Comments for The Productive Economy Council http://www.pec.org.nz The Productive Economy Council represents a growing community of people that wish to see New Zealand return to the upper end of the OECD in terms of GDP per capita. Wed, 10 Mar 2010 22:14:32 +0000 http://wordpress.org/?v=2.7.1 hourly 1 Comment on Best practice monetary policy? by Les Rudd http://www.pec.org.nz/2009/11/best-practice-monetary-policy/comment-page-1/#comment-1701 Les Rudd Thu, 19 Nov 2009 22:58:49 +0000 http://www.pec.org.nz/?p=232#comment-1701 Selwyn – yep, dismal. JK replying to Phil G’s speech: http://www.nzherald.co.nz/business/news/video.cfm?c_id=3&gal_objectid=10610438&gallery_id=108295 Like he went straight into 'spin cycle' even before rinsing it through! Dismal. Selwyn – yep, dismal. JK replying to Phil G’s speech:

http://www.nzherald.co.nz/business/news/video.cfm?c_id=3&gal_objectid=10610438&gallery_id=108295

Like he went straight into ’spin cycle’ even before rinsing it through!

Dismal.

]]> Comment on Goff says RB policy targets don’t work by Les Rudd http://www.pec.org.nz/2009/11/goff-says-rb-policy-targets-dont-work/comment-page-1/#comment-875 Les Rudd Thu, 19 Nov 2009 00:22:13 +0000 http://www.pec.org.nz/?p=227#comment-875 Monday this week I made the following comment about this topic: http://www.interest.co.nz/ratesblog/index.php/2009/11/16/top-10-at-10-south-canterbury-losses-china-bubble-to-pop-mad-butcher-vs-chrisco-dilberts/comment-page-1/#comment-47427 (Plus see further comments in that thread.) So got to thinking about how ‘The Guernsey Way’ (interest free public credit) could be combined with, increasing the core funding ratio to 100% – ie. full reserve banking. However, I thought that too incredible and defaulted back to the ‘mixed’ approach, ie. ‘The Guernsey Way’ and ‘The North Dakota Way’ – the latter went in the NZMEA submission to the oppositions banking inquiry. In mulling that over came across a vid by Bill Still, who presents better than Ellen Brown, see here where he describes North Dakota state bank: http://www.youtube.com/watch?v=sGNPEQDXxwo So blow me down with a feather as he cites the same idea as a salve to the US’ woes, in parts 20/21 of ‘The Money Masters’ vid series on You-Tube. The link below is to part 19 where he sums up and proposes the ‘public credit’ and full reserve banking solution: http://www.youtube.com/watch?v=CIPHd4Gjcck&feature=related I wonder if Dr. B is thinking this way with the new focus on the core funding ratio? I doubt it, But maybe Goff and co. will have what it takes - LEADERSHIP - and start a purposful debate on how NZ can remodel KiwiBank toward the BND approach (with all central government finances transacted through it,) OR, consider NZ regions having their own ‘community focused banks’ (with all local gov. finances transacted through them) OR, maybe a sector specific bank, say ‘The Exporters Bank’, or ‘Productive Economy Bank’ – given we seem to have plenty of banks for the ‘Unproductive Economy’!! No harm in dreaming a bit eh? Monday this week I made the following comment about this topic:

http://www.interest.co.nz/ratesblog/index.php/2009/11/16/top-10-at-10-south-canterbury-losses-china-bubble-to-pop-mad-butcher-vs-chrisco-dilberts/comment-page-1/#comment-47427

(Plus see further comments in that thread.)

So got to thinking about how ‘The Guernsey Way’ (interest free public credit) could be combined with, increasing the core funding ratio to 100% – ie. full reserve banking. However, I thought that too incredible and defaulted back to the ‘mixed’ approach, ie. ‘The Guernsey Way’ and ‘The North Dakota Way’ – the latter went in the NZMEA submission to the oppositions banking inquiry. In mulling that over came across a vid by Bill Still, who presents better than Ellen Brown, see here where he describes North Dakota state bank:

http://www.youtube.com/watch?v=sGNPEQDXxwo

So blow me down with a feather as he cites the same idea as a salve to the US’ woes, in parts 20/21 of ‘The Money Masters’ vid series on You-Tube. The link below is to part 19 where he sums up and proposes the ‘public credit’ and full reserve banking solution:

http://www.youtube.com/watch?v=CIPHd4Gjcck&feature=related

I wonder if Dr. B is thinking this way with the new focus on the core funding ratio?

