Friday's Top 10 with NZ Mint: Winston Churchill's land tax; Morgan Stanley's 'nuclear holocaust' bonds; 5 years of 'Brexit' uncertainty; Jon Stewart's 'Global Warming hoax'; China's corrupt Hukou system; Dilbert

Here's my Top 10 links from around the Internet at 9.30 am in association with NZ Mint.

As always, we welcome your additions in the comments below or via email to

See all previous Top 10s here.

My must read today is #4 on China's Hukou system and how its leaders corrupt it for their own ends. This is the sort of thing that triggers unrest.

1. Why no capital gains, financial transaction or land taxes? - The Guardian's George Monbiot asks this question in Britain. The same question could be asked here.

Monbiot quotes a surprising advocate for a land tax: Winston Churchill.

We've seen income tax cuts for the wealthiest and for companies.

Has it worked to boost growth? No.

The money has instead been piled up and invested in government bonds, which have become increasingly valuable as interest rates have fallen.

And the major political push is to reduce government deficits, which would make those bonds even more valuable...

Hang on a minute. Who is the winner here?

Here's Monbiot on land taxes:

In 1909 a dangerous subversive explained the issue thus. "Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains – and all the while the landlord sits still. Every one of those improvements is effected by the labour and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived ... the unearned increment on the land is reaped by the land monopolist in exact proportion, not to the service, but to the disservice done."

Who was this firebrand? Winston Churchill. As Churchill, Adam Smith and many others have pointed out, those who own the land skim wealth from everyone else, without exertion or enterprise. They "levy a toll upon all other forms of wealth and every form of industry". A land value tax would recoup this toll.

2. As if we needed more proof - ProPublica's Jesse Eisinger reports on a 2007 deal marketed by Morgan Stanley to investors where they knew the assets they were selling were toxic.

No US banking executives have been held accountable for selling this dreck.

On March 16, 2007, Morgan Stanley employees working on one of the toxic assets that helped blow up the world economy discussed what to name it. Among the team members' suggestions: "Subprime Meltdown," "Hitman," "Nuclear Holocaust," "Mike Tyson's Punchout," and the simple-yet-direct: "Shitbag."

Ha ha. Those hilarious investment bankers. Then they gave it its real name and sold it to a Chinese bank.

We are never going to have a full understanding of what bad behavior bankers conducted in the years leading up to the financial crisis. The Justice Department and the Securities and Exchange Commission have failed to hold big wrongdoers to account.

We are left with what scraps we can get from those private lawsuits lucky enough to get over the high hurdles for document discovery. A case brought in the New York State Supreme Court in Manhattan against Morgan Stanley by a Taiwanese bank, which bought a piece of the same deal the Chinese bank did, has cleared that bar.

The results are explosive. Hundreds of pages of internal Morgan Stanley documents, released publicly last week, shed much new light on what bankers knew at the height of the housing bubble and what they did with that secret knowledge.

3. Five years of uncertainty ahead of 'Brexit' - Reuters' Hugo Dixon explains what British Prime Minister David Cameron's pledge to hold an 'in-out' referendum on Britain's membership of the European Union means for the economy.

Cameron may come to regret this long period of limbo-land. Businesses from Britain and overseas will be reluctant to invest so long as there is uncertainty over the UK’s membership of the EU which accounts for half its trade. Less investment could, in turn, make it harder for the economy to pull out of what could be a triple-dip recession. There’s even a tail risk that financial markets might now look at Britain’s still-high deficit more critically and push up gilt yields.

The long-term risk of a “Brexit” has also gone up. Cameron says he would campaign with heart and soul to stay in the EU if he can renegotiate Britain’s relationship in the way that he wants. But he may not succeed in such a negotiation. And, even if he does, the British people may still vote to pull out of the EU – especially since the referendum would be held in the middle of the next parliament, a time when incumbent governments are typically unpopular.

4. China's Hukou system - This residential registration system is a key way people's movements and benefits are controlled in China. Its now right at the heart of Xi JingPing's anti-corruption drive. OffbeatChina has a useful explanation and hints at how this could make a lot of people very grumpy.

It turns out the rich and connected can have more than one hukou card, which allows them to buy multiple properties...

Hukou, as a household registration record, officially identifies a person as a resident of an area using identifying information such as name, date of birth and family relations. Theoretically, one individual can only have one hukou record as a unique identifier, just like one can only have one SSN number in the US. But two recent news about corrupt officials and their family members challenged that assumption.

“Younger House Sister,” a post-90s generation girl who has a Shanghai hukou, was found to own 11 apartments under an affordable housing project in Zhengzhou, Henan province. Her father Qu Zhenfeng was found to be the former director of Zhengzhou State Housing Bureau. All 4 family members of Qu have 2 hukou. Registered under the family’s different hukou are a total of 29 houses.

