Corporate debt is the problem – not the answer.

Written By: - Date published: 8:47 am, July 11th, 2011 - 160 comments
Categories: debt / deficit, Economy - Tags:

We keep getting told that Government is the problem and that the Private Sector is the answer. This Reserve Bank data indicates that up until 2008 Government Debt as a percentage of Gross Domestic Product (red) consistently tracked downwards. At the same time Corporate debt (blue), which includes the overseas debt of New Zealand banks and corporate entities, has reached a point where it is now over 110% of GDP.

 In dollar terms Private Sector debt is currently over six times the size of Government debt.

Maybe it’s time for the major banks and corporates to feel the heat instead of the Public Service?

160 comments on “Corporate debt is the problem – not the answer.”

  1. tsmithfield 1

    At least corporate debt is intended to produce wealth. So it tends to be “good” debt.

    Anyway, government debt is actually a liability to taxpayers as is private debt. So, it is a bit of a false dichotomy to separate the two.

    • Colonial Viper 1.1

      At least corporate debt is intended to produce wealth. So it tends to be “good” debt.

      Wealth for whom? The major shareholders.

      And how successful have they been at creating wealth for everyone else? Well, by my reckoning the financial markets destroyed $7T of worker savings and retirement funds between 2008-2010.

      The crisis in the PIGS country is instructive. Much of that debt burden was corporate debt, or was facilitated by the corporates far beyond what those countries could ever pay back,

      Especially when the credit rating agencies are part of the game to drive interest rates up on those countries in order to break them.

      This is no longer debt fuelling productive industrial capitalism, its debt fuelling ponzi bankster capitalism.

      • tsmithfield 1.1.1

        “Wealth for whom? The major shareholders.”

        Na. The people lending the money, who seem to be the issue of concern in the article above. The lenders are concerned about cashflow (to service the debt) and security of their money (assets to take security over). If they are satisfied in these two respects they will lend the money.

        The problem with government debt is that it tends to fund social issues for which it is much harder to make a sound business case to justify.

        • Colonial Viper 1.1.1.1

          Na. The people lending the money, who seem to be the issue of concern in the article above.

          As long as you aware that this is not creating wealth, it is merely pulling cash from debtors and concentrating it with creditors. No new technology, processes, products or brands are necessarily produced.

          The problem with government debt is that it tends to fund social issues for which it is much harder to make a sound business case to justify.

          Business cases are necessary for financial decisions, but when the understanding is that the economy is here to serve society and not the other way around, other measures are needed too.

          Further its important to differentiate between a financial decision and an economic decision. The latter will always take into account social, community, environmental, infrastructure issues.

          • tsmithfield 1.1.1.1.1

            Maybe it will. Won’t necessarily make the lenders sleep easier at night though.

        • felix 1.1.1.2

          “Na. The people lending the money, who seem to be the issue of concern in the article above. “

          That’s an argument which can be equally applied to any debt. So your argument is now that any debt is good debt.

          Isn’t it?

          • tsmithfield 1.1.1.2.1

            A factory borrowing to expand = good debt
            Buying a LCD TV on GE = Bad debt.

            • Colonial Viper 1.1.1.2.1.1

              How about a factory expanding to build LCD TV’s to consumers using GE?

              At the end of the day interest bearing debt demands exponential economic growth, and as the bugs multiplying in the petri dish found out, that only works happily for so long.

            • felix 1.1.1.2.1.2

              That’s not what you said at all. You said corporate debt is good debt because it makes a profit for the lender.

              Was that a typo?

    • peter 1.2

      It’s National who continually separate the two sectors. Successful economies such as Germany recognise that the two sectors go hand-in-hand. In this country they get played off politically to the detriment of everyone. Keep in mind that your “good debt” results in significant interest and profit payments abroad.

    • RobC 1.3

      At least corporate debt is intended to produce wealth. So it tends to be “good” debt.

      The use of the term corporate debt (not the author’s fault) is misleading as I suspect it includes housing credit, which makes up a significant proportion of private debt

      • Colonial Viper 1.3.1

        Residential mortgages can be considered private debt. But the foreign funds that banks borrowed (and now owe) in order to provide those mortgages is corporate debt.

    • mik e 1.4

      A $172billion of it is tied up in speculative investment .Its funny how it ballooned out the last time Bill English was finance minister . This time hes doing it all by himself with Govt debt ballooning out to $72billion.Another treasury geek tragedy!

  2. queenstfarmer 2

    There is not even a vague explanation here as to how corporate debt “a problem”, let alone “the problem”.

    • Colonial Viper 2.1

      Its the usual explanations, messes the balance of payments, sucks money out of the NZ economy, demonstrates that our living standard is not paid for by money earnt but by debt loaded up, reinforces the story that a lot of debt has not been used productively etc. etc.

      • queenstfarmer 2.1.1

        You’re conflating several things here, as well as assuming that all debt is overseas debt. Companies should be free to borrow what and where they like (with usual reckless trading rules, and prudential rules for certain sectors, etc), as long as they don’t come crying to the taxpayer or vice-versa when it all goes wrong.

        • peter 2.1.1.1

          RB indicates that this is all overseas debt.

        • KJT 2.1.1.2

          The problem is that they do come crying to the taxpayer.

          That is the only reason why private debt is considered a liability to NZ. Because Western Governments, including ours, have shown they will bail out private debt.

          Those who made huge amounts of our wealth from lending and financial gambling, after they got regulation and taxation reduced, are the first to come to the public, cap in hand when they lose out.

          Big gamblers in speculative assets know that they are taking on little risk because it can always be transferred to taxpayers when they lose. And! they still get to keep their winnings.

          • queenstfarmer 2.1.1.2.1

            Yes there were bailouts all round the world. It should not happen again. Capitalist businesses who live by the sword should die by the sword. The political problem is whether they threaten to take down too many other people to justify (in the political sense) being bailed out again. However I would hope that the political environment would preclude that for a very long time.

      • Roger 2.1.2

        More specifically to recent government behaviour, John Key stated that there was a government debt problem that required selling assets to the private sector immediately to help avoid a credit downgrade. As we can see from the data above this is a manufactured crisis and driven by ideology rather than necessity.

        At the same time, this government apparently needs to gut kiwisaver, as well as stopping contributions to the Cullen Fund that would have actually done something to correct the actual problem of private debt, as seen above.

        That nice man Mr Key really is full of crap isn’t he?

    • lprent 2.2

      I think that the point of the post is that the current government and especially Bill English does not separate the two when they discuss debt levels.

      Whenever you read what they are saying about NZ debt levels, they refer to it as the combined total of about 120% of GDP, usually followed by some veiled warnings about joining the ranks of the PIGS (who do have high government debt).

