Yes, it's Budget Day ...

 ... so to help journalists desperate for something to write about before the Budget comes down, here are some quotable quotes. Send a copy to your favourite columnist:

"The average ... family head will be forced to do twenty years’ labour to pay taxes in his or her lifetime."
    ~ James Bovard

"The average family pays more in taxes than it spends on food, clothing, and shelter combined."

    ~ Congressman Dick Armey

"If politicians were serious about day care for children, instead of just sloganising about it, nothing they could do would improve the quality of child care more than by lifting the heavy burden of taxation that forces so many families to have both parents working."

    ~ Thomas Sowell

"I think coercive taxation is theft, and government has a moral duty to keep it to a minimum."
    ~ William Weld

"A government debt is a government claim against personal income and private property – an unpaid tax bill."
    ~ Hans F. Sennholz

"Christmas is a time when kids tell Santa what they want and adults pay for it. Deficits are when adults tell the government what they want and their kids pay for it."
    ~ Richard Lamm

"Everyone wants to live at the expense of the State. They forget that the State lives at the expense of everyone."

    ~ Frédéric Bastiat

"Apparently, politicians can change the planetary climate, but they can’t fix the potholes, repair the drains, or balance their books."

    ~ Alice Smith

"The secret to balancing the budget is to remember that all tax revenue is the result of holding a gun to somebody's head. Not paying taxes is against the law. If you don't pay your taxes you'll be fined. If you don't pay the fine you'll be jailed. If you try to escape from jail, you'll be shot. Thus, I - in my role as citizen and voter - am going to shoot you - in your role as taxpayer and ripe suck - if you don't pay your share of the national tab. Therefore, every time the government spends money on anything, you have to ask myself, ‘Would I kill my kindly, gray-haired mother for this?’"

    ~ PJ O'Rourke

"The state is never accused of greed. There is no limit to what it may take from us. And those who live on what is taken in taxes are never accused of greed either. Greed is virtually identified with the "profit motive." We have no invidious term for the parasitic motive. The state and its clients are all but immune from moral criticism."
    ~ Joseph Sobran

"[There are dangers in] the disposition to hunt down rich men as if they were noxious beasts."     
    ~ Winston Churchill

"To tax the larger incomes at a higher percentage than the smaller, is to lay a tax on industry and economy; to impose a penalty on people for having worked harder and saved more than their neighbours."

    ~ John Stuart Mill

"When Barbary Pirates demand a fee for allowing you to do business, it's called 'tribute money.' When the Mafia demands a fee for allowing you to do business, it's called 'the protection racket.' When the state demands a fee for allowing you to do business, it's called "tax." 
    ~ Jeff Daiell

"There are people who think that plunder loses all its immorality as soon as it becomes legal. Personally, I cannot imagine a more alarming situation."
    ~ Frédéric Bastiat

"Taxation is far greater an evil than theft. It is a form of slavery. If you cannot choose the disposition of your property, you are a slave. If you must ask permission to work, and/or pay involuntary tribute to anyone from your wages, you are a slave. If you are not allowed to dispose of your life (another way of defining money, since it represents portions of your time and effort, which is what your life is composed of) in the time, manner and amount of your choosing, you are a slave."

    ~ Rick Tompkins

"Taxation of earnings from labor is on a par with forced labor. Seizing the results of someone’s labor is equivalent to seizing hours from him and directing him to carry on various activities."

    ~ Robert Nozick

"The man who produces while others dispose of his product is a slave."
~ Ayn Rand

“Taxation is the price we pay for failing to build a civilised society, since taxation represents force.”
    ~ Mark Skousen

"The bureaucrat’s first objective, of course, is preservation of his job – provided by the big-government system, at the taxpayers expense. … Whether real world problems get solved or not is of secondary importance. It doesn’t take much cynicism, in fact, to see that the bureaucrats have a vested interest in not having problems solved. If the problems did not exist (or had been invented), there would be no reason for the bureaucrat to have a job.”

~ William Simon, former U.S Treasury Secretary

"… thou shall not steal, even by majority vote …"

    ~ Gary North

"In levying taxes and in shearing sheep, it is well to stop when you get down to the skin."

    ~ Austin O’Malley

"Public works are not accomplished by the miraculous power of a magic wand. They are paid for by funds taken away from the citizens."

    ~ Ludwig von Mises

"A [tax loophole is] something that benefits the other guy. If it benefits you, it is tax reform."

    ~ Russell B. Long

[S]tatism is but socialised dishonesty; it is feathering the nests of some with feathers coercively plucked from others – on the grand scale. There is no moral difference between the act of a pickpocket and the progressive income tax or any other social program."

    ~ Leonard Read

“We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”
    ~ Winston Churchill

"Taxation without representation is tyranny."
    ~ James Otis

"Taxation WITH representation ain't so hot either."
    ~ Gerald Barzan

"If taxation without consent is not robbery, then any band of robbers have only to declare themselves a government, and all their robberies are legalised."

~ Lysander Spooner

"When a new source of taxation is found it never means, in practice, that the old source is abandoned. It merely means that the politicians have two ways of milking the taxpayer where they had one before."
    ~ HL Mencken

"The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin."
    ~Mark Twain

"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it."
    ~ Ronald Reagan

"According to the Tax Foundation, taxes now consume more than 38% of the average family’s budget. That is more than is spent on food, clothing, housing, and transportation combined. Compare this to the plight of medieval serfs. They only had to give the lord of the manor one-third of their output — and they were considered slaves. So what does that make us?"

    ~ Daniel Mitchell

"Death and taxes are inevitable; at least death doesn't get worse every year."
    ~ Will Rogers

"When more of the people's sustenance is exacted through the form of taxation than is necessary to meet the just obligations of government and expenses of its economical administration, such exaction becomes ruthless extortion and a violation of the fundamental principles of free government."
    ~ former US President Grover Cleveland

"Rulers do not reduce taxes to be kind. Expediency and greed create high taxation, and normally it takes an impending catastrophe to bring it down." -
    ~ Charles Adams

"We have a system that increasingly taxes work and subsidises non-work."

