ACT Conference

February 27th, 2010 at 9:54 am by David Farrar

I’m attending the conference as media. First speaker this morning is .

Gibbs, like many on the right, started life as a dedicated socialist, and was active in Wolfgang Rosenberg’s New Left Club. He saw the light after visits to Yugoslavia and East Germany.

Gibbs talked about how the liberal market solution is often counter-intuitive. That instinctively people want to block Chinese imports to protect New Zealand manufacturers, even though almost everyone knows logically free trade is better.

He whacked at National for refusing to sell Kiwirail, and indeed refusing to sell any state assets at all. That got more resonance than his next statement about how the assets that most need to be sold are the public hospitals.

Overall a very interesting, if some what disjointed, speech about liberalism, markets and democracy. Gibbs also made a plus for more direct rather than representative democracy, through Internet voting on bills proposed by MPs.

In an aside Gibbs also said he thinks countries should go back to the gold standard. Hopefully someone will ask Don Brash what he thinks of that.

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34 Responses to “ACT Conference”

  1. Redbaiter (13,197 comments) says:

    ” He whacked at National for refusing to sell Kiwirail, and indeed refusing to sell any state assets at all. That got more resonance than his next statement about how the assets that most need to be sold are the public hospitals. ”

    Right on. This is more productive than whining on about being the “Liberal Party”.

    These ideas tho are seriously opposed by NZ’s ruling left wing media junta. What is ACT’s strategy for dealing with these tyrants? If they don’t have one they may as well fold their tent now.

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  2. Michael (904 comments) says:

    Would anyone want to own Kiwirail – unless they got large subsidies?

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  3. eszett (2,401 comments) says:

    With below 2% in the polls and Rodney taking the hit, they are well on the road to irrelevance. Folding their tent seems like a good idea.
    Which, of course, has nothing to do with their policies and ideas. It’s those evil left wing media tyrants.

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  4. reid (16,290 comments) says:

    “In an aside Gibbs also said he thinks countries should go back to the gold standard.”

    It’s a shame he said that only as an aside. That and fractional reserve banking are two of the most critical issues that face the global economy and have done since early last century.

    If the world exits the US as the reserve, the USD will tank. The US then has three choices: it can either stand aside and watch its global economic power disappear, or it can setup a new gold-backed currency, or it can start a war which will have to be of global proportions, a regional one won’t do it. The state the USD is in right now and its prospects given the US debt, means that that the first WILL happen, it’s just a matter of when. So why wait until its forced on you by a crisis. Why not do it now, in an orderly fashion?

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  5. RKBee (1,344 comments) says:

    “Gibbs also said he thinks countries should go back to the gold standard”.

    Good Idea… but a bit simplistic.. when theres very little gold reserves..
    And a strange statement when his ideals are to sell of all the silver..

    Has he just realised you cant go on printing money.. with out a true standard like gold to base its value.
    or money becomes worthless… its all a bit rich and to late now to go back to the gold standard now paper money is now so over inflated it is worthless. where is this physical gold reserve to base our monetary value.. you just can’t buy large amounts of gold with worthless cash. New Zealand or any country for that matter would have to have the physical gold reserve first. And no country has the amounts needed. But of course the traders will sell you paper bonds saying you have brought gold. But in reality if you asked to cash it in for physical gold they don’t have it, and never did. So what do we base the value of our paper money on today.. Inflated Fantasy.. when it comes out of the back end of a bull..

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  6. jaba (2,137 comments) says:

    if Rodney fails to get the so called super city up and running, and doing ok, before the next election, he/they will be gone burger which worries me as it will give an under performing inadequate Labour Party a sniff .. that should worry all companies and PAYE earners with earnings over $70k (with no dependents)

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  7. Jack5 (5,053 comments) says:

    The gold standard. Imperfect, but better than what we have now.

    Still this doesn’t address NZ’s problem of being so small in a free-market sea. We may be too small to be prosperous. Australian statehood is the most logical future, economically.

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  8. Jack5 (5,053 comments) says:

    Pertinent to the ACT conference is the main story on the front page of today”s Christchurch Press (link below).

    It is about the new millions of tax bills run up by pressured Christchurch developer Dave Henderson. Henderson was a prime sponsor of ACT in Christchurch and a close friend of Rodney Hide. Henderson and Hide campaigned together against the IRD.

