Analysis by Keith Rankin.
On Monday (Pushing a String; Ineffective Monetary Policy, 22 September 2025) I wrote about how, in circumstances of economic depression or structural recession, monetary policy is ineffective as the sole policy to induce a country’s economic recovery. Here I look at the historical antecedents of today’s monetary policy narrative.
Understandings of Money
Human understandings of money go back to the prehistoric development of accountancy, the world’s first profession. (Other professions, by definition, require at least some basic method of accounting.)
There are three broad historical concepts of money: money as wealth, money as a veil, and money as circulating promises. (If we think of coins as a promise, it is the sovereign whose head is on the coin who gives value to that coin, and not the amount of silver or gold that the coin contains. If we think of banknotes, the promise is made by the senior banker whose signature is on the note.)
For the first two concepts, money is a commodity with innate value (such as gold or silver) which is co-opted to act as (among other things) a medium of exchange. For the third (correct) conceptualisation of money, it’s a social technology which arose out of the practice of accountancy and its derivative, banking.
In the intellectual history of money, the important decades were those either side of the year 1700. The two most important names are the English philosopher John Locke (advocate of commodity money) and the Scottish radical banker John Law ( advocate of bank money). Discussion of events in those times is beyond the scope of what I’m writing here; but I recommend the book Money, the Unauthorised Biography (2013), by Felix Martin.
(I would also like to mention here John Law’s banking rival, Richard Cantillon, of Irish Catholic upbringing and living his professional life in Paris and London. He made his money through the financial crisis of 1720 by pioneering the practice of short-selling, made famous to lay-audiences by the movie The Big Short; this made Cantillon very unpopular with his many rivals who lost their money only to watch Cantillon become very rich. Cantillon went on to write the most important economic treatise of the first half of the eighteenth century – Essay on the Nature of Commerce in General – in English; it is a book that particularly plays up the importance in the new capitalism of entrepreneurship. The book was written in English, but only the French translation survived; Cantillon was murdered – a crime believed to have been instigated by one of his many enemies – in a fire in his London home, with the fire consuming the original manuscript. The French translation was able to be published, however, and eventually the book was retranslated into English. When I was reading Cantillon’s retranslated book many years ago, I was struck by the frequent use of the word ‘undertaker’ to mean ‘entrepreneur’. Later, in the 2000s, US President Bush apparently claimed that “the trouble with the French is that they have no word for ‘entrepreneur’.” I could not help but think of Cantillon.)
The differences in conceptions of money can be summed up as the philosophers versus the bankers. The philosophers, and their economist ‘descendants’, prevailed in a misframed and misadjudicated debate. The bankers, in reality, were more correct. Misunderstandings about money are as prevalent today as they ever were.
It is true that even modern money can be construed as a commodity; a ‘silver’ florin – still in circulation in New Zealand as a 20c coin – buys much less today than it did in the past. Using CPI inflation as a proxy for monetary inflation, the Reserve Bank’s inflation calculator tells me that a florin’s purchasing power was 120 times greater 125 years ago than it is today, a result of an average annual inflation rate of 3.9%. (In New Zealand we also have a crown still in circulation; it’s the 50c coin. In the 1950s and 1960s New Zealand did not then have a crown coin, but it did have a half-crown coin [25c today] in circulation alongside the florin [20c] and the shilling [10c]; these still-existing New Zealand coins reference the principal coins used by the merchants of Sweden, Netherlands, and Austria – all ‘G10’ nations in the 1750s.
Nevertheless, that is despite its superficial history as a commodity, money is in its essence a technology, not a commodity. While money is a technology of trust, hence the explicit or implicit signature, it is a technology whose power is based on its circulation. ‘Currency’ is like an electric current; it must flow in order for it to perform its function.
Money as Gold or Silver or modern equivalents such as Bitcoin and Real Estate
The idea that money is wealth is known as ‘mercantilism’. Belief in merchant capitalism – the mercantile system, mercantilism – drove the European global commercial expansion from around 1490 (Columbus) to 1790 (French Revolution). Nevertheless, mercantilism is to economics what alchemy is to chemistry; hence most economists know nothing about mercantilism, just as most chemists know nothing about alchemy, and as most doctors know nothing about humoral medicine. Both belief in alchemy and in belief in humoral medicine represent critical pathways in the evolution of those modern scientific disciplines.