    ~ Milton Friedman

"When you subsidise poverty and failure, you get more of both."

    ~ James Dale Davidson, US National Taxpayers Union

"The mounting burden of taxation not only undermines individual incentives to increased work and earnings, but in a score of ways discourages capital accumulation and distorts, unbalances, and shrinks production. Total real wealth and income is made smaller than it would otherwise be. On net balance there is more poverty rather than less."
    ~ Henry Hazlitt

"The poor of the world cannot be made rich by redistribution of wealth. Poverty can't be eliminated by punishing people who've escaped poverty, taking their money and giving it as a reward to people who have failed to escape."
    ~ PJ O'Rourke

"A government with the policy to rob Peter to pay Paul can be assured of the support of Paul."
    ~ George Bernard Shaw

"There cannot be a good tax nor a just one; every tax rests its case on compulsion."

~ Frank Chodorov

"Freedom is the quality of being free from the control of regulators and tax collectors. If I want to be free their control, I must not impose controls on others."
    ~ Hans F. Sennholz

"There's only one way to kill capitalism--by taxes, taxes, and more taxes." -
    ~ Karl Marx

"The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation."
    ~ Vladimir Lenin

"Giving money and power to government is like giving whiskey and car keys to teenage boys."
    ~ PJ O'Rourke

"A society of sheep must in time beget a government of wolves."
    ~ Bertrand de Jouvenel

"The power to tax involves the power to destroy."
    ~ former US Supreme Court Justice John Marshall

"Taxes are not levied for the benefit of the taxed."
    ~ Robert Heinlein

"Taxes are the sinews of the state."
    ~ Cicero

"Government is the great fiction, through which everybody endeavors to live at the expense of everybody else."

    ~ Frederic Bastiat

"Be wary of strong drink. It can make you shoot at tax collectors, and miss."
    ~ Robert Heinlein

Does Demand Create Supply?

Amongst the first reactions when Nicola Willis announced a coming cut in Wellington's bureaucrats came the outcry that the reduced consumer spending by those unemployed grey ones will keep Wellington "at the bottom of the pack in terms of things like economic activity," their reduced demand leading (so it's said) to a downward spiral.

The most cited author of that premise is alleged economist Nick Brunsdon, who seems to labour under the illusion that economic causality can be reversed, that demand induced by govt deficits somehow creates its own productive supply -- that if government keeps on over- spending and injecting new money into the economy, then productive wealth will follow. Fortunately, Frank Shostak is here in this Guest Post to dispel that destructive illusion ...

Does Demand Create Supply?

by Frank Shostak

By popular thinking, increases in demand cause economic growth. According to such thought, whenever the economy falls into a recession what is required is to strengthen demand. Since government is seen as an important part of total demand, what is then required is to increase government outlays, thereby lifting overall demand and hence increasing economic growth.

According to the popular view, it is also possible to strengthen overall demand through the inflationary increases in money supply. With more money in their possession, and for given prices, the so-called real balances will increase and this, in turn, will strengthen individuals’ expenditure on goods and services. This allegedly will strengthen the economy’s overall demand and will strengthen economic growth. A decline in the prices for a given money supply will also boost the real balances and thus the economic growth. 

But does it make sense that demand is the key driver of the economy?

In the free market economy, wealth-generators do not produce everything for their own consumption. Part of their production is used to exchange for the products of other producers. Hence, in the free market economy, production precedes consumption. This means that something is exchanged for something else. This also means that an increase in the production of goods and services sets in motion an increase in the demand for goods and services. According to David Ricardo,

No man produces but with a view to consume or sell, and he never sells but with an intention to purchase some other commodity, which may be immediately useful to him, or which may contribute to future production. By producing, then, he necessarily becomes either the consumer of his own goods, or the purchaser and consumer of the goods of some other person.

An individual’s demand is constrained by his ability to produce goods demanded by others. The more goods that an individual can produce, the more goods he can demand.

Expanding Private Savings: Key to Economic Growth

Without the expansion and the enhancement of the production structure, it is difficult to increase the supply of goods and services. The expansion and enhancement of the production structure hinges on the expansion of production, private saving, and capital investment. Saving supports individuals in the various stages of production. It supports individuals that are employed in the enhancement and the expansion of the production structure. Hence, what matters for economic growth is not just tools, machinery, and labour, but saving and investment in capital goods.

Government Is Not a Wealth-Generator

Contrary to popular thinking, the government does not produce any wealth. Increases in government spending cannot grow the economy. By nature, the government must take from the private, productive economy to facilitate any of its actions. By doing this, the government weakens the wealth-generating process and undermines prospects for economic recovery during a downturn. According to Murray Rothbard,

Since genuine demand only comes from the supply of products, and since the government is not productive, it follows that government spending cannot truly increase demand.

Likewise, an increase in money supply only sets in motion an exchange of nothing for something. This means a weakening in the process of wealth formation and leads to economic impoverishment.

An important factor that makes the fiscal and monetary stimulus appear to “work” is if the amount of private savings is large enough to support non-wealth generating activities while still permitting a growth rate in the activities of wealth generators. It also gives the appearance of wealth as new sectors are stimulated. Additionally, if funded by inflation, the benefits of inflation appear early and are only realised later.

If, however, voluntary saving is declining, then, regardless of any increase in government spending and inflation by the central bank, overall economic activity cannot be revived. In this case, the more the government spends, and the more the central bank inflates, the more will be taken from wealth-generators, thereby weakening any prospect for a recovery. Additionally, these measures will further distort the economy.

As one can see, not only does the increase in the expansionary fiscal and monetary policies not raise overall output, but, on the contrary, it leads to a weakening in the process of wealth generation in general. According to Jean Baptiste Say,

. . .the only real consumers are those who produce on their part, because they alone can buy the produce of others, [while]. . .barren consumers can buy nothing except by the means of value created by [actual] producers.