I doubt it, But maybe Goff and co. will have what it takes - LEADERSHIP - and start a purposful debate on how NZ can remodel KiwiBank toward the BND approach (with all central government finances transacted through it,) OR, consider NZ regions having their own ‘community focused banks’ (with all local gov. finances transacted through them) OR, maybe a sector specific bank, say ‘The Exporters Bank’, or ‘Productive Economy Bank’ – given we seem to have plenty of banks for the ‘Unproductive Economy’!!

No harm in dreaming a bit eh?

]]> Comment on Bernard Hickey: Bollard leads world by Les Rudd http://www.pec.org.nz/2009/11/bernard-hickey-bollard-leads-world/comment-page-1/#comment-60 Les Rudd Sun, 15 Nov 2009 23:42:40 +0000 http://www.pec.org.nz/?p=225#comment-60 Good try Dr B. about time, what took you so long? Almost a four year wait… A welcome step in a better direction, however, methinks “lead” is overstating it a bit Bernard, considering this is akin to tinkering and we still don’t know how ‘loop-hole’ tight it is. Isn’t this the real problem though: DOLLAR DECEPTION: HOW BANKS SECRETLY CREATE MONEY, Ellen Brown, July 3rd, 2007 http://www.webofdebt.com/articles/dollar-deception.php “Price inflation is only one problem with this system of private money creation. Another is that banks create only the principal but not the interest necessary to pay back their loans. Since virtually the entire money supply is created by banks themselves, new money must continually be borrowed into existence just to pay the interest owed to the bankers. A dollar lent at 5 percent interest becomes 2 dollars in 14 years. That means the money supply has to double every 14 years just to cover the interest owed on the money existing at the beginning of this 14 year cycle.” Isn’t this a real solution, NZ could REPEAT again: WAKING UP ON A MINNESOTA BRIDGE: HOW TO SOLVE THE INFRASTRUCTURE CRISIS WITHOUT SELLING OFF OUR NATIONAL ASSETS, Ellen Brown, August 4th, 2007 http://www.webofdebt.com/articles/infrastructure-crisis.php “Located among the British Channel Islands just south of Great Britain, Guernsey is so small that it has been able to stay under the radar long enough to try some experimental financing without raising the hackles of the international banking establishment that is normally in control of such things. When the Guernsey government needs funding, it simply issues the money it needs. In 1994, Dr. Bob Blain, Professor of Sociology at Southern Illinois University, wrote of this remarkable island: In 1816 its sea walls were crumbling, its roads were muddy and only 4 1/2 feet wide. Guernsey’s debt was 19,000 pounds. The island’s annual income was 3,000 pounds of which 2,400 had to be used to pay interest on its debt. Not surprisingly, people were leaving Guernsey and there was little employment. Then the government created and loaned new, interest-free state notes worth 6,000 pounds. Some 4,000 pounds were used to start the repairs of the sea walls. In 1820, another 4,500 pounds was issued, again interest-free. In 1821, another 10,000; 1824, 5,000; 1826, 20,000. By 1837, 50,000 pounds had been issued interest free for the primary use of projects like sea walls, roads, the marketplace, churches, and colleges. This sum more than doubled the island’s money supply during this thirteen year period, but there was no inflation. In the year 1914, as the British restricted the expansion of their money supply due to World War I, the people of Guernsey commenced to issue another 142,000 pounds over the next four years and never looked back. By 1958, over 542,000 pounds had been issued, all without inflation. Guernsey has an income tax, but the tax is relatively low (a “flat” 20 percent), and it is simple and loophole-free. It has no inheritance tax, no capital gains tax, and no federal debt. Commercial banks service private lenders, but the government itself never goes into debt. When it wants to create some public work or service, it just issues the money it needs to pay for the work. The Guernsey government has been issuing its own money for nearly two centuries. During that time, the money supply has mushroomed to about 25 times its original size; yet the economy has not been troubled by price inflation, and it has remained prosperous and stable.” What’s good for the Guernsey, could be good for the Kiwi, AGAIN: http://publiccreditorbust.blog.com/2009/09/11/michael-joseph-savage-explains-how-public-credit-was-used-to-build-state-houses/ Why not? Jacko – useful comment here, it got me delving back into ‘Web of Dept’, the NZMEA submission with the North Dakota State Bank solution, and then Iain Parker’s blog: http://www.interest.co.nz/ratesblog/index.php/2009/11/13/opinion-tax-kiwi-trading-to-reduce-speculation-and-lower-the-currency/#comment-47303 Good try Dr B. about time, what took you so long? Almost a four year wait… A welcome step in a better direction, however, methinks “lead” is overstating it a bit Bernard, considering this is akin to tinkering and we still don’t know how ‘loop-hole’ tight it is. Isn’t this the real problem though:

