: unemployment will be higher and stocks will go lower than in 2009. I The question now is one of timing: when will the government stop propping up the economy? The more robust the recovery, the quicker the prop ends and the sooner we get a second leg down.
So to recap:
A depression was borne out of high levels of private sector debt, the unsustainability of which became apparent after a financial crisis.
The effects of this depression have been lessened by economic stimulus and government support.
Government intervention led to a reduction in asset price declines, which led to stock market increases, which led to asset price stabilization and more stock market increases and eventually to asset price increases. This has led to a false sense that green shoots are leading to a sustainable recovery.
In reality, the problems of high debt levels in the private sector and an undercapitalized financial system are still lurking, waiting for the government to withdraw its economic support to become realized
Because large scale government deficit spending is politically unpalatable and unsustainable over the long-term, expect a second economic dip within three to four years at the latest."
http://www.ritholtz.com/blog/2009/12/the-recession-is-over-but-the-depre...
@David: I note that such
@David: I note that such comments of a second dip are becoming common place...so is it the banksters trying to out-psyc the US Govn into not taking away the prop? right wing talk show hosts aiming to blame Obama for the "disaster" or the real thing?.....Given the P/E ratio of the share market is insane and how many companies rely on consumer spend Im just waiting for the fear to overtake the greed and trigger a drop...Im just wondering where the event causing that is coming from so many to choose from...oh and oil is working its way down....slowly that's for sure, but its sort of agreeing with all these negative vibes out there. How can anyone think or believe what they hear ie that its recovery time...
@The chairman: Countries like Saudi
@The chairman: Countries like Saudi have been rumoured to be foreign buying land in order to feed their growing population in the future....when you consider that NZ is highly productive, you have to wonder why more farms and land hasnt been sold. Also if you have lots of soon to be worthless USDs and US IOUs why not buy something real with it...The only thing I dont see on their plan to ship food grown abroad home is what if the Govn in question stops them...how can they guarantee delivery...if say we are short...
regards
Gosh thanks for the xmas
Gosh thanks for the xmas present there AndrewJ.....like I really think that bloke is telling the truth..not!...the market price is the only accurate guide!..try this out:
http://www.marketwatch.com/story/commodities-dont-diversify-stock-market...
Kevin and Nicholas Arrand, Your
Kevin and Nicholas Arrand,
Your comments re Capital Adequacy Requirements, in 1985 there was a structural change in the multilayered international commercial banking network, registered deposit taking institutions(banks) moved to a Credit Multiplyer regime, whilst non-registered deposit taking institutions(finance companies etc) remained on the Capital Adequacy Requirements. Re below, remember, for the Western allied or conquered banking network, that the Board of Directors(Bank of International Settlements - BIS) for the private international banking network is based in Basel - Switzerland with back offices in London(Bank of England) and New York(US Federal Reserve) both are private institutions that sit within their governments, then all national central banks are subsidiaries of the private central banking network operating with differing levels of independence, we are told for our own good, within the governments of most nations. Then, all major international financial development institutions, IMF - WorldBank - OECD; via voting structures, are subsidiaries of the private central banking network(irrefutable proof of above re NZ here http://publiccreditorbust.blog.com/2009/08/31/iain-parkers-submission-to... ) back to what occured in 1985 below:
"The book-entry program of the Federal Reserve, United States Treasury and several federal and international agencies has succeeded in largely replacing paper U.S. Government and agency securities with computer entries at Reserve Banks. By eliminating certificates, government and agency securities are better safeguarded and more rapidly transferred by the nation's depository institutions.
Securities in book-entry form are less vulnerable to theft and loss, can't be counterfeited and don't require counting or recording by certificate number. In addition, owners do not submit coupons to obtain interest payments or present certificates to redeem securities.
As of year end 1988, about $1.8 trillion, or 98.7 percent of the outstanding marketable Treasury debt, was in book-entry form. All Treasury securities held in physical form by depository institutions"”whether owned by them or held on behalf of others"”are eligible for conversion to book entry and for transfer by wire."
http://www.newyorkfed.org/aboutthefed/fedpoint/fed05.html
-----------------------
Our (NZ) finance companies, as allowed by BIS international regulation, were able to issue as much as $92 of created credit as loans for every $8 of deposits, thus when their immediate liabilities(withdrawls) exceeded $8 in every $100, without access to a higher creator of further credit as the registered banks do, they became insolvent, lest the government tapped them into a higher creator of credit via the taxpayer/govt bond complexity, which is exactly what happened, further delivering us into servitude of the private central bankers.
Now, although monopoly of the money(medium of exchange) supply, in its various forms, by slaveminded elitist's and the lending out of that supply at usurous rates of interest has been a many times repeated conspiracy against societies since the human species developed the ability to communicate and record transactions, the impact of this conspiracy has exponentially grown at various stages as the Means of Exchange(money) has changed forms and with evolving technology. Everyone of these changes has seen the real physical form of money in circulation reduced in proportion to what is created to virtually represent money.
Since the inception of electronic debt book created credit, binary bank vaults(computer) and the expanding of the electronic transfer system, in most developed nations the amount of real money(notes and coins) in circulation has dropped to 3%. This has been allowed to happen because a modern run on the bank is far more likely to see people, due to trained confidence in the modern system, electronically transfer their binary bits that now represent money, out of the account they have lost confidence with into another they think is safer. If this puts a drain on any banks supposed reserve limits the modern electronic debt book entry system simply allows them to type in some more, that is of course unless they decide to make a sacrificial lamb of the odd institution, or lowly copy cats, in order to keep peoples confidence in what is a confidence trick. This is the basis of the credit multiplyer effect and the only limits to its expansion is said to be the private bankers expertise and prudence as they have become more acturaries that actuals.
Iain..you will have to excuse
Iain..you will have to excuse me for I have not been reading all your posts!..trying to preserve what little sanity I have in this nuthouse...but if I am right, you think govt should issue its own credit and not borrow...fair enough...my issue with that is ...I do not trust govt any more than I trust Goldman Sachs or the Fed or a banker...they are all prone to the same dirty games with other peoples money..right!...So let's imagine we changed to having the govt issue credit...where are the controls Iain..where are the financial police???
Greetings all from South Beach
Greetings all from South Beach Miami. I'm in the USA for 5 weeks so not following this much but glad to see everyone ticking along.
Nice to see Gareth Morgan gettung more publicity for talking about RBNZ reform......of course other less important people have been banging on about this on this blog for ages.
Maybe Gareth's nicking our ideas?
I discussed Basel III here a few months ago. Credit will be tightened and rightfully so. We may eventually get back to the days when you could borrow 3x your salary and when you needed a 20% deposit to buy a house.
http://sustento.org.nz/market-watch-g20-tightens-the-purse-strings/
Problem is you wouldn't get markets going up 40% which means it might all be a bit boring. Imagine a world with a stable money supply, stable rates of interest, markets which fell and rose on actual achievements and.....with little leverage......Goldmans would be out of business so I guess that won't happen. That's really the problem. The people in charge will look after their own interests first.........nothing new there.
View from the US: no problem getting a table at Spago in LA or Nobu in South Beach.....massive sales on at all shops pre Xmas....hotels are not full......people seem pretty cool about things but its discount city at the moment. Property is still cheap and people still feeling the pinch.
But the sun is still shining which has to be good.
Wally, I have studied intricately
Wally,
I have studied intricately the history of markets, currency and banking for over a decade now and have had many moments of sad realisation that just stagger me, created credit, multiplying credit expansion, the fact that any NZ citizens could be so slaveminded etc. I have stated many times, it purely comes down to decency of leadership. If you study the history of political or religious systems, you will find periods where they are administered by decent people for the good of their followers and periods where decency is infiltrated and turned into crony pyramid scams that favour only the administration and their bribed co-operatives. Hence the many denominations of each and all as they have splintered down the ages when the followers have woken up to the fact that they are having the piss taken out of them. Most every major human upheaval has been caused by the monopolisation of the means of exchange by a few cronies and their bribed co-operatives.
It has been a long while since I have had a staggering realisation, but just the other evening after making the below posts;
http://www.interest.co.nz/ratesblog/index.php/2009/12/18/top-10-at-10-ga...
http://www.interest.co.nz/ratesblog/index.php/2009/12/18/top-10-at-10-ga...
I had a realisation that that made a pigs arse of myself for thinking I fully comprehended every aspect of the private international banking network, when I didn't and I owe many much more intelligent hard working persons an apoligy. Decent people have many times attempted to turn the administration of credit into something that serves society as opposed to something that entraps it in servitude, yet the private banker has always managed to continue to grow that much more disproportionately wealthier than all else that he can tempt even the most decent of people with huge bribes.