Conclusion

By popular thinking, increases in government spending and central bank inflation strengthens the economy’s overall demand. This, in turn, sets in motion increases in the production of goods and services. What we have here is a claim that “demand creates supply.” However, to be able to exchange something for goods and services, individuals must first have something that others want. This means that, in order to demand goods and services, individuals must produce something useful first. Hence, supply drives demand and not the other way around. Governments, by nature, must take from the private, productive sector in order to fund their activities. Increases in government spending and the money supply growth rate results in the diversion of savings from the wealth-generators to non-wealth-generators, thus undermining the wealth generating process.

* * * * 

Frank Shostak is an Associated Scholar of the Mises Institute. His consulting firm, Applied Austrian School Economics, provides in-depth assessments and reports of financial markets and global economies. He received his bachelor’s degree from Hebrew University, his master’s degree from Witwatersrand University, and his PhD from Rands Afrikaanse University and has taught at the University of Pretoria and the Graduate Business School at Witwatersrand University. Frank’s publishes frequent posts on economics and the markets on his Substack page.

His post first appeared at the Mises Wire.

"Much of the social history of the Western world over the past three decades has involved replacing what worked with what sounded good."

"Much of the social history of the Western world over the past three decades has involved replacing what worked with what sounded good. In area after area – crime, education, housing, race relations – the situation has gotten worse after the bright new theories were put into operation. The amazing thing is that this history of failure and disaster has neither discouraged the social engineers nor discredited them."

~ Thomas Sowell from his 1993 book Is Reality Optional?

"Emotion has its place. You might argue that it was appropriate in crisis situations like the pandemic, the Christchurch shooting, and the White Island eruption. ...
    "But emotion can only go so far, because wanting something to be true, because it's kind, is not the same as it actually being true."

~ OJB from their post 'I Blame Women!'

"It is not kind to keep borrowing against future generations’ futures. It isn’t kind to promise the world and deliver sweet F all. Remember Ardern was going to house all of NZ’s homeless within 4 weeks of becoming PM, end child poverty, and build 100,000 houses? How wonderful! And what happened? ..."

~ Ani O'Brien

Nicola Orwell [updated]

Over the weekend, we were watching the recent George Orwell doco Orwell 2+2=5 on DocPlay. Worth it, except to the extent it (deliberately?) confuses economic power with political power -- the very important distinction, as Harry Binswanger explains, between, the Dollar & the Gun. (And the film's own language does get somewhat Orwellian itself towards the end.)

Anyway, two quotes from the great man came to mind as I read Finance Minister Nicola Willis attempting to explain why her government spending more is nonetheless a 'saving.'

"What [her] Government has largely done,"explains Luke Malpass, "is to cut in some areas to fund increases in others." In her words:

It is not a saving in the sense that we are spending less as a government; it is a saving in the sense that, in the absence of making those savings, we would not have been able to fund increases to health and education and essential services without borrowing more.

As Orwell writes:

Political language is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind.

And:

When one hears a politician using a word like 'socialist,' 'communism,' 'freedom,' 'patriotic,' 'realistic,' 'justice,' and the like, one is not sure what he is saying, but it is clear that he is not saying anything meaningful.

Add to that last one the word 'saving.'

1984 was not supposed to be an instruction book; it was supposed to be a warning.

Look! Look! Come see how much 'saving' Nicola has been doing year on year! 

[Source: NZ Treasury's official Financial Statements]

UPDATE: To put some more context into what Willis's 'savings' look like, here's Matthew Horncastle, who's been reading the NZ Govt's Financial Statements, which say that last year, Willis's government took in $169.8 billion in revenue.

The majority of that is taxes. Forced. Compulsory. Taken from working people, business owners, and families under threat of legal consequence. There is no opt out. 

    They spent $183.5 billion. That is $13.7 billion more than they collected. 

    Net government debt is now $182.2 billion. That is $140,000 for every household in New Zealand. The interest bill alone is $8.9 billion a year. Every single year. That is more than the entire budget for law and order. More than defence. More than housing. Just interest. Just the cost of the debt that already exists. 

    And debt is still growing. In 2019 net Crown debt was $58 billion. It is now $182 billion. In six years the government tripled the national debt and handed every New Zealand household a $140,000 bill they never agreed to. 

    That is not governance. That is generational theft. 

    Free people should not be working to service the borrowing habits of politicians who will never personally bear the consequences of what they have spent. 

    Get the books back to surplus. Cut spending. Stop borrowing. Let productive people keep more of what they earn.
    This is not complicated. It just requires the courage to do it.

Treasury's Chief Strategist doesn't understand inflation

Sadly, it seems the NZ Treasury's Chief Strategist Struan Little doesn't understand inflation.

Speaking to the NZ Capital Markets Forum, he gave the audience a helpful rule of thumb for fuel price rises here: 

[E]very US$10 increase per barrel of oil roughly translates to 10 cents a litre extra for New Zealanders at the petrol pump. Therefore, prices at around US$100 a barrel mean a 40 cents a litre increase in New Zealand.

That's helpful. The conclusion he drew from that however is not:

In that scenario [he said] ... the impact on CPI [i.e., of the official inflation figure] would be around 0.5 percentage points – that is around 3.1 – 3.2% instead of 2.7% in the baseline in the year to June 2026.

This is nonsense.

Yes, there will be a rise in the specific price level of oil. But unless there is a concomitant rise in the local money supply, there is no way that can cause a rise in the general price level, which is what the CPI is supposed to measure.

In fact, in the absence of a concomitant rise in money supply, the impact on the general price level will be precisely zero because to spend more on fuel means having to spend less on other things. 

Yes, the price rise for oil does affect almost every thing in the economic system. Which makes a problem for all of us. But the only way for all those other things to rise in price as well is for there to be an across-the-board increase in monetary demand. And the only way that can be possible is for there to be an increase in the supply of money available -- the most likely cause of that in the present environment being governments continuing to borrow too heavily.