DOLLAR DECEPTION: HOW BANKS SECRETLY CREATE MONEY, Ellen Brown, July 3rd, 2007

http://www.webofdebt.com/articles/dollar-deception.php

“Price inflation is only one problem with this system of private money creation. Another is that banks create only the principal but not the interest necessary to pay back their loans. Since virtually the entire money supply is created by banks themselves, new money must continually be borrowed into existence just to pay the interest owed to the bankers. A dollar lent at 5 percent interest becomes 2 dollars in 14 years. That means the money supply has to double every 14 years just to cover the interest owed on the money existing at the beginning of this 14 year cycle.”

Isn’t this a real solution, NZ could REPEAT again:

WAKING UP ON A MINNESOTA BRIDGE: HOW TO SOLVE THE INFRASTRUCTURE CRISIS WITHOUT SELLING OFF OUR NATIONAL ASSETS, Ellen Brown, August 4th, 2007

http://www.webofdebt.com/articles/infrastructure-crisis.php

“Located among the British Channel Islands just south of Great Britain, Guernsey is so small that it has been able to stay under the radar long enough to try some experimental financing without raising the hackles of the international banking establishment that is normally in control of such things. When the Guernsey government needs funding, it simply issues the money it needs. In 1994, Dr. Bob Blain, Professor of Sociology at Southern Illinois University, wrote of this remarkable island:

In 1816 its sea walls were crumbling, its roads were muddy and only 4 1/2 feet wide. Guernsey’s debt was 19,000 pounds. The island’s annual income was 3,000 pounds of which 2,400 had to be used to pay interest on its debt. Not surprisingly, people were leaving Guernsey and there was little employment.

Then the government created and loaned new, interest-free state notes worth 6,000 pounds. Some 4,000 pounds were used to start the repairs of the sea walls. In 1820, another 4,500 pounds was issued, again interest-free. In 1821, another 10,000; 1824, 5,000; 1826, 20,000. By 1837, 50,000 pounds had been issued interest free for the primary use of projects like sea walls, roads, the marketplace, churches, and colleges. This sum more than doubled the island’s money supply during this thirteen year period, but there was no inflation. In the year 1914, as the British restricted the expansion of their money supply due to World War I, the people of Guernsey commenced to issue another 142,000 pounds over the next four years and never looked back. By 1958, over 542,000 pounds had been issued, all without inflation.

Guernsey has an income tax, but the tax is relatively low (a “flat” 20 percent), and it is simple and loophole-free. It has no inheritance tax, no capital gains tax, and no federal debt. Commercial banks service private lenders, but the government itself never goes into debt. When it wants to create some public work or service, it just issues the money it needs to pay for the work. The Guernsey government has been issuing its own money for nearly two centuries. During that time, the money supply has mushroomed to about 25 times its original size; yet the economy has not been troubled by price inflation, and it has remained prosperous and stable.”

What’s good for the Guernsey, could be good for the Kiwi, AGAIN:

http://publiccreditorbust.blog.com/2009/09/11/michael-joseph-savage-explains-how-public-credit-was-used-to-build-state-houses/

Why not?

Jacko – useful comment here, it got me delving back into ‘Web of Dept’, the NZMEA submission with the North Dakota State Bank solution, and then Iain Parker’s blog:

http://www.interest.co.nz/ratesblog/index.php/2009/11/13/opinion-tax-kiwi-trading-to-reduce-speculation-and-lower-the-currency/#comment-47303

]]> Comment on Bollard “calls for exchange rate stability” by Les Rudd http://www.pec.org.nz/2009/11/bollard-calls-for-exchange-rate-stability/comment-page-1/#comment-59 Les Rudd Sun, 15 Nov 2009 22:40:37 +0000 http://www.pec.org.nz/?p=214#comment-59 The ideas described here might help: http://www.interest.co.nz/ratesblog/index.php/2009/11/16/top-10-at-10-south-canterbury-losses-china-bubble-to-pop-mad-butcher-vs-chrisco-dilberts/comment-page-1/#comment-47427 The ideas described here might help:

http://www.interest.co.nz/ratesblog/index.php/2009/11/16/top-10-at-10-south-canterbury-losses-china-bubble-to-pop-mad-butcher-vs-chrisco-dilberts/comment-page-1/#comment-47427