Gong Aiai, who has been dubbed by netizens as the “Older House Sister,” is the vice  president of Rural Commercial Bank in Shenmu County, Yulin City, Shaanxi province, and also a delegate of China’s National Congress. This county-level cadre was found to own over 20 apartments in Beijing with a total value exceeding 1 billion RMB. And the highlight of the scandal is that she has 4 hukou, 3 in Shaanxi province and 1 in Beijing.

5. Storing up problems for the future - Jeremy Warner from the Telegraph is at the World Economic Forum talkfest of the rich and famous at Davos. He writes well here about the basic problems that haven't been solved.

Although central banks can certainly buy time for debt deleveraging and economic adjustment, they cannot solve underlying deficiencies in competitiveness and solvency. Countries that put their faith in easy money alone are only storing up new, and possibly worse crises for the future.

Belatedly, central banks seem to be waking up to the dangers. Already, it has become a major talking point here at the World Economic Forum in Davos, with some strongly worded warnings from Axel Weber, former head of the German Bundesbank. Central banks and governments are heading into a very dangerous environment, he said, by trying to solve a problem of too much leverage with even more leverage.

Many advanced economies are continuing to live at the expense of future generations, while all central banks have achieved by flooding the world with liquidity is to push underlying problems further down the road. “We are trying to keep a speed for our economies which is simply unsustainable,” he said. Quite so.

6. Would currency wars create deflation? - Nicholas Wapshott writes at Reuters about the danger that tit-for-tat currency devaluations would create deflation. This seemed counter-intuitive to me, given devaluations usually involve printing money.

He also makes some good points about how QE has robbed bond vigilantes of their gun sights.

There are indications that the early skirmishes of a currency war have begun. This is a dangerous business. If countries undercut their competitors’ prices by devaluing their currencies, the stability of the world economy is put at risk. A full-fledged currency war invites deflation, a ruinous downward spiral of prices that in turn invites a worldwide recession. The cause of the conflict lies in the failure of the chosen measure to offset a Great Recession since 2008: wave after wave of “quantitative easing” (QE) by central banks to beat stagnant growth. QE was intended to funnel cheap money into national economies to boost economic activity and increase aggregate demand, thereby creating growth and jobs. But persistent QE has had an important unintended consequence. It has removed a key measure by which traders judge sovereign interest, or the ability of a country to pay its way.

Before the financial freeze of 2008-9, traders who worried about a country’s solvency would decline to buy government bonds or insist on a punishingly high return. That mechanism became confused when, to head off a precipitous Great Recession, finance ministers from the leading industrial nations agreed to pump vast amounts of newly minted money into their economies until the danger had passed. QE, or the buying of government bonds by central banks, was intended to reduce general borrowing costs and allow businesses to borrow cheaply to invest, and thereby employ the jobless.

That did not happen. Banks — fearful of making imprudent decisions similar to the ones they made on mortgage lending that plunged the world economy into a slump in the first place — have been hoarding money, have bought other banks with it, or have awarded it as bonuses to their executives. Businesses, fearful of making large investment decisions so long as demand remains sluggish, have also sat on their cash reserves. The result is the low- to no-growth economy we are currently enduring. John Maynard Keynes thought this would happen. As he told Franklin Roosevelt, it is “like trying to get fat by buying a larger belt.” Providing endless supplies of cheap money cannot in itself lead to growth. Measures to promote demand can best do that.

7. 'This is no currency war' - Felix Salmon, also at Reuters, writes the Japanese money printing move is just normal monetary policy and the yen's move reflects economic expectations, not the first salvo in a currency war.

I’m sure that the Japanese government is happy about the weakening yen. But these are not the opening salvos in some new currency war: instead, the yen should be getting cheaper, just because the Japanese central bank should be doing everything in its power to increase inflation expectations and nominal GDP growth. This move is what you’d expect if the yen moved in line with the kind of monetary policy that makes sense.

And as for central bank independence — well, that battle was lost during the financial crisis, I’m afraid. When it comes to globally coordinated policy actions, central banks should not be independent, and in general the more independent they are, the less effective they have been. Nominal independence is a good thing: we don’t want the finance minister announcing interest rate moves, as used to happen in the UK until about 15 years ago. Central bankers are like judges: they should be technocrats, rather than politicians.

But the fact is that the last genuinely independent central banker was Alan Greenspan, who blew two enormous bubbles and was in many ways the prime cause of the global financial crisis — mostly by being far too laissez-faire, and keeping interest rates far too low for far too long. Central bank independence gave him the kind of credibility that he’d never have had if the president had been setting the exact same monetary policy, more’s the pity.

8. Japan's ageing economy is a hint of things to come - So says Edward Hadas in this thoughtful piece at Reuters about the economic and political effects of ageing societies.