Little's error is an example of what economist George Reisman calls the myth of Crisis-Push Inflation -- a subset of the myth of so-called Cost-Push Inflation. It's usually a way for politicians to deflect attention for  their profligacy in borrowing.

At least Little does call that out, even if he falls prey to that other error. 

More than a covid's-worth of fiscal incontinence

"[W]hen the pandemic hit Ardern and Robertson had a decision to make. Respond in a fiscally prudent manner or borrow seventy billion, at least thirty of this was spent on non-pandemic frippery, and wrap themselves in a cloak of virtue while leaving an economic calamity to a future set of politicians. ...

"Ardern and Robertson used the pandemic to advance their own agenda ... [John] Key saw a crisis and, lacking an economic agenda or political philosophy, ran to the international money men to maintain the status quo rather than attempt meaningful reform.

"Given the content of the Covid Report the current government is right to highlight Robertson’s fiscal incontinence; pointing to the 70.4 billion total spend as a contrast with their own rectitude.

"Except. Well. ... [Nicola] Willis, who has managed to add over twenty billion new debt in her first two years in office, is projected to increase sovereign debt by more than Robertson achieved over the next five years.

"And this is without a pandemic, major earthquake or outbreak of foot and mouth. ...

"Imagine a company director who has seen revenue fall but maintains payroll by borrowing. Eventually the line of credit ends, staff lose their employment and the director is forced to sell the family home.

"That is our economic policy in one paragraph."

~ Damien Grant from his column 'John Key and Jacinda Ardern both turned to debt when disaster hit'

Austerity, what austerity?

 

"You may have heard a lot of stories about austerity. Consider that both the government and the opposition may want to convey the impression that it has happened, despite it very much not having happened.

"Throughout the 2010s (barring #eqnz), per capita real operating expenditure net of interest expenses ranged from $17,143 to $18,653 - with 2019's jump to $18,653 being well out of line with the prior track. Labour substantially increased spending under its wellbeing focus ...

"Per capita real operating expenditure net of finance cost has been above $21,000 since then; the provisional figure for 2025 is $21,648. ...

"The largest-spend category here by far is social protection [sic]: benefits and superannuation. ...

"Any giant shedding of government staff will show up in General Public Services. The austerity really stands out in this picture. Can't you see it too? ..."

 

~ Eric Crampton from his post 'The state of the books'

"This pathetic and muddled belief in the power of credit to cure all economic ills is perennial in New Zealand"

With all the talk this week of how the cheap credit of a a dirt-cheap OCR announcement filtering through to the economy, as if some wand had been waved we should all celebrate, I couldn't help thinking of NZ economist JB Condliffe's sage observation on the New Zealander's enthusiasm for cheap money:

"Still belief  persisted in the magic of credit to achieve all economic objectives. ... This pathetic and muddled belief in the power of credit to cure all economic ills is perennial in New Zealand ... "

He wrote that in 1959 in his book The Welfare State in New Zealand. 

I doubt he'd be surprised today.

Trump’s Phony War For Bigger Government

"[T]he Trumpification of the GOP means the Swamp is destined to become ever deeper and more virulent. The Donald is the very opposite of a traditional GOP conservative because he is constantly on the prowl for ways to expand the reach of the Federal government.

"After all, that’s the essence of his insane Tariff-Palooza and the abuse of tariff powers granted to the Congress by the plain words of the constitution ...

"The push for more government is also behind his constant yammering for low interest rates and more money-printing at the Fed ... to buy shares of Intel and other tech and defence companies ... instituting national land use controls and allocation of building materials. And, of course, nothing smacks of Big Government in Washington more than a mega-fiscal bill (the OBBBA) that will add $55 trillion to the public debt over the next three decades.

"So the Donald’s latest lurch into Bigger Government and a Deeper Swamp is not surprising. We are referring to his unhinged campaign for Federal intervention in local law enforcement ... [when] policing the streets and neighbourhood's of the 88,000 units of state and local government in America is the very essence of Federalism and decentralised government power and accountability. ...

"[T]he last thing we need is Washington politicians and bureaucrats sending the uniformed national guard into local cities and towns on the pretext that the Fed’s could do the job better. ... The plain fact is, most larger cities in America are dealing with street crime challenges, but there is no emergency whatsoever that demands Federal intervention and militarisation of local law enforcement. And it’s not even a case where Dem cities and blue states are way out of alignment with the rest of the country and therefore merit Washington’s special attention. ...

"[This] self-evidently has nothing to do with a national emergency or a unique crime breakout ... [W]hat the Donald is really up to ... is using random crime anecdotes as an excuse to launch a political attack on Democrats and peddle a false narrative that everyday Americans are in grave danger because the Blue Cities and States of America have become incubators of criminal mayhem. But that’s a flat out lie. ...

"Still, there is a larger issue that the Trumpified GOP is completely missing. Namely, vibrant Federalism—which is the only antidote to corrupt, wasteful Big Government embedded in the Washington Swamp—needs to be free to fail as well as succeed without Washington politicians usurping their functions and responsibilities. ...

"At the end of the day, the real threat to average Americans is not street crime in the big cities, whether run by Republicans or Democrats. The actual crime threat is a Washington based Fiscal Doomsday machine that is burying the American economy in unsustainable debt.

"If the Donald really wants to MAGA, he’d be well advised to take on the fiscal criminals of the UniParty who dominate both houses of Congress and enable the vast extent of the Washington Swamp he [once] pledged to drain."

~ David Stockman from his post 'Trump’s Phony War On Crime—Just More Big Government'

Q: "Why does Trump want to control the Federal Reserve board?"

"Questions you should be asking right now: 

"1. Why does Trump want to control the Federal Reserve board? 

"2. Why does Trump want to staff it with an economist who's best known for his crackpot scheme to intentionally devalue the dollar & effect a backdoor national debt default?"