      However when the government starts discussing how to reduce the NZ debt, they seem to only discuss government debt levels. Which as can be seen from the graph are too low to have much effect if they were reduced. Bill should be concentrating on how to reduce the ‘corporate’ debt, of which an excessively high proportion of which is in property. I’d suggest that he starts with a Capital Gains Tax for attacking the problem over the long term 😈
       

      • peter 2.2.1

        Yes, Nationals white lie is that Public overseas debt, which is low, must be dealt to yet the much greater non-Public foreign debt, mainly generated through bank loans, is not mentioned.

        This all gets back to the need for NZ to save more rather than borrow from overseas. What are national doing to encourage saving?

        • Draco T Bastard 2.2.1.1

          What are national doing to encourage saving?

          Selling everything that we own so that we pay more to the overseas rentiers…

          Oh, wait…

        • mik e 2.2.1.2

          Sending people to OZ where they have a very good savings policy that will see them through the baby boom bubble plus provide working capital for their economy, keep inflation down by their increases they have announced, we would be better of joining them. But because we are so far behind they wouldn,t have us unless we can increase our super funds from $30million to $400milion.

    • mik e 2.3

      look at the piigs especially Greece and tell me we don,t have a problem here. The problem is that our lenders don,t mind lending our economy more than we can afford to buy cars houses and cyclicly performing businesses ie farming and low value exports [commodities] mainly so when the bubble really bursts its not if but when as buyers will turn their back on high prices sooner than later. Yes they already have come to the tax payer SCF and they will .More asset sales less Govt super etc just what the neo libs want will happen by default !

  3. Lanthanide 3

    Why is there what appears to be a big gap between 1997 and 2000 on the graph on the X axis?

    It has produced what looks like a huge hump in the corporate debt levels. I was going to ask “anyone know what happened around 1997 to make it jump so high” but actually it’s just a very poorly made graph that lead to the jump.

    • RobC 3.1

      Yes L, that jump could have been highlighted to avoid confusion.

      Not completely the author’s fault though – for some reason the time series used to produce the graph had only yearly figures for those missing 3 years, with semi-annual figs beforehand and quarterly after

      • Lanthanide 3.1.1

        It is possible to create a graph which has 0 for unknown data, rather than just missing it out. It’s unsightly, but more truthful.

        • Colonial Viper 3.1.1.1

          Or just make it clear there are no intermediary data points there and you are just drawing a line straight through.

          The main problem is the discontinuity in the x-axis which is inexcusable when its not marked.

          • Lanthanide 3.1.1.1.1

            Yes, that would be fine too.

            • Jim Nald 3.1.1.1.1.1

              Yup, the x-axis scale should be kept consistent and the discontinuity/missing data indicated by vertical dashed lines or a shaded region.

    • peter 3.2

      I’ve just had a look at the Reserve Banks raw data. For whatever reason some years are missed out.

      • Jim Nald 3.2.1

        Email a request under the Official Information Act?

        [looks like the ‘Click to Edit’ function is working ok now … hmm, wonder why I had probs earlier]

        [lprent: It is javascript and runs on the client browser side. I’d guess you had a caching problem or something broke in your browser. ]

  4. mikesh 4

    Why do you consider it a “poorly made graph”?

    • Lanthanide 4.1

      My comment explains why it is poorly made. Because it doesn’t have a consistent x axis.

      That’s something I learnt in 3rd form maths.

      Mainstream news sites are often just as bad with their graphs and sometimes I complain about it in their comment sections too. But I think blogs like this should do a much better job at graphs than the mainstream media. I critiqued several of Marty G’s graphs in the past, too.

      • lprent 4.1.1

        It is how authors learn. Feel free to complain about that kind of stuff.  But this is a new guest author with a first post – so please don’t put them off too much.

  5. If a company borrows a heap, it counts against tax, doesn’t it? Foreign owners heap up the debt to balance profits, or load up debt on their local company and expatriate profits to the parent multinational?

    • queenstfarmer 5.1

      To some extent yes, it’s the same around the world. That’s why most countries have a number of rules to keep this in check – e.g. thin capitalisation rules, transfer pricing rules. These are fairly standard to prevent 100% of taxable profits being manipulated out to tax havens.

  6. mikesh 6

    [Because it doesn’t have a consistent x axis]

    OK. I hadn’t noticed. But even so it is still a fairly hefty increase – just more gradual between 1997 and 2003 than it actually looks.

  7. mikesh 7

    Obviously if debt remains the same and GDP drops then the ratio will increase. The question really is whether a higher ratio produces a feedback which would further depress GDP.

  8. Rusty Shackleford 8

    This is the picture you would hope to see. Ideally, public debt should be an oxymoron. Govt should pay for itself through taxes, not through debt.

    The red line is only a problem if those big corporates think they will get bailed out. In the case of banks it’s a certainty. Oh whoops, that is the exact system we have. The problem is moral hazard, not corporate debt. That red line would come down right fast if implicit bail outs weren’t around.

    • felix 8.1

      Do you mean the blue line?

    • Colonial Viper 8.2

      Govt should pay for itself through taxes, not through debt.

      Yep, too the largest extent. (Sometimes brief periods of debt can be handy, e.g. WWII etc).

      That red line would come down right fast if implicit bail outs weren’t around.

      I’ve come to the conclusion that was not bail out money paid to the banks, it was ransom money.

      As in “give us these billions of dollars right now, delivered as per our exact instructions, or the economy gets it and we destroy your country’s financial system”.

      It’s the bankster occupation – and you know who I got that term from 🙂

      • Rusty Shackleford 8.2.1

        “Sometimes brief periods of debt can be handy, e.g. WWII etc”
        Riddle me this CV. How does taking perfectly useful capital and labour and smashing it all togeather in a big pile bring prosperity?

        Everything else you said is fairly common knowledge that only statist shills disagree with, except that the economy would have had zero long term negative effects if we had just given the banksters and corporatists the middle finger.

        • Colonial Viper 8.2.1.1

          How does taking perfectly useful capital and labour and smashing it all togeather in a big pile bring prosperity?

          You’re right it doesn’t*. However, it does stop you from being gassed to death in a concentration camp.

          Any other bright questions about “prosperity”?

          *Ended the unemployment of the Great Depression damn well though.

          except that the economy would have had zero long term negative effects if we had just given the banksters and corporatists the middle finger.

          Yep.

          • Rusty Shackleford 8.2.1.1.1

            We likely wouldn’t have had WW2 if A. The Allies hadn’t imposed punitive reparations on Germany after the first war. Which leads me to B. You can’t have world wars without fiat money.

