Recorded Live – A View from Afar podcast. Series 06, Episode 03 – In this episode, political scientist and former Pentagon Analyst Paul Buchanan and Selwyn Manning deep-dive into: The End of the Liberal Internationalist Order and the Rise of Illiberalism.

The topics discussed include:

• A Global Transition Process – What is this exactly and Why is this happening?
• Why is conflict used as a global systems regulator and agent of change? And what does this mean for 2026?
• The US has been the core of two pillars of liberal internationalism – its security system and system of trade.
• Why then has the United States decided to break the very system it has benefitted from, and risk advancing its own demise?

Paul and Selwyn invite you to subscribe, like, and click notifications in the YouTube link so that you don’t miss another live episode.

Remember, if you are joining us live , you can comment and lodge questions but remember we may include your comments and questions in our programmes.

Also, we encourage you to join us via YouTube, as on YouTube live interaction is especially efficient. See you there.

You can also follow this podcast via the following podcast platforms:

LIVE@ 12:30PM (NZ TIME): A View from Afar podcast. Series 06, Episode 03 – In this episode, political scientist and former Pentagon Analyst… Paul Buchanan and Selwyn Manning will deep-dive into: The End of the Liberal Internationalist Order and the Rise of Illiberalism.

The topics to discuss are:

• A Global Transition Process – What is this exactly and Why is this happening?
• Why is conflict used as a global systems regulator and agent of change? And what does this mean for 2026?
• The US has been the core of two pillars of liberal internationalism – its security system and system of trade.
• Why then has the United States decided to break the very system it has benefitted from, and risk advancing its own demise?

Remember, if you are joining us live via the social media platforms, feel free to comment as we can include your comments and questions in this programme.

And, we encourage you to join us via YouTube, as on YouTube live interaction is especially efficient. See you there.

Despite the mega-commentary about the Israel-Iran war, and especially the United States’ participation in that war, almost nothing is being debated about how the war is being funded.

I’ll make some comments about Iran later. But we need to focus on the United States, which is by far the most profligate party to this war. And Israel is being funded, like a charismatic and entitled teenage brat, by its (American) sugar daddy.

Most of us should have noticed that, with the exception of new tariffs which are not a significant source of United States government revenue, there has been no move to raise taxes. (The President has clearly invoked the use of tariffs as means of leverage through extortion; though he doesn’t properly appreciate that these taxes are paid by American residents.) Nor has any explicit ‘war loan’ or ‘war bond’ been floated in Wall Street.

The United States is ‘printing money’ to fund the war. This expression is both pejorative and a misnomer. Because printing money is an unmentionable, it’s hardly ever mentioned! Though it should be, because it’s an important financial mechanism, and it is not as sinful as it’s made to sound.

‘Printing money’ is not a literal expression; actually printed (or photocopied) money, counterfeit money, is illegal. Printing money, a figurative moniker, is in fact the day-to-day business of banking, with billions of dollars printed every day (and a near-similar number of dollars unprinted). The technology of printing money is that of double-entry-bookkeeping. Money is a social technology, as is double-entry bookkeeping.

What matters most to us is the role of the central bank – the Reserve Bank – in creating new money. And in particular the relationship between the Reserve Bank and its privileged customers, most of which are governments’ Treasuries and commercial banks. Even more particularly, we are interested in the most highly privileged relationship of all, that between the United States Federal Treasury and the United States Federal Reserve Bank. This exceptional relationship arises because the United States Dollar is the world’s reserve currency.

The War

Here are two quotes from Al Jazeera’s This is America: War on Iran: Cost of weapons and shift in the nature of warfare, 1 April 2026

Richard Gaisford: “It’s a significant contribution being made to the US economy by the defence industries. The last figures we have were for 2024, and that showed that it generated [?] something near one trillion dollars …”.

This comment reflects a wide belief that money is made by economic activity, and that the United States makes money by making, among other things, military hardware and software. The reality, of course, is that the money is made first, and is then used to purchase such hardware and software.

Interviewer: ‘Who has got the means to keep fighting at those levels the longest?’ Kenneth Katzman (a former senior analyst on Iran at the US Congressional Research Service): “The US Dollar is the main reserve currency of the globe, which means that the United States basically has the capability to manufacture money. Your viewers may not understand the mechanics of it, but basically the United States can print money.” (Actually, not only the United States.)

He goes on to address the military asymmetry between Iran and the United States: “The United States is a 28-trillion-dollar economy; Iran is a 400-billion-dollar economy”. Here he is talking about each country’s capacity to produce goods and services; not its capacity to manufacture money. Any amount of money can be made by any country’s banking-government nexus, and at trivial cost.

The interviewer (New Zealand’s Anna Burns Francis), and the other panellist did not respond to that seemingly provocative comment about printing money; there was no further discussion about how the war is being financed, only about how much it is costing. Discussion about the mechanics (and constraints) of printing money would go against the grain that most of us are fed. The public is not supposed to know – and generally does not know – that money is itself costless and can be manufactured, at will, in smaller or larger quantities.

Kenneth Katzman’s comments are not controversial; they are a statement of fact that no economist would disagree with. All countries’ banking systems (of which the central government is a component) have the capacity to print money; indeed, the New Zealand system (and other countries’ systems) necessarily did so in 2020.

The United States has fewer constraints on printing money than do other countries, but not zero constraints.