The present United States president is an unreconstructed mercantilist, in that he believes – by fair means or foul – his country becomes wealthy (aka ‘great’) by ‘making money’ through the exploitation of land and labour and foreigners. In particular, unreconstructed mercantilists want their countries – as presiders, or through their identification with their national ruling class – to make money at the expense of their rivals.
In this crude understanding, money is conceived not as a circulating medium but as a stash of wealth. Monetary policy, as such, is simply to augment that hoard. Modern ‘assets’ such as real estate (land considered as a financial commodity) and cryptocurrencies represent modern developments in the ‘money as wealth’ paradigm; hence the ‘mining’ of cryptocurrencies is an exploitation of nature (through its wasteful use of electricity) just as is gold and silver mining. For our monetary system – connected to silver and gold only in the abstract – those metals may as well still be under the ground as in bank vaults.
Money as a Veil
The (incomplete) debunking of mercantilism was performed most notably by two Scotsmen: David Hume around 1750 and Adam Smith in 1776. Smith pointed out that nations could best accumulate money through free market mechanisms (rather than through extortionary mechanisms), relying in part on capitalists’ innate patriotism as a determinant of their enlightened self-interest.
It’s Hume to whom I wish to turn. He was the first to fully conceive of commodity money as a ‘veil’. The idea was that money is simply a scarce and durable commodity, such as silver or gold; silver was the more important monetary commodity in his time. (Anyone visiting Fremantle, Australia, should not miss the Shipwrecks Museum, which features many silver coins recovered from the Batavia and other ships of the Dutch East India Company.)
The idea, today known as the crude quantity theory of money, was that the price of silver (as a commodity) was effectively the price of circulating money. So, when silver was scarce, the price of silver would be high, the price of silver coins would be high, and therefore the prices of all goods and services (and of labour) would be low (ie low relative to highly-valued silver coins). Cabbages and carriages and personal services would be cheap; wages would be low. And, when silver was relatively abundant, the price of silver would be low, and therefore the prices of all goods and services would be high. Cabbages and carriages and personal services would be dear; nominal wages would be high. It didn’t really matter if prices were high or low; the economy would work just the same. Hence the notion of money as a veil.
When the price of silver was falling there would be inflation. When the price of silver was rising, there would be deflation. While neither inflation nor deflation were huge problems, both were destabilising; the biggest concern was that, with inflation, the purchasing power of hoarded money would decline. Thus, it was seen as preferable that prices were either low or high, but not rising too much. (The ruling classes – the owners of private and royal treasure hoards – clearly quite liked deflation, while hating inflation.) Royal hoards of silver and gold belonged in the sovereign’s ‘Treasury’.
Hume developed the veil idea into a theory of monetary economics as applied to international trade. (While the modern concept of a nation as a territory defined by its borders was only just emerging in Hume’s time, the G10 of the 1750s were: Great Britain, France, Spain, Austria, Netherlands, Sweden, Ottoman Turkey, Russia, Mughal India, Qing China; all imperial powers, some waxing others waning.) Hume also noted that money had some real value; not as absolute wealth, but as circulating oil, as lubricant.
Countries with balance of trade surpluses would accrue silver ‘reserves’, whereas countries with trade deficits would deplete their silver reserves. The quantities of money in circulation – especially silver coins or ‘specie’ – were assumed to be a constant proportion of those reserves. (And, as a more tacit assumption, private stashes of silver were presumed to be at a stable proportion to public reserves.) Hence, there would be predictably more money circulating in a country following an inflow of silver; and less money in a country when there had been an outflow of silver. The mechanism, as stated by Hume, came to be known as the price-specie flow mechanism.
Based on earlier mercantilist habits of thought, all countries’ ruling classes wanted inflows of silver and wanted to avoid outflows. In effect, Hume claimed, it wasn’t such a big deal. The international monetary system would self-regulate. Countries with inflows of silver would experience rising prices; countries with outflows of silver would experience falling prices.
The world economy would self-regulate as if it was under ‘thermostatic’ control. Costs of production would fall in deficit countries, and would rise in surplus countries. Hence deficit countries would increase their exports and decrease their imports; surplus countries would decrease their exports and increase their imports. Money flows would reverse, until those cost discrepancies were eliminated; it’s an elegant mechanism.