            Because getting your head shot off is such a good option compared to being unemployed.

            • Colonial Viper 8.2.1.1.1.1

              You can’t have world wars without fiat money.

              ????

              Seriously?

              Money funds wars and some pretty big ancient wars have been funded in the past without fiat currency.

              • Rusty Shackleford

                Nothing approaching those two. And the subsequent wars in the years after 1945. It would be utterly impossible to fund that sort of run up on expenditure fro taxes alone.

                And ancient wars were often funded by debasing the currency.

                • KJT

                  WW2 was funded in the States by wealth taxes and bonds.

                  In the UK it was funded by borrowing from the States. They were reluctant to tax the wealthy.

                  Note. who came out better off.

  9. mikesh 9

    [This is the picture you would hope to see. Ideally, public debt should be an oxymoron. Govt should pay for itself through taxes, not through debt.]

    Or borrow, if it must, from the Reserve Bank.

    [The red line is only a problem if those big corporates think they will get bailed out. In the case of banks it’s a certainty. Oh whoops, that is the exact system we have. The problem is moral hazard, not corporate debt. That red line would come down right fast if implicit bail outs weren’t around.]

    It may also be a problem if interest paid is not fed back into the economy.

    • Draco T Bastard 9.1

      This is the picture you would hope to see. Ideally, public debt should be an oxymoron. Govt should pay for itself through taxes, not through debt.

      Or borrow, if it must, from the Reserve Bank.

      It should go like this:

      1.) The reserve bank prints money to pay for the government to do the stuff it does
      2) The private sector saves some of the money and uses that to start and run private businesses
      3.) The government taxes to remove excess money from circulation so as to prevent hyper-inflation

      This would allow us to produce a sustainable economy (one that exists within environmental limits) and removes the need for fractional reserve banking*, foreign investment and borrowing make believe money from overseas.

      *Fractional reserve banking should be outlawed anyway.

      • Rusty Shackleford 9.1.1

        Your analysis leaves out the inherent inequality as explained by Cantillon.

        • Colonial Viper 9.1.1.1

          Well its probably not important then, I daresay.

          • Rusty Shackleford 9.1.1.1.1

            Yea, nah. The Cantillon Effect is pretty important if you want to talk about the inequalities and inefficiencies inherent in printing money. http://www.economictheories.org/2008/08/effect-of-changes-in-money.html

            • Colonial Viper 9.1.1.1.1.1

              By the way, you know that DTB isn’t talking about physically printing money right?

              The new money could be distributed in any way deemed suitable for a given time, yeah?

              • Rusty Shackleford

                What is the difference between printing physical cash and tapping it into a computer. Seriously, I’m asking. I don’t know the answer.

                • mik e

                  INFLATION and INSTANT dollar devaluation which leads to more INFLATION unless you focus what you spend that money on locally produced goods and services ie housing would be a good area to invest printed money as it would bring down the prices of houses by increasing supply wooo but the major trading banks wouln,t want a bar of it because they wouldn,t be able loan as much.

            • Draco T Bastard 9.1.1.1.1.2

              That effect doesn’t appear to be due to printing of money but due to the Irrationality of the Free Market.

              I suppose I should also point you to my comment here which has some bearing on it.

              • Rusty Shackleford

                Yea, because central planning is awesome. Those countries with the most central planning in the past are the richest today. The ones with the freest markets are the poorest. I totally forgot about that.

                • Rusty Shackleford

                  Draco, I’m afraid your ideology is a bunch of historical misconceptions and twisted fallacies. eg the rich hoard wealth (ignoring that savings are the mechanism by which capital accumulation occurs) and the New Deal ended the depression (but it was actually WW2 (but you can’t actually explain how destroying wealth creates prosperity)).

                  You lump the Austrian school of economics (can you give me a brief overview of what the Austrian school is without consulting wikipedia or saying “Favors the rich at the expense of the poor”) in with the monetarists even though much of the most cutting analysis of the monetarist system comes out of the Austrian school of thought.

                  I’m afraid 200 words and a pat conclusion isn’t going to convince me that freedom is bad for me.

                  • Rusty Shackleford

                    Tom Woods dissecting the anti-capitalist mentality. A lot of it sounds vaguely familiar.
                    http://www.lewrockwell.com/woods/woods173.html
                    http://www.lewrockwell.com/woods/woods174.html
                    http://lewrockwell.com/woods/woods175.html

                  • Draco T Bastard

                    Yea, because central planning is awesome.

                    False dichotomy. I advocate a democratic socio-economic system where your vote counts the same as everyone else’s as far as the use of the nations resources go. The Renewable Resource Base is published and everyone gets a say in how those resources are used rather than leaving it to the capitalists. An economy based upon actual information and rational decision making.

                    Those countries with the most central planning in the past are the richest today. The ones with the freest markets are the poorest.

                    Not yet but they soon will beif you only count money as wealth.

                    (ignoring that savings are the mechanism by which capital accumulation occurs)

                    There’s no such thing as capital accumulation. There is only such a thing as resource use which we need to minimise to become sustainable. Money has no value and so saving it makes no difference except in the present socio economic model that gives the people with vast quantities of this no-value vast power.

                    I’m afraid 200 words and a pat conclusion isn’t going to convince me that freedom is bad for me.

                    I didn’t say freedom was bad for you – I said making ill-informed decisions is and that is the crux of the free-market. Can’t get away from it as people aren’t omniscient.

                    • Rusty Shackleford

                      The US is becoming more centrally planned and China less so. Not surprising that their economic paths would converge.

                      People are inherently born with the ability to combine all the factors necessary to produce refrigerators that get better and cheaper year on year? (I use the refrigerator analogy a lot because I work with people who talk fondly of the first one their family had 25 years ago).

                      People should have to live with the consequences of their poor decisions. It’s the only way to learn not to make bad ones. Central planners don’t feel those consequences so they don’t learn the lessons.

                  • KJT

                    Rusty. You just said that WW2 ended the depression here. Of course it was stimulus. RWNJ economics does not distinguish between stimulus that breaks things or that which leaves us better off. Christchurch is adding to our GDP. 🙁

                    Shows you are talking a load of crap. How about reading some real history instead of the RWNJ alternative versions.

                    • Rusty Shackleford

                      KJT, stop making a fool of yourself. If I said WWII ended the depression, just quote me.

                      Your so called “RWNJ Economics” might have a faulty measure of prosperity but Austrian economics recognizes that and makes allowances. I even agree that GDP isn’t a great measure of prosperity. It counts wars as a positive and labor saving devices as a negative. If you read anything in the Austrian tradition you would know this. Instead you prefer to shout “RWNJ” and “Somalia” as loud as you can.