    How long before Opposition MPs start socking this to Rodney Hide?

    http://www.stuff.co.nz/business/3381363/New-tax-debts-nearly-6-5m

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  9. Whafe (650 comments) says:

    Agree with Red totally, it is not just convincing our population of left slanting plonkas, it is changing a global media of which is of the left persuasion……

    We need ACT to get stronger, hard ask / task but it is what is needed, National is hardly right of the middle are they? ;)

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  10. tvb (4,364 comments) says:

    Return to the Gold standard!!!! Is he mad. Gibbs does not seem to understand that international best practice on central banks having their main focus as controlling inflation is the best way to ensure currency stability rather than having currencies tied to something as arbitrary as GOLD!!! Suppose Russia suddenly floods the market with gold – something it could do or hoards the stuff. What then.??? Or South Africa or some other country that has lots of gold. It would throw the international finance system into something quite random and the people with gold do not necessarily represent economic power. As for Act activists wanting Act to pull out of Government and then do what. Protest about things on various blog sites, take to the streets?? People who talk like that simply do not understand what being in Government MEANS.

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  11. sonic (2,818 comments) says:

    “Gibbs talked about how the liberal market solution is often counter-intuitive”

    Indeed, considering it has just plunged the whole world into economic crisis, stupid people think we should stop for a moment and consider if it was all a stupid mistake.

    However its hard to get worked up about ACT with it’s 2% support, if it wasn’t for it’s habit of saying out loud what David and his chums say in private that is.

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  12. Jack5 (5,053 comments) says:

    Just as we were to jawbone about the gold standard, sonic/catatonic/insonic stirs from his slumbers…

    However, tvb posted at 2.57

    …Gibbs does not seem to understand that international best practice on central banks having their main focus as controlling inflation is the best way to ensure currency stability…

    Currencies more stable now than in the 1920s under the gold standard? Are you sure, tvb?

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  13. tvb (4,364 comments) says:

    It was the slavish adherence to the gold standard that brought on the great depression. It is utterly random to have currencies tied to a mineral whose supply could be manipulated by gold rich countries. The answer to currency stability is to have international agreements over the pursuit of price stability and not to start printing money. Why gold. Why not some other rare metal or seaweed, or uranium or butter. Tying the value of money to some commodity whose supply is quite unpredictable and can be manipulated is stupid.

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  14. Adolf Fiinkensein (2,888 comments) says:

    David, if you’re there as media, where are the reports?

    Nothing apart from Allan Gibbs’ opener.

    You might as well be dead.

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  15. Luc Hansen (4,573 comments) says:

    There is not enough gold in the world to go back to the gold standard, unless we want a world of a very few rich and a great many poor.

    Hmm, hang on, maybe I should try that one again…

    Anyway, I suggest we all look at why we drpped the gold standard in the first place, and to Mr Gibbs I would say beware of simplistic solutions to complex problems.

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  16. Jack5 (5,053 comments) says:

    Gold has never stopped being a major international monetary tool. Consider the International Monetary fund announcement it is to sell 191.3 tons – with India and China rumoured to be most likely buyers.

    The gold price climbed 2 per cent this month and is over $US1110 an ounce as it climbs back to the December all-time record of $US1120.

    Reuters puts the reason for India’s interest in buying the IMF gold as “the uncertain outlook for two of the world’s major reserve currencies — the (US) dollar and euro.

    Here’s Wikipedia on one of those not unsympathetic to a gold standard – Alan Greenspan:

    …Greenspan famously argued the case for returning to a gold standard in his 1966 paper “Gold and Economic Freedom”, in which he described supporters of fiat currencies as “welfare statists” intent on using monetary policies to finance deficit spending. He has argued that the fiat money system of today has retained the favorable properties of the gold standard because central bankers have pursued monetary policy as if a gold standard were still in place…

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  17. Banana Llama (1,043 comments) says:

    Forgive my ignorance but why would minting gold be any different than governments printing paper to shore up a deficit? at least gold requires some significant labour to extract, smelt and mint rather than just typing $1,000,000,000,000 and placing it in a bank account.

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  18. kaya (1,360 comments) says:

    tvb – the current monetary system is a ponzi scheme. Fractional reserve banking is the greatest scam ever visited on the human race, most people know something isn’t right but they don’t know what that is.
    I don’t know if the gold standard is the answer and it could be manipulated, but at least it is something tangible.

    Watch Money as Debt:

    http://www.moneyasdebt.net/

    Pretty simplistic bit it does the job.

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  19. redqueen (555 comments) says:

    It’s interesting that so many people dislike fractional reserve banking, and like the idea of gold for its ‘stability’, even if they don’t believe it will work for various reasons, when Mr Smith himself pointed out that gold has been just as easily inflated throughout history. The real issue is whether a central bank, or government, has control of currency and what its objectives are. There are good reasons to have a currency, and especially a centrally issued one, and this really comes down to costs and benefits. While there is nowadays something romantic, from a conservative perspective, about a ‘gold standard’, from a practical perspective princes and sovereign statements has been debasing coinage longer than they’ve been printing money. What’s amusing is that, like all modernism, we think we’re just so new and clever for reinventing the wheel and calling it something different.