I used to think that if the Private Debt Based Monetary System were in more decent hands and the issuance of created credit kept in the boundaries of human and sustainable natural resources, that created productivity could actually exceed the impost of compounding interest upon issued created credit, thus although still very disproportionate and unfair, a trickle down of wealth to the many could occur. It was not until the other evening I finally had the sad comprehension that under the modern debt based system that the above is not possible. Over the centuries the reduction of what physically represents the means of exchange(notes and coins) in circulation to 3% now sees 97% odd of the means of exchange(principal as created debt book entry credit) enter circulation with compound interest attached to it, owed to the private international banking network. This means that credit with compounding interest attached must be borrowed to produce anything(privately or nationally) that credit with compounding interest must be borrowed to consume what is produced(privately or nationally) and return the means of repayment to the producer, given the revolving nature of the above, the fact that only the principal is issued into circulation and not enough to cover the compound interest attached, the compouding interest owed continues to exponentially grow unabated. The end result can only be balance of payment crisis and deeper debt servitude.
The effect of compounding interest within the current privately owned debt based monetary system turns international commerce into a casino, the games in the casino are called Stock Markets, Housing Markets etc and as with any casino some people might beat the system out of shear luck, but most will lose to it by mathamatics and design.
Wally the bankers own the corporates that own the media that dont make this common knowledge. The above must be made common knowledge and we must hope that sufficient people in our society realise that a self interested parliament and a self interested electorate only play into the hands of the private central bankers that constructed and designed the casino that is the current global monetary system with its rigged market games. We must then hope that the majority will vote to remove the slavery inducing compound interest that currently comes attached to our credit money supply and the reason that the administration of the new credit money supply without compound interest attached should be in the hands of public representatives is in order that a financially literate electorate can hold them to account by way of a fully informed vote.
Sir Josiah Stamp (1880-1941) President of the Bank of England in the 1920's, speaking at the commencement address of the University of Texas in 1927
"Banking was conceived in iniquity and was born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits."
----------------
In conjunction with interest free public credit, commercial banks must also have the power of credit creation removed from them. And, the money supply must be kept within the boundaries of sustainable natural resources and for that matter so must the human population, because Wally, to surrender that the above will never happen, that learned behaviours of common decency will never overcome our self destructive animal instincts, is to surrender us to a torturous future for most.
I personally, apart from the odd down moment, are an optimist that believes mans problems have been created by man and can be solved by man before we waste our supposed intelligence advantage.
I hope you got to here Wally, or I will have one of those down moments.
I'm not bloody reading all
I'm not bloody reading all that Iain...cut your answer down to 4 lines. 2 per question.
Sorry Wally, sometimes complex things
Sorry Wally, sometimes complex things developed over centuries can't be fitted into a couple of lines, sadly you'll just have to remain blissfully ignorant until the knife is right at your throat, but of course by then its all to late.
To those a little more motivated to find out if the dust on the horizon belongs to friend or foe before they are in your face, re the above post, just imagine if we borrow, with compounding interest attached, from the private central bankers the $45 trillion they are suggesting we need to "invest" to combat climate change before 2050:
"This is a start. Achieving the large-scale greenhouse gas reductions that scientists say are needed will require a massive global shift to cleaner energy sources and technologies.
The International Energy Agency recently estimated that the world will have to invest as much as $50 trillion through 2050 in new energy infrastructure and equipment in order to reduce carbon dioxide levels to half of today's levels.
The renewable energy market is already taking off. Global clean energy investments quadrupled in the past four years, to $150 billion in 2007. Toyota is growing at breakneck speed because it saw that consumers wanted hybrids and other fuel-efficient vehicles. US automakers ignored climate change "“ and now their large sport utility vehicles are sitting unused in car lots and their very survival is at stake. "
http://www.ceres.org/Page.aspx?pid=913
The renewable energy sources mentioned above are needed anyway and will naturally address polution, thus they are the obvious perfect opportunity to back a reformed new monetary system of interest free public credit before it becomes another opportunity stifled and stolen.
Sorry Wally, I will not being changing my behaviour for unmotivated peoples, the only time I would consider such a thing would be after examining irrefutable evidence from motivated people.
You mean NO!
You mean NO!
Indeed, Steven. Governments and corporations
Indeed, Steven.
Governments and corporations are making a play for the world's resources.
Here are the Overseas Investment Office Decisions from January to June 2009. There are a few land and farm sales listed.
http://canterbury.cyberplace.co.nz/community/CAFCA/cafca09/index09.html
Previous years can be found here:
http://canterbury.cyberplace.co.nz/community/CAFCA/OIC.html
No matter how severe the local shortfall becomes, once resources are sold there is little (apart from attempting to repurchase) Government can do. International trade agreements limit Government's recourse.
Believe I have read something
Believe I have read something on this blog a month or so back about China divesting exposure to US dollar, and moving into commodities eg primary products derived from land.
As a actively farming Fonterra shareholder, eager to retain some control over my destiny, and hopefully my childrens, I'm very concerned with unsupported suggestions such as made by Don Brash (hard to believe retains any credability) for Fonterra to be encouraged to abondon it's co-op structure, which has proven successful for over 100 years, in favour of corporate structure so as to drive efficienies???!!!. Given above comments in this blog, this would mean my kids and I can look foward to milking cows for the benefit of China, an employee on my own land. Can't say I'm too keen with that prospect.
Recent movement to large scale corporate farming begs the question as to what will be their destiny, eg Crafer farms, Allan Hubbard (Dairy Holdings), Armer Farms, to name a few. Quite substantial farming enterprises for a NZer to stump up and buy when they eventually come to be sold. Will this be a way for foriegn interests to get a foot in the Fonterra co-op door?
Wholesale and retail are both
Wholesale and retail are both acceptable to us. Welcome to our site and free to look! Thank you and wish you a nice day. Good Luck!
Wally, Does this fit your
Wally,
Does this fit your small bite stipulations;
The bankers own the corporates that own the media that dont make the private debt based monetary system common knowledge. It must be made common knowledge and we must hope that sufficient people in our society realise that a self interested parliament and a self interested electorate only play into the hands of the private central bankers that constructed and designed the casino that is the current global monetary system, its rigged market games and its created credit reserve currency chips . We must then hope that the majority will vote to remove the slavery inducing compound interest that currently comes attached to our credit money supply and the reason that the administration of the new credit money supply without compound interest attached should be in the hands of public representatives is in order that a financially literate electorate can hold them to account by way of a fully informed vote.
International farmer, Unfortunately two distinct
International farmer,
Unfortunately two distinct sectors have developed in farming:
1 - those that wish to make longterm fair and reasonable gain from the production and selling of dairy products that will see them get from one end of life to the other with dignity, in the conjunction with the longterm economic wellbeing of all of NZ society
2 - those that are interested in making short-term capital gain from the buying and selling of farms to whom ever is prepared to pay the most, without a care in the world for the long-term economic wellbeing of all Kiwi's.
Private central banker puppet governments, of all denominations, have dominated our entire short history, allowing the private central bankers ever more control of our economic and social policy via their cycles of excessive lending of created credit, inevitable balance of payment crisis, foreclosure and liquidation sale of real assets into markets which they also dominate.
The Douglas - Richardson tag team era saw in 1995 the repeal of Land Aggregation Laws which they described as a policy of economic envy owing its existance to the misguided notion that people should not be able to accumulate to much wealth.
After the Land Aggregation repeal the long-term interests of NZ were supposed to be protected by the fact that any farm forsale must be put on the local market for two months before it be offered to oversea's buyers and that sales of land of parcels over a certain size and value must be investigated as to if they are in the long-term national interest. These protections have since been water down to be nearly non-existant open slather.
The private central bankers can now use their created credit, money written into existance by debt book entry, money that did not exist before someone promised to borrow it, to underwrite deals with local co-operatives to buy large parcels of land. They will happily lend the locals more than they know the going concern will ever enable them to keep up the repayments on because they will get to force them to sell the asset on their terms. Or, they will happily deal with locals simply seeking to make a quick buck by being the go between in deals that will ultimately see assets of national interest end up in the hands of private central bankers and their corporate subsidiaries.
@International Farmer: Fonterra has to
@International Farmer: Fonterra has to remain out of corporate hands IMHO...its got enough debt as it is....it needs to be paid down, and not rolled over. Just listening to the stupid comments about how putting SOE's on the share markets as they are "quality" one just has to ask WTF happened to the last lot of "quality" organisations private enterprises tookover from Govn. Its simple and obvious what will happen, more greedy banksters will get a fat cut, Fonterra / SOE's will be eviscarated and loaded with debt by private equity and left for dead....just like last time....
@The Chairman: and yet some countries "simply" stopped the export or added huge tarrifs on food, India for rice (vietnam?) I think Argentina did something as well....so actually I dont think its that limited without a specific free trade agreement (note sure on that)....ultimately what can the foreign Govn do if NZ Govn says no? The free trade agreement with China worries me though....I think we in the west only think short term, we are poor chess players IMHO, we maybe see 2 or 3 moves ahead, I think the likes of China are thining at least 5...maybe more.....
If food becomes harder to get and (say) India shuts its rice off, where can China go? it can come to NZ the free trade agreement stops us putting on tarriffs or any other blocks...
messy.......however a Govn who ignores us voters wont be around for long....so a new Govn and kick out the FTA....
regards
Steven
Steven, refreshing to see someone
Steven,
refreshing to see someone with their finger on the pulse.