  10. Rusty Shackleford 10

    “Or borrow, if it must, from the Reserve Bank.”
    Printing money is fraud.

    “It may also be a problem if interest paid is not fed back into the economy.”
    Remember I was talking about corporate debt here. I made a boo boo. I’m not too upset about overseas companies lending in NZ. Those outside firms earn NZD. Where is the only place on earth you can spend NZD?

    • Zorr 10.1

      “Printing money is fraud.” — it is comments like this that make you look a right tit

      “Where is the only place on earth you can spend NZD?” — same as this one… someone didn’t even bother to sit in on econ 101

      • Rusty Shackleford 10.1.1

        1. So, if I start printing up fresh Rutherfords you won’t have any qualms about it?

        2. I just tried to pay for my morning coffee with a NZ 5er. The old Korean dude behind the counter just gave me a funny look and asked me to leave.

        You realise saying words doesn’t make you right, right? You actually have to say something substantive. Not, just “You are wrong.” There has to be a “because” in there somewhere.

        • Zorr 10.1.1.1

          The suggestion of your comment was that the Reserve Bank increasing the amount of available cash by putting more in to circulation (aka printing money) was some form of fraud.

          You are in Korea then? Or a country other than NZ? (your comment doesn’t give me much to work with) However, you can take that NZ fiver, pass it over at a currency exchange and they will provide you with the local equivalent of that money with regards current currency exchange markets. So yes, you can spend that NZ money in a country other than NZ. You just have to be smarter than an amoeba about it though.

          • Rusty Shackleford 10.1.1.1.1

            Yes, printing money is fraudulent. It doesn’t matter who does it. If the govt is going to monopolize one side of every transaction, it has an obligation to protect the value of the medium of exchange. Otherwise, let people use whatever they want as currency (govt didn’t invent money, after all).

            In Korea. So, you are saying that if I change the 5er, they go and throw it in an incinerator?

            • Zorr 10.1.1.1.1.1

              If printing money is fraudulent then shouldn’t all representations of centrally designated indicators of wealth be declared illegal? All money was printed at some time unless it was immaculately conceived by the Gods hand through Ayn Rand?

              You are using the 5 NZDs in your possession to purchase the local equivalent of that amount. You have effectively “spent” our currency in a foreign country at that point. I am pretty sure they don’t throw it in an incinerator… but who knows?

              All your talking points ignore major concepts that are required to even have the discussion. You may as well write for Investigate or some other such wingnuttia conspiracy rag because they are in serious need of your kind of mind numbing talent.

              • Rusty Shackleford

                Well for beginners, it is obvious that you are ignorant of the history of money. This is a good enough primer. http://www.lewrockwell.com/rothbard/rothbard202.html#chap01
                Money has to have value. It wouldn’t just spring up by the hand of God, as you point out. Who would accept worthless paper for real useful things?

                Yes, I’m spending the money overseas. That money is in turn spent in NZ. Where else could it be spent? It’s worthless anywhere else.

                You have already shown your ignorance of the nature of money. Smearing me as a conspiracy theorist does you no good.

                • Colonial Viper

                  Rusty, not even gold has any frakking real value. You can’t eat it, drink it, clothe yourself in it (gold paint excepted), sleep on it (unless you want a bad back) and it doesn’t keep you warm. You can’t even go to Countdown and buy dinner with it for goodness sakes.

                  An economy needs widely accepted tokens of exchange and brand new Rutherfords (or T-Bills) are as good as any other. For now haha.

                  • Rusty Shackleford

                    Gold does have industrial uses and as jewelery. Its value won’t go to zero like paper money can. Which is irrelevant as gold and silver was what naturally emerged as money. As Rothbard points out. http://www.lewrockwell.com/rothbard/rothbard202.html#chap01

                    You also can’t easily make more of it. Inflation dies in a gold standard.

                    You can’t spend it at Countdown as that would be illegal. I would happily accept gold as payment but couldn’t even if I wanted to.

                    “An economy needs widely accepted tokens of exchange and brand new Rutherfords (or T-Bills) are as good as any other. For now haha.”
                    Paper is fine as long as it is backed by an asset. That was how money worked for much of history. As Rothbard points out.

                    • McFlock

                      So, Rusty – what’s the main means of exchange in your Randian paradise, Somalia?

                    • Colonial Viper

                      Gold does have industrial uses and as jewelery.

                      Yeah but jewellery has no intrinsic value! You can’t eat it, drink it, sleep on it, or take shelter with it. Any value beyond that it has is purely in the mind of the beholder.

                      Paper is fine as long as it is backed by an asset. That was how money worked for much of history.

                      Yeah but then they discovered it wasn’t necessary for an asset backing for the paper to continue to function.

                      Further, serious ancient civilisations like the Chinese, Greeks and Romans did not always (or even usually) use paper money at all.

                    • Colonial Viper

                      So what if there isn’t an infinite amount of gold?

                      There isn’t an infinite amount of radium either.

                    • Rusty Shackleford

                      McFlock, Rothbard explains how money came about in the link I posted.

                      CV, one of the characteristics of money is that it holds its value. Fiat money doesn’t hold its value because the ability to make more of it is infinite. There isn’t an infinite amount of gold.

                    • KJT

                      The triumph of capitalism.

                      This is what happens in an unfettered free market.

                      Yearly income in Somalia for a pirate 79k. Median yearly income in Somalia. $500.

                      “Most of the weapons are supplied by outside merchants who also get the bulk of the ransom money paid. Weapons are supplied by arms manufacturers in UK, France and Russia. To a lesser extent from the USA”. (IMO).

                      “Somalia is an excellent place to do business. Workers are cheap and compliant. Debt collection is quick and effective. Protection is available for anyone who can pay for it.”. (US Mercenary)

                    • Rusty Shackleford

                      The fact that there is a fixed amount of gold is an advantage. It wouldn’t be a very good medium of exchange if you could simply print more.

                    • Rusty Shackleford

                      What is the deal with statists and Somalia? The place sucks but it is unarguably better now than when it had a govt.

                      In any case, KJT stop obfuscating and show me the graphs.

                    • McFlock

                      “What is the deal with statists and Somalia? The place sucks but it is unarguably better now than when it had a govt.”

                      Haven’t we already been through this? Oh yes, here we are.

                      It turns out that your “better now than when it had a govt” means moving forwards, but “improving” more slowly than almost every other country on the planet.

                      Oh, and Somalia is apparently still the fifth worst place in the world to be a woman.

                      Oh, and what’s the main means of exchange in your Randian paradise, Somalia?

                    • Rusty Shackleford

                      All I’m saying is that Somalia isn’t a very good stick to beat libertarians with.