There were three problems. At an increasing rate, and especially after 1750, un-understood bank money was growing rapidly, so – for that reason and others – the money supply in the growing G10 countries (especially Great Britain) had become increasingly detached from the silver supply. Second, price levels never varied proportionately with the quantity of money; the velocity of circulation (ie turnover) of money varied substantially in the short-and-medium term, with new forms of un-understood money making up for long-term shortages.
But, at the time, the main issue was the resistance to inflation (rising prices) on the part of the nations’ ruling classes. In particular, in the eighteenth century, the G10 economies were highly protectionist; Great Britain became the worst offender, mercantilist trade barriers morphed into open warfare. Later, in the nineteenth century, silver (and gold) flows between nations were minimised through the use of international credit arrangements; the unbelievers in bank money allowed full use of the banks so as to shore-up their countries’ ‘wealth’. Indeed, at the end of the nineteenth century in Great Britain (now the United Kingdom), prices in 1900 were half of what they were in 1800 despite massive increases in the actual money supply.
The more people believed in commodity money the less important it became. I remember learning from a lecturer of mine (indeed a recent persona in New Zealand’s monetary policy governance) that the most sophisticated treatise on money in the whole of the nineteenth century was An Enquiry into the Nature and Effects of the Paper Credit of Great Britain, by banker Henry Thornton, written in 1802. Meanwhile, ‘monetarism’ became the intellectual weak link of the Ricardian classical system (reflecting the tradition of the philosophers rather than the bankers). And the huge disputes about money in the 1840s, between the currency school and the banking school, were settled by the elites in favour of their favoured philosophical narrative rather than through truthful observation.
There was also elite resistance to deflation (falling prices) on the part of nations with depleted reserves of silver and gold. While deflation boosted the (largely unrealised) purchasing power of the treasure hoards of the small numbers of rich people, falling incomes to peasants and other workers diminished the local demand for goods and services, leading more to business failures and the concentration of ownership of economic assets in favour of the already rich.
The International Financial Game
In the second half of the nineteenth century, the formal gold standard emerged; although most money was neither silver nor gold, then bank money (especially paper money and bank deposits) in the Euro-capitalist would be treated as if it was gold. In principle, countries’ gold reserves would be shuffled across the floors of the bank of England’s vaults in accordance with countries’ trade deficits and surpluses; with the Bank of England being tantamount to a global central bank.
But short-term finance – much like inter-bank finance today – would stabilise countries’ money supplies; meaning that countries with trade surpluses would not experience monetary inflation, and countries with trade deficits would not experience monetary deflation; so those patterns of destabilising surpluses and deficits would not be resolved. Money as a thermostatic veil had become completely ineffective. Further, international money flows were increasingly divorced from imports and exports; much more they had become cross-border flows of ‘investments’, profits, interest, rents, and royalties.
This process was not well understood at the time; today we understand it by focussing on ‘current account’ balances rather than ‘trade balances’. Indebted countries today are countries with repeated large current account deficits. (Thus, New Zealand is easily one of the most indebted countries in the world; although the New Zealand government has low indebtedness by international standards. One of the puzzles of our time is why professional and media commentators focus so much on government indebtedness and so little on national indebtedness.)
To make up for the by-now irrelevance of the price-specie-flow mechanism, the leading lords of finance – especially those who became governors of the emerging central (Reserve) banks – developed the first international-rules-based order.
Countries experiencing more inflation (rising prices becoming more common after around 1905) saw themselves as becoming ‘less competitive’, so – rather than addressing root causes – the rule for them was to instigate a price deflation by placing downward pressure on their money supplies. The principal means to do this monetary deflation was to jack-up interest rates; to raise the rate of interest at which the leading banks or central bank would lend to other banks, thereby reducing banks’ willingness to make new loans and in turn diminishing the amount of money in circulation.
The deflation mechanism, a response to the implicit overvaluation of the problem country’s exchange rate, was expected to force a downward adjustment of prices and wages in such countries. We saw exactly this mechanism of internal devaluation at work in Greece in the mid-2010s as it’s bearing the burden of the Euro-crisis. The Euro currency is an effective system of fixed exchange rates between member nations; therefore the only solution to an overvalued exchange rate is a costly internal devaluation. We note that nations such as Germany and Netherlands try not to follow the same rules by having an internal revaluation; this means that the Euro-zone as a whole has uncorrected current account surpluses.
