What was wrong with the Gold Standard was the deep depressions that resulted from it in the 1870′s and 1890′s. In the latter’s case, Australia’s GDP dropped by 30%

This is a debate that must be joined. Going back to the 1990′s no one imagined the global financial system would evolve in the way it has, with system-wide currency speculation – either by deposit-taking institutions and investment banks / hedge funds in the West, or by Central Banks in the East. This has left NZ, with 100% of GDP in external liabilities and a free floating currency with virtually no foreign exchange reserves to back it, exceedingly vulnerable. The reason neoliberals do not defend it, is at some level they know it is broke. But no one has a clear idea what to do about it.

Wholesale change is probably beyond us, as you imply Marty. But there is scope for a Baldrick approach, a series of cunning plans. Note how Goff’s speech had an immediate impact on the NZD.

A number of possible ideas have been mentioned here, but we need a package of measures that address both external and internal speculation.

On external measures one alternative would be for the Treasury to conduct FX intervention. This is what should have happened when Cullen proposed FX intervention, but the RBNZ under Bollard and Orr fought a brillant rear-guard action, where they kept the powers for themselves, which they have used only sparingly, and with the NZ$ back in the 70′s have now shot their wad.

One idea I like, which has not been proposed, is for the Minister of Finance to be able to allocate the Super Fund between a NZD hedged fund and a USD unhedged fund. This would effectively allow the super fund to sell NZ$ above 70 cents say, and buy it back lower down. The current fully hedged strategy does not make sense.

We should also be pressuring the Asian central banks to limit their exposure to the NZ$. It is unfair that countries like China and Singapore resist pressure for their currencies to appreciate by buying US$, and then recycle it into an appreciating NZ$.

And then there are the internal measures CGT and mortgage levy would add to the armoury, but other measures could include adjusting the loan to value ratio as Singapore and Hong Kong have done.

As Goff has said, it is time for a new approach. Doing nothing, as Key prefers, is not a good option.

And yes you are an enemy of freedom.

Someone below mentioned full-reserve banking – maybe just maybe you could have an open mind and look at some ideas from differing ideas to your own – don’t act like the there’s only monetarism and whatever it is you’re proposing.

As far as our situation is concerned I think I would like to interest rates determined by market forces with the money supply controlled. The current setup where banks create money ad infinitum, backed up by overseas currencies seems to me a recipe for inflation and instability.

I missed that. So withdraw my comment and apologise accordingly!

Mind you it does show the difficulty inherent in trying to mitigate the changes to the current system warts and all.

I promise to read Marty’s posts most closely in the future!

This has given our economy stability and a degree of certainty, which I hope you will all agree is desirable.

Not against the suffering that it’s brought with it.

Until we get the anarcho-syndicalist revolution I’ll cope with any measure that makes capitalism more tolerable including the use of universal superannuation to provide economic stability. The alternative is the monetarism that currently aids and abets the transfer of wealth from the many to the elite few.