In Japan and many Western countries, giant pension funds have been built on the economic fiction that societies can pay pensions out of savings. In fact, the income of the elderly always comes out of current production. Supposed pension savings have already helped distort bond markets and government finances – pension fund purchases of Japan’s government debt have contributed to some of the lowest yields in the world, funding fiscal deficits which are among the world’s highest as a share of GDP. The time will come when there will be fewer young savers to buy bonds than old pensioners who wish to sell them. At that point, the distortions would reverse: yields rise sharply, provoking a massive financial crisis.

In prosperous, ageing and shrinking nations there are too many voters who are well established and afraid to take risks, too few who are young and adventuresome, or have young children whose interests they wish to advance. I believe that ageing has already made Japanese politics more arthritic. Only in a rigid political environment could the plan of Japanese Prime Minister Shinzo Abe to move from basically flat prices to a 2 percent inflation rate be considered radical. Europe is similar. Progress on such ambitious projects as the euro and banking union would be much faster if there were more young Europeans and fewer old Germans and Italians.

The Japanese experiment with small families has lasted long enough to suggest that a low birth rate neither enriches nor impoverishes but does encourage financial fragility and political calcification. The negative effects should be enough to discourage even enthusiasts for fertility control and negative population growth. While individuals may like the freedom and the environment may be less stressed, demographic decline could prove impoverishing for society as a whole.

9. Ashton Kutcher is Steve Jobs? - Apparently he is in the movie. Here's the first footage of Ashton and Josh Gad plays Woz. Steve wants to change the world. Woz is not so sure.

10. Totally Jon Stewart on the Global Warming Hoax and the coming Ice Age where he lives.


We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.


But but if a land tax is slapped on property to enable more cash to be stolen for the stupid pollies to waste on pet projects and on vote it not true that the banks own most of the land and the property....and if the banks are threatened with higher taxes, they will tell the pollies where to go...!

I'm rather tired of reading the pieces that advocated some form of further taxation.
How can people have liberty and live as free individuals and pay taxes. The two are inconguent. Taxes are nothing more than a form of debt bondage.
The incongruity lies in subjecting one free citizen to anothers use.  
It is not the poor who are in debt and being placed in direct bondage in NZ. For many of this group are receiving all the benefits that the Government can bestow upon them under the guise of social responsibilty. It is also important to point out that the word Social has been hijacked for Political purposes to mean what the Politicians wish it to mean. Other words like Liberty have also been provisioned with a meaning that is not true to the original word.
Private enterprise business has been placed into debt bondage by Political interference and  through heavy handed legislative processes.
Once again I post a link to the Universal Declaration of Human Rights this time I draw attention to Article 30.   
Th Declaration of Human Rights actually gives people Individual Sovereignty the UN Charter is quite clear and concise and makes specific reference using the words "Individual Sovereignty". It is high time people understood what these important documents say. Google UN Charter and read it.
If all the journalists, writers, academics etc around the world understood the Charter and the Universal Declaration of Human Rights they would not write such nonsense on a continual basis. 
Just about avery economy is now facing up to the effects of taxation and globalisation and few want to face up to the facts of what the cause is.  Massive Government failure in every area of the legisalative process. Legislation which is in contravention to the Declaration above which would have protected the Sovereingty of the Individual. Taxation must become voluntary. Government must be become fully transparent. People must take full responsibility for themselves and the directions that they choose and the choices they make. 

Bit paradoxical quoting the UN to justify the end of government? If there's no taxation and no government then who's going to define rights and uphold them?
If taxation becomes voluntary as you claim to wish for, then you are guaranteed that government will be completely transparent - it won't be there.
Hayek and Rand were both cranks - which one have you swallowed whole?

Korual - I have not quoted the UN to justify the end of Government. I refer to information that the UN provisioned us all with, so that all Governments would guarantee those Rights as outlined in the Declaration.
NZ has a Political Economy whereby Policy and legislation is directed by interest groups. Interest groups place priority on their direction and there is little debate on whether the policy benefits all people equally. 
I do not wish to abandon Government entirely but a smaller size of Government is all that is necessary to ensure that the Rights as outlined in the Declaration is all that is necessary. 
Our current system requires that an individual needs to jump through an enormous array of Bureaucratic hoops just to get something simple accomplished and all this hoop jumping requires time, money and resources of the private individual.
The simple human need to relieve oneself will require building consents and a plethora of other commitments that are both timely and expensive. On top of all the local body compliance we are legislated to pay we are then required to pay taxes like GST for the priviledge of relief and on-going tax charges of GST on toilet tissue, GST on rates (which is really a tax on a tax etc. Some Councils charge per toilet installed, now that is an interesting charge as you can only sit on one at time. 
You have obviously not read the Universal Declaration of Human Rights as your post shows your total lack of understanding of what the document states. 
If tax were by voluntary contribution then the Government would have to come to the citizens with a cause and a budget to obtain donations towards their project.  They would also be required to provide proper accounts of their expenditure and income much like I have to provide to their Government Departments today. 