As an exercise of interest, I invite anyone to look at the debt chart of any nation within the Western banking system umbrella and take note of the increase in debt issuance since capital adequacy requirements were removed from the private international registered banking network in 1985:
http://www.usagold.com/reference/monetary_data.html
http://mwhodges.home.att.net/debt.htm (US)
http://ips.ac.nz/events/downloads/2008/Bertram.pdf (NZ)
http://www.aph.gov.au/LIBRARY/Pubs/rp/2008-09/09rp30.htm (Aus)
None of these debt based fiscal stimulation packages has yet resulted in the creation of enough productivity to facilitate repayment of the issued debt, infact repeated balance of payment crisis have occured causing many nations to be forced to sell public necesities into private ownership to pay down compounding debt.
Mark Weldon proclaimed today he cant wait until the day the private central bankers are able to underwrite more of our stockmarket:
"From Weldon's point of view, the timing is excellent. In 2009 the stock exchange helped companies raise $6.2 billion of debt and equity capital "“ finance that helped them stave off disaster as banks and credit markets tightened up.
"We would have had quite a few meaningful corporate failures and job losses if the local equity and bond market wasn't here over the year," he said. "That's probably a good backdrop for the Capital Markets Taskforce report."
http://www.stuff.co.nz/business/3179141/NZX-boss-can-t-wait-for-2010
So Steven, now the private central bankers once again have us in debt repayment crisis and, if we meekly surrender, we will be forced to sell public necessities into the hands of their corporate subsidiaries. Once portions of our public assets are listed on the market, they will use one of two ways to fleece us, if allowed they will use their created credit to take their positions(underwrite) and work with the co-operative minister who holds the proxy vote of the entire public holding to hollow and gut the public asset to maximise the capital gain return on the private portion by incumbering it with further debt and reducing maintanence of the infrastructure, then after they have cut and run, because it is a public necesity, the tax payers as the long-term shareholders of no choice are left fix it up. You will often find the co-operative minister working for the buyer of the asset after the transaction.
Or secondly, if the electorate of a nation is a bit more suspicious, as in Russia and Australia they will offer the newly listed shares to the public first, knowing full well that most will immediately redeem their paper equity for cash which will give drive the price down and give them their opportunity to buy in with their created credit.
Read part 1 and 2 on a Kiwi's part in this process in Russia
http://www.russiablog.org/2008/06/the_founders_of_renaissance_ca_1.php
An interesting piece on why
An interesting piece on why our present (world) consumption is un-sustainable. Indeed it might prop up my concern on the China-NZ free trade agreement....when you see the projections for China's growing consumption rate at 8%....eg by 2024 it "could" want as much oil for itself (90mbpd) that is actually produced today (84mbpd)...
"China now consumes more grain than the United States. It consumes almost twice as much meat, roughly three times as much coal, and nearly four times as much steel. "
Yet this is "only" 14 years away...so the Chinese Govn's target of 8~10% per year growth is clearly a problem.
http://www.earth-policy.org/index.php?/press_room/C68/pb4_ch1_datarelease/
If you ignore this "issue" then clearly trading with a country that has money ie China as opposed to the USA which is going broke and has a history of a policy of dis-advantaging imports to defend its domestic industry makes better sense long term...so HC might well have this right...
Hmmm somber reading.... "If China
Hmmm somber reading....
"If China can no longer grow enough wheat and rice to feed its 1.3 billion people and goes shopping for massive quantities of grain, global food costs will rise dramatically. When domestic food prices skyrocketed in the 1970s, the United States restricted exports of grain and soybeans. This time around, with China holding $800 billion in U.S. Treasury securities, we won't be in any position to limit exports. China is our banker. China's food shortage will be our shortage, too."
http://www.earth-policy.org/index.php?/press_room/C68/copenhagen_washpost/
@Iain: “We would have had
@Iain: "We would have had quite a few meaningful corporate failures and job losses if the local equity and bond market wasn't here over the year,"
So we look beyond that...why did company management get into such a state?...and not just one company, lots, corporate debt seems huge, yet I see no equally huge profits, ie adequate payback on the capital borrowed. So what's been achieved?
As for bankers........yes I expect them to reap huge returns, and our useless Pollies will help them....but its a road of diminishing returns, we are up against an expotential curve, they will probably succeed in destroying the SOEs...but the system just cant be kept going....
Last time I dont think ppl looked or realised, at what was going on, Prebble got away with it. This time ppl are hurting and when you hurt I think you ask why and like an Elephant you wont forget being sold out (I know I wont)...also the Internet rises ppls awareness, gives them a non-newspaper view of the world....so Pollies are on borrowed time I wonder? hmmm
I think the biggest thing that interests me is the retreat of Globalisation...it cant survive on expensive energy and when it becomes more localised the effect of a National debt default decreases. Why worry about debt your parents lumped on you? Especially when it isnt real money it wasnt earned in the real economy...it was created...by someone offshore...
regards
I also recall the right
I also recall the right retards arguments that the CEOs etc were worth their salary....I cant see any proff of that right now....
regards
signs of an expotential curve:
signs of an expotential curve:
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6834079...
"In fact, we would like to see the restoration of a gold standard to prevent the sort of excesses we have seen. The world has been in a bubble since the mid-1990s. They are still blowing news bubbles to keep it all going, but each bubble is shorter and shorter. It is frightening, and is all going to end in tears," he said.
signs of deflation:
"Saxo Bank is squarely in the camp of Sino-sceptics, noting that China's alleged industrial and GDP growth does not tally with weak electricity use. In any case, growth has been built on an investment bubble creating "massive spare capacity". 2010 will be the year when it becomes clear that there is not enough demand in the world to absorb all their excess production"
"Saxo Bank offers its thoughts as `Black Swan' risks that could paddle up quietly and bite you, rather than absolute predictions. Take them in the right spirit. "
2010 could be an interesting year of black swans indeed.
regards
Indeed, Steven. Free trade agreements
Indeed, Steven.
Free trade agreements are what limit Government's recourse.
Free trade agreements allow foreign Governments to legally challenge any Government refusal.
Opening New Zealand up for sale is not in the country's long-term national interest.
Raj Patel on America's Growing Hunger Crisis and the UN Summit to Fight Hunger in Rome
http://www.democracynow.org/2009/11/17/raj_patel_on_americans_growing_hu...
No! but it's an improvement
No! but it's an improvement Iain. ".. the administration of the new credit money supply without compound interest attached should be in the hands of public representatives ...." wow!
Following up on the comments
Following up on the comments made by Kevin, Nicholas, Chairman and Iain about fractional reserve banking, I recently came across that useful RBNZ bulletin that Chairman shared, but if you want something concise, illustrated and with a commentary, I found the money creation chapters of Chris Martensons 'Crash Course' quite useful, as it goes wider than creation of money by just the 'trading banks'. As for the 'reserved cash at hand' ratio NZ banks have to adhere to, as that RBNZ bulletin describes it, I think that is effectively the 'Capital Adequacy Ratio' and that this replaced the concept of 'the reserve ratio' with the introduction of the first Basel accord in 1988 and the ratio is 8%. See:
http://www.themoneymasters.com/?s=basel
#9 here, http://www.bendyson.com/the-cause-of-the-financial-crisis/how-did-we-end...
http://www.maxi-pedia.com/capital+adequacy+ratio+CAR
Note , "Singapore's minimum CAR is more stringent set by default at 12% (comprising 8% Tier1 and 4% Tier 2)." Leave us standing don't they!
As for the 'money multiplier effect', I think that can be taken as the inverse of 'Capital Adequacy Ratio'. See:
http://www.investopedia.com/terms/m/multipliereffect.asp
(That is, it appears, max 12.5, or only 8 for Singapore, or approx 50% less than us turkeys!)
Money is multiplied as an effect of the process within the 'whole system', that is, depositing and borrowing, over and over - between many components in the system. Where the components are various and different banks, similar institutions and depositors and borrowers. I might be wrong, but it does not actually appear as easy as a bank taking in say $1000 and being able to lend out 12.5 times that amount in a related immediate singular transaction. (Wouldn't that be so cool, but so naughty!) The multiplying effect comes as an aggregate outcome of the whole process, as described in the references above. However, in more than one sense the net effect is almost the same - suppose all those depositors want 'their' money back? Then I guess you may well be looking for something "out of thin air"?
What I want to know is, where does the interest associated with debt come from? What effect does this have on inflation? Should we use interest rates as an inflation control tool?
And people call 'public credit' funny money.
I'd all be hilarious if it weren't so insane.