]]> Comment on Bollard “calls for exchange rate stability” by Selwyn Pellett http://www.pec.org.nz/2009/11/bollard-calls-for-exchange-rate-stability/comment-page-1/#comment-56 Selwyn Pellett Wed, 11 Nov 2009 02:48:25 +0000 http://www.pec.org.nz/?p=214#comment-56 Time will tell Les. They are seriously looking at all the issues and lots of data gathering at the moment. Frankly they have the horsepower to come up with some great solutions if as you say they have the political will to do so. The debate over asset sales needs to start now as it might as well be broadcast on TV 1 News that National is lining up the asset sales. The treasury report is an early announcement and part justification. “Live within your means” New Zealand but in the mean time we will clock up some debt and then say 2 years from now that you have spent too much and it’s time to sell of the silverware again. Sel Time will tell Les. They are seriously looking at all the issues and lots of data gathering at the moment. Frankly they have the horsepower to come up with some great solutions if as you say they have the political will to do so.

The debate over asset sales needs to start now as it might as well be broadcast on TV 1 News that National is lining up the asset sales. The treasury report is an early announcement and part justification. “Live within your means” New Zealand but in the mean time we will clock up some debt and then say 2 years from now that you have spent too much and it’s time to sell of the silverware again. Sel

]]> Comment on Bollard “calls for exchange rate stability” by Les Rudd http://www.pec.org.nz/2009/11/bollard-calls-for-exchange-rate-stability/comment-page-1/#comment-55 Les Rudd Wed, 11 Nov 2009 02:37:22 +0000 http://www.pec.org.nz/?p=214#comment-55 Selwyn - I see little hope of Nats gov. responding positively to Lab's banking inquiry. Given theere are well research options to fix most of the problems indentified in that work, that implies a time limit on Labour responding positively to create a proposed mandate for change - no matter how much they fear 'political risk'. They either show LEADERSHIP, or they don't. Writing a report is one thing, but writing history is another - and from what I saw of them over the last ten years, they don't look that so qualified for that kind of challenge. I'd like to be proved wrong. Selwyn - I see little hope of Nats gov. responding positively to Lab’s banking inquiry. Given theere are well research options to fix most of the problems indentified in that work, that implies a time limit on Labour responding positively to create a proposed mandate for change - no matter how much they fear ‘political risk’. They either show LEADERSHIP, or they don’t. Writing a report is one thing, but writing history is another - and from what I saw of them over the last ten years, they don’t look that so qualified for that kind of challenge. I’d like to be proved wrong.

]]> Comment on Bollard “calls for exchange rate stability” by Selwyn Pellett http://www.pec.org.nz/2009/11/bollard-calls-for-exchange-rate-stability/comment-page-1/#comment-54 Selwyn Pellett Wed, 11 Nov 2009 02:26:00 +0000 http://www.pec.org.nz/?p=214#comment-54 Don’t hold back Les, say what you really mean. I agree by the way....Left and Right is dead and we need to get on with making decissions that make sense for 95% of New Zealanders instead of 5%. Don’t hold back Les, say what you really mean. I agree by the way….Left and Right is dead and we need to get on with making decissions that make sense for 95% of New Zealanders instead of 5%.

]]> Comment on Bollard “calls for exchange rate stability” by Les Rudd http://www.pec.org.nz/2009/11/bollard-calls-for-exchange-rate-stability/comment-page-1/#comment-53 Les Rudd Wed, 11 Nov 2009 02:17:47 +0000 http://www.pec.org.nz/?p=214#comment-53 Grumpy Old Man - it's why I've never seen the NZ Labour Party as the party of the 'common man/woman' - given they slavishly followed the neo.con religion as slavishly as those at the other political pole. No surprise I guess when you look at the NZ political geneology involved. Anyway given the completion of this recent parliamentary banking inquiry that David Cunliffe has led, maybe they can generate a new mandate for change will lead to 'The End of Left versus Right’ in terms of rebuilding the NZ economy and also abandon the dogma associated with both ‘Left-wing Utopias and Free Market Fantasies’. Here's hoping. I wonder if they got the wotsits for it? Grumpy Old Man - it’s why I’ve never seen the NZ Labour Party as the party of the ‘common man/woman’ - given they slavishly followed the neo.con religion as slavishly as those at the other political pole. No surprise I guess when you look at the NZ political geneology involved. Anyway given the completion of this recent parliamentary banking inquiry that David Cunliffe has led, maybe they can generate a new mandate for change will lead to ‘The End of Left versus Right’ in terms of rebuilding the NZ economy and also abandon the dogma associated with both ‘Left-wing Utopias and Free Market Fantasies’. Here’s hoping. I wonder if they got the wotsits for it?