Korual -  Perhaps you need a reminder as to why the Universal Declaration Of Human Rights was written in the first place.  Governments can get out of hand in a variety of ways which slowly fragments society and oppresses the people. Atrocities and war don't just happen someone is pulling the levers and manipulating behind the scenes. It is power and control that causes the problems. The Declaration was to empower the ordinary common citizen so that others could never destruct the security of our societies. The Declaration is one of the most important documents given to the individual citizens of the member countries, states and territories who are signitaries. 
Your entitled to your opinion that you think Rands works were that of a crank.  However you would do well to understand her works and where she lived and what inspired her to write her works. Her world was a completely different place to that of NZ but she understood what happens when humans are corrupted.

Nonane - time for a few truths.
You can't have 'universal rights' with an expanding population, unfettered consumption, and a fiscal system requiring that growth.
Don't blame the rule-makers, nor the tax-takers for the finite nature of our wee spaceship.

How disappointing Bernard that you didnt run with that brilliant piece highlighted yesterday by the head of research at Tullett Prebon - it really should be required reading. Mind you I do feel that editorial line at is shifting somewhat.....

AndyH- I passed it on (with Martenson's 'big picture', and a few  other wee bits) to RadioNZ.
Just so they can't say they weren't told.
Public media has no need to believe/report that  the emperor is clothed - their only goal should be 'the truth'. They're going to have a harder time regurgitating shyte, if I've got anything to do with it.

The Tullet Prebon report was a good read. Thanks for posting it Andyh.

Working through that one now Andy and it will go on my facebook page as well.
The critical distortion here is clearly inflation, which feeds through into computations showing “growth” even when it is intuitively apparent (and evident on many other benchmarks) that, for a decade or more, the economy has, at best, stagnated, not just in the United States but across much of the western world.
This is what I have been saying for nearly a year now with my rework of the quantity theory of money to account for the destructive effects of interest - (M.V)+i=P.Q  The key to my developement of that theory is understanding that the right side of the equation is essentially GDP, so either price or production can create apparent growth. Money has to keep being printed to service the interest so in all situations printing and the illusion of growth occur, well that is until default.
Bernard knows this as he has had a copy of the extended version of my theory since early last year.

I have recently discovered that GDP is unreliable. For a start there are different means of measuring it.
Further, when we are told "the economy grew by X%" what are they really telling us?
GDP can grow because
(a) inflation
(b) increased sales per head of population
(c) increased sales due to immigration
Only (b) actually increases the number of jobs for a fixed population
(c) increases jobs but also increases the number of people to fill those jobs.
I believe that the only true, and real measure of growth, must be "GDP per head of population"

The bit I like best about what you say Mike is "I have recently discovered". I have had a few of those moments myself in my self education on economics, these forums being a important part of that process :-) Unfortunately some here won't or can't advance their knowledge are a stuck on the same of old record. Keep going forward mate.

yes thanks AndyH, I enjoyed reading it also

The truth too much to handle perhaps?

In 1909 there was no GST, no income tax, no land tax, no rates, no departure tax, no company tax, no petrol tax, no road tax, and no capital gain tax.
Government was funded by stamp duty, and taxes on a variety of items such as liquour and  tabacco.
For BH to try to compare then and now and do so to subtly promote a land tax is disingenuous to say the least.

Well back then they did have a seeminlgy endless supply of Maori land to steal and collect the stamp duty from.

I would like to see Maori start up their own bank and curency. They could back their curency with their assets and so would be more attractive than our present fiat system
Would be good to have some competition.

Amen. I don't think they will figure that out though for the same reason that most everyone else hasn't (or won't).

As a vested interest its hardly suprising you object, is it.
There was also no public health service. OAP and no public education  all these are choices ppl have made and chose to pay tax on.
The point of a land tax is to level the playing field, so all "profit" should be taxed equally so a business person choses the sector to operate and profit in and the sector that bast offers tax evasion.

#1 - Exactly
The government is going to spend five hundred million tax dollars, taken from the ordinary working kiwi, and put it into irrigation in South Canterbury. Also, they are going to put the average workers tax dollars into an irrigation company. All this at the tax payers expence while the farmer sits back and collects tens of millions of dollars in capital gain. All for doing nothing. We don't even get cheap dairy products in return, no, we have to pay the international market price.
More crony capitalism

We don't even get cheap dairy products in return, no, we have to pay the international market price.
No, we pay more than the discounted foreign export destination sale price.
Read NZ Herald article: Brits say NZ third dearest to visit
Most items in the survey were four times more expensive in New Zealand than the cheapest destinations.
Cigarettes were 13 times dearer than in Vietnam, and Coke was 92 per cent more than the world average.
Previous Herald reports have found the price local beers, wines and fish to be more expensive in New Zealand than abroad.
Flights are dearer when bought in New Zealand, and books, mobile phone charges and clothes are often vastly more expensive.
Ahead of the Rugby World Cup two years ago, New Zealand faced some overseas criticism for being a "rip-off".