I said above, "I might
I said above, "I might be wrong, but it does not actually appear as easy as a bank taking in say $1000 and being able to lend out 12.5 times that amount in a related immediate singular transaction." and someone has just redirected me to the Ben Dyson reference I used and it appears I was wrong:
"9. In July 1988, the Basle Accord removed the fractional reserve system and replaced it with the "capital adequacy system". Under the capital adequacy system, banks can lend up to a set multiple of its capital. The current rules mean a bank can issue about 12.5 times its capital. Should a bank, which is already fully loaned, wish to lend some more, it can simply issue new capital. By raising £80 million in new capital a bank can lend £1 billion. Of the £80 million, only a small proportion needs to be equity. The rest can be loan stock. In other words, by issuing a certain type of loan a bank can authorise itself to issue a great deal more."
The mind being repelled perhaps ....
What I still want to know is, where does the interest associated with debt come from? What effect does this have on inflation? Should we use interest rates as an inflation control tool?
And people call "˜public credit' funny money.
It'd all be hilarious if it weren't so very, very insane.
Funny that Gareth Morgan only
Funny that Gareth Morgan only found his voice once he was a millionaire. His wealth has diven him mad and he seems to be getting more and more frustrated with his lack of influence and power.
Here's a xmas present for
Here's a xmas present for you shorts...take your pick:
http://images.google.co.nz/images?hl=en&source=hp&q=best+morgan+car+pict...
@Les Rudd Sorry if this
@Les Rudd
Sorry if this is more basic thank you were asking for:
"Where does the interest associated with debt come from?"
Every dollar note printed has interest attached (debt).
"What effect does this have on inflation?"
Because each bank note printed creates more debt we need to print more money to cover that debt, which creates more debt. More notes means each note has less value proportionately.
Right now our central bank(s) have printed more notes than ever before in history. However, hopefully we will soon be able to engineer sub-atomic particles en mass to produce gold, thus messing up the system.
John S - thanks. Notwithstanding
John S - thanks. Notwithstanding any fogginess around how money is created presently, considering any, and the aggregate of the mechanisms in use ... "It'd all be hilarious if it weren't so very, very insane." How to fix? Cheers, Les.
@Les (borrowed from http://www.hasslberger.com/economy/money.htm
@Les
(borrowed from http://www.hasslberger.com/economy/money.html)
How to exclude the creation of credit by the banks? Simple. Instead of requiring a 10% or 20% deposit to the Central Bank for every loan given by banks, a 100% deposit should be required. That means, a bank can collect the savings of it's clients, it can deposit them at the Central Bank and it can then, and only then, give out loans up to the same amount it has deposited.
Now as to the creation of money having to return to the control of government, or actually to the control of the people, this is an exquisite problem. First and foremost, a mechanism must be available which allows to keep track of prices on a continuous basis. Having such a mechanism, it is now possible for the money issuing institute (the Central Bank) to exactly control the buying power of money, putting inflation and deflation under its direct control.
In accordance with the principle that the amount of currency in circulation must exactly match the amount of goods and services on offer, we can now eliminate inflation and keep the currency stable, by one simple mechanism. The issuing authority is instructed to stabilise the price index. This is done by decreasing liquidity at the first sign of increasing prices, and by increasing the amount of money in curculation by the issue of new money when prices start to fall.
There is absolutely no need to have price instability!
It is important to know that inflation is caused by the fact that more money is in circulation than is necessary to buy the goods and services that are available, and deflation is caused by the opposite "” too little money in circulation.
This has been known for decades, only that with the money issuing authority in the hands of the (private) bankers instead of a (public) central issuing authority, it was very difficult to fine tune the monetary mass to keep pace with the fluctuations of economic activity.
It is really as simple as that, a centralised money issuing authority that is responsible for keeping prices stable, will be able to do just that by regulating the issue of new currency.
How to fix a perfect
How to fix a perfect 300 year old power system that owns us completely?
Exquisite question. I doubt you'll even be able to opt out of getting 'chipped' in 10 years when the "Why carry a wallet?" ads come out.
The only solution I can see is a personal one - understand the REAL system (not the vote for blue team / vote for red team farce) and benefit any way you can from that knowledge. Educate your kids and hopefully all will be well.
Les - Q:"What I still
Les - Q:"What I still want to know is, where does the interest associated with debt come from?"
A: The Loan agreement... but there are a number of factors that enable it to be serviced or paid back ie. Imagination~ Work done, but more importantly for at this point in time Cheap Energy but Climate Change and Peak Oil are about to put paid to that one.
What effect does this have on inflation?
A: Where Supply of Stuff is relatively inelastic, More credit bids up prices i.e. resulting in higher CPI, hence term Inflation. but has the Stuff really got more expensive, or is only more expensive when expressed in terms of more Credit money having been issued.
Should we use interest rates as an inflation control tool?
A: It's tool that controls the Inflation Being a symptom of a Fiat Money system, however... in my view it's better to control the desease rather than simply addressing the symptoms.
What really bakes my noodle is.... beacause we Kiwi's are not adequate savers, the Big 4 have been borrowing offshore and calling those borrowings Equity, from which to lend out at 12.5:1 or what ever....
the last time I heard of Liabilities being accounted for as Equity. we are F^*KED!
Stupid Ajax editor!
Stupid Ajax editor!
Les, To be correct the
Les,
To be correct the interest on debt is created by new debt being issued in the form of new loans.
Mathematically speaking the money supply must increase in order to create the new money required from the interest demand. Of course this can be avoided if the economy collapses.
This is known more commonly as the "boom bust" economy apparently put to bed by Gordon Brown some time ago. Unfortunately Gordons' advisors didn't see fit to explain the process of money creation to him.
Interest drives the economic cycle. It always has done. It must come from the current supply of money i.e. a transfer of wealth from the prodductive to the investment sector or from newly created money.
2009 will be remembered as the year that the money system was exposed publicly for the first time taking this blog as a fairly public and well read space).
Well done to all for asking the obvious questions. It's a long and hard road to hoe but ultimately the facts will talk for themselves.
John S - 'chipped', hmm, I
John S - 'chipped', hmm, I guess that could be quite pragmatic if you could programme each person's chip with a credit volume control of some sort, anyway... I was thinking more in terms of stop issuing so much money with interest attached, why do we keep doing that? (Another obvious question Raf. ) See some of the ideas discussed, mentioned in the latter half of this thread:
http://www.interest.co.nz/news/special-report-why-nz-needs-bipartisan-gr...
mouse - I've been gelling my thoughts more along the lines Raf describes, thanks both.
Cheers, Les.
Iain: Probably one you've seen...
Iain:
Probably one you've seen...
Zeitgeist (a later part)
http://www.youtube.com/watch?v=_dmPchuXIXQ&feature=related
Maybe a little too simplified, but at least its in moving pictures for those who can't read all you wish to say.
KW John, That section of
KW John,
That section of Zeitgeist Addendum is very good.
Wally, Les, All, I am going to attempt to explain something in short that I myself have only recently fully comprehended as to why the debt based monetary system never leads to enough economic activity to overcome the impact of compound interest.
- All new money is loaned into circulation as a compound interest bearing debt. Since this system only creates the principal and never the compounding interest, the debt is always greater than the money supply and constantly growing. -
Hows that Wally?
Now for those that need proof of that
"10 people borrow $100 each creating a total money supply of $1000. How can each save $10 and pay back $110 each, a total of $1200 when the money supply is still only $1000? How can each of the 10 people gain a monetary profit of $10 on their borrowed 100? Doing so would mean that each person would have $110 or a total of $1100 with a total money supply only $1000! This could only be made possible with an increase in the money supply. But, the money supply is only increased by more borrowing at interest! It's mathematically impossible for all to save and profit. A few can, but only at the expense of many. Would like to live in a world where you could only have a family if some one else lost their family? This how our money world works!"
Full plain languaged, reasonably short, pdf expansion of above
http://www.wealthmoney.org/documents/CritMathflaw.pdf
Brilliant vids explaining the same
http://www.youtube.com/user/thebyrondalechannel
For proof that debt based stimulous has never equated to economic activity in excess of the debt borrowed check out these charts below. Even if interest bearing credit money is issued inside the boundaries of sustainable natural resources it will always be mathematically predatory. When ammounts of interest bearing credit money are issued well in excess of the boundaries of sustainable resources it is nothing short of overt debt slavery that if left unchecked will see the lenders monopolise the entire means of exchange;
http://www.chrismartenson.com/forum/total-debt-growth-vs-gdp/22972
http://mwhodges.home.att.net/debt.htm (US)
http://www.aph.gov.au/LIBRARY/Pubs/rp/2008-09/09rp30.htm (Aus)
http://ips.ac.nz/events/downloads/2008/Bertram.pdf (NZ)
Think of a giant casino, it is implied that everyone enters the premises(global economy) with a good chance of winning, you first have to exchange your local currency for their chips(reserve currency) to be able to participate, then you start playing, but in truth via mathematical formula and the games(markets) being able to be rigged a very few participants will win if their actions by shear luck align for a time with those that control the games, but overall as a collective there is a disproportionate transfer of wealth to those that created and own the casino.