Monetary policy as we know it today, through interest rate manipulation, was born. A major problem was that the whole capitalist free-market economy depends on prices – including interest rates – adjusting freely in accordance with market forces; interest rate manipulation is contrary to capitalist freedom. The hijacking of interest rates for an interventionist purpose disabled a central feature of self-adjusting liberal market economies.
The rules of the game that applied in the early twentieth century created a powerful ‘deflationary force’, interrupted for a while by World War One during which those rules were suspended. The financial lords did generally raise interest rates in accordance with the rules, but were often reluctant to lower interest rates when those same rules required them to do so. When inflation was relatively low, however, rather than ‘reflate’ or ‘inflate’ their nations economies the lords of finance and their political masters saw this as an opportunity to run trade surpluses and to thereby augment their national gold hoards; in the 1920s, France and the United States were the biggest culprits. This one-sided adherence to the rules led directly to the Great Depression, the suspension of the gold standard, and the return to war. But the rules could never have worked; they were predicated on a stable relationship between money in circulation within each country and that country’s prices.
Post World War Two
After WW2, the gold standard was revived under American leadership as a gold-exchange standard, with the value of the US dollar pegged to gold, the other ‘hard currencies’ pegged to the $US, and the other currencies (such as the £NZ) pegged to hard currencies (eg the £NZ was pegged to the £UK). There would be periodic devaluations (mostly) or revaluations (occasionally, as in New Zealand in 1948 and 1973); although the $US could neither devalue nor revalue. This last issue led to the end of the gold-exchange standard in 1971, when Richard Nixon suspended the convertibility of the $US to gold; this enabled the $US to devalue, a monetary matter necessitated by the Vietnam War and the associated American current account deficits. What happened next was a mix of a US-dollar standard (whereby, the $US was treated ‘as if’ it was gold) and a floating exchange rate mechanism, meaning that the free (or free-ish) foreign exchange market would set the price of participating countries’ currencies. New Zealand became a participant in 1985.
The New International Financial Game
A world of free-market currencies represented a new international financial game, with rules in the same spirit as the price-specie-flow mechanism (as described in the 1750s by David Hume) and the gold-standard interest-rate rules developed in the years just before 1900.
The idea was that trade flows (or at least ‘current’ flows, distinct from ‘capital’ flows) would be the principal determinant of currencies’ exchange rates, and that countries with current account deficits would see depreciating exchange rates (albeit with some inflation) and thereby increases in ‘competitiveness’, and that countries with trade surpluses would see appreciating exchange rates (albeit with some deflation, or at least disinflation) and thereby face decreases in ‘competitiveness’.
From the late-1970s, the world of monetary policy and finance saw a return to the ‘economic liberalism’ which peaked in the 1920s; this time under the misleading names of ‘monetarism’, ‘neoliberalism’, ‘public choice’, ‘rational expectations’, ‘economic rationalism’ and ‘free-market economics’. The momentum for this financial coup-d’etat had been gathering in the 1960s, through the work of Milton Friedman and other members of the ‘Chicago School’; indeed, the revival of monetarism probably go back to Friedrich Hayek (also at Chicago, though not a direct colleague of Friedman), author of the popular 1944 anti-Keynesian book The Road to Serfdom. The Chicago School went on to manage the economic program of the neofascist Pinochet regime in Chile; more the politics of serfdom than the economics of freedom.
The name ‘monetarism’ harks back to David Hume, though misleadingly. Milton Friedman’s monetarists treated money as a veil when it suited them. For example, in the inflationary 1970s, Friedman offered a simple solution based on the crude quantity theory of money. Whatever the causes of a bout of inflation, restricting the growth of the quantity of money in circulation to say 5% per annum would bring the inflation rate down to 2%, he argued. Friedman was offering a counter-deflation, a cover-up rather than a solution. Yet, in his simplistic narrative of the 1930s’ Great Depression, A Monetary History of the United States, 1867–1960, he claimed that the quantity of money was anything but a veil. Money, for Friedman, became simultaneously everything and nothing.
Friedman, and Hayek too, favoured ‘quantitative tightening’ over the more overtly interventionist jacking-up of interest rates.
Neoliberalism – the ‘new right’, commonly called ‘neoconservatism’ in the United States – was the revival of 1920s’-style ‘economic liberalism’ under post-Nixon conditions. Its stated mantras were ‘free-market’, ‘more-market’, ‘private-good public-bad’. The neoliberal microeconomists readily joined forces with the monetarist macroeconomists in the advocacy of authoritarian mandates to suppress the market ‘signals’ that were interest rates and inflation.