We note that money, like all financial and financialised assets, is not wealth; it is claims on wealth. So, the affordability of money – in practice – is measured by the ability of the economy to meet those claims, in the event that those claims are presented. (Indeed, the world can afford an octillion dollars’ worth of financial claims if it can be 100% certain that those claims will not be exercised; will not be spent on goods or services. The current world is awash with massive private holdings of financialised assets which, for the most part will not be spent on anything other than other financial assets. In technical language, such money has a very low ‘velocity’.)

We note also that newly printed United States’ dollars permeate into New Zealand through exports, including New Zealand made supplies to America’s war industry; to the United States’ military/industrial complex, which includes the space industry.

How does a country fund a war by printing money?

There are two key issues: rationing, and responsiveness.

The liberal critique against governments’ printing money is a general claim that governments are untrustworthy and spendthrift. In the eighteenth century when the liberal critique emerged, one principal concern was government adventurism in the form of warfare. This classical liberal critique presents one consequence of such government largesse as inflation (extra spending coming up against finite resources), and also presents any instance of general price increases as a consequence of government largesse. When governments consume relatively more resources, then – through the catalyst of inflation – private households and businesses consume relatively less.

The classical liberal critique emphasises this rationing issue, known as crowding out; in doing so, that critique presumes that private spending on goods and services is, per se, more efficient than public sector spending and redistributive transfers. There are two parts to this rationing argument: first, private parties are deemed to better assess (compared to bureaucrats and politicians) which items of spending translate to greater utility (ie happiness); second that relatively more private spending can be classified as ‘investing’, meaning spending for future rather than for present happiness. (Neither of these two propositions is generally true.)

The second issue, less emphasised by classical liberals, is responsiveness or ‘supply elasticity’. Classical liberals tend to assume that spending enabled by printed money does not elicit new production; ie does not bring-about a supply response. While this is true by definition for a hyper-taut economy, for the most part, economies are not hyper-taut and are indeed responsive to additional spending.

In the present case of the United States, the Israel-Iran War – on the pro-Israel side – is being funded substantially by new money printed for the United States government by the United States federal banking system; in the public accounts, this shows up directly as a huge increase in the United States’ fiscal deficit.

While prices are rising faster in the United States than before, this increase in general prices would appear to be substantially due to the supply-side cost-impact of the war itself, and not by increased aggregate demand inside the United States and the countries the United States imports goods and services from.

The United States domestic economy is not as supply-elastic as it might have been, given what ICE is doing to that country’s labour force. Nevertheless, the United States’ economy has been sufficiently depressed that it is now able to increase output without much difficulty. Hence, extra United States’s government spending has not in itself caused consumer prices in the United States to rise. The present chokehold on imports – a result of the war – is however causing CPI-inflation in the United States and the rest of the world. Prior domestic underemployment is one reason why money-printing may not be inflationary.

The second component of a country’s economic responsiveness to wads of newly printed money is that much production can be outsourced to the rest of the world. Thus, United States’ imports increase, the United States’ current account deficit increases, and the rest of the underemployed world gets to benefit from this as an economic stimulus. So, if the New Zealand banking-government nexus refuses to print money as a form of stimulus, the present Trump-printed money does create an alternative stimulus in New Zealand.

Certainly, New Zealand has very high visible and hidden unemployment, so (at present) is easily able to respond to the Trump stimulus. On that basis, New Zealand’s economic growth this year may not be as slow as is widely anticipated; though domestic confidence – in itself, a form of stimulus – may be countering the stimulus coming from the United States. In New Zealand too, any rise in CPI-inflation will be almost entirely due to the global supply chokeholds, and not to the American president’s money printing largesse.

Essentially, the United States is funding its war through its twin deficits: the United States fiscal deficit, and the United States current account deficit. The war is being funded through increased utilisation of underemployed resources throughout the world. In New Zealand’s case, we can see this easily and directly, by observing New Zealand’s increased exports to the United States.

How easily can other countries print money?

Technically, it’s as easy to print money in New Zealand as it is for the United States. However, the New Zealand dollar is not a global reserve currency, so a flood of new New Zealand dollars into the global economy is likely to generate financial risk; or at least perceptions of financial risk. ‘Investors’ – that is, financial traders – out there most likely would be more cautious about holding large quantities of New Zealand dollars (or $NZ assets) than they would be about holding large quantities of United States dollars. That caution generates an exchange rate risk; a risk that would be communicated to financial-asset-holders by the New York based rating agencies such as Standard and Poors.

When the exchange-rate risk is not widely seen as a matter of concern, New Zealand benefits mainly through its routinely-high current account deficit; that is, just the same way as the United States is able to benefit from printing money and enjoying the economic bounty of the world.

If the exchange rate risk becomes a concern however, the world would discount New Zealand dollar assets, and New Zealand would experience high levels of domestic inflation; that is, higher inflation than most other countries. The resulting low New Zealand dollar would confer a ‘competitive advantage’ on New Zealand; the current account deficit would close, exports increase, and reduced imports would create an increased demand for New Zealand- made goods and services.

The issue then becomes how responsive (ie supply elastic) the New Zealand economy is. If the domestic economy is able to respond to these new circumstances (which is the more common experience of other countries), then New Zealand would recover and soon prosper. The alternative is that New Zealand would go into an inflationary tailspin; that is, if its productive system is so hamstrung that it cannot respond to the stimulus of a low dollar exchange rate. One bad sign is over-dependence (as distinct from over-reliance) on imports. A dependent economy cannot switch away from imports. A country which relies on imports by choice, because imports are easily funded by exports, can usually pivot – if required to do so – towards more ‘tradable production’.