Les, This post http://www.interest.co.nz/ratesblog/index.php/200
Les,
This post
http://www.interest.co.nz/ratesblog/index.php/2009/12/18/top-10-at-10-ga...
explains how the mid eighties was the era in which the reserve handbreak was completely removed and the debt attached created credit money supply headed into orbit on most every nations historical debt chart. We have been herded and harvested Sheoples.
Financial deregulation and household Indebtedness
Financial deregulation and household Indebtedness
This paper (link below) discusses several aspects of the linkages between deregulation, household consumption, savings and indebtedness.
There were two reforms that directly affected financial institutions.
Firstly, there was a removal of interest rate controls. Prior to the reforms, financial institutions were limited with regard to what interest rates they could give to depositors.
Secondly, compulsory reserve ratios on financial institutions were abolished and a range of credit guidelines' was removed. These included reserve asset ratios and lending ratios.
Credit guidelines that had been in place roughly eighteen months prior to deregulation were removed. The credit guidelines limited M3 institutions to a 1 percent per month growth in credit issued.
Three macroeconomic reforms in particular gave New Zealand banks better access to overseas credit and opened New Zealand's financial markets to foreigners.
Firstly, overseas borrowing controls were relaxed. Prior to the reforms, private overseas borrowing had to be of a fixed term of at least twelve months and with an interest rate of not more than 2 per cent more than the London or Singapore inter-bank rate.
Secondly, restrictions prohibiting New Zealand financial institutions from borrowing overseas were removed, although specific currency exposure limits remained.
Finally, foreigners' access to New Zealand's financial markets improved when overseas-owned companies in New Zealand were allowed unrestricted access to New Zealand's capital market.
Together, these reforms enhanced New Zealand households' ability to access credit.
More here:
http://www.rbnz.govt.nz/research/discusspapers/dp03_01.pdf
Yes Iain I had a
Yes Iain I had a grasp of that. I take you back a few days..".. the administration of the new credit money supply without compound interest attached should be in the hands of public representatives "¦." Iain, I understand the concept...but until such time as social credit can convince me that placing the control of the money supply in the hands of the mps, would be better than the exiting system where individuals retain the right to take their own risks in taking on debt, then I will stick with what there is. I refuse to have Helen or Bill or Hone or any other mp dictate to me what I may borrow, when I may borrow it and what I may invest in. Piggy's dictatorship was bad enough. He who knew best even controlled how much of my money I was allowed to change into Aussie loot when I crossed the Tasman. Bugger going back to that bloody era.
Wally - How bad does
Wally - How bad does our fiscal state have to get before you're convinced? Total collapse?
Iain - 21/12 10.44pm, thanks.
Iain - 21/12 10.44pm, thanks. I still need some clarification about the time order of the changes, but that can wait and they are not as important as appreciating how using either and both a fractional reserve, and capital adequacy system has meant, "...created credit money supply headed into orbit." As we all know and as the last RBNZ reference provided by 'The Chairman' (useful stuff) shows, from the conclusions section:
"New Zealand's household liabilities have more than doubled since 1990 with most of the borrowing from banks. At the same time, households' share in bank funding has been declining."
The crux of the matter you outline in your 21/12 10.21pm, "All new money is loaned into circulation as a compound interest bearing debt. Since this system only creates the principal and never the compounding interest, the debt is always greater than the money supply and constantly growing."
From an earlier comment of mine, "I was thinking more in terms of stop issuing so much money with interest attached, why do we keep doing that?"
So, why do we keep doing that? It seems so inflationary, so wealth destroying, so prone to instability, so taxing - it costs us ALL in higher TAXES - why do we want to keep suffering these outcomes?
Do we HAVE to?
All - are there any workable fixes - that won't, ".... have Helen or Bill or Hone or any other mp dictate...," a 'centrally planned' uber-regulated utopia that will piss-off Wally, and me - and will also help stop pissing-off Gen X&Y - to Auz and elsewhere - as they seek to avoid becoming the next generation of 'debt-slaves' to the 'banksters' and the 'boomers'? Any ideas?
Cheers, never say die, Les.
Sorry TC, the current mess
Sorry TC, the current mess is as a consequence of poor govt over decades..the very last thing we should allow to happen is for the govt to have control over the money. They have proved themselves to be incapable, inept, indifferent and in it for themselves.
Wally - "They have proved
Wally - "They have proved themselves to be incapable, inept, indifferent and in it for themselves." Sounds like the banksters too - and we don't elect them.
So, ".....are there any workable fixes"?
Cheers, Les.
Yes Les...but the fixes require
Yes Les...but the fixes require a govt that is not preoccupied with porking the voter base for support in an election. That's why Key has been screaming "NO" all year...
Wally - I agree, but
Wally - I agree, but if no one challenges with functional fixes we just collude with the Key like TINA thinking and the status quo, which is something I hope is not going to happen with the work of the TWG:
Bernard Hickey : Political bomb could level tax landscape
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1061...
The monetary policy and system reform issue and possible fixes have been ignored for too long - it's crucifying us. So I'm glad if Gareth M, anyone, engages in and progresses some challenging debate.
So ignoring the "NO" problem - ""¦..are there any workable fixes"? What are they? Anyone?
Don't forget no one, nowhere wanted to talk about effective asset taxation a wee while ago - but NZMEA kept on keeping on, sometimes very much on our own and against the odds. Now look where we are - we never said die. If we do more in NZ are indeed 'goners' - I don't want that.
Cheers, Les.
The absence of leadership has
The absence of leadership has brought us to where we are, most running around like kids screaming more, more, more: and as we all know there is no end to that demand until someone says no.
Leadership, the ability to sell immediate pain for intermediate benefit is the only thing that will change our trajectory. The advice is coming thick and fast, but where ever we go to we have to move, at the moment policy is caught like a possum in the headlights, hoping the worst will not happen but scared to move. Almost any other position is better but there we all sit.
The metal of this government will now be exposed, sit or move "“ we will see.
My money is on "NO"
My money is on "NO" being the answer from Key...although this time round he might get some advice from the paid spin doctors and use terms like 'possibly' and 'interesting'. The answer involves the useless gutless media turning the heat on the govt instead of behaving like lap dogs. To get the media off its bum involves lighting a fire under the seat. Turn the heat on the media and the journalists who either lack the education to grasp the problem or couldn't give a stuff what they write.
Until the govt mps smell votes drifting away..they will do what Key and the Cabinet tell them to do. You have to be a threat to their right to own all the places at the pig trough.
wally, you make a valid
wally,
you make a valid point as to who should manage the money supply. some would argue that the "market" for currency should be just that and that people should pay more attention and be discerning about who they deposit their money with.
that's a discussion i would be very keen to have.
but 2 points worth considering:
1) why should the public borrow money from the private banks when it can create the money itself at zero cost and therefore save huge amounts on interest? it's completely counter intuitive.
2) one could have a mixed system where the government creates itss own coin for public expenditure (fixed at a certain amount 30% etc) and the rest could be provided by the market. over time public money would crowd out the private money thus reducing the amount of interest bearing created money in the system. people would still lend each other money through intermediaries.
i think that's the point to start.....and then see how it develops from there.
people might be quickly convinced when they see that hospitals and schools cost less to build.
John W,
I think the govt is scared to have this discussion publicly as they will quickly lose control of it. so they keep it very close and don't allow those, who really understand it, to be involved in the process and thereby often end up with one sided conclusions as we see from many mainstream economist websites.
I have yet to hit
I have yet to hit the grog Raf, so I'll have a bash....the banks that are allowed to operate as such for profit, if well regulated (ours were not) would be unable to pork bubbles on lending (as ours did) and would be restricted to operate within a competitive market. They would risk failure and loss as in the States (the small fish) for poor management and be fined for breaking regs. ( ours are not allowed to fail !)
Giving govt the power to create its own credit for 'public' use such as building bridges and roads etc...would be like handing the management of a maximum security prison over to the inmates. Not thought to be a wise thing to do, even by the inmates!.
There are no tax loop
There are no tax loop holes for property. The same rules apply to all types of businesses and investments.
Wally, I believe you have
Wally,
I believe you have it wrong, money has bribed government from the shadows for the shadows. Does as it has always done, comes down to plain decency.
As for you have a choice as to whether you take on debt, not all current debt is discretionary, you have no choice, either via national debt or private you have a lein on you.
Raf, Wally, Iain et al
Raf, Wally, Iain et al
In the early stages as suggested by Raf, could a RBNZ type set-up (state owned, but arms length from the pollies) administer the issuance of public credit for public works? Down the track a bit, the banks could be progressively reigned in through increasing their 'capital adequacy' ratios. Perhaps the debt free money spent into the system by the state (via whatever mechanism) could quite quickly counteract the need to issue more debt to cover interest payments. It would be interesting to see the effects on the money supply and the economy at large without this stress on the system. A bit like being cured of a slowly advancing disease - like old age perhaps!