                      I’ve told you to read the Genesis of Money chapter in Rothbard’s The Case Against The Fed.
                      http://www.lewrockwell.com/rothbard/rothbard202.html#chap01
                      It explains far more succinctly the form of currency that might (and did) emerge under a free system.

                      This is pretty good too.
                      http://www.lewrockwell.com/rothbard/rothbard261.html

                    • McFlock

                      “All I’m saying is that Somalia isn’t a very good stick to beat libertarians with.”

                      Well, here you are wrong, because it has little or no government and is one of the biggest shitholes on the planet, and more importantly almost everywhere else is improving more quickly, even on a hellhole:hellhole comparison table. And that was using your own sources which claimed that Somalia was “improving” because it wasn’t held back by government.

                      I read your link. Besides conflating “commonly used barter item” into “money”, it neglects that the key to even the earliest forms of currency was the guarantee of the issuer – the face of the king (or on occasion, the general). The guarantee that the item being exchanged is x ounces of x purity gold. This was changed to the promise of x ounces of gold, and now it’s based on a bet as to future comparative currency value.

                      The promise is why counterfeiting and shaving have been frowned upon historically, right up there with treason. Tends to piss off the ruler when you start dragging their name through the dirt.

                      So, let’s make it simple: what is the most common means of exchange in Somalia today? Is it a barter item, or is it a token of a guarantee of some kind, if so issued by whom?
                       

                • Draco T Bastard

                  Money has to have value.

                  No it doesn’t. In fact, all money is is an abstract representation of value. In and of itself it is valueless.

                  It is a tool used to exchange items of value and preventing the Coincedence of Wants getting in the way.

                  The real fraud that happens with money is that the private banks print it and then charge interest. This causes two immediate problems:
                  1.) Excess money resulting in inflation
                  2.) Money and power flowing to the banksters

                  Inflation dies in a gold standard.

                  No, you get deflation instead as the economy grows and the amount of gold in the system remains static or goes down as it gets used.

                  • Colonial Viper

                    No, you get deflation instead as the economy grows and the amount of gold in the system remains static or goes down as it gets used.

                    🙂 Yep

                    And the money supply can be far more tightly controlled by vested interests who wish to slow down or speed up an economy.

                    • Rusty Shackleford

                      A. Deflation is a good thing. you just don’t understand it.
                      B. “the money supply can be far more tightly controlled by vested interests who wish to slow down or speed up an economy.”
                      And this doesn’t happen now?

                    • Colonial Viper

                      A. Deflation is a good thing. you just don’t understand it.

                      ROFL

                      Sure, if you mean that bankrupting countries, companies and individuals is good as it allows the cashed up capitalists to swoop in and take over the hard assets for cents on the dollar 🙂

                      A gold standard makes it extremely easy for vested interests to control the money supply. And yes Rusty, even easier than now 😛

                    • Rusty Shackleford

                      By what mechanism does this occur, and can you give an example? You can just post a link of someone who has already done so if you want. There’s no point reinventing the wheel.

                  • Rusty Shackleford

                    Draco, money doesn’t start out as valueless. It starts as barter goods and evolves into the most convenient means of exchange. This evolution happens completely independently of govt action. Only when the govt monopolizes money does it become valueless. A valueless currency would never spring up on its own. Your analysis is close in every other respect, but lacking badly in the area of what money actually is.

                    • Colonial Viper

                      None of what you say makes any sense.

                      The Government has the right to produce the money of the land and it always has had that right.

                      Further it also has the right to demand payment of taxes in a form which suits it, and that form tends to become the legal tender of the land.

                      edit – living in Rusty’s imaginary parallel universe where he makes up the rules is pretty tiresome. There aren’t even free parks in his parallel universe to take a relaxing walk in to chill out.

                    • Rusty Shackleford

                      “The Government has the right to produce the money of the land and it always has had that right.”
                      What govt are you talking about? As I have pointed out, govts didn’t event money. So, they haven’t always had the right. Also, there is no constitutional arrangement in the US for the govt to monopolise the medium of exchange. The word dollar comes from the Spanish “thaler” which was the dominant currency (gold backed), in the US for much of its early history.

                      So naive CV. Despite the fact the govt routinely abuses its ability (notice I said ability, not right) to print money, you are more than happy to go along with it.

                    • Draco T Bastard

                      money doesn’t start out as valueless. It starts as barter goods and evolves into the most convenient means of exchange.

                      “Money” doesn’t exist. In fact your “most convenient means” should tell you why money has evolved into a fiat system. The “most convenient means” is the most useless, and thus worthless, item available.

                    • Rusty Shackleford

                      You can have your fiat system. Just allow alternatives to compete against it. If fiat is the best, there shouldn’t be a problem.

                    • Colonial Viper

                      All governments have had the power to issue their own money, and all governments have done so.

                      This includes the ancient Persians, Greeks, Romans and Chinese empires.

                      Seriously you are making shit up. Even the US produced its own Colonial Scrip.

                      Man you are out there in lala land.

                      (And of course money came into being before bureaucratic governments, but you will almost always find that some kind of authority set up or approved the money e.g. a town council or tribal elder etc)

                      You can have your fiat system. Just allow alternatives to compete against it. If fiat is the best, there shouldn’t be a problem.

                      Setting up multiple kinds of legal tender are extremely problematic.

                      Try paying for your groceries with bitcoins.

                    • Rusty Shackleford

                      Where have I said govts didn’t issue money? All I said was they didn’t invent it. People wouldn’t naturally accept worthless paper money, as Rothbard points out.

                    • Colonial Viper

                      I told you that govts have always issued their own money and you denied that on the irrelevant basis that they did not invent money.

                      You’re wasting my time now by saying that of course govts issue their own money.

                      Frak off I have no time for your circular discussions.

                      “The Government has the right to produce the money of the land and it always has had that right.”
                      What govt are you talking about? As I have pointed out, govts didn’t event money. So, they haven’t always had the right.

                      The above quote is your post-hoc bullshit I failed to pick up on.

                      You are wasting my time

                    • Rusty Shackleford

                      I’ve never at any point said that govts don’t issue their own money. Govt didn’t invent cars either, but they’ve sure as hell tried to build them. How difficult is that to understand? I have never said that govts haven’t issued money. My contention is that it is dangerous for them to monopolize the money supply. Which is evident.

                    • Draco T Bastard

                      My contention is that it is dangerous for them to monopolize the money supply. Which is evident.

                      No it’s not. Governments are the administrative arm of the people and so it is, indirectly, the people issuing the money. That democratic administration really is necessary else the power accumulates into the hands of a few and we end up with massive poverty and the few living the life of kings.