~ Phil Magness

Doug Casey: "The goal is to remake the world’s monetary regime"

 

"Stephen Miran’s appointment to the Federal Reserve isn’t just another personnel move—it’s the placement of Trump’s Reset architect inside the very institution that will help carry out America’s most ambitious economic overhaul in generations.

"If you’re still unfamiliar with what Trump’s Reset entails, I strongly recommend checking out Matt Smith’s comprehensive analysis. He’s done the heavy lifting of connecting dots that were only hinted at in Miran’s original white paper. ...

"The goal is to remake the world’s monetary regime….

"But there are consequences to Trump’s plan - one of which is a guaranteed period of painful adjustment. ...

"Trump doesn’t just want a weaker dollar - he wants a dollar that is radically devalued against every other currency on earth. ... a dollar devaluation of 90%.

"That may sound horrific - but it’s only slightly less than the devaluation of the 1970s, when the dollar lost 75% of its purchasing power.

"Anyone not holding 'real stuff' - like gold, silver, natural resources, commodities, etc. - is going to see a dramatic drop in their standard of living.

"Team Trump will deal with US debt the way governments always deal with debt…

"By inflating it away - and with it, the purchasing power of your US dollar savings....

"But he wants more than just a weak currency.

"He wants to change the nature of the US economy by copying China['s] model of state-backed investment.. ... [and] industrial policy ... [demanding] large profitable corporations reinvest in China. ...

"Trump’s plan will [demand] the same of US companies. And the Trump plan is already in motion. Apple announced a $500 Billion investment in America in late February ... [Intel were forced to give a ten percent cut to the US Government.] ... Expect to see many announcements like these ....

"[Trump's advisor Stephen] Miran makes it clear that nothing good can happen until the burden [sic] of having the reserve currency is shared by our trading partners.

"Does that mean the dollar will lose its status? Probably."

~ composite quote from Doug Casey's 'The Mar-a-Lago Accord Confirmed: Miran Brings Trump’s Reset to the Fed' and Matt Smith's 'Get Ready for Trump's Monetary Reset'

"Let me get this straight: the Republican Party now favours concentrating power in one individual to impose protectionist tariffs, centrally plan the economy, nationalise stakes in private businesses, and use the Fed to create massive inflation to monetise soaring budget deficits."

~ Peter Schiff 

Rocketing rates rises rightly reviled

"Look at me, I'm on a bus!" Second-prize winner in the "my council spends too much awards,"
Greater Wellington's spender-in-chief Daran Ponter unfortunately ignores the exits.

BY HOW MUCH HAVE YOUR rates gone up by this year?

If you're "lucky," they've only risen by under 3 percent — that's if you're under the regime of either the Whanganui or Waitomo District Councils, or the Bay of Plenty Regional Council. You, dear people, are the "lucky" ones. Only a 3-percent rates rise

Not so lucky however if you live under the arm of the Clutha District Council, Upper Hutt City Council, Waipa District Council, Hamilton City Council, or Hastings District Council. If you're unlucky enough to have those folk on the letterhead of your. rates bill, then you're forced to pay more than 15 percent more this year than last year.

And pity those poor folk in Hastings.  Over the last three years, under Mayor/Chair Sandra Hazlehurst, their rates demands have gone up by just under 50 percent. Fifty percent in three years! And there are four councils demanding even more over these last three years — West Coast Regional Council demanding 66 percent more than they did in 2022, and Greater Wellington 55 percent more.

Well, I guess Wellington does need to fix its pipes, right?

But here's the problem. Those rocketing rates rises haven't been going to fix the pipes, have they. Like every other council ni the country, the Greater Wellington Regional Council has found what its politicians and planners think are far more important things on which to spend your money.

Monuments. Landscaping.

Bread. Circuses. Consultants.

Overseas trips.

All paid for from your rates, which also pay (almost) for their hefty borrowing. 

You can find all these frightening figures at the Taxpayer Union's Rates Dashboard 2025, released today.

>> CHECK IT OUT

THE FIGURES ARE FRIGHTENING. BUT they still don't reveal the whole truth.  'Cos even with rates rocketing, these profligate bastards still can't pay their way. They're not just over-spending, they're over-borrowing.

At least 11 councils have net debt-to-revenue ratios of more than 200 percent.

Hamilton is on 281 percent, just four points away from the limit on councils’ debt covenants. Queenstown Lakes is on 265 percent. Tauranga is on 248 percent now, but forecasting to blow the 285 percent lid from 2030 onwards.

“Some are reaching their debt ceilings, which will have the auditors in a twist,” says [Greater Wellington's Spender-in-Chief Daran] Ponter. “That’s a real issue. If you look to the UK, Birmingham has effectively gone into liquidation in the last few weeks. There’s a city of two to three million people that basically can’t pay its way anymore.”

Hamilton’s mayor Paula Southgate [42% rates rises over three years]and Local Government NZ vice president Campbell Barry, who is the Hutt City mayor [45% over three years], today published research showing the wide gap between council revenues and capital spending obligations, over the 10 years of the new longterm plans.

The research, by Infometrics, shows councils had already committed to $23.3 billion capital investment from 2021 to 2024. Infometrics principal economist Brad Olsen says once construction inflation is added in, that’s nearly $3 billion more.

It's all very well for Nicola Willis to say she wants councils to "stick to the basics" and "not waste ratepayers money" — "focusing on the things people expect them to do, which is the rubbish, the roads, the pipes, the basics - and not all the fanciful projects" — but she is doing damn all about it.

It's just more politico-blather.

Sandra Lee, 2002: Let's get councils
spending more, and doing less core

Nicola Willis is Finance Minister. She should have a good talk to her hopeless Local Government Minister Simon Watts about repealing the one Act that gave explicit permission for councils to begin focussing on all the fanciful projects, and to ignore the things people expect them to do, such as the rubbish, the roads, the pipes, the basics ...