Cheers
Martin, exactly the what needs
Martin, exactly the what needs to happen, but an RBNZ accountable to who is the question? Leave it in the hands of the status quo, remembering they claim now that the RBNZ, which supposedly works in our interest but doesn't, should be independent of political interference, this is exactly what has allowed them to have their wicked way with us. The control of the money supply is, for me, far better off in the hands of representatives answerable to the voter, that is of course only viable if the wider public of NZ are let in on what has been going on and made far more financially literate.
Wally, I interpret your stance as saying I can see that we have a system that by casino like mathematical design is going to see the creators of that casino inevitably own everything because of their obscene commercial advantage, but we should not bother to even look at change lest those we change to do the same. Wally, the outcome of the current system makes a mockery of all these platitudes you put in your posts -choice, market competition, not having to use credit if you don't want, taking your own risk's - Wally none of what your implying is currently possible by choice, I am not saying that any of the current mob are yet decent enough to to the job, but when they can by popular education be driven to become decent, I say we have lots to fear, nothing to lose and everything to gain.
And happy xmas to you
And happy xmas to you Iain...wonderful to 'meet' someone who believes in a time when those elected to lead can through education become decent and thereby do a better job of controlling all forms of money supply....and do it so well we forget we once had the individual right to make our own decisions about how much debt we took on and from whom we obtained it ...goodbye to democracy and hello to our new Gods in the Beehive. I think not Iain. The current system might be a clapped out pipe dream that barely manages to make progress from one bubble to the next...but it is my pipe dream and I am not for handing control of my life over to some fool in wgtn.
On 19th, at 8.14pm, Chairman
On 19th, at 8.14pm, Chairman shared this with us:
'The Reserve Bank, private sector banks and the creation of money and credit'
http://www.rbnz.govt.nz/research/bulletin/2007_2011/2008mar71_1lawrence.pdf
I came across this a few days before and got in contact with RBNZ to ask a few questions, to help clarify some 'Muggle' fog based on my incomplete understanding, assumptions and pre-conceptions, which I manifest earlier in this thread - doh! So just for the benefit of any other 'Muggles' like me I'll share those questions, and answers that I received yesterday. Notwithstanding the development of what I think is a better understanding of money creation now, it hasn't changed my views on the benefits of 'public credit' and implementing more suitable and effective credit volume controls - because however money might be created, if it's created as debt+interest, in whatever way, the 'whole system' assessment and conclusions remain the same and so do the obvious fixes, IMO. So it's good to see many comments above addressing these very doable fixes and the associated issues, as we also discussed in a thread here:
http://www.interest.co.nz/ratesblog/index.php/2009/11/20/special-report-...
The Q&As: Q1) What is
The Q&As:
Q1) What is the actual 'reserved cash at hand' ratio NZ banks have to adhere to? Is this ratio otherwise known by the simple term, 'the reserve ratio'?
"To describe the process by which money is created, in the article we refer to 10% of customer deposits that is reserved as cash at hand. You are correct that this is in essence a 10% reserve ratio. However, the Reserve Bank of New Zealand does not impose reserve ratio requirements. It is up to each bank to determine the proportion of deposits not involved in new lending."
Q2) How is the ratio in 1) above related to the 'Capital Adequacy Ratio' and 'Core Funding Ratio'? How are these two ratios related to each other?
"The purpose of liquidity and capital requirements are different. The article "The Reserve Bank's new liquidity policy for banks" in the December 2009 Bulletin, provides a brief description of liquidity risk and outlines planned new liquidity requirements for registered banks. The one-year core funding ratio is one of the quantitative requirements of the policy and measures the extent to which loans and advances are funded by funding that is stable. The capital adequacy ratio is essentially the ratio of capital (shareholders' funds and subordinated debt) to risk exposures. The article "Basel II: A new capital framework" in the September 2005 Bulletin outlines the importance of regulatory capital.
While both capital and liquidity requirements would have some bearing on banks' lending and thus money creation, liquidity requirements are conceptually closer to what is traditionally understood as a reserve ratio requirement."
Q3) I have seen recent reports in the media about RBNZ improving the 'Core Funding Ratio' with 65% of bank liabilities required to be funded from sources greater than one year and that the ratio will increase to 75% in stages over time. However can you tell me the 'Capital Adequacy Ratio' for NZ banks?
"The minimum capital requirement for NZ banks is set at 8% of a bank's aggregate risk-weighted assets."
Q4) Which one of these ratios is inverted and used to estimate something I believe I have heard called the 'money multiplier'?
"From a theoretical perspective liquidity requirements would be most closely related to a money multiplier. However, there is no direct relationship between any of the quantitative ratios specified in the liquidity policy for banks and the money multiplier. The amount of money that is created through time can be determined from monetary aggregate statistics available on the Reserve Bank website."
"monetary aggregate statistics" - oh, yawn - not a hope this side of Christmas!
Muggling on, cheers. Les.
More questions I'm interested in,
More questions I'm interested in, maybe you can help:
What would have been the track of the OCR and NZD since say 2004, if banks had to adhere to the new core funding requirements and a CAR at 12.5%, as Singapore maintain?
Ditto above, if as a complement to the OCR Dr B. could have varied the 'principal repayment rate' of loans? (Use fixed rate loans to shelter from global i.rate activity, but no sheltering from domestic monetary policy.)
How more balanced would our economy be now, if those kinds of ideas had been implemented since, say 2004? (How many more exporters would still be around? Have started up? How would housing affordability look? How would your property portfolio look? Anyway..... )
There's no need to ask if we'd be paying less tax if we were effectively utilising more 'public credit' in the money supply - that's a no brainer.
I hate paying tax, how about you? Oh, you don't anyway, I wonder why, Mr LAQC - but I can now understand why you don't give a shit about reforming monetary policy and using 'public credit' so that we could ALL pay less tax.
Iain, Raf, Martin, John - what we need is a good salesperson on this job, trying to get people to understand they'll lose less of their wealth to inflation, caused by 'insanely hilarious money' and also pay less tax seems like a tough pitch.
Don't forget, never say die - even if you don't quite know what's killing you!
Cheers, Les.
Oh yes I see no
Oh yes I see no problems at all for our elected representatives having complete control of money. I can see the flow heading for Jacks Point already. Imagine the scale of the rorts they could run...the mind boggles. It would be like letting a truck load of hungry pigs lose in a field of spuds and Kumara.
Wally - I sympathise with
Wally - I sympathise with your cynicism, but hang the TINA thinking, it could be done, see Martin H's comment above, and maybe by using something of the ilk Matt Nolan discusses here:
http://www.interest.co.nz/ratesblog/index.php/2009/03/19/opinion-an-inde...
Given the benefits it's got to be worth progressing the debate, and positively looking for workable solutions, rather than doing a JK - NO, TINA.
Why would anyone not want to look at ways where we end up, as a nation, having a more stable money supply, more stable currency and paying less tax?
Cheers, Les.
"Why would anyone not want
"Why would anyone not want to look at ways where we end up, as a nation, having a more stable money supply, more stable currency and paying less tax"...beats me Les...can you do it without letting politicians make the money decisions for you? Do you really want to go back to the days when you had to ask a beaurocrat in wgtn how much you were allowed in foreign currency for your trip to Australia?..I don't.
Stop trying to implement a Cuban system. That's what social credit or public credit or marxist credit or whatever else you want to call it really is. What we have works well until the politicians either turn a blind eye to the need for regulation or shove their noses in where they ought not to be.
"The 28 year-old man is
"The 28 year-old man is in hospital getting treatment for police dog bites and will face a charge of attempted murder." the herald.
Somebody send that dog a bone the size of a tree trunk for xmas.
I spose it will mean ACC for the bum and charges to be laid against the dog!
Wally - "...can you do
Wally - "...can you do it without letting politicians make the money decisions for you?" They are anyway and making more of a gaff of it by using 'insanely hilarious money' (debt+interest) than they could with 'public credit' and effective controls. It's not as though this is out of this world stuff, it has been done effectively in the past, is being done effectively now elsewhere,and could be done effectively again, here in NZ. The evidence is there, check the info and links hanging off here:
http://www.interest.co.nz/ratesblog/index.php/2009/11/20/special-report-...
"Do you really want to go back to the days when you had to ask a beaurocrat in wgtn how much you were allowed in foreign currency for your trip to Australia?" It need not be like that at all, was a 'public credit' system being used back then?
"Stop trying to implement a Cuban system. That's what social credit or public credit or marxist credit or whatever else you want to call it really is." See link above - were/are the examples cited marxist, socialist, communist?
"What we have works well until the politicians either turn a blind eye to the need for regulation or shove their noses in where they ought not to be." I don't disagree, see other ideas, questions I pose above. Got any answers to them?
Cheers, Les.
"“What we have works well
""What we have works well until the politicians either turn a blind eye to the need for regulation or shove their noses in where they ought not to be." I don't disagree""
Gosh Les...if you don't disagree, why not demand better regulations and less political porking of the current system.
Wally - I meant this
Wally - I meant this part, ".. the politicians either turn a blind eye to the need for regulation or shove their noses in where they ought not to be." From what I said before I clearly wasn't meaning this part, "What we have works well ...." - because it don't and it is flawed on a systemic basis, nevermind the lack of suitable controls.