                      Oh, wait, that’s what we have now due to free-market capitalism and the private banks printing money.

                    • Rusty Shackleford

                      You say (often) that in a free market system power accumulates in the hands of a few. Yet, we don’t live (and have never lived) in a free market system. Yet, it is the fault of the free market that we have a cartelized banking system that is democratically elected. Very confusing.

                      Let me try it from another angle. As you say, it is the people issuing the money. But the banks actually issue the money. Which is it?

                    • Draco T Bastard

                      The government, as the representatives of the people, should issue the money, not the banks. ATM, the government has given away the right to print money to the private banks which has brought about the problems you mention. This is due to the influence that people with money have had over the governing structures that they shouldn’t have. This means that we need to change our governing structures to a more democratic system which precludes any sort of capitalism or free-market delusion.

                      BTW, capitalist free-market is an oxymoron. Capitalism must be a restricted market so as to ensure that the few can make a profit from everyone else.

                    • Rusty Shackleford

                      Be my guest. Just don’t be coercive. That means people can use other means of exchange if they feel like it.

                  • mik e

                    Thats definitely not true we have always had inflation with or with out gold gold it self has been inflating in price because of financial uncertainty! then in the 1930s when inflation was low they were able to print money like wise in the US recently but the UK has had a problem with printing money causing minor inflation it is being used as a doubled edged sword in the US to stimulate an rescue businesses successfully GM ,Chrysler ,Goldman Sachs etc, and to keep the Dollar down especially against the devalued Yuan.Inflation has always been with us gold standard or not.

                    • Rusty Shackleford

                      There are inflationary episodes, but the trend is deflationary. ie inflation one year, deflation the next. However, the entire trajectory of the money supply is far more spiky. Just look at a graph of price levels in NZ in the 19th century.

                      Those businesses shouldn’t have been rescued. Do we really want Goldman Sachs to exist? The factors that caused GM to go broke in the first place are still in play. Those assets should have been repriced and picked up by people who knew what to do with them.

                      Did the stimulus work?

  11. mikesh 11

    [Printing money is fraud.]

    It’s OK for Queen Elizabeth to print money, and she, I think, has delegated this authority to the various commonwealth governments. If this is not correct I suggest you write to her and complain.

    Creating money, however, is a very different kettle of fish. But if this were fraudulent, bankers would all be in jail.

    • Rusty Shackleford 11.1

      Where does QE2 get the authority to print money? (presuming she does, which she doesn’t). It’s a little bit like saying, “Queen Elizabeth has the authority to overturn the laws of gravity and she delegated that authority to the Commonwealth govts.”

      Just because you say something doesn’t mean you can legislate for it. “Broadband internet is a natural right.” “The Queen can print money.” “the laws of gravity no longer apply.” I can say these things with ease, and with pure intentions. But it doesn’t mean I can work against the laws of economics and expect these things to come true.

      • Colonial Viper 11.1.1

        That’s laughable, the law of gravity is an underlying aspect of the universe, the market economy is not.

        I can say these things with ease, and with pure intentions. But it doesn’t mean I can work against the laws of economics and expect these things to come true.

        FFS the “laws of economics” are also not underlying aspects of the universe, where the hell did you get the idea they were haha.

        • Rusty Shackleford 11.1.1.1

          Although economics is a soft science, it is more than possible to logically deduce axiomatic laws from first principles..

          • KJT 11.1.1.1.1

            Really.

            http://kjt-kt.blogspot.com/2011/03/voodoo-economics.html

            “I’m talking about the acolytes of the ‘free market’ who have been predicting an ‘economic recovery’ for many years now.

            But, unlike Ken Ring, these promoters of voodoo economics haven’t been treated with scorn and derision. No sir. In fact their nonsensical predictions are discussed earnestly in Parliament in the newspapers, on the TV, in the radio, on blogs.

            It doesn’t seem to matter that they NEVER get it right. It doesn’t seem to matter they are promoting economic theories that are junk. But unlike Ring’s quackery, the quackery of neoliberalism is treated with reverence, it is ascribed legitimacy”

            Economists seem to have a problem with deriving axioms that work.

            • Rusty Shackleford 11.1.1.1.1.1

              Keynesian/Monetarist economics is utterly bunk. They didn’t predict the crash, nor have their policy prescriptions solved the ongoing crisis. They are popular because they tell the ruling class what the want to hear.

              The Austrian school economists predicted the crash and can point to historical examples where something approaching their policy prescriptions were enacted. Peter Schiff, Bob Murphy, Tom Woods and (to a lesser extent imo) Carl Denninger are the leading lights of the school. Schiff is on the record as far back as ’06 predicting the housing crash.

              As for axioms? Try Human Action by Mises.

              • KJT

                More from the alternative universe.

                The Neo-Liberals are still predicting continued economic growth.

                Actually things are happening just as Keynes predicted. Or are you going to tell me that austerity works. USA, Ireland and UK are doing so well!

                Are you too young to remember what happened to SME’s during the Richardson depression.

                • Rusty Shackleford

                  Austerity measures cause a short term economic shock. How could they not? You are taking a heap of (malinvested) activity out of the economy. It seems to be working in Iceland. Unfortunately, the economies you mentioned refused to cull that malinvestment.

                  I don’t know what SMEs are. Richardson cut govt spending during a recession and GDP and employment grew afterward. http://marginalrevolution.com/marginalrevolution/2010/06/ruth-richardson-and-fiscal-austerity.html
                  This happens often. My favorite example is the States in 1920. Harding cut spending during a recession and economic activity recovered quickly. Hoover and FDR raised spending and they got a decades long depression for their efforts.

                  • KJT

                    I like how you can continually reiterate the opposite of what actually happened.

                    The 30’s recession showed exactly the value of Keynesian stimulus. The immense amounts of money that was poured into the war economy (Stimulus) was the real end of the depression.

                    Look at the graphs of the depression. Harding. Deeper depression. FDR depression eases.

                    Same with relaxing Richardson’s austerity with a change of finance minister.

                    The supporters of voodoo economics are no different from those who believe the phony earthquake predictions in Christchurch. No matter how many times they get it wrong true believers do not change their minds.

                    • Rusty Shackleford

                      Show me the graphs.

                    • Rusty Shackleford

                      “Look at the graphs of the depression. Harding. Deeper depression. FDR depression eases.”
                      No graphs then?

                      From here
                      http://mises.org/daily/3788

                      “The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent. No wonder, then, that Secretary of Commerce Herbert Hoover — falsely characterized as a supporter of laissez-faire economics — urged President Harding to consider an array of interventions to turn the economy around. Hoover was ignored.