The opposite of the economics of ‘freedom’ is the economics of ‘intervention’. Yet neoliberalism in its various guises is very much the politics of economic intervention; just certain types of intervention, such as asset privatisation, monetary policy with a high interest-rate bias, and the minimisation of public goods’ provision.
‘Public choice’ became a name for ‘private preference’. And ‘rational expectations’ became the underpinning of ‘credible’ – ie unnuanced and unforgiving – monetary policy to override allegedly irrational expectations; we had to believe that the awful monetary medicine prescribed for us was good for us, regardless of the evidence or the ethics. Rational expectations were imposed because the mandated public authorities were required to tell us what our expectations should be and why they had to be ‘corrected’. ‘Economic rationalism’ meant authoritarian dogmatism rather than democratic pragmatism, especially in relation to matters of money, inflation, interest rates, private ownership; and, increasingly, in relation to public debt. Economic rationalism was idealism in the philosophical and utopian meaning of that word.
Just as the rules of the gold-standard game were perverted – both because they were based on false premises, and because they were corrupted by mercantilists seeking perpetual trade surpluses – so the rules of the floating exchange-rate game have been perverted. There are two ways to manipulate the original trade-based rules. The first manipulation is for countries to defend their exchange rates by central banks using foreign reserves to buy domestic currency when the market price of the domestic currency is falling. This is called a ‘dirty float’, meaning a nation’s authorities acting to prevent the depreciation that was intended to be a central aspect of the mechanism. This has been generally a biassed form of intervention; the converse policy to inhibit an appreciation was used much less often (though was used to great effect by the Bank of England in 1932 after the pound was floated in 1931).
The more familiar intervention to pervert the rules has been the use of jacked-up interest rates to attract foreign money, thereby maintaining the living standards of the monied classes through an overvalued exchange rate (meaning cheaper imports and overseas travel). This is the policy that has created massive private debt in Aotearoa New Zealand, and some other countries; while also containing the growth of government debt. Lots of spending on imports by New Zealanders has increased GST revenue as well as creating income tax revenue in, for example, retailing and wholesaling. Such huge blowouts of private debt are the flipside of what has been euphemistically called ‘foreign investment’; money inflows not arising from exports, many of which – known as the carry trade – amounted to ‘speculation’ or ‘arbitrage’. The interested authorities and commentators have effectively covered-up these increases in national debt by relentlessly focussing on government debt; indeed to the point of labelling government debt as ‘national debt’.
This kind of monetary policy intervention – a perversion of the floating exchange-rate game – is tantamount to a Ponzi scheme whereby new national debt is required to service existing debt. The scheme has changed since 2023, with New Zealand relying on non-trade money inflows other than the ‘carry trade’; an important example is that of money brought in by immigrants.
While the likes of New Zealand hijacked ‘the game’ by trying to maintain an overvalued exchange rate, other countries – especially the modern mercantilists like Germany, Netherlands, Sweden, China – sought to maintain undervalued exchange rates. Sweden did it in the 2010s by having zero and negative interest rates. Germany and Netherlands play a game within the rules of the Eurozone. And China moved from a low fixed exchange rate against the US dollar to a dirty float of the renminbi. These countries, less so China since the global financial crisis, accumulate money hoards through current account surpluses, just as France and the United States ‘played’ their trade surplus game by undermining the gold standard rules of the 1920s.
Important Change in Understanding of Monetary Policy since the 1980s
In the late 1980s, banking and other retail financial services changed far more than is commonly realised. While this is true worldwide, changes in New Zealand, well illustrate the key points.
Back in the day – the early 1980s and before – term loans, including mortgages, were contracted at a certain interest rate for the life of the loan. When the focus of monetary policy turned to interest rates and away from quantitative policy levers, the understanding was that higher interest rates would deter new debt; and lower interest rates would increase new debt, including new mortgage debt. The understated presumption was that lower interest rates would increase the uptake of new loans in all sectors, yet there was a second (also understated) presumption that governments would not be responsive to changes in monetary policy; thus, monetary policy was perceived as only applying to the business and household sectors. Yet a rational government should be at least as price-sensitive when undertaking debt as a rational business.