Any comment on these parts,
"The evidence is there, check the info and links hanging off..."
"It need not be like that at all, was a "˜public credit' system being used back then?"
"See link above "“ were/are the examples cited marxist, socialist, communist?"
"....see other ideas, questions I pose above. Got any answers to them?"
Cheers, Les.
Wally, I'm guessing there may
Wally, I'm guessing there may have been a bit more of a delay in getting the dog off that alleged perp. Just a guess though.
I'd chip in for a biscuit or three.
I don't buy it Les..
I don't buy it Les.. but you put it into simple English without the links OK..tell me how it would work and why it would not be open to corruption and rorting..as the current system is...
Hamish...I bet that dog is getting more pats than any politician would in a lifetime...deserves a massive bone. I'm sure the handler was doing his best too!
Wally - at some point
Wally - at some point in time I think I might like to be involved helping to put together some simple communication on this topic, say for the less financially literate person on high street, but that isn't you. I, and others here, may not have convinced you, yet, but given it's only a question of mouse clicks and some reading effort, I really don't feel like replicating and extending that effort just so someone as financially literate as yourself avoids the same. I reckon just take your time, read and think it through. You seem more savvy than me on things financial so I reckon you'll answer the questions more easily and quickly if your'e using the same material I used, which I and others have at least pointed you towards. That said try these links too, that for simplicity I have listed from primarily one website:
1) CASH-STARVED STATES NEED TO PLAY THE BANKING GAME: NORTH DAKOTA SHOWS HOW
http://www.webofdebt.com/articles/state_bank_option.php
2) TURNING THE TABLES ON WALL STREET: NORTH DAKOTA SHOWS CASH-STARVED STATES HOW THEY CAN CREATE THEIR OWN CREDIT
http://www.webofdebt.com/articles/state_bank_option2.php
3) REVIVING THE LOCAL ECONOMY WITH PUBLICLY-OWNED BANKS
http://www.webofdebt.com/articles/publicly-owned.php
4) CUT WALL STREET OUT! HOW STATES CAN FINANCE THEIR OWN RECOVERY including, a section on,
'The Commercial Banking Model: The Commonwealth Bank of Australia'
http://www.webofdebt.com/articles/cut-wallstreet.php
5) ANOTHER WAY AROUND THE CREDIT CRISIS: MINNESOTA BILL WOULD AUTHORIZE STATE BANKS TO "MONETIZE" PRODUCTIVITY
http://www.webofdebt.com/articles/minnesota-bank-proposal.php
* A successful infrastructure program funded with interest-free "national credit" was instituted in New Zealand after it elected its first Labor government in the 1930s. Credit issued by its nationalized central bank allowed New Zealand to thrive at a time when the rest of the world was struggling with poverty and lack of productivity. Also see link below:
http://publiccreditorbust.blog.com/2009/09/11/michael-joseph-savage-expl...
* The island state of Guernsey, located in the British Channel Islands, has been funding infrastructure with government-issued money for over 200 years, without creating price inflation and without government debt.
6) WAKING UP ON A MINNESOTA BRIDGE: HOW TO SOLVE THE INFRASTRUCTURE CRISIS WITHOUT SELLING OFF OUR NATIONAL ASSETS (More detail on Guernsey's approach.)
http://www.webofdebt.com/articles/infrastructure-crisis.php
You see, it could be done. Cheers, Les.
Good try Les...loved the fluff
Good try Les...loved the fluff .." say for the less financially literate person on high street, but that isn't you"...if this social credit or public credit or whatever was so good back in the 30s, why was it brought to an end. Why do we have Trading banks and a RBNZ independent of govt and tasked by govt to keep inflation between 1 and 3%.?
Been back to read GM's
Been back to read GM's comment re the RBNZ and came to the conclusion the RBNZ was under the gun to pressure the banks to pork property to make for a happy electorate to win support for the pigs at the trough. See what you get when the pollies are allowed to stick their snouts where they ought not to be stuck....and some want to hand the management of money to the same snouts!!! I think they should be gutted and done up as pork chops and sides of bacon.
Wally - "....if this social
Wally - "....if this social credit or public credit or whatever was so good back in the 30s, why was it brought to an end." I think you need to go do the reading and stream through some of the visual stuff on YouTube, eg. Bill Still et al.
"Why do we have Trading banks and a RBNZ independent of govt and tasked by govt to keep inflation between 1 and 3%.?" Ditto answer above, but why do North Dakota have a state bank, effectively, using the 'public credit' approach, that is part of a similar system - with no apparent problems, in fact quite the opposite it appears? Abstracting the ND example to NZ, as a rate payer I'd be keen to see regional councils have similar bank set-ups as ND - and enjoy lower rates because of it. But that would meaning the trading banks losing market share - oh, maybe back to your first question?
Enjoy the reading and viewing. I think it'll be worth your effort. Cheers, Les.
Wally - just read your
Wally - just read your 2.11pm, is it the 'public credit' approach that does work, or (our) government and its institutions that don't work? Cheers, Les.
Les...we hold different views...you want
Les...we hold different views...you want 'public credit'...I don't.
Wally - ok. I will
Wally - ok. I will only add the reason I'm interested in the concept is the possibility of having a more stable money supply, a more stable currency and paying less tax. I don't doubt there are wrinkles to be ironed out, just as required with the present system, however I think it's worth the effort trying to understand how it could make a positive difference.
Anyway, Merry Christmas, I can't think of many comments of yours that I've not appreciated and it's been good having a yarn with you here.
Cheers, Les.
Wally, It is disturbing, but
Wally,
It is disturbing, but some how healthy that you are not convinced about the relevance of public credit. If you are not convinced, then maybe, through pinpointing your reasons, we may gain insight into why (apart from the aggregate of private manipulative pressures to maintain the status quo) the momentum toward a public credit based monetary system has lost its head of steam in the past - which is obviously important if it is to be taken seriously again.
So if we can assume that there IS a way to keep the process relatively free of political manipulation, and that at least the interest on government debt for public works is an OPTIONAL national expense (i.e. issuing public credit as opposed to borrowing it) what are your objections Wally?
Cheers
Thank you all for the
Thank you all for the time you have invested in this public debate this past year. I am sure that the proportion of the populace who have been stimulated, informed or otherwise educated by your ministrations is significant, and growing. Those that actually read these threads are only the first link - the truth of enlightenment radiates far beyond the source.
Wally, the principle of public credit seems so straightforwardly better than the current system that it seems the onus is on critics to refute it (on principle or mechanics) rather than proponents to justify it...
Yes ok I just got home from work after a beer or two but...
Cheers
By the way Les, anybody, W(or who)TF is TINA?
The International Nudists' Association .
The International Nudists' Association .
Ahh thanks Roger, I thought
Ahh thanks Roger, I thought it was the Time Is Nigh, Apparently. Are you all members - or just the Libertarian faction?
Luckily I'm skint . 'Cos
Luckily I'm skint . 'Cos the rich members struggle to find a spot to park their loose change . ............ . Never accept coins off a nudist , you really don't wanna guess where they've been !
Thanks for the tip Roger,
Thanks for the tip Roger, I guess a buck smells the same no matter how it's created - eh Wally (or does it?????)
Cheers
Roger, if you go to
Roger, if you go to the black sea in summer and you will see the nudists which is most, have a lot of places to hide a few coins they have folds everywhere, before that I always thought of a nudist beach more like a club Med experience where most are under 25 unfortunately the east Europeans would look out of place in Tahiti. I watched as men barbequed starkers, thinking not me with fatty snarlers.
As for us, Im talking to folks around here and we are looking at a bleak new year, the Wineries and export orientated businesses are really suffering and it looks like its going to be foreclosure year. Its really tough out there for exporters and banks are playing hard ball unemployment in the regions is going to snowball.
Interesting question Martin H. I
Interesting question Martin H. I wonder what one of the very first 'bucks' would be worth as a collectors item today...more than a buck?
Dunno Wally, but if it
Dunno Wally, but if it keeps the flies away from the bbq...maybe!
Wally, Les, TINA, Ahem...5.39pm? Can
Wally, Les, TINA,
Ahem...5.39pm?
Can you spell out your objections Wally?
Here's a start-
1. Don't trust the pollies.
2.
Cheers
the troubles in the wine
the troubles in the wine industry
http://www.stuff.co.nz/business/industries/3191388/Listed-company-in-rec...
Martin H - There Is
Martin H - There Is No Alternative. The usual bs rebuttal against anything that challenges the status quo. Typicallly deployed by Neo.libs and 'central planners' alike, and those with conflicted, vested interests - usually uttered with a painful high pitched squeal like - pleeeeaaaaseee, but what about my portfolioooooeeeeee .... that I'm porking (or speccing by cfd's - supra-leveraged, go figure .... ) just by holding and hoping our woefully inadequate inflation control system never actually does the job other non-holders (typically cash savers) are dumb enough to believe it is.