That Act was the Local Government Act, which receives far less opprobrium than it should.

JUST OVER TWO DECADES AGO, in 2002, the then-Local Government Minister was the hard-left Alliance Party's Sandra Lee. And it was then that local government debt began to rise dramatically — not because councils around the country were over-investing in infrastructure; not because they were going hard on their core business; not at all because they were building, maintaining and upgrading roads, bye-roads, drains, pipes and parks as they were damned well supposed to. For the most part, instead, with some significant exceptions, they weren't. What they began building instead was a lot of expensive fucking monuments. 

Monuments mostly to themselves.

The culprit here was Sandra Lee's Local Government Amendment Act 2002, which granted to city councils, district councils and regional councils a "power of general competence" (I know, right?) which would enable them to enter into any activity they wished, with the only limit being their imagination and the pockets of their ratepayers.

Prior to Sandra Lee's Local Government Act, councils could only do what they were legally permitted to to, i.e., to carry out their core business. After Sandra Lee's Local Government Act, however, the leash was off. And council credit cards started straight away racking up debt for vanity projects everywhere. 

I'd like to say I told you so. I'd like to, so I will. Because I was as outraged then as I am now:

Libertarianz Leader Peter Cresswell is outraged at today's announcement by Helen Clark and Minister of Local Government Sandra Lee to grant local authorities "a power of general competence" in order to "enhance the well-being of their communities." "The well being of everyone in a community is more likely to be enhanced by retaining a tight leash on councils," says Cresswell, "since most councils have already well demonstrated they struggle for competence."
    "Local government throughout New Zealand's history has demonstrated its utter incompetence in handling the loot they confiscate from ratepayers by wasting it on such idiocies as the New Plymouth Wind Wand, the Auckland Britomart edifice, and the Palmerston North empty civic building." he said. ...
    "More substantially," says Cresswell, "there is a crucial constitutional principle at stake -the constitutional principle that citizens may do whatever they wish, apart from what is specifically outlawed, whereas governments and councils may only do what is specifically legislated for. The main purpose of this constitutional principle is to keep a leash on government, both central and local. It is this leash that is beginning to gnaw at local governments, and it is this leash that Clark and Lee propose to untie."
    "It is a dangerous step to take," warns Cresswell, who points out that councils are being given more 'freedom' at he same time as the Resource Management Amendments Bill threatens to take away even more freedom from New Zealand property owners. "The constitutional principle is being reversed," he says. "Even as they propose giving local government wider powers to act, they are taking away the power of individuals to act for themselves," says Cresswell. "Every property owner should rise up in protest," he says.
    "Libertarianz will be making a strong submission on the consultation document," says Cresswell. 

Which we did. For all the bloody use that it did: The Clark Government passed it, a succession of Local Government ministers since since has kept it, and every bloody local councillor ever since Sandra's "permissive" Act has spent like a drunken sailor on shore leave with a start-up founder's credit card.

The New Zealand Local Government Funding Agency (LGFA) supplies around two-thirds of that council debt, and last time I looked their tab was just over $18 billion. That's about $20,000 for every ratepayer. Add to that an existing $5 billion of Auckland and Christchurch council debt. And those numbers are every year by around a billion a year as ballooning rates rises fail to keep up with even-more ballooning council spending.

And as you can now see, it's not like they've been spending much of it underground.

In Christchurch they've been turning the city into "an innovative and modern community with major facilities from Akaroa Wharf to Te Kaha Canterbury Multi-Use Arena." In Wellington they've been watching the city's infrastructure crumble while they vote to spend hundreds of millions on earthquake-prone inner-city monuments of questionable value. And here in Auckland, council have allocated yet another billion dollars (plus fuck-ups) to pour down the ever-expanding black hole of the train set with the ever-disappearing-opening date, plus several hundreds of millions more to continue transforming the place into "one of the world's most liveable cities."

A shame there are still very few plans to make it an affordable one.

What on earth is to be done?

You know, here's an idea.

Instead of keeping Sandra Lee's Local Government Act and binning Three Waters, which is where this new Coalition Government went, how's about — and hear me out, now that you've all heard the story —how's about we bin Sandra Lee's act and tell fucking councils to stop over-spending, to close down their PR departments, and to get back to their core fucking business.

Maybe you could suggest something like that to Simon Watts, who's the current Local Government minister. 

But you'll have to explain to him first who Sandra Lee is, and what she did back then to stuff things up. Because the gormless twit does appear a bit simple.

UPDATE: It's been pointed out to me that Simon Watts is trying to overturn some of Sandra Lee's Act, and argued that I've been unnecessarily harsh about him in my conclusion.

Nearly two years into his job, he is introducing an Act he says will "refocus" councils to their core jobs.

. . . .

 . . . .

. . . .

Unfortunately, however, while this is good as far as it goes, it's the Act from way back in 2002 that still needs a bullet.

"The congressional budget bill has become the most bloated bill to ever waddle and slide through congress." [updated]

UPDATE: David Stockman, Reagan's former Budget Director: "During his first term in the Oval Office, Trump added nearly $8T to government debt. That was more than 43 presidents had combined to accumulate during the first 216 years of the Republic."

 "There is only one explanation [now] as to how the so-called conservative party looked 10-year baseline deficits of $22 trillion straight in the eye, yet then genuflected to the King of Debt and voted to add $5 trillion more red ink on top.

    "Or even more egregiously, GOP policy-makers were was told by CBO that the current fiscal path of 17% of GDP in revenues and 24% of GDP in spending will generate a catastrophic public debt of $130 trillion by mid-century. But that apparently made no never mind at all as they voted to pile on another $50 trillion, anyway—thereby insuring an eventual end-of-days financial conflagration.
    "To wit, these GOP pols sure as hell knew better, but were simply buffaloed and monkey-hammered into an act of fiscal insanity by the bellicose economic ignoramus who occupies the Oval Office. And while we are at it, let’s leave nothing to doubt: The four main planks of Trump-O-Nomics amount to a recipe for an economic Demolition Derby.
    "We are referring to catastrophic public debts, a renewed print-a-thon at the Fed, an insane Tariffpalooza and gutting America’s immigrant dependent labor market. Never before has an ill-educated buffoon come up with a more destructive policy mix and yet out of sheer bully-boy aggression single-handedly forced it upon an entire political party that should know better and which historically stood against every one of the four pillars of Trump-O-Nomics." [MORE HERE]

* * * 

"The congressional budget bill [which was passed in the US Senate today] has become the most bloated bill to ever waddle and slide through congress.