So, New Zealand can print money too, though printing in the proportion that the United States does certainly would be unadvisable. However, if a country overprints money, the normal situation is that the extra money just sits there in the banking system. (The brief real estate boom of 2021/22 has been widely attributed to excessive printed money stimulating a process of real estate speculation; though the unique circumstances of that few months – including labour and capital pandemic lockdowns – have not been properly researched. The government could easily have borrowed and then parked that money, but chose not to.)

Generally, the rest of the world is accommodating when some countries print more money (though not when all countries print too much money). The world has been very responsive to the United States for the entirety of post-WW2 history; it was American spending of new money that drove the economic growth of the capitalist world for 80 years.

The present US money printing to fund a globally-significant regional-war can be expected, sooner or later, to encounter an inflationary wall of its own making. The consequences of this war are to make the world economy much less responsive (ie are breaking the world’s economy) just as the American military-industrial complex – indeed the world’s expanding military-industrial complexes – are placing so many extra demands on the world’s economic environments.

War funding under pressure

Countries’ invaded or otherwise attacked on the perception that they are ‘easy meat’ tend to be much more capable of defending themselves than is widely understood. Their monetary systems are not integrated into the orthodox channels of the wider capitalist system; but their domestic monies work to keep domestic economies fully employed while on a war-footing. Yes, Iran will be printing money, and Iranians will be facing substantial visible and suppressed inflation. For Iran, that monetary process is a necessary part of its own defence. Money printing facilitates both necessary rationing in favour of the public sector, and also necessarily pushes the production system to its limits.

War times, historically, have shown that our economic systems are generally much more responsive than we presume them to be. Surprisingly often, the bullies neither win nor even achieve a limited range of objectives. Syria may be coming right today, despite rather than because of the nation which set off that 2010s’ war; a war which cruelly sandwiched the Syrian people between foreign bullies and a consequently more oppressive domestic tyranny.

We note that, when the United Kingdom was under threat during the first years of World War Two, it was able to import much on credit – especially from the United States, which was then a neutral country. China has played a large role in facilitating the United States’ more recent wars, through its current account surpluses. This time China will be helping to fund Iran’s war; as well as accommodating the United States through its ongoing – almost infamous – trade relationship with that country.

Indeed, when the Israel-US-Iran War is eventually over, it will be China’s version of the Marshall Plan which will revive the degraded world economy; part of that revival will be to write-off war debts, just as the United States – through plenty of printed money – eventually accommodated Germany’s reparations bill after World War One, and the West’s war debts after World War Two.

————-

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.

• Why did Netanyahu and Trump attack Iran and start this war?
• Why did the US decide to attack without a clear reason to do so and without strategic planning nor a legal argument for it?
• What impact will this war in the Middle East have on US Midterm Elections?
• And what of independent operators in this conflict, such as European states, why do they risk being drawn into this US-Israel Middle East War?

You can follow this podcast via the following podcast platforms:
 

One puzzling feature of the present Israel-Iran war is the almost complete absence of reference – in the western media at least – to the Iranian President, Masoud Pezeshkian.

The American president claimed that Israel had killed the Iranian President, but he was referring to the Supreme Leader. Killing Ali Khamenei, the Supreme Leader of Shia Islam – and, when he was alive, the Patriarch of Iran – was comparable to the assassination of Pope Leo or King Charles. (These last two are both ‘supreme leaders’, though neither of these two are anything like the administrative or military leader of a nation state; they are moral and morale leaders.) Iran’s President, Masoud Pezeshkian, is still very much alive; and would prefer to build bridges than bombs.

Admittedly, the Iranian constitution is somewhat complex – especially to casual western onlookers – having distinct power centres for religious, military, and civilian authority. Do we dismiss Pezeshkian simply because he is neither a ‘cleric’ nor a ‘revolutionary guard’? I think there is much more to our dismissal of him than some consideration that he’s unimportant.

Ali Khamenei was, during the 1980s, the third President of Iran. His two predecessors had fewer religious credentials than Khamanei, reflecting the comparatively secular nature of the role of president. Their presidencies were short-lived however; the first president was impeached in mid-1981, and his successor was assassinated by bombing four weeks later; revolutionary Iran was a tumultuous place.

President Khamenei clearly played a critical role in the 1980s’ Iran-Iraq War, from which Iran survived; unexpectedly to many, and stronger from having been tested through a war in which the western powers supported the other side and its president Saddam Hussein.

The Presidency of Iran is clearly a very important political role. Problematically for the West, who wishes to cast Iran as an anti-democracy, it’s a highly-contested democratically-elected position of power. Indeed the President has featured in most political news stories throughout the history of the Islamic Republic, at least until the election of the present president in 2024 (following the death of his predecessor, Ebrahim Raisi, in a helicopter crash).

In the 2024 election, Pezeshkian, the ‘progressive left’ candidate defeated Mohammad Bagher Ghalibaf and Saeed Jalili, the ‘conservative right’ candidates. I heard recently that, when Ingrid Hipkiss asked who the Americans might negotiate with, given President Trump’s claim to have killed several tiers of Iranian leadership, the answer suggested by Simon Marks was Ghalibaf, who was high up in the regime and had even stood for president. Not a single mention of the actual President! (Refer Morning Report, RNZ 24 March 2026, Trump suspends strikes on Iran’s power plants.)

I would argue that Pezeshkian’s success was more reflective of popular preference than the other elections that year, which delivered Donald Trump in the United States and Keir Starmer in the United Kingdom. Both Trump and Starmer were widely disliked by their countries’ electorates (now even more disliked than in 2024), only winning because the only other options for political leadership were deemed by voters to be worse.