                      Instead of “fiscal stimulus,” Harding cut the government’s budget nearly in half between 1920 and 1922. The rest of Harding’s approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third.

                      The Federal Reserve’s activity, moreover, was hardly noticeable. As one economic historian puts it, “Despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction.”[2] By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923.”

                      So we get a deep depression that lifts relatively quickly with no intervention. A decade later we get another deep recession, but this time we stimulate and intervene. Yet you expect me to believe it was non-intervention that caused an unprecedented depression? Fucking hell.

                    • Colonial Viper

                      Rusty your sources are all shit. No wonder you can;t think straight – the rules you are applying only work in your parallel universe.

                      BTW you must accept that Bernanke is more of an expert on the Great Depression than you are 😛

                    • Rusty Shackleford

                      What is wrong with my sources? Tom Woods isn’t famous, but his credentials are impressive.

                      So now you are using an appeal to Bernanke as your case. Your ideology really is confused.

                  • McFlock

                    This guy argues that Woods, among others, is wrong in both fact and interpretation. Daniel Kuehn “A critique of Powell, Woods, and Murphy on the 1920–1921 depression ”
                    The Review of Austrian Economics 2011 Volume 24, Number 3, 273-291 (DOI: 10.1007/s11138-010-0131-3)
                     
                     

                    • Rusty Shackleford

                      Gated. Lame. You obviously have access to it. Can copy and paste or summarize?

                    • McFlock

                      Lame. It’s called a “library”. Google it.
                      Or actually, if you had the nous to google the title, you’d find the abstract.

                      Actually wikipedia summarizes the main points. Saves you the effort of googling the wider internet rather than getting all your economic theories from the rightwingnutjob.com search engine.
                       
                       
                       

                    • Rusty Shackleford

                      I love books as much as the next guy, but why should the burden of proof (or search in this case) be on me?

                      So, you’re saying I should get my facts from Wikipedia? Rather than people (no matter how much you hate them) who actually studied the area? Although, I would hate to fall into the trap of denigrating sources rather than actually engaging the evidence.

                    • McFlock

                      Are you shitting me? You link to idiot-tory.org at the drop of a hat, and you can’t handle wikipedia in the half day between now and you going to the insane difficulty of visiting a library? Most population centres on the planet have public transport – well, except somalia. 
                      Anyway, I’m home now so you shall have to wait before I c&p the relevant 10% or less, as I assume you respect intellectual property rights.
                       
                       

                    • Rusty Shackleford

                      Somalia probably lets the private sector handle transport. There are no regulations, so you probably see 20 people hanging out the side of 4 door sedan.

                      Also, I abhor IP.
                      http://mises.org/daily/3682

                    • McFlock

                      Fascinating.

                    • McFlock

                       
                      Error of interpretation:
                      Kuehn:
                      “By the time Harding called for “intelligent and courageous deflation,” the New York branch of the Federal Reserve had already raised the discount rate to the 7% plateau that would be maintained for the ensuing year. Harding’s election in November of 1920 roughly coincided with the halfway point in Strong’s high discount rate policy. The trough in industrial production was in March 1921, the month that Harding was inaugurated. Thus, despite his forceful campaign rhetoric, Harding did not play a significant role in the painful, but necessary, deflation of 1920–1921. The emphasis that Powell (2009) and Woods (2009) place on Harding’s role in liquidating malinvestments with a contractionary fiscal policy is therefore consistent with Harding’s personal outlook on economic policy, but it is historically inaccurate. Instead, the impact of the Harding administration during this time period must be assessed by examining his fiscal policy during the recovery, rather than the initial deflation.”
                       
                      Error in fact:
                      Woods:
                      “The economic situation in 1920 was grim. [. . . ] Instead of “fiscal stimulus,” Harding cut the government’s budget nearly in half between 1920 and 1922. The rest of Harding’s approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third.”

                      Kuehn on Harding’s taxes:
                      “The net effect was that from 1921 to 1922, the period of the initial Harding tax “cut,” the percent of individual income collected as revenue through the income tax actually increased from 3.67% to 3.95% (Internal Revenue Service 2010).”

                      It’s a bit difficult to argue a tax cut when you increase the tax base (well, Key tries it), and it’s also a bit tough to assign credit for a recovery to someone who came into the job just as things were beginniing to improve. It’s a bit like the general who wanders onto the battlefield (having slept in) just as his troops start winning, and historians later go on about his wonderful victory.

                    • Rusty Shackleford

                      “The net effect was that from 1921 to 1922, the period of the initial Harding tax “cut,” the percent of individual income collected as revenue through the income tax actually increased from 3.67% to 3.95%”
                      Isn’t this just a Laffer Curve effect? If you have a giant tax rate you are depressing employment at the margin (why work an extra hour if most of it will be taxed away). Cut the tax rate and people work more, thus income tax receipts rise. This is predicted by the Austrian model. http://en.wikipedia.org/wiki/Laffer_curve

                      Woods:
                      “The economic situation in 1920 was grim. [. . . ] Instead of “fiscal stimulus,” Harding cut the government’s budget nearly in half between 1920 and 1922. The rest of Harding’s approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third.”
                      This is a restatement of Woods’ position. Did Harding not do all of these things?
                      -Cut the budget
                      -Cut the tax rate
                      -Reduce the national debt
                      ?

                    • McFlock

                      “Isn’t this just a Laffer Curve effect?”

                      No. It’s got nothing to do with people earning more because of lower taxes, it’s about catching a thousand tons of sardines rather than 200 tons of whale – there are more sardines in the sea, and previously they were unnetted. But because you’re no longer catching whales, mises.org say “ooo look we’ve stopped harvesting this area of ocean”.
                      Do you really think there’s much of a margin at the threshhold of $1mil p.a. in 1920? Particularly when they would have been picked up by the lower threshhold anyway – they had a tax INCREASE.

                      “This is a restatement of Woods’ position. ”

                      No, it’s a quote that I then commented on. Harding did some of those things AFTER the recovery started, Wilson balanced the books BEFORE the depression (an error of fact on your part, but then you’d have to arbitrarily redefine your temporal relationship between cause and effect, which is actually more the act of a religious zealot than a “soft scientist”. You’d also have to credit the father of world government with putting the country on the right track to get out of the recession as soon as possible).

                      Basically, playing fast and loose with stats (top tax rate cut vs increasing tax base =/= “tax cut” for most people) and temporal relationships (wow – Harding fixed the economy simply by taking the oath of office? =AWESOME) makes me doubt (as if I had not cause enough already) your ability to analyse an economic situation with any depth greater than a miserly.org cheat sheet (which seems to have errors of fact and inference).