"[Trump's ill-named] 'Big Beautiful Bill' just can’t stop growing. This pile of pork that required two pallet boards and a forklift in order to move him from the House side of the Capitol building to the Senate, is getting fatter with each passing day. It may not even be possible, at this point, to move him from congress to the President’s desk for signing.

"It seems Trumpublicans, who once masqueraded as budget hawks, just cannot spend enough money these days. Having already packed in more pork than the entire nation of China could eat in a decade at a time when the US is drowning in its own debt according to every credit agency that typically matters, Senate Republicans saw the need to fit a lot more fat into the flesh folds of this cut-taxes-and-spend-more, fantasy monster.

"Having loaded Bill’s crevices up with lard, we read today that this big butt-full of bills is now sprinting like a morbidly obese walrus for the finish line, but is likely to die of a heart attack before it arrives ...

"Meanwhile, the bill’s tab [has] ballooned like a post-tax-cut deficit, possibly adding trillions more than the already eye-popping $3.3 trillion House version. But hey, what’s a few trillion among friends? ...

"Despite the outrage, insiders predict the holdouts will do what they always do—complain loudly, wave a flag of fiscal doom, then wither like spineless tarts. After all, nothing unites Republicans like a giant tax cut and a promise from Trump that “this time, it’s gonna be beautiful. Really.” ...

"According to the Congressional Budget Office (CBO), 'Big Beautiful Blob' has gone up from adding $3.3-trillion to the budget ... to adding $3.9-trillion. ...

"Even the CBO notes,

… these numbers understate the potential costs of the bill, since the legislation relies on a number of arbitrary expirations. Borrowing could rise by another $1 trillion – to $5 trillion or more – if temporary provisions were made permanent.

"Not only that: The CBO’s numbers also likely underestimate where interest costs will be after 'Big Beautiful Blob' throws its monstrous weight behind the damage tariffs will do to the dollar and simultaneously to the Treasury market because right now investors are still, as I wrote in my last Deeper Dive, hanging onto fantasies that more time for negotiation means more chance of tariffs coming down. That includes bond investors who have bought the bull. ...

"[T]ariffs will drive interest rates on the government debt up by diminishing the need for central banks all around the world to hold Treasuries as their primary vehicle for reconciling their member banks’ foreign exchanges on trade with the US. Less trade equals less utility for those Treasury holdings, which means less demand, so higher interest. A falling dollar also means less foreign demand for Treasuries because foreign investors lose money on the exchange rate when they sell the treasuries and go back to their own currency.

"That will all happen because Treasuries are effectively the money bags that exchange currency typically travels in via the click of a computer key reassigning ownership. There is still no one that I read who is paying attention to that likely trigger for the United States’ ultimate debt death spiral. Because no one is seeing it, there is all the more likelihood it will take us down.

"And, of course, the rise in Treasury interest means a rise in all commercial interest that is pegged off of benchmark Treasuries. 'Big Beautiful Blob,' throwing its weight onto the Treasury heap, only makes the problem worse. It also increases the risk that no one sees tariffs as causing the spike in interest rates because they have the Blob to blame as a scapegoat. ...

"This budget bomb is likely to be more obliterating to the US future than those bombs the US just dropped in Iran, which multiple reports are now saying were not all that Trump boasted them up to be."

~ David Haggith from his post '"Big Beautiful Blob" Keeps Getting More Bloated'

"This pork-filled Bill is a disgusting abomination."

"Jamie Dimon warns ... the bloated US debt coupled with the irresponsible disability of [the US] congress to even face up to what a trillion dollars in interest each year means, assures the bond vigilantes will be busting up business-as-usual.

"Dimon opened his remarks talking about Reagan, who sounded the alarm about the national debt back in the early 1980s when America’s debt to GDP ratio was just 35%. Today it’s 122%. And with each passing year the number becomes even worse.

"Dimon warned the audience that 'tectonic plates are shifting,' referring to America’s status as the dominant superpower in the world—which is rapidly slipping.

"'The amount of mismanagement is extraordinary, he said. America has added $10 trillion to the national debt in just five years… and for what benefit? Is the country $10 trillion better off? Did any of that $10 trillion improve the lives of anyone who isn’t in Washington DC?'

"Just covering the interest payments on the national debt now costs taxpayers more than $1 trillion per year. And if the current trend on rates and deficit spending hold, it will reach $2 trillion per year by 2028.

"So, a level of debt that has already caused all major credit agencies to downgrade US credit is on a path to double its cost by the end of President Trump’s term, and yet congress is proposing a behemoth bill Elon Musk, again, described today as a 'disgusting abomination' that will explode federal budget deficits ...

"Musk had earlier said that [Trump's] Big Beauteous Bill undermines everything DOGE set out to accomplish. ...

"Does this porker look like a big winner, sprawling across the US bond universe with his puddling fat? I’ll side with Musk: this pork-filled Bill is a disgusting abomination."

~ David Haggith from his post 'From Bonds to Big Beautiful Bill, We're Going Bust'

A coward's budget [updated]

The New Zealand Government's gross debt — the amount taxpayers must service — will now increase by another $73b by 2029, reaching a massive $283b.  That's $94,000 for every New Zealand family (with nearly $6000 of that just to pay the government's interest!).

Things are desperate. It's the middle year of an election cycle. Time for something bold.

No?

No.

