Monday, 16 July 2012

The answers are simple the solutions are complex.

We are broke and getting broker for some very simple reasons …

  1. Our exchange rate is too high
  2. Our exchange rate is open to manipulation (it is unstable).
  3. The worse our economy gets the higher our currency rises when we need it to fall – this is the complete opposite of what needs to happen
  4. We play by the rules of free trade and no one else does
  5. Foreign owned banks use inflation and speculation to fill the country full of debt and capture our productive surpluses.
  6. Banks can print money without any effective control by the state
  7. We spend more than we earn
  8. We are squandering the talents of our young while burdening them with debt
  9. Our retirement savings are inflating the share-market
  10. Anything of value is sold to foreign investors
  11. Our employers have to meet the social costs of trading in New Zealand while their competitors don’t (an effective subsidy)
  12. Labour is taxed while energy capital and land aren’t
  13. We treat basic infrastructure as an “investment” rather than as a basic function of production – roads aren’t there to make money they exist to allow business to function - same with power telephone and a whole raft of other things.
  14. And we too often allow the core institutions of community and commerce to act with impunity with regard to the law and to moral behaviour.

It is not foreign forces or some compelling logic causing these things to happen to us.

The last reason is that we have just suffered thirty years of ideological leadership.  

It is our leadership that has made us poor as we have wished this on ourselves.  The mess that is the Euro is the best illustration of the problem of exchange rates not reflecting the relative earning potential of separate national economies.  We have the same issue with Australia the US and China,  as Greece has with Germany - our principal trading partenrs are cheating on the free trade deal   and we are the losers.  Our dollars is over-valued to an extent of about 30% in comparisons to them.  This could be resolved overnight - but it would take courage.

It is this ideological base that is the first thing that needs changed. 

Once that has happened then fixing this country is easy - we are rich in resources, we are well educated, we should be energy self sufficient.  We should be the luckiest country in the world but our leadership prevents this from happening.


  1. Only points 8 and 14 do not involve money - is that a reasonable reflection?

  2. they are all wealth related AC in some form - our kids are an investment too - though we have treated them as another asset to load with debt.

  3. I'm desperately trying to avoid descending into semantics. For some reason I have the idea that the failings of the last thirty years are rooted in something more fundamental than economic or financial mismanagement, and that the things you describe are symptoms of a broader and deeper failure.

  4. There are deeper factors at play - mainly unrestrained greed ignorance and psychopathology.

    Money is the mechanism that these deeper defects in culture and human nature use to achieve control and to satisfy needs. It is the loss of control of the process of money that is at the core of our societal woes - mind you there are a few other things like global warming, population growth and energy costs and finite resource coming at us while we all worry about our money system - which is an artificial crisis while the others are real crises.

    The point I was making and intend to elaborate on is this current global financial mess (and the immediately related local version) is purely the creation of a belief system that is flawed. With the right leadership this could eb sorted out rapidly. But then we would all see the real problems on the horizon and that would be more deeply scary

  5. Hi DarkHorse, do you tweet links when you write a new post? Would help keep a track without having to remember to come back to your blog.