              • Colonial Viper

                Keynesian/Monetarist economics is utterly bunk. They didn’t predict the crash, nor have their policy prescriptions solved the ongoing crisis.

                Meh. Hyman Minsky did, and his basic theory was Keynesian in origin.

                And are you blind you haven;t noticed that the world financial system is not controlled by Keynesians, it is controlled by Chicago school neoliberals.

                For gawds sakes open your eyes to the real world, not your parallel make believe one.

              • Draco T Bastard

                And I’m on record as predicting the crash in 2003 and I didn’t use no loony economic theory (all economic theories based around capitalism) to do so.

                • Rusty Shackleford

                  Personally, I predicted 9 of the last 5 crashes. Beat that.

                  • McFlock

                    Wow.

                    It’s actually not obvious whether you are being flippant or you are just applying your standard perception filter to the dimension that everyone else lives in.

                  • KJT

                    Rusty. You have already contradicted yourself enough to ensure nobody here takes you seriously.

                    Read my post on Altermeyers authoritarian followers and reasoning.

                    You don’t believe in Keynesian stimulus, but by your own admission WW2 ended the 30’s depression. The biggest make work stimulus in history.

  12. Uroskin 12

    Please, do not feed the trolls (or the international currency exchange ignoramuses)

    • Colonial Viper 12.1

      🙂

      • ropata 12.1.1

        Criminality is the problem not Keynes.

        The GFC is not only a huge problem for all current economic/monetary theories with their flawed models of human behaviour but it also reveals the deep amorality of transnational corporations. Accountable to nobody their sole purpose is to monetize everything, rainforests, oceans, people, whatever they can lay claim to. The Great Financial Crisis is also fundamentally a great moral crisis and financial watchdogs have failed in their duty to society. Most of Wall St should be in jail not running the f***ing US Government!

        Rusty try reading Paul Krugman or watching Max Keiser. The market is inherently unstable because powerful people always try and skew it. The Austrian school tends to lack the important component of empathy which sustains the fabric of society.

        • Rusty Shackleford 12.1.1.1

          Krugman is a statist shill. I read almost everything he writes. Keiser is OK (but he shouts a lot). Try reading Schiff, (Bob) Murphy and (Tom) Woods. They are equally (if not more so) incisive.

          • Colonial Viper 12.1.1.1.1

            You wouldn;t know what a real statist even if you were locked up in solitary with one.

            Krugman is not a statist lol

            He just understands that Government is the biggest player in the economy and it should play when the private sector refuses to.

            • Rusty Shackleford 12.1.1.1.1.1

              You pull out that line every time I use the word, so please CV, why don’t you enlighten me as to who is a real statist?

              • ropata

                No American would call himself a statist or a socialist, they are all paranoid about commie invasions. IMHO a powerful democratic state is far preferable to rule by unaccountable transnational corporations.

                • Rusty Shackleford

                  It’s not what you say, it’s what you do.

                  The giant companies that worry you so much derive their power from the state. A limited govt can’t subsidize, bail out or give special favors under the law. A limited govt can still prosecute fraud and malfeasance.

                  • ropata

                    The US government is pretty well hamstrung by Republican intransigence at the moment and you think that is a good thing? The banks have bought off the politicians there and “limited” government isn’t working out too well for Main St America. Great for the bankster class however.

                    • Rusty Shackleford

                      The US govt isn’t limited nor is there any measurable difference between the Dem and GOP policy platform. They talk different games but their actions are the same.

                    • ropata

                      What planet are you on? The US govt is a tool of military industrial and financial interests, even their diplomats shill for their corporations

                    • Rusty Shackleford

                      “What planet are you on? The US govt is a tool of military industrial and financial interests, even their diplomats shill for their corporations.”

                      Why are you so belligerent? What have I written that disagrees with this statement?

  13. mikesh 13

    [Where does QE2 get the authority to print money? (presuming she does, which she doesn’t).]

    The queen doesn’t need to get the authority from anywhere. She’s the queen so she can do what she likes, within reason. If anyone thinks different then I guess they’re free to launch a revolution.

    • Draco T Bastard 13.1

      Ah, the appeal to authority from a RWNJ. No explanation about how the queen gets such authority but just because.

      • mikesh 13.1.1

        [Ah, the appeal to authority from a RWNJ. No explanation about how the queen gets such authority but just because.]

        I could say that her authority came from the constitution, but it would not get us any further since you would probably then ask: Why does the constitution give her that authority?

        ps I’d hardly classify myself as RWNJ.

        • Rusty Shackleford 13.1.1.1

          I always thought the power of monarchs came from divine authority.

          • lprent 13.1.1.1.1

            That came late in the piece and was more to do with entrenching the authority of the church with the secular lords than vice versa. Mostly the authority of kings came from their ability to raise thugs to do their bidding against other thugs.

        • Draco T Bastard 13.1.1.2

          No, I’d merely ask What constitution?

          And then there’s the fact that you did say:

          The queen doesn’t need to get the authority from anywhere.

          Which is contrary to the idea that she gets it from a constitution and indicates that you think she has the power no matter what, ergo, an appeal to authority.

          • mikesh 13.1.1.2.1

            [No, I’d merely ask What constitution?

            And then there’s the fact that you did say:

            The queen doesn’t need to get the authority from anywhere.

            Which is contrary to the idea that she gets it from a constitution and indicates that you think she has the power no matter what, ergo, an appeal to authority.]
            Reply

            There are a list of items which are deemed crown prerogatives which I’m pretty sure would have constitutional force. Two of the items on the list are the appointment of judges and the minting of coinage. I don’t remember the rest, but the minting of coinage would probably extend to the printing of banknotes, though it doesn’t extend to demand deposits at trading banks.
            The queen doesn’t “get” the authority “from” the constitution. She has the power. That is the constitution.
            And, yes, the power originally derived from the fact that the monarch had the military clout to back up his or her claims.

  14. prism 14

    Cripes Rusty you still going. I would have thought you’d have blown a foo-foo valve by now. Earlier in the day I counted 13 comments from you so your investment in the site is going up. They should charge for each comment. With you around the moderators etc. could afford a trip to Hawaii and see John Key there. He probably will spend as much time there as in NZ if he gets back into the sheepskin seat.

    The point of your jousting lance can’t be rusty after so much use. You had better call yourself Shiny or “Steel” to match your true persona.

  15. Phil 15

    Pedantry – Your link to the RBNZ site is not useful, it’s the A to Z listing.

    The actual table is here: http://www.rbnz.govt.nz/statistics/extfin/e3/data.html

    …which in turn is sourced from the quarterly International Investment Position report from Stats NZ.

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