#1.  Lots of choice assertions but no argument evident.  But Wait !  Churchill said it in 1909.  Must be right
#2.  Quelle surprise
#3.  Hukou problem ?  Just buy in Mt Eden and that solves it.  Been done lots before.
#8.  Some unlimited exponential population growth can be the only answer.  Silly Japanese for not thinking of that.

#1 The principle is that of unearned income there KH and it doesn't need an argument as the effect is so obviously apparent as to not need explanation to anyone willing to look. 

So, what's bothering you: that the income is "unearned", or that as income it is not taxed?

Unearned income is always destructive to a society, that includes interest, merchanting, politicking (a form of tax) and ironcially tax.
A loose definiting of earned would be made it or grew it. If you didn't then you are taking(stealing) the proceeds from someone that did. Or as someone put the other day, you are stealing another mans time.

Isn't the "unearned income" the main pillar of the capitalist system?
If I spend some of my capital to buy a piece of land and sell it later at a higher price (assuming the market price for that land has increased by then), the difference is what you call "an unearned income".
If you spend some of your capital to buy part of a (or whole) company (i.e., shares) and sell it later at a higher price (assuming the market price for that company has increased by then), the difference is what you call "an unearned income".
I could give more examples. The point is: taxed or not taxed, the "unearned income" is the cornerstone of capitalism as a system. The system is not ideal, but appears to be the best out of anything implementable at this point of our evolution...

Yes, with a question mark over the last sentence. It would appear the qualifier there would be the definition of best, and best for who? (future included in there).

For everyone.

I am not sure that 'unearned income' is the pillar or cornerstone.
Capitalism could be said to include:
1.  private ownership (property rights)
2.  the right to own the means of production (freedom)
3.  the right to accumluate capital
4.  the creation of goods and services
5.  the right to sell and buy freely (not set or fixed by others)
Your examples describe only speculation and not investment. The difference being an investment must give a measurable return.  Whereas a speculation relies wholly on the value of the asset increasing but without a return of any kind.
I do not deny speculation exists in a capitalistic society.  I do suggest it is not the heart of the system.

"Unearned income" is exactly the heart of the capitalistic system and it does not occur in speculative activities only. A business owner receives a portion of value added by every of his employees; combined, these portions comprise his "profit" which is "unearned income" too. (I know of business owners who do not take part in their business' activities at all, leaving them to be run by others. They get the "profit" all right). So, the "unearned income" is received by the business owner as long as the business is "profitable". Karl Marx analysed this to death in his "Das Kapital", showing that the unearned income is indeed a key attribute of the system. 

I think you are presenting speculation and investment as the same thing, which they are not.  One is productive and one is not.  That's a big difference.
Also, a business owner only receives a portion of value if his business is succesful.  80% of business starts fail within two years. The profit you suggest is "unearned" is a return for the risk and effort required to create and maintain a successful business.  And you don't have to work in a business to take that risk.

No speculation involved in the example I gave. Owners of production means get their "unearned income" in the form of "profit" and this is a key attribute of the capitalism as a system. No effort to maintain the business is applied when other (hired) people do all the work.
As to risk, it is there when one speculates too. 

Employees do not add unearned value, they must be paid.
Few work for free.
Employee effort alone does not constitute profit. If that were true we could logically conclude businesses go bankrupt because of the lack of employee effort.
You have overlooked intellectual property, brand value, the value of time and place distribution, the added value of manufacture, the time value of money, costs of commodity and other many other variables the count toward profit.
Magical businesses that maintain without effort only occur in fantasy land.
Your summation that "profit" means "unearned" is eroneous and ignores the reality of the effort required to create real wealth.

Scarfie - It is not stealing someone else's earnings or time.  If I buy goods from a manufacturer for $100 and sell them two weeks later for $150.00 i have neither stolen his earnings nor his time.  Time provides value and not always will the value increase sometimes it goods decrease in value. A bit like the lamb market this year.
Now going back to the goods I purchase from the manufacturer. The manufacture doesn't have the market that I can sell the goods into. Under your loose definition of earnings, Do you think that I should just tell the manufacturer where the market? Sorry Scarfie but that part is my knowledge and my work and my sourcing so naturally I would want my earnings. It would be more destructive to society if I did not sell the goods and the manufacturer went bust and everyone lost their job etc.