Pezeshkian, on the other hand, was a progressive and genuinely popular choice; not a person wanting to align Iran with the West, but a person wanting to build strong relationships. Through, for example, Iran joining the BRICSnetwork of economically powerful countries which favour geopolitical multipolarity rather than Western unipolarity. (See this picture of BRICS 2024, with Pezeshkian very prominent, and neither looking like a Shia cleric – as Raisi had looked – nor conforming with western dress codes.) He comes across as a statesman, certainly not a demagogue.

My take on the Iranian presidential enigma is this. Politics is substantially propaganda – aka ‘narrative’ – and geopolitics involves such messaging on a global scale. Much narrative is conducted through images rather than through words, and is largely shaped by which images are missing; propaganda is as much about deamplification of unwanted messages as it is about amplifying regime (and prevalent media) narratives.

President Pezeshkian does not present the imagery of smarminess (being unpleasantly suave) or of evilness or of rigid fundamentalism; he does not present the images that Israel and the West would like to portray in conveying their story about Iran. Rather, he presents as honest, pragmatic, constructive, and electable. He is quietly spoken. I have heard mention that one of Iran’s political strategies is the so-called good cop, bad cop strategy. If so, Pezeshkian is certainly the good cop. I think he is a good cop, period.

Pezeshkian is neither a clerical ideologue nor a shouty military spokesperson. He is not a newsreader with head covered, dressed all in black. Those are the images which western media push about Iran. Too moderate to assassinate; such grotesque (albeit routine) geopolitical violence would increase Pezeshkian’s profile in the West, which the West seems not to want. Better to just pretend he doesn’t exist, even though he’s the President. (Though some – including Al Jazeera’s Israeli-born political analyst, Marwan Bishara – suggest that Israel prefers to assassinate their more moderate opponents, given that such people [when alive and visible] might distract us from consuming Israel’s dehumanising narratives.)

To glean a semblance of truth in contentious times, you often have to hear what is not being said, and see what is not being shown. You have to look out for softly spoken messages; looking past caricatures and scapegoats, and looking past CAPITAL LETTERS and !!!

————-

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.

One of the United States’ navy ships heading towards the Persian Gulf is the USS Tripoli. (USS = United States Ship.) How the heck did it get that name? (Will the next two United States’ naval ships be called the USS Abbottabad and the USS Santo Domingo?)

The answer will be a surprise to many. The American Revolution which began in 1776 was completed in 1783, with the British capitulation to the American patriotic forces. So, the history of the United States as an independent sovereign state goes back to 1783. The British and Americans fought again from 1812 to 1815, during the Napoleonic Wars (what I suggest is better called either World War Zero or Great World War One, and my favoured dates are 1798 to 1815, with Waterloo being the final battle; Great World War One contextualises 1914 to 1945 as Great World War Two). Wikipedia describes the outcome of the War of 1812 as ‘inconclusive’.

We may note that Encounter Bay, in South Australia, is named after a World War Zero encounter between British and French naval ships – Investigator and Géographe. The encounter was in 1802. The name Tripoli dates from another encounter (a much more violent encounter) within World War Zero, in this case a war between Libya (then known as Ottoman Tripolitania) and the United States. That encounter, a war within a war, was the First Barbary War (1801-1805).

The genesis of the Barbary Wars (see this famous picture of the USS Philadelphia in Tripoli Harbour, depicting the saving-from-capture of that ship in February 1804) was an earlier war. The American-Algerian War of 1785 to 1795was the first foreign military adventure of the United States since its independence in 1783. Wikipedia lists the ‘result’ of this war as an ‘Algerian victory’. It will be a surprise to many people that America’s first foreign war was so soon after independence, and in the Mediterranean rather than somewhere close to home; independent America has a long history of violence in the ‘Middle East’. It will be no surprise that, in 1795, the United States lost that war.

The context of the 1785-1795 war was that Great Britain, piqued by the loss of its American colonies, refused the United States the ‘protection’ of the British Navy.

We note here that imperial nations traditionally extracted ‘tribute’ from both their subjugated territories, and other populated territories which might otherwise be candidates for subjugation. Further, smaller maritime states traditionally extracted rent from passing ships.

These ‘clipping-the-ticket’ relationships still exist, of course. Egypt, for example, extracts monopoly rents from its possession of the Suez Canal; as does Panama re the Panama Canal. As would New Zealand if South American merchant ships were to transit through Cook Strait on their way to Australia. Indeed, as international airports charge landing fees. Further, the extraction of imperial tribute has become apparent once again, as the American president tries to use import taxes – tariffs – and bilateral ‘deals’ as ways of ‘making lots of money’; as a way of leveraging imperial power. This is extortion through protection money, in the very worst sense of that concept of power.

In the 1780s, and before, Britain and Algeria ‘scratched each other’s backs’. Britain let Algeria – literally a ‘pirate state’ – do its thing, so long as it did not charge rents from ships under the protection of the British Empire. Thus, after 1783, American ships ceased to benefit from British protection. The conflict ended in 1795, with the United States agreeing to pay rents to Algeria, and – by implication – to other ‘pirate kingdoms’ on the North African Barbary Coast.

The Barbary Wars began when newly elected president – Thomas Jefferson – refused to pay rents to Tripolitania, aka Libya. As a result, Tripolitania declared war on the United States. The United States sent a number of frigates, including the USS Philadelphia.