]]> Comment on Bollard “calls for exchange rate stability” by Grumpy Old Man http://www.pec.org.nz/2009/11/bollard-calls-for-exchange-rate-stability/comment-page-1/#comment-51 Grumpy Old Man Wed, 11 Nov 2009 01:48:19 +0000 http://www.pec.org.nz/?p=214#comment-51 Thing is it is the global elite that wins with the neocon agenda, individual countries do to some extent but the large private transnational interests really hover up all the gain. And the people at the very bottom get well and truly reamed. Thing is it is the global elite that wins with the neocon agenda, individual countries do to some extent but the large private transnational interests really hover up all the gain. And the people at the very bottom get well and truly reamed.

]]> Comment on Bollard “calls for exchange rate stability” by Les Rudd http://www.pec.org.nz/2009/11/bollard-calls-for-exchange-rate-stability/comment-page-1/#comment-50 Les Rudd Wed, 11 Nov 2009 01:39:18 +0000 http://www.pec.org.nz/?p=214#comment-50 tadhg - good questions, the most important one being, "why has it not been re-visited as a policy?" I believe you will get some answers to that question from two books that I have completed reviews for that can be downloaded from the top area of this page on the NZMEA website: http://www.mea.org.nz/events.aspx The books are, 1) Culture and Prosperity: the truth about markets – why some nations are rich but most remain poor. John Kay, 2003, Harper Business. He cites and analyses Argentina and New Zealand(!) as examples of countries that were onces rich but are now in the “intermediate-rich list” – not far off being considered poor. 2) The Origin of Wealth – Evolution, Complexity, and the Radical Remaking of Economics. Eric D. Beinhocker, 2006, Harvard Business School Press. This might be a useful chapter for you, ‘Politics and Policy – The End of Left versus Right’ that includes a very interesting section entitled ‘Left-wing Utopias and Free Market Fantasies’. You might also want to have a read through an article/thread by Selwyn on Interest.co.nz: http://www.interest.co.nz/ratesblog/index.php/2009/11/06/opinion-how-neoliberalism-has-failed-new-zealand/ And these by John Walley: http://www.interest.co.nz/ratesblog/index.php/2009/11/04/opinion-rbnz-needs-effective-tools-to-control-non-tradeable-inflation-and-volume-of-credit/ http://www.interest.co.nz/ratesblog/index.php/2009/10/23/opinion-why-new-zealand-needs-to-follow-singapores-example/ It is not as though we are lacking options. What we do lack is LEADERSHIP and the WILL to change, and both have been lacking for a considerable time, which is undeniable. Les Rudd Invited Member NZMEA tadhg - good questions, the most important one being, “why has it not been re-visited as a policy?” I believe you will get some answers to that question from two books that I have completed reviews for that can be downloaded from the top area of this page on the NZMEA website:

http://www.mea.org.nz/events.aspx

The books are,

1) Culture and Prosperity: the truth about markets – why some nations are rich but most remain poor. John Kay, 2003, Harper Business. He cites and analyses Argentina and New Zealand(!) as examples of countries that were onces rich but are now in the “intermediate-rich list” – not far off being considered poor.

2) The Origin of Wealth – Evolution, Complexity, and the Radical Remaking of Economics. Eric D. Beinhocker, 2006, Harvard Business School Press. This might be a useful chapter for you, ‘Politics and Policy – The End of Left versus Right’ that includes a very interesting section entitled ‘Left-wing Utopias and Free Market Fantasies’.

You might also want to have a read through an article/thread by Selwyn on Interest.co.nz:

http://www.interest.co.nz/ratesblog/index.php/2009/11/06/opinion-how-neoliberalism-has-failed-new-zealand/

And these by John Walley:

http://www.interest.co.nz/ratesblog/index.php/2009/11/04/opinion-rbnz-needs-effective-tools-to-control-non-tradeable-inflation-and-volume-of-credit/

http://www.interest.co.nz/ratesblog/index.php/2009/10/23/opinion-why-new-zealand-needs-to-follow-singapores-example/

It is not as though we are lacking options. What we do lack is LEADERSHIP and the WILL to change, and both have been lacking for a considerable time, which is undeniable.

Les Rudd
Invited Member
NZMEA

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