Why would you buy goods and sell then two weeks later unless you wish to steal the difference in that value from the manufacturer?
Now if you wanted to transport the goods and collect a reasonable fee for the transport, that would be perfectly acceptable. Don't kid yourself that merchanting is okay as it isn't, it is destructive because by doing so you are a parasite of those who are producing. I think your flaw is seeing society as competitive where as the best examples are cooperative. Don't kid yourself that consititutes work either. Knowledge without work is of no value, just like me talking to you here :-)


Bugger I answered that Alex, so removed also :-)

Scarfie - get into business and then you might finally understand what I'm talking about.
Manufacturers, Wholesalers, Distributors, Retailers etc all exist for a reason and it is not unearned income, stealing or parasitic behaviour. 
The markets and money have to keep circulating and I think that is where you and PDK and Steven all get confused. You think the markets should be stationary during some periods which is incorrect.  The market is alive and continuously moving 24 hours a day.
If you think that merchanting is not OK then you had better look again. Merchants are a necessary part of the market.  They actively move products around the world.

By 'buying at 100, and 'selling' at 150, you've committed exactly the same action ask a currency-trader, middle-person, paid advisor.
You now expect to 'buy' what you understand is $50 worth of bits of the planet - but there is no guarantee of any correlation. Just because you want it, doesn't mean it exists. And - at an inevitable and calculable point, it won't.
It's nothing to do with 'the market. It's to do with the ability of the planet to underwrite. I appreciate small-minded folk get confused by the numeric expression of the proxy, but the underwrite is not driven by the proxy, the underwrite is physically limited, and the currently-bidding proxy can only be divided into it.
Lack of understanding in the comment about jobs too - 'jobs' are nothing but the expectation that some proxy can be amassed. The bits of the planet can be had without any proxy, but the proxy is wortth exactly nothing if there is nothing on the shelf.
The manufacturers bigger problem is resource-supply, and energy availability. And his 'profit, of course, which is yet more conjured-up proxy expectation.
Like pulling teeth, so it is. Don't want to know, can't understand, or peer-trapped into a corner?

PDK, to be fair, you often mix (your favourite) topic of finite planet into discussions where other things are discussed. In this particular case, the workings of the capitalistic system and the resultant "unearned income" were being discussed. If and when that "inevitable and calculable point" indeed comes, the system will be affected quite drastically and possibly collapse - but that is a different topic altogether...
And the "small-minded folk" are actually not as small-minded as you claim to think. It is not hard to understand the EROEI and consequences of its decline, but one cannot use that understanding to feed his family here and now, one needs and looks for ways to make more "proxy" to address today's needs, ignoring therefore the reflections about the possible collapses in the future...  

The  term to think of is painting yourself into a corner.  For instance a subsistance farmer wants (say) 3 or 6 sons to ease his workload, those in turn want that many sons again.  7 billion ppl later we are only feeding that many with fossil fuel which will decline inside a decade.  So the problem with here and now is we are doing things are are destroying the underlying ability of the planet to support (say) 2 billion ppl, and that damge rate is increasing.  So by decade end that "natural" support level might only be 1.5billion.
So yes you are right on "the system will be affected quite drastically and possibly collapse"
If on the other hand we take steps like population control, like increasing our renewable energy sources at a cost today then NZ at least wont be so drastically impacted...
Though my worry is the swamped lifeboat scenario....

What do you mean population control in the New Zealand context, our birth rate is just below replacement rates? New Zealand has little influence over population growth elsewhere. And we already have one of the highest rates of renewable energy use.
So what is a kiwi to do when he/she has all these day to day worries of paying the bills, finding work, feeding the family etc? Are we (kiwis) worrying unnecessarily?

But that is overall...

Alex I take it from you comments that, unlike some others, you don't argue with the fact of unearned income being bad, but you are making excuses for why it is acceptable?
Have you seem my posts regarding the decline in the rate of population growth since 1961? IMO that is the leading indicator that the planet has run out of bits as PDK puts it, my way of explaining it is peak EROEI (as opposed to peak oil). Either way it looks very much like the Seneca Effect in action, so that better way of managing things doesn't have to be found, it is very rapidly going to find us.
The definition of capitalism is an interesting one because it has been contemporary with the industrial revolution, which in turn was fueled by coal and oil. So does capitalism equate to increased consumption of energy?

I often use the Titanic analogy. If you are called from your cosy stateroom, told to don lifejackets, and told that the vessel is doomed, going back into the cosy stateroom is an understandable instinct, but a flawed strategy.
Which is why I make no apologies for keeping all discussions related to the sinking.
If and when?  It's happening all around you - what part of it can't you see? I'll grant you that part of the problem is the across-the-board belief that 'money' will always get you those bits of the planet.
Yes, you describe something called the tragedy of the commons. Even if we backed-off to no carbon pollution whatever, curtailed procreation to 1 per couple, rationed fossil energy, and severely limited consumption-per-head (what do you think the message behind Waterworld, Avatar, Hunger Games and The Carbon Diaries is? - or didn't you think to ask that?) the problem now is that there too many folk just needing to boil the billy for today.
We might have gotten there if we'd started 30-40 years ago. Would have had to be a command-effort, too - look at the number of idiot posters here who still think the earth is flat, even now, with all the evidence.