To this day, the United States commemorates the 1804 burning of the USS Philadelphia by Stephen Decatur as a heroic rescue, an act of derring do which Lord Nelson reputedly claimed was “the most bold and daring act of the Age”. It was this action which led to the naming of three United States naval ships, including the current ship, as ‘Tripoli’. Decatur went on to become a hero, once again, in the 1812 to 1815 war with Britain. And many American towns came to be named after him. (We may note that, in another ‘heroic’ action in World War Zero, in 1812, the Russian military burned the city of Moscow in order to save it from Napoleon’s invading army. One significant aftermath was a literary novel: War and Peace.)

This war was not an American victory; importantly for the United States, it was not the ignominious defeat that it might otherwise have been. The United States – or at least mercenaries in the pay of the United States – did win the subsequent 1805 Battle of Derna, which the USS Tripoli officially commemorates.

The First Barbary War ended inconclusively in 1805, with a deal. Wikipedia says: “In agreeing to pay a ransom of $60,000 (equivalent to $1.3 million in 2025) for the American prisoners, the Jefferson administration drew a distinction between paying tribute and paying ransom.” Jefferson agreed to pay a ransom. We should note that the Second Barbary War of 1815, also involving Decatur, lasted just two days, and was an American victory (under President Madison).

Another reason for the naming of the USS Tripoli, which is essentially the same reason.

In 2011, the United States (as NATO), under President Obama, fought in another war against Libya. This was a successful war of ‘regime change’, this time through air power rather than sea power; though few would say that the replacement regimes have improved either the stability of Libya or of the Eastern Mediterranean. This war of ‘decapitation’ of Libya was Obama’s dress rehearsal for an even more ambitious attempt to do the same in Syria. The subsequent Syrian Civil War was another distressing failure of United States’ foreign bellicosity. At least Obama asked Congress, and as a result he was unable to escalate; Obama was thwarted in his further attempts to become a decapitating conqueror (noting Abbottabad as well as Tripoli). Much of Syria descended into anarchy, until Russia intervened.

The USS Tripoli was commissioned in 2012, as much in commemoration of recent American adventurism as it was in commemoration of that country’s earliest acts of violence in a land far far away.

*******

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.

The New Zealand Government’s response to Israel-US attacks on Iran has revealed a chasm. On one side are those who argue; that New Zealand must stay aligned with its 20th century allies right or wrong.

On the other side are those who insist; that the long fought for reputation, of a nation that stood for an international order based on law, justice and multilateralism, should be the guiding principles in good times and bad.

New Zealand has inched toward such societal rifts before; the Springbok Rugby tour of New Zealand in 1981; shortly followed by a generational shift and geo-political quake that came in the form of New Zealand’s anti-nuclear movement and subsequent enduring legislation. The United Nations security council endorsed response in Afghanistan to attacks on the United States shook the foundations of the Labour-Alliance coalition Government in 2001-02. And the fraudulently justified US-led invasion of Iraq triggered hundreds of thousands of New Zealanders to protest in the streets. (The Helen Clark Labour-led Government of the time refused to officially be included among the US-led coalition forces that invaded Iraq.)

In recent times, old loyalties and biases have been challenged with the genocidal disproportional response by Israel against Hamas and generally Palestinian woman, children, and the elderly whose only offence was to exist in the path of the military machine.

And now, the US Donald Trump Administration’s alliance with Israel has unilaterally justified its attacks on Iran – the murder of its supreme leader and the assassination of over 40 individuals in its operational chain of command – as a legal pre-emptive response to a perceived first-strike-plan by Iran. This, while negotiations were underway to address regional security concerns.

This is the backdrop to New Zealand Government’s response where Prime Minister Christopher Luxon and Foreign Minister Winston Peters wrote on Sunday March 1:

“In this context, we acknowledge that the actions taken overnight by the US and Israel were designed to prevent Iran from continuing to threaten international peace and security.

“We condemn in the strongest terms Iran’s indiscriminate retaliatory attacks on Qatar, the United Arab Emirates, Saudi Arabia, Kuwait, Bahrain, and Jordan. We cannot risk further regional escalation, and civilian life must be protected.” (Ref. https://www.beehive.govt.nz/release/nz-government-statement-iran )

*******

LISTEN: To Radio New Zealand’s The Panel, where host Wallace Chapman is joined by panellists Sue Bradford and Phil O’Reilly. First up, is an extended conversation on the US and Israel attack on Iran. Columnist and Iranian New Zealander, Donna Miles-Mojab, delivers her take on the conflict and what it means for the regime. Then, I (Selwyn Manning) give an analysis on New Zealand’s stance and the legality of the attack.

It’s well worth a listen, as the fault line of New Zealand debate is clear.

*******

For those who are prepared to abandon the process of law and justice on international affairs, the New Zealand Government’s statement offered clarity; that their government would stand at the side of traditional security ‘friends’ as they commit to fight against another ‘evil’ empire.

For others, the statement was another example of mediocrity from a coalition that lacks a morality within its own argument – an apparent abandonment of principles such as international law and multilateralism – frameworks that have served small significant nations like New Zealand well.

The argument follows; that New Zealand’s coalition government has jeopardised the national interest, the hard won identity respected by those nations that still hold true to multilateralism and principle.

Here’s a please explain moment:

New Zealand is a small nation, but it is a significant actor in international affairs. Once, it could be relied upon – especially on matters of principle – to articulate a strong position on breaches of international law and justice. We have held positions at the United Nations security council, have been a driven advocate among general assembly nations and a persuasive arbiter among multilateral groups such as CANZ (Canada, Australia, New Zealand) that tag-team diplomacy at the United Nations and elsewhere.