Its not about doing more with less, or vainly trying to to. It's about doing less with less. Less with our money.

Ms Willis has failed us on both counts.

Let me give you two examples. (Three Four if you count my polite suggestion yesterday to gradually raise superannuation age, and include Lindsay Mitchell's today to time-limit welfare assistance.")

Several years ago when Helen Clark's Labour Party was about to lose an election , then Finance Minister Michael Cullen placed a fair proportion of New Zealanders onto welfare. His Welfare for Working Families programme made sure that, until ended, more than half of the country will now be beneficiaries. On the mooch. More than half of the country pulling down more from other taxpayers than they can ever give back.

This National Party Finance Minister could have done nothing with the programme — allowing inflation to make the maximum threshold for the programme dissolve.

She could have ended it altogether — signalled in good time, of course, to let folk plan ahead — but ending it could have saved $2.5-3billion. 

Instead, she raised that threshold below which working families get welfare. Around 142,000 New Zealand families. Which means even more working New Zealanders will continue to be moochers off (further normalising the behaviour perpetuating the Welfare State).

Many years ago a National Party Finance Minister introduced an Accommodation Supplement to, supposedly, help out poorer renters. Of course, it did nothing of the sort: instead if helped out their landlords, who could simply raise their rents to meet this new "supplemental" monetary demand for their supply. The Supplement — a grant to landlords — currently costs around $5 billion.

This National Party Finance Minister could have announced a lowering of the Supplement, saving some of those billions.

She could have announced it would end altogether, saving them all (while lowering rents). Instead, another expensive, destructive market-distorting subsidy continues.

I highlight these two measures because, for all Nicola Willis's hand-wringing about being prudent, about being responsible, about needing to achieve a surplus — and with the economic system flatlining while government debt vaults up decade by decade, bold measures to get there are not just a nice-to-have but a have-to-have — this budget is neither prudent, nor careful nor responsible.

Not being bold is to be irresponsible.

It's to be a coward.

Opposition parties are trying to paint this as an austerity budget. National Party pollster David Farrar boasts that it isn't.

It bloody should have been.

More here from others:

The Taxpayers’ Union is slamming Budget 2025 as a waste of time and hype, asking ‘is that it?’

"Nicola Willis has failed,” says Taxpayers’ Union Spokesman Jordan Williams. “This Budget could easily have been delivered by Grant Robertson."

“Willis promised to tackle the last Government’s ‘addiction to spending’. Spending is going up as a proportion of the economy in this year’s Budget compared to the current year. Core Crown Expenses are forecast to be 32.9 percent in 2025/26 compared to 31.8 percent under Robertson in 2022/23.

“She promised to balance the books. The OBEGAL never gets into surplus according to Treasury forecasts. Willis has had to make up a new measure to exclude the ACC deficit to create an illusion of a laughably small surplus in 2029.”

“And she promised growth. But the headline measure – an accelerated depreciation regime – is basically no better than what the last Labour Government tried immediately after COVID.”

“According to the Budget documents, the Government's headline ‘growth’ policy adds just 1 percent to GDP over 20 years. It is laughable in its small size.”

“More spending, more debt, and nothing to materially shift the dial and grow the economy. It’s not a Growth Budget, it’s a fudge-it."

Further:

"Spending as a share of GDP is materially higher than in the last fiscal year Grant Robertson was responsible for."  

Liberty Scott:

It's very much a centrist budget to not please those wanted a balanced budget and shrinking of the state, and of course isn't a budget of new grand larceny and profligate handing out to preferred causes, it basically just holds the line of NZ's Jacinda-era bloated state. ... a[nother] kick-the-can-down-the road budget.

Eric Crampton mentions some political sleight-of-hand:

"At some point, we have to wonder about the fiscal responsibility provisions in the Public Finance Act matter, because those effectively say you should not be running structural deficits for a decade, and we will have been running structural deficits for a decade. The ones during Covid were excusable - now, not so much. ....

"If you want to see the state of the government's books on the more traditional OBEGAL measure, rather than the one that excludes substantial ongoing ACC deficits, you have to go to the "Additional materials" in the online appendix. 

"Here 'tis. No return to surplus."

Michael Reddell:

"The Growth Budget" has just one growth-oriented policy [i.e., accelerated depreciation for business investment], estimated by Treasury to raise GDP by a mere 1% over 20 years (0.5% in total in the next five). 

"We were, of course, promised 'bold steps.' 

"Simply unserious."

UPDATE: More from Michael:

"[T]he government chose to title its effort [yesterday] 'The Growth Budget.' The Minister spoke today against a backdrop emblazoned repeatedly with that label.... the Prime Minister made a big thing of the need to accelerate growth ... The Minister of Finance in announcing the Budget date ... [boasted] 'the Budget will contain bold steps to support economic growth' ...

"They did not deliver.

"There was a single growth-oriented initiative in the Budget ... [T]he best Treasury estimate is that it will lift GDP by 1 per cent, but take 20 years to do so

"This year’s Budget represents another lost opportunity, and probably the last one before next year’s election when there might have been a chance for some serious fiscal consolidation. The government should have been focused on securing progress back towards a balanced budget. Instead, the focus seems to have been on doing just as much spending as they could get away with without markedly further worsening our decade of government deficits. ...

"We used to have some of the best fiscal numbers anywhere in the advanced world, but as things have been going – under both governments – in the last few years we are on the sort of path that will, before long, turn us into a fairly highly indebted advanced economy, one unusually vulnerable to things like expensive natural disasters. ...

"The government seems to have become quite adept at rearranging the deckchairs (cutting spending that they consider low priority and increasing other spending) but they are choosing to make no progress at all in reducing the structural deficit. ...

"Which brings us to the most recent IMF Fiscal Monitor released a few weeks ago [showing how our] primary deficit now compares ... Depending on your measure we were (based on HYEFU/BPS numbers) worst or close to worst in the advanced world. Today’s Budget will have done nothing to improve that ranking."