Wally, 6.39pm - go do the reading and watch the streams - you'll find out.
Roger - more lol, stop it.
Cheers, Les.
Sorry Less : Was just
Sorry Less : Was just contemplating the summer BBQ , with Bernard ( all 6 ft 5" of him ) standing there , resplendent in a " Borat man-kini " ! ............Sausage anyone ?
AndrewJ : I am sacrificing my liver to save the NZ Wine Industry . Dare you to be so patriotic ! Superb savvies for $ 8 or $ 9 on Blackmarket Wines...........Oops , don't plug a product .
UGG !
AJ, Dammit, the biotech industry
AJ,
Dammit, the biotech industry is a niche area we should be nurturing. (global leadership potential, small carbon footprint). Why can't we take the same approach to science based innovation as with oil exploration - I am sure potential retained benefits could be comparable and more sustainable.
Cheers
Sorry Martin H I missed
Sorry Martin H I missed your question...you hit the answer on the head with.." a way to keep the process relatively free of political manipulation"..this cannot be achieved.
Wally - my 10.00am and
Wally - my 10.00am and something of the ilk Matt Nolan proposes for setting taxes. Also simple things like my mate 'Jacko' and I have suggested, not just a Governor of RBNZ taking a decsion on such, so use a committee (as BoJ, BoE, FOMC approach) plus greater transparency, at least disclosure of minutes - maybe other things. Any ideas? A bi-cameral legislature perhaps, etc, etc, etc - it ain't difficlut to make the institutions work - if we had the will to make em' work. Fix those and 'public credit - and lots and lots else is a piece of piss. BND and Guernsey make this work, Auz and others make incentivising'winning behaviours' (R&D tax credits) work - why can't we in"Noddyland" to quote a phrase used by our most popular commontater? Before the fix happens, the will has to happen - what is holding you back?
Cheers, Les.
Thanks Wally, but - Ahh,
Thanks Wally, but -
Ahh, let me try this out, so There Is No Alternative?
(thanks Les!)
But surely we currently have the RBNZ set-up in order to keep their part in the current process "relatively free of political manipulation". So does it come down to a preference of paying commission/interest to the banks because they are the more trustworthy option than (say) the RBNZ (issuing debt free money)?
Do you agree that - as only the principle sum is loaned into existence by the banks, the proportion of debt money in the system which is committed to paying interest must inevitably grow exponentially? And there is at least a possibility that we are hitting the 'hockey stick' phase?
Cheers
Less, Yep! Good concise summary
Less,
Yep! Good concise summary of the point.
Wally, humour can't continue to
Wally, humour can't continue to get you through when you begin to be exposed as short of factual rebuttal. Don't waste your breath folks Wally thinks he has learned all he needs in life to make his all ok, thus you will never get him to put another minute into reopening his mind to anything that might rock his selfish world.
I put forward these facts in support, I believe the motivated people who have given other hard working motivated people the respect of actually reading something of their evidence that is longer than 2 lines will be in agreeance that the privately owned and controlled debt based monetary system, and the way that every dollar enters circualtion as interest bearing debt via government external borrowing or internal private debt with compound interest attached makes it mathematically impossible for all debt in existance to ever be repaid. This makes it quite clear to anyone with an open mind that you have no discretionary individual means of avoiding debt, thus no individual choice. Wally's continued implication that public credit would see him lose his current independent choices, makes it quite clear to me has not given anyone a minute of respect on this site or he would quite clearly comprehend from the irrefutable weight of evidence, hell Wally you defend harder than the cocky bankers themselves.
And, the cream on the cake, the best bit of humour yet, Wally says I don't want no bloody Wellington bureaucrat making the decisions, then turns round and says
" What we have works well until the politicians either turn a blind eye to the need for regulation or shove their noses in where they ought not to be."
Increased regulation Wally, by whom? Handed down by the privately owned international banking network as it is now.
Wally you are as contradictory as Mike Moore when he said Democracy needs more transparency, but most diplomacy must be done in secret.
I'll not be distracted by you anylonger, I give everyone I meet respect until it is clear that respect is not being returned.
Integrity without knowledge is weak and useless, knowledge without integrity is dangerous and dreadful.
Just out of interest, anyone
Just out of interest, anyone know Wally's history? what does he do or has done for a crust?
With that folks I wish you a merry Christmas. I have to be back on the hamster wheel early in the morn to ensure the Sheoples get the supplies for another debt based spending spree.
Cheers
Iain
Wally, you asked "if this
Wally, you asked
"if this social credit or public credit or whatever was so good back in the 30s, why was it brought to an end."
It ended because the Labour finance minister of the time, Walter Nash, got half smoozed by the London bankers and half blackmailed with the threat of economic sanctions if we did not stop with this idea of issuing our own money supply. He in turn influenced Michael Joseph Savage, a financially illiterate dip shit, to pull back on Labours election promises.
One John A Lee who had written all the election material that got Labour elected on a platform of credit reform during the banker caused depression, protested vehemently, their were physical brawls in cabinet and caucus meetings. Michael Joseph Savage died of cancer at the height of the debate and during the annual Labour Party conference. The bankers co-operatives used the emotion of the time to accuse John A Lee of killing him with stress and moved that John A Lee be expelled from the Labour Party. He was expelled, it split the Labour Party apart and they lost the next election as the nation turned on them for reneging on their promises.
I recomend anyone to read John A Lee's 1963 book - Simple On A Soap Box - It would make a great movie for those that want to know just how gutter gangster like the politics of this country have been.
Now I really am going to get some shuteye.
Two sentences and just 4
Two sentences and just 4 lines , Iain , to make your point ! ( any idea if that book is in the library ? )
Actually , lots of John
Actually , lots of John A. Lee's books on TradeMe . Busy writer and politician . Wikipedia have a longish piece on him . Parallels with Jim Anderton , how Lee's political journey travelled . Thanks for that , Iain . Catcha tomorrow .
152 comments on a fairly
152 comments on a fairly standard, 5 day old 'Top 10 at Ten', hmmmm, weren't this bit was it:
"Diversify into women and sheep" ?????
Roger, over to you - just volley it, you can do it.
Cheers (and I mean that most sincerely in a few hours), Les.
<b>Les</b> : Some of the
Les : Some of the lads around here have been flocking to a woolly gal , long before the human females got scarce . ........... . If your partner ain't warm and obliging in the night , she can make breakfast in the morning . ........... Sadly however , if ewe try to kiss your partner whilst in the act of love , a broken neck has often sent ewe to that green pasture in the sky . ( ummmmmm , so I am informed ........ Yup , that's it ........ I was told . Aha . )
And there I was thinking
And there I was thinking TINA stood for
Tool Inserted, Now Acquiesce
A résumé of all 155
A résumé of all 155 comments:
We must realise, in many ways the world changed for ever. As a nation we are part of an increasing weaker chain. Like many others our link has to become stronger.
Creating new values for New Zealander's and also to compete successfully as a nation internationally we do need new ideas. We need to change our path. Economically efforts must be concentrated on quality and sustainability:
http://www.ace.mmu.ac.uk/esd/Economy/economy.html
I wish everyone a happy Christmas
Walter
Oh yes happy xmas all.
Oh yes happy xmas all. I must away and buy some shares in Westpac so I can collect the divs and reinvest this in BNZ shares. It's a wonderful system allowing individuals the chance to invest in and own a share in the 'Goldmans'. Great to see copper has popped again and a big thanks to the Market for seeing the potential in China. Let's hope John and Bill put their politicial aims to one side and act on the need to put the country on a road that does not lead to yet more property speculation. We need more FPHs if we are to create real wealth. Back in a few days.
Gez Iain, V is for
Gez Iain, V is for Vendetta!
V is also for Viola
V is also for Viola , Virus , and Virgin .
Good old FedEx - my
Good old FedEx - my copy of Bill Still's 'Secret of Oz' arrived this morning, have watched and highly recommend it - especially to you Wally. Only 101 mins. Add in two G&Ts, another 10 mins, and I highly recommend this - especially to you Roger.
Iain, some good comments above.
Have a safe and Moneytree Christmas, cheers, Les.
Thanks <b>Moneytree Reform</b> : I'd
Thanks Moneytree Reform : I'd love two G&Ts , are you mixing ? Having a slurp of Jamesons & a pint of Kilkenny . G&T would be lovelly . Cheers ! ( FedEx brought me " The Addams Family " vol. 2 , TV series ., today . All 540 minutes on 3 discs.)...................I have a sneaky feeling , MTR , that you are more of an intellectual than me . But if you mix the G&T I'll overlook your superiority . Merry Christmas !
Plain and simple - there
Plain and simple - there has to be a better way. Eat drink and be merry for tomorrow...
Everyone has their favorite way
Everyone has their favorite way of using the internet. Many of us search to find what we want, click in to a specific website, read what's available and click out. That's not necessarily a bad thing because it's efficient. We learn to tune out things we don't need and go straight for what's essential.
www.onlineuniversalwork.com
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