New Zealand was once a staunch advocate (and remains a member state) of the International Criminal Court. And, in matters of trade, New Zealand sought to develop common ground rather than difference – tools that have been beneficial to others in times past when conflict has raged and red-mist would otherwise have dominated attempts at a diplomatic solution.

Today’s New Zealand is a myriad of conflicting arguments; its current coalition government argues that Iran’s regime is evil so therefore the powerful must bomb it to peace.

But the fact that the Iran regime is not a paragon of virtue – either domestically or regionally – does not diminish the fact that the United States’ and Israel’s governments decided to attack – decisions that allegedly and arguably breach international law.

International law: In a rudimentary sense; it comes down to whether Israel in the first instance was legally obliged to commit a preemptive strike on Iran, murdering its supreme leader and taking out over 40 of those who were in its chain of command.

Was there an imminent threat to Israel? At this juncture, it appears not.

Were diplomatic efforts underway to address regional security concerns, through US diplomatic efforts? Yes… up until Thursday February 26.

When Opposition Is Beyond Political

Back to New Zealand: New Zealand’s Prime Minister Christopher Luxon, on matters of geopolitics and global security, often appears to operate more like a CEO rather than the chair of a nation’s cabinet.

Widespread reports of the Prime Minister’s lack of coherency on this matter is reasonably consistent with a manager waiting to be guided by a governor, or board chair by way of policy, on the required pathway ahead.

The problem for Christopher Luxon is; he has no such external nor internal guidance. In geopolitics and matters of global security, policy alone does not help. Natural leadership qualities do.

Throughout his prime ministership, Luxon has displayed a tendency to outsource foreign affairs leadership responsibilities to his junior coalition partner, New Zealand First leader Winston Peters. Or, when that doesn’t work, he leans toward Australia and/or the United States to provide direction on big picture issues.

But for many New Zealanders, New Zealand can’t have it both ways; either it (the coalition government) sides with the ‘might-is-right’ Trump-led approach to chaotic global affairs, or it sides with the multitude of countries that still hold on to principles of justice and international law.

Where will New Zealand as a society tilt? It will likely be up to New Zealand voters, later in 2026, to finally decide which way this country tracks over the next few years.

US President Trump’s vanity and sense of global imperialism has become more expansive and performative this year.

These are times when countries like New Zealand, lacking persuasive moral leadership, can easily lose their souls, and, in the process of being risk averse, risk abandoning their own sovereignty, national interest, and identity.

*******

Over the last few days, there has been plenty of media chatter in relation to the government’s proposal to pass a law enabling police to forcibly shift street dwellers from Auckland’s CBD. (Refer ‘Move On’ orders penalise those with the least, Scoop 22 Feb 2026.)

While Labour likes to express outrage, neither Labour nor National have given as much as a hint as to a solution they would commit to implementing. National sees street vagrants in much the same way as the Israeli government sees Palestinians; in both cases, they just want the ‘problem people’ to go away.

New Zealand, like most countries, has a long history of vagrancy, and of mean-spirited laws to deal with it. New Zealand, however, in 1938 introduced a universal welfare state; a political contract which gained broad bipartisan support until 1984. Over the 1938 to 1984 period the vagrancy problem was minimal. I remember being shocked at seeing beggars in Ireland in 1976; that was depression-era optics, which I thought had long passed in the developed world.

The most recent time I ventured out of Australasia was in 2019, on a trip to Canada, Scotland, and London. I remember remarking that Vancouver seemed to have fewer homeless people than Auckland. The next day I changed my mind; I discovered that the problem in Vancouver was more on the edge of the CBD, whereas in Auckland it had already become normalised around Queen Street and the city’s main library. I note this point, because the problem cannot be blamed on the Covid19 pandemic, and it was a problem that neither Labour’s Jacinda Ardern nor Phil Goff were willing to prioritise during their terms in office (as Prime Minister, and as Mayor).

(In Scotland, while Aberdeen did have a problem, it was less obvious than in Auckland; and even less obvious in Edinburgh. In London, I stayed in Stepney Green, a social housing area close to Whitechapel, and did not particularly sense a ‘street dweller problem’ there; nor in closer-to-the-City and now-gentrified Spitalfields.)

The current chatter focuses on homelessness, while only noticing in passing that many street occupiers are also beggars; meaning that, at its core, the problem is one of income insecurity.

Hardly anyone has connected the dots between begging and the regression of social security in New Zealand. The universal welfare state has lost its way since 1984. My sense is that many of today’s vagrants are not receiving any social security money; and that that may be in large part because it is too difficult – and humiliating – for them to deal with a Kafkaesque system that calls beneficiaries ‘jobseekers’, and is forever looking for ways to not support vulnerable people into constructive engagement. While the general public would regard vagrants as being unemployed, Statistics New Zealand does not even count them as unemployed. Our governmental systems are oriented around the ‘labour force’, and are largely blind to working-age people ‘not in the labour force’.

It is not my role here to analyse the way that our untweaked version of capitalism creates vagrancy. Rather, it is to note that our vagrants need these three things: an amount of unconditional income, a place better than the street where they can sleep and wash, and something fulfilling – maybe, even, productive – to do.