Something else happened in the late 1980s. As the big trading banks absorbed the various retail non-banks (such as building societies, savings banks, and then finance companies) mortgage finance underwent a fundamental change. As well as the majority of mortgages now being issued by the increasingly powerful bank oligopoly – the one-stop shops – the interest rates would only be contracted for short periods; time durations well short of the maturity date of the loan. Long-term finance was now being priced as if it was a series of short-term loans.
An important but rarely stated implication of this change was that the average interest rate of a 30-year mortgage would be the average of the short-term interest rates over those thirty years. So in a world of economic cycles through which short term mortgage interest rates fluctuate between say 3% and 7%, then the average interest rate would be 5% regardless of what the interest rate is at the time the loan is issued. On the basis of the ‘rational expectations’ mode of thinking (which also took-off in the mid-1980s) the interest rate should not have any impact on the quantity of new mortgage lending, because the expected average interest rate would be 5% regardless.
We still chatter in the media and academia as if high interest rates do discourage new mortgage lending, and low interest rates do encourage more. For example, there is a widespread supposition that new mortgages issued in 2021 were substantially facilitated by the low interest rates prevalent then; and that, therefore, if interest rates had been significantly higher in 2021 then the short-lived housing bubble that year would not have happened. But this does not survive the ‘rational expectations’ test; if the critical factor in 2021 really was unusually low short-term interest rates, then the bubble will have been caused by irrational expectations of average interest rates over the duration of the mortgage.
This century, the perception of tight money policy as a deterrent to new lending has gradually given way to the perception that mortgagors have become the ‘meat in the monetary policy sandwich’; the perception that monetary policy works through targeting the discretionary day-to-day spending of this narrowing cluster of middle class and upper-working-class households.
Though less discussed in mainstream media, there also remains the widespread perception that tight monetary policy works through restricting the growth of business lending, especially small-business lending; lending which was always based on short term debt. One irony here is that reduced small-business lending encourages more mortgage lending by banks, especially given that under the one-stop banking-shops the same institutions are now doing both types of lending. We saw that particularly in the years 2004 to 2008, when increased mortgage lending stimulated a real estate bubble despite a tightening monetary policy implemented through the Reserve Bank imposing higher interest rates. It is likely that something similar happened in 2021; banks pushing new mortgages (regardless of the interest rate at the time) because of the huge risks then-associated with small business lending.
New Zealand Exceptionalism
New Zealand central bankers gloried in being at the vanguard of these changes in global monetary policy intervention. In the late 1980s, the monetarists – very much in control in New Zealand as a result of the financial reforms of the mid-1980s – pushed the ‘money-as-a-veil’ idea, that CPI-inflation was a simple derivative of the increasing quantity of money, that inflation could therefore be made ‘illegal’, and that the Reserve Bank would become the monetary police. In the absence of evidence of its efficacy – inflation in New Zealand was lower in the 1990s than in the 1980s, though there was no evidence that the new framework for monetary policy had caused inflation to be lower (there was a general decline in global inflation in the 1990s) – ‘direct inflation targeting’ became prevalent practice internationally. New Zealand features in American macroeconomics’ textbooks for that reason.
While the notion that underpinned New Zealand’s 1989 Reserve Bank Act was precisely the naïve presumption that underpinned Hume’s price-specie-flow mechanism in 1750, in the world of the 1980s the only way to implement such policy was through the creation of an independent monetary police-force. And the only way those police in most countries could (at that time) contemplate performing their task was through the interest-rate lever. The transition from free-market monetary economics to manipulative monetary oversight was now complete, undertaken by interventionists who claimed to be free-market ideologues. (Alan Greenspan, Federal Reserve Bank chairman in the United States, was indeed a member of Ayn Rand’s ‘objectivist‘ inner sanctum.)
Next Week
My next article looks at good monetary policy in the last 100 years, especially New Zealand in the 1930s (NZ after 1933 and 1934 and 1935), Keynes’ monetary and fiscal balance, Social Credit, reserve asset ratios, Japan’s recovery from crisis, and Modern Monetary Theory. I will mention the recent ‘labour mercantilist’ idea of Roger Douglas and Robert MacCulloch. And will mention that idea’s Australasian precursors; and the associated problems with wealth funds, especially Sovereign Wealth Funds. And I’ll mention Ricardian equivalence, with its much-touted reason given by economic liberals to justify fiscal conservatism, thereby putting all their policy eggs into monetary policy.
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Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.