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  20. ISeeRed (236 comments) says:

    ACT still polling within the margin of error? When is ACT going to get its act together?

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  21. Pete George (23,476 comments) says:

    Whafe at 1:52 pm

    …it is not just convincing our population of left slanting plonkas, it is changing a global media of which is of the left persuasion……

    What do you suggest? Media censorship? Re-education camps for the masses? Gulags for diehard dissenters?

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  22. James (1,338 comments) says:

    A dunce writes…

    ““Gibbs talked about how the liberal market solution is often counter-intuitive”

    “Indeed, considering it has just plunged the whole world into economic crisis, stupid people think we should stop for a moment and consider if it was all a stupid mistake.”

    Oh really? And in what universe did that happen hummmm? The one where the worlds Governments DIDN”T fuck about creating bubbles in the market?

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  23. Redbaiter (13,197 comments) says:

    ” Re-education camps for the masses? Gulags for diehard dissenters? ”

    Not surprised to find those are the ideas that are uppermost in your mind Pete.

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  24. MT_Tinman (3,136 comments) says:

    Pete George (3981) Says:
    February 28th, 2010 at 6:43 am

    Whafe at 1:52 pm

    …it is not just convincing our population of left slanting plonkas, it is changing a global media of which is of the left persuasion……

    What do you suggest? Media censorship? Re-education camps for the masses? Gulags for diehard dissenters?

    Add death camps for the slime and the plan’s perfect.

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  25. Dirty Rat (504 comments) says:

    Jack5@1.46pm

    very interesting read that one.
    According to Henderson the IRD wanted to destroy him personally.

    Well, when you have 90% of your 64 Companies not filing tax returns, go figure.

    The IRD are correct in going after him, and I’m sure that the Creditors whos lives he has probably ruined feel the exact same way.

    There is tax minimalisation, there is tax avoidance, and then there is tax evasion.

    If this the type of thieving git that ACT supports

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  26. James (1,338 comments) says:

    “There is tax minimalisation, there is tax avoidance, and then there is tax evasion.”

    And all of them are moral and the right thing to do.No different from hiding your wallet from a mugger

    “If this the type of thieving git that ACT supports”

    That “thieving git” is robbed to keep legions of lazy scum like you alive…..respect please.

    “According to Henderson the IRD wanted to destroy him personally.”

    Read his book “Be very Afraid”…..and watch the movie based on it.You may learn something….

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  27. Dirty Rat (504 comments) says:

    You support a criminal activity which is what Tax Evasion is ?

    He wasnt robbed, he also owes Credtors, he robbed them, and he robbed law abiding taxpayers

    But I suppose ACT thinks that is okay

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  28. Peter Cresswell (48 comments) says:

    I congratulate Mr Gibbs for stating the bleeding obvious. The one-hundred-year experiment with central banks and their fiat money has failed spectacularly. Time to recognise that.

    @ Luc Hansen, you said: ““There is not enough gold in the world to go back to the gold standard . . .

    Not so. There’s as much gold as you need. As Ludwig Von Mises points out in ‘Human Action': “The quantity of money available in the whole economy is always sufficient to secure for everybody all that money does and can do.” <a href="http://mises.org/story/797*

    @TVB, you said, “Gibbs does not seem to understand that international best practice on central banks having their main focus as controlling inflation is the best way to ensure currency stability . . .

    But since the rise of the central banks we’ve seen just the opposite. Just to quantify the instability somewhat, since the rise of the central banks, the loss of purchasing power caused by central bank meddling means that every dollar is worth around ninety-five times less than it did a century ago. By contrast, when the gold standard was at its height over the half-century to 1901, the purchasing power of every dollar actually increased. [See for example the two graphs at the foot of this post showing the currency stability of the gold standard period, and the massive loss of purchasing power since.]

    @Banana Llama, you said, “Forgive my ignorance but why would minting gold be any different than governments printing paper to shore up a deficit?

    The answer is in your own response: Since gold requires some significant labour to extract, smelt and mint, reality itself places a check on the ability of governments to use the destructive expedient of inflation (i.e., printing paper money) to bail themselves out. That a gold standard places a check on government’s ability to run deficits is not a problem of the gold standard, it is its primary virtue.