While, for the rest of this essay I’ll focus on the former, I’ll just mention the latter briefly. Minimum wage laws put most of these people out of the reach of the formal labour market. That leaves them two choices for something societally connected to do; voluntary work, or petit-entrepreneurship (aka non-criminal hustling). (Two other options, both disconnected from mainstream society, are: ‘hanging out’ in ways that intimidate, or participating in underworld crime.)

A Very Basic Universal Income (VBUI)

As our income-tax scale stands at present, a Very Basic Universal Income of $150 – payable to every tax-resident aged over 18 – could be mostly funded by abandoning the 10.5% and 17.5% tax rates. All annual personal income below $78,100 would be subject to a 30% tax rate.

Non-beneficiaries earning less than $53,500 would gain, because their VBUI would be more than their extra tax. (For these people in fulltime work, the gain would be small; $12 per week for a minimum wage worker working 40 hours per week; $16 per week gain for a minimum wage worker working 37½ hours per week.)

In technical economists’ language, the VBUI would be called a ‘refundable tax credit’, or maybe a ‘demogrant’.

People earning more than $53,500 per year – and beneficiaries – would have an unchanged net income situation. (For beneficiaries, the first $150 of their benefits would become universal; an accounting change only, from a costing point-of-view.)

People on benefits would have the first $150 per week of their benefit recategorised. People losing their jobs would continue to receive their VBUI, unconditionally. People not in the labour force would have their VBUI payments made directly, and there would be an opt-out mechanism; not an opt-in.

The biggest gains come to non-beneficiaries aged over 18 defined in the official statistics as either ‘underemployed’, ‘part-time’, or ‘not in the labour force’. The most important gains are that the $150pw VBUI constitutes an unconditional safety-bridge for those in danger of becoming redundant, or of having their hours reduced to part-time; and that it thus acts as an ‘automatic stabiliser’, meaning that people who lose their incomes can still maintain some of their usual spending.

The VBUI also means that people who gain work, or who gain extra work, still get to keep all of their Very Basic Universal Income. There is no income or poverty trap (as there is now), whereby gains in income from a new source lead to reductions in income from existing sources.

And it also substantially reduces the cost of administering social security, if people who lose their jobs automatically retain a very basic income to help tide them over losses in market income. The only information needed about non-beneficiaries in New Zealand would be their date and place of birth, their bank account number, and their immigration status. People receiving no publicly-sourced income other than a VBUI would at no stage be required to provide the authorities with any further information; they would pay tax at the going rate to the IRD based on market income connected to their IRD number.

Very Basic Universal Income is an ‘opt-out’ mechanism, which means that everyone receives it unless they have specifically asked to not receive it. And, even then, opt-outs should be managed as ‘temporary’. (All people legally allowed to earn income in New Zealand would have at least an IRD or NHI [Health NZ] number; ‘bank accounts’ at Kiwibank could be opened by Inland Revenue or Health New Zealand for people without other known access to banking facilities.)

In addition to reduced administration costs, there are several other ways that a miserly government could recoup its not-very-onerous outlays on VBUI. The two most obvious ways would be to raise the company tax rate from 28% to 30%, and to reduce the income threshold for the 39% tax down from $180,000 per year. A centre-right government which has done all these things – all very much consistent with centre-right philosophy – might then aspire to removing the 33% tax rate. That would leave a two-step tax scale: 30% and 39%.

We note that the introduction of a VBUI would, in itself, mean only one change to the existing benefit structure. That one change would be the accounting formality to categorise the first $150 per week of a benefit as a universal income, as a ‘duty-of-care’ income integrated into both the tax system and the benefit system.

A VBUI is not generous, and it’s not a Universal Basic Income (UBI). But it does act as an income that acknowledges both human rights and economic efficiency. Once the mechanism and mindset are in place – noting that the ‘mindset’ issue is analogous with that associated with the introduction of proportional-representation voting in New Zealand in the 1990s – then it becomes comparatively easy to tweak the numbers. In time, the VBUI might become a BUI, a Basic Universal Income; more like $250pw than $150pw. We need to start at a low amount, to sooth the apprehensions of the professional naysayers; those unimaginative people too ready to block social and economic progress.

A Teenage Basic Universal Income (TBUI) for adolescents

Late in 1979, Robert Muldoon raised the universal family benefit to $6 per week – a benefit (which commenced in 1946) payable on behalf of all children without any means testing. If we adjust that $6 by the CPI changes we get an equivalent of $42 today. Or if we adjust by GDP per capita – a better measure than the CPI, a measure which allows for economic growth – that $6 in late 1979 becomes $70 today.

My proposal is to pay a TBUI of either $42 or $70, to all New Zealanders aged from 14 to 17. For many of these teenage recipients, the amount would be paid directly to the recipient, and deducted from the Family Tax Credit payment presently paid to their caregivers.

I have calculated that recipients of a $42 (or even $45) TBUI should face a special flat tax rate of no more than 20% of their market income. And recipients of a $70 TBUI should face a special flat tax rate of no more than 23% of their market income. I favour fourteen- and fifteen-year-olds – all still legally at school – to receive the $42; and sixteen- and seventeen-year-olds to receive the $70 and pay a bit more tax.

The TBUI acknowledges that a significant minority of New Zealand’s vagrant population is in the 14 to under-18 age range. They would receive payments in the same way as older vagrants; if necessary, through an account opened for them by the IRD or Health NZ.

Call it ‘pocket money’, if you like. All New Zealand residents would receive this from when they turn 14, unless they opt-out. Fourteen is the age, in New Zealand, when children may be legally left-alone, unsupervised. Thus, it is the first age to directly signal that a young person should have a degree of independence, of economic autonomy.