Haha.  And you can demonstrate you are right because being so is self evident to you.  aah.  I understand what you are saying.

The interesting thing with your lack of ability to understand is that the principle is commonly used in legal processes. For instance patent examiners won't grant patents on inventtions or processes, or parts thereof, that are self evident or apparent. Some things are so obvious as to not need explanation. Of course the principle of unearned income was first noted by Aristotle more than 2000 years ago so I don't quote anything new, as I say it is there for anyone who cares to look.

#6 Curency war. Deflation, how can this be?
A curencies value is a measure against other curencies.
If i drop the value of my curency against yours, then you drop the value of your currency to match mine then we are back to square one and nothing has changed.

...can't be. You get inflation when your currency depreicates, and hyperinflation if it deprecites a lot. All your imports become more expensive. 

correct, but have to give more thought to this one.
If i devalue my dollar so that my products are cheaper than yours. Then you do the same we do end up at square one, only both of our prices are higher due to inflation.
Hmm, sounds about right.

yes, I would think it comes back to the purchasing power of a dollar. If I make $1 worth 80 cents in foreign currency (devalued), then price of all goods bought goes up for locals. If someone else does it too, matching devaluation, then perhaps it does cancel itself out as you say, their stuff becomes cheaper. But still purchasing power seems to me to be eroded in both countries which = inflation

Well Churchill was a member of the House of Commons, which was started up so that the middle classes could take political power off the landowning aristocracy in the House of Lords. This was necessary for the rise of the capitalist classes, just as the quote says. Rent seeking aristocrats and their bankers were a burden on capitalist enterprise from the start and now at the end it is the rent seeking oligarchy that is the burden suffocating business and households.
Given that most MPs are landowners you can see how they have got the political power to untax property to an extent never enjoyed by business and employers. You can bet they'll keep the property pyramid going for as long as they possibly can. Landlords get all the breaks, though they still complain about pollies interfering...biting the hand that feeds, or protesting too much?

In 2001 67.8% of all New Zealanders were living in property they owned, not just MPs:

Seems a lot of uncertainity in the world today.  I think if we look back 400 years ago I think the Maori's have claims to the Islands in the South China Seas that is being disputed between China, Phillipines and Japan.   Before the Maori's came to the Pacific they were foraging in the South China Seas so they should put a bid in for claims to the foreshore and sea beds in this area.  

#8 - the future belongs to those who show up for it (Glenn Reynolds).

The crew may not have realised we do have taxes called "RATES" in NZ...
...which on average are about 0.5%PA of a property's capital value.
Then we also have these things called "LEVIES" or "CONTRIBUTIONS" which depending on where you are can be up to 10% of the value of a newly built home.
Of course the solution to our woes is to add more taxes!!!
Maybe we should shovel off all the journos to North Korea to see what a roaring success communism is...

When the All Black's play a game of rugby they have reserves. When the All Whites play a game of soccer they also have reserves, and so it goes with many sports.
These reserves sit on the sideline watching the game, and my not get to play all season.
Do we all winge
"why should they get paid if they don't play?"
"The cost of my ticket to watch the game would be cheaper if we didn't have to pay those bludgers"
"I have to pay more for Sky Sport because of those bludgers"
"Why do we need reserves anyway?"
and so on
No we don't complain.
Why then can we not see the unemployed as "Reserves" waiting on the sideline for a job when the economy picks up.
If the American Industrial Military aggression causes another war, those unemployed people will shed blood and die just like everyone else. So they are reserves in waiting for the defence of the country. Was it just people with jobs who fought and died in two world wars?
So i hope, we all, think things through before we verbally assault our fellow human beings

Mike B - when your in the Reserves and you get called up you have to play.
3rd and 4th Generations of unemployed in some families is not acceptable.  
The unemployment benefit needs to have a cut off time. NZ is having to employ labour from off-shore to get work done at the moment.

It Friday Yay..!!!!!!
On the subject of tax...!
 A chappie in Eversham has just filed a return I think we'd all like to ....
It was returned to him for follows.

Importance of Tax Return Accuracy


 HMRC has returned the tax return to a man in Eversham after he apparently answered one of the questions incorrectly.

In response to the question.


Do you have anyone dependant on you, he answered " 2.1 million illegal immigrants, 1.1 million crackheads,4.4million unemployable JeremyKyle scroungers,900thousand criminals in over 85 prisons,650 idiots in Parliment and the whole of the European Commission."


HMRC  stated the response he gave was unacceptable.


The mans response to HMRC was " why,who did I miss out"



The World Trade Organisation trade war between Antigua and the United States looks like it is nearing it's hilarious climax.

Re # 5 ; Watching the US economy is like watching your neighbour borrow and  spend 100k to renovate the house and realise only 30k in 'added value" !!
How can a roughly 10% annual deficit leading to a paltry 3% ish (yeah rite) growth rate not wake the American public up to the ponzi scheme? Guess the party will continue while the $US is still backed by oil (bullets?) huh? Pity Africa and its resources.