    So a gold standard provides a check against inflation. Further, since gold (once produced) does not go away, then as long as fractional reserve banking is not contemplated, then there can never be any troubles with deflation either. After all, for that to happen it would mean that all the world’s stocks of one of nature’s basic elements would somehow have to disappear — a physical impossibility.

    @ Luc Hansen, you said: ““There is not enough gold in the world to go back to the gold standard . . .

    Well, there is — as I argue above. And it’s not beyond the wit of man to easily convert back to a stable currency unit based on gold. George Reisman, for one, indicates in this article how the remonetisation of gold can be very easily done: “Our Financial House of Cards and How to Start Replacing It With Solid Gold.”

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  29. Peter Cresswell (48 comments) says:

    Mind you, on the subject of remonetising gold) there is one significant hurdle to doing that here in New Zealand: We don’t have any.

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  30. stephen (4,063 comments) says:

    And what of the possible ‘meddling’ of countries like South Africa et al?

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  31. Peter Cresswell (48 comments) says:

    @Stephen, you asked: “And what of the possible ‘meddling’ of countries like South Africa et al?

    Well, the quantities involved just can’t match any “meddling” that countries like South Africa could do, even if they wanted to lose money by doing it. They achieve nothing by holding gold off the market. And the quantities involved mean they have no capacity to “dump” huge quantities onto the market.

    World gold stocks are around 4500 million ounces, yet the top four producers, China, USA, South Africa, and Australia produce around only 7-10 million ounces each per year, and total gold production last year was only around 75 million ounces.

    Hard to sway a market when you have so little traction with which to do it.

    A look at the historical record tells you the story. From 1800 to 2000 the world’s gold stock increased from just over 100 million ounces to around 4000 million ounces. But at no time did gold production (as a year-on year percentage) exceed five percent; the yearly increments to the above-ground stock of gold have always small — much smaller than the yearly increments of paper money pumped out by over-zealous central banks.

    Indeed, during the the period 1800-2000 the average year-on-year increase in the gold stock was just two percent. And as just one example among many, the peak years of production (the 1850s, when the Californian gold mines were coming on stream) saw the highest year-on-year increases ever, which was just 4.25 percent. Compare this to, for example, the increase each year of central bank paper, which in New Zealand (even since David Caygill’s’s ‘Reserve Bank Act’) has seen year-on-year increases every year of well over ten percent.

    Says Richard Salsman, “As a result, gold’s real value — what it will purchase in goods and services — is the least variable of any commodity,” and is the reason the late Roy Jastram from Berkeley called this tendency for gold’s real value to be stable as “the golden constant.”

    In fact, from 1550 to 2000 (the years that Jastram measured in his book) ‘The Golden Constant’ the purchasing power of the pound was virtually stable for all that period, right until the First World War and the abandonment of the Gold Standard, when purchasing power started going through the floor.

    The same story can be told of purchasing power of the US dollar from 1780 to the present, which is virtually stable from 1780 until the introduction of the Federal Reserve Bank in 1913, when once again the purchasing power goes down like a league player at summer training camp.

    So in summary, there is very little ‘meddling’ with gold stocks that countries like South Africa can do, even if they wanted to. Whereas leaving central banks to print paper money positively invites destructive meddling – which has been precisely what we’ve seen over the last century.

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  32. stephen (4,063 comments) says:

    Cheers.

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  33. MikeE (555 comments) says:

    @Dirty Rat: The IRD tried to destroy him once, and lost. Now it looks like they are back to finish the job.

    I’d wager that staff there do have a personal vendetta against hendo. Especially post movie, post henderson house (now hotel so) etc. And he’s 100% correct re penalties. They are crippling and in no way designed to allow creditors to pay tax owed, but instead to destroy them financially.

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  34. James (1,338 comments) says:

    Dirty Rat:”You support a criminal activity which is what Tax Evasion is ?”

    I support the moral right of a person to his own wealth created by him through productive effort and I oppose the thieving scum who think they have a greater right to that wealth.It is coercive taxation that is the criminal activity….not the resistence to it.The funding of the State to carry out its legitimate duties (rights protection) is another matter entirely.

    “He wasnt robbed, he also owes Credtors, he robbed them, and he robbed law abiding taxpayers.”

    Robbed taxpayers of what…?He created far more taxed wealth than most taxpayers ever do.Yes he does owe creditors and is morally obliged to pay them back.And he probably will.Hendo has a history of paying creditors even when not legally required to do so….thats the character of the man.

    “But I suppose ACT thinks that is okay.”

    Shows what you know dropkick….now run along and spend your extorted welfare payout…thats a good parasite.

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