Because Americans have been,
a) brainwashed into believing that its their god given right to have anything they want.
b) Lots of ppl desperate to avoid any 'unpleasentness' even though it been brought on themselves in spades.  Of course quite a few americans are truely desperate ie hungry, so that takes precedence over everything.
The American dream....
Its about to turn into a nightmare the only worry is, whos going to have the worst trip....
Bullets indeed....there isnt enough in Africa or elsewhere to get the only other option is to use force to take the slice of cake you desire and prevent others collecting thier fair share.
So bullets it will be.....
Interestingly with the new proposed US gun law american gunshops are sold out of 0.223 and 7.62x39mm ammo and the guns that use them Ak47/74 and AR15...thats many millions if not billions of rounds......
I cant see this being a quite decade myself.

steven: "so bullets it will be"
They're off the planet with their stupidity - Didnt you just love that guy Wayne LaPierre of the NRA saying "The only thing that stops a bad guy with a gun is a good guy with a gun."
What he didn't explain, and no one asked, was "could a good guy with .22 pistol stop a bad guy with an AK47?"   Odds on they will try. Or, could go for single shot 50mm rifles, and shoot first.

Which makes me wonder when they say such things just how NZ can take them as our that a smile of "hello mate" or "he'd look good with tomato sauce".  Hence when I think of peak oil I really think NZ should and has the ability to produce as much "in-house" as it can.  Such things like bio-fuel plant take Govn investment. One party wont spend except on as is and the other would simply spend but not on anthing offering resiliance, just more consumption.
NB I dont tend to read anything by the NRA as I think they are utter nut jobs...I tend to come across it second hand....but I can well believe it.  Dunno where 22s come from, the Glock and 1911 seem to be the std US faire.
Even if the US brings in the ban, existing auto weapons get "grandfathered"  ie you get to keep them and the 30 or even 300 round mags as wont solve a thing....

RE item 1  Land Tax
Arguements against a land tax seem to fall into the following camps.
1. The world is running out of resources , so everything is pointless
2. All taxes are bad so any changes to how and what we tax are equally as bad
3. All taxes are bad because they used by people other than the tax payer and those people are usually poor and not very nice in some way or other.
4. Whatever JK says is the right answer is correct and anyone who thinks differently or questions how things are currently done are just plain wrong.
5. Lets 'play the man not the ball'
At all times the  key is to not actually discuss the NZ tax system at all. Stick with items 1-5 in no particular order as it is so much easier.
In New Zealand we tax "doing" and we do not tax "not doing " So we tax doing stuff like working, transacting, consuming , interacting, creating, inventing, building the stuff that our entire society needs.
Meanwhile we never ever tax, sitting around and not doing.- land owning, rent seeking.
Churchill explained it all pretty well, yet the article was ignored and instead we got the standard 1-5 comments from nearly everyone.

The full Churchill speach on the topic is here.

JK Speach
Capital markets
When it comes to capital markets, the biggest thing happening this year is the Government’s offer of shares in state-owned energy companies.
Subject to the Supreme Court’s decision, this will start in the first half of the year with our offer of up to 49 per cent of the shares in Mighty River Power.
We also want to proceed with another IPO later this year.
The whole share offer programme will be a shot in the arm for New Zealand’s capital markets.
I wonder why he called selling the 49% an IPO?  An Initial Public Offering. It is a very specific term with a very specific meaning.
Definition of ‘Initial Public Offering – IPO’
The first sale of stock by a private company to the public.
So does this mean that they have already decided to move beyond a 49% sales- it certainly sounds like they will. That must be why he used the term. I think JK is 'dog whistling' to the markets with that one

 As Churchill.......
.............These individuals (who aren't landowers from their efforts, and are leeches paid by government coffers we'll note) may point this out.  However, it is wrong.
I think that looking at Churchills life in the full you find an Aristocrat without the money to live like one, so he went about earning the money to live like one and live like one he did. Politics did not pay- very little if at all. He wrote all his working life and with that he paid his way so no I do not think he was a leach  at all . I think you have been miss informed in that regard.
As for the rest of the comment maybe read the `churchill speach in full. I put a link up above.

And, NO, I do not consider writing "work".  (hence the whole Fourth Estate thing)
This is getting very silly. And not really on the topic of Land Tax at all.

Post war, indeed, after the carnage that the Upper class caused to the male working populace during WW1, which then followed with the first "Gilded age" enjoyed by few, the ppl in post WW2 were determined not to see a repeat, hence the welfare state, hence Churciill was so defeated.  Interestingly post WW2 with things like a welfare state saw 20 years of boom, until the energy problems of the 70s.....rinse and repeat today. Kind of points to energy being the key...