Finally

All of the payments I have suggested are very basic and somewhat stingy. What matters is that they are unconditional, and confer a sense of citizenship onto our most vulnerable adults and semi-adults. There are no poverty traps; no impediments to recipients from ‘bettering themselves’, from being aspirational. Universal Incomes are not withheld when persons’ circumstances improve.

I personally would prefer less parsimonious payments; deficit-funded payments which would give an underdone economy a necessary bit of stimulus, realising that the arising increase in collective prosperity itself recoups such fiscal deficits. (The 1938 introduction of Universal Superannuation and other reforms turned out to have a fiscal cost significantly less than the projected costs. Refer Elizabeth Hanson’s 1980 book: The Politics of Social Security…) I note that we live in austere times; without really knowing the reason for these fiscal blindspots. Nevertheless, I am suggesting that, even with Scrooge in charge, we can do much better than we do today.

Further, with these universal incomes in place, everyone will know that everyone else will know that all of our vagrant population is in receipt of at least some income. (Refer Steven Pinker’s 2025 book: When Everyone Knows That Everyone Knows…) As it is, some of the beggars on the streets may be receiving substantial benefits, while others are receiving absolutely nothing; today we, in the public, are unable to tell any individual vagrant’s actual level of need.

There are solutions to these ‘all-rhetoric no-solution’ difficulties. It just takes the political will to see past our blindspots. Some form of rights-based universal income guarantee is a necessary but not a sufficient solution to the compounding vagrancy problem; and to other problems too, especially those problems affecting young people. (Note: Youth facing more psychological distress…, RNZ, 25 Feb 2026.)

Note on the Politics of Achievement

When Michael Joseph Savage in 1938 proposed (and then legislated for) a universal welfare state – with special emphasis on an initially very basic Universal Superannuation – he converted what could have been a political losing hand in that election year into New Zealand’s greatest ever electoral victory. There were many on the left and on the right of Savage’s parliamentary caucus – political people without political nous – who seemed to be eager to snatch defeat from the jaws of victory. Fortuitously, Savage was not one of them. By not being one of them, by not losing courage, he became the New Zealander of the twentieth century. Savage didn’t solve every problem. But he did make a difference, for the better; and was loved for that. While a modest man himself, his political leadership for New Zealand was far from austere.

Do our current lot of politicians even want to win in November? My advice to both National and Labour is to pursue the politics of success, and not the politics of nihilism.

(In this regard we might note that the Labour Opposition in 1931 suffered an ignominious election defeat, despite the appalling economic catastrophe which was then taking place. Labour went on to win in 1935, by promising a universal welfare state. It came close to electoral embarrassment in 1938; it came close to failing to deliver on its 1935 promise.)

*******

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.

The RNZ news bulletin of 10pm on 18 February stated: “New Zealand and Australia are outliers in having three-year parliamentary terms, with four or five year terms far more common … politicians have over the years expressed frustration at how much can be achieved in a three-year cycle.”

This is a common but not really valid belief. This year the world’s second largest democracy – United States of America – is holding its election for its House of Representatives. That country has – and has had – a stable two-year term. For some reason it is never mentioned in these discussions.

Below is a table showing average term lengths for comparator countries. We note that in countries with flexible electoral terms, which is all of these except United States, it is commonly only the more unpopular governments which go full-term.

We note in particular that elections in the United Kingdom have been on average 3.7 years apart, despite that country having a five-year term limit. And that that country presently has a governing party for which popular support, as consistently measured by opinion polls, has so far registered below 20% for much of the so far short life of its rule. The fact that the likely date for the next election is more than three years away is a major source of political instability there.

Most importantly, in the table above, New Zealand is not an outlier.

*******

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.

For this, the sixth series of A View from Afar, political scientist and former Pentagon analyst Paul Buchanan and Selwyn Manning deep-dive into geopolitical issues and trends to unpick relevancy from a world experiencing rapid and significant change.

And, in this episode, the topic will be: How to Define A Way Forward When the World is in Chaos.

Since the re-election of the US President Donald Trump, Paul has been doing a lot of work… a lot of reading… and a huge amount of thinking.

Today we hear from Paul about:

1. The US Trump Administration’s “Authoritarianism at home, Imperialism abroad” currency.
2. How to deconstruct the entire “spheres of Influence” nonsense.
3. About United States fears of the rise of the Global South in a poly-centric world.
4. And Paul and I will lean-forward and consider; what to expect in the medium and longterm.

If listeners enjoy interaction in a LIVE recording environment, you can comment and question the hosts while they record this podcast. And, when you do so, the hosts can include your comments and questions in future programmes.

With this in mind, Paul and Selwyn especially encourage you to join them via YouTube, as on YouTube live interaction is especially efficient.

You can join the podcast here (and remember to subscribe and get notifications too by clicking the bell):

OK, let us know what you think about this discussion. Let the debate begin!

*******

SIGNIFICANT QUOTE PAUL G. BUCHANAN: “The sad fact, though, is that the US is the center of our earthly geopolitical universe, serving as the first rock to drop in the global pond whose ripple effects are extensive, negative, and washing up in unexpected and unforeseen ways. That rock, in fact, is a black hole sucking the remnants of the rule based order into oblivion, or if not oblivion, irrelevance in a new age of power politics (might makes right, etc.). It is a dark force from which things as they exist cannot return.”

You can follow this podcast via the following podcast platforms:

On 14 January, Al Jazeera produced an episode of ‘Inside Story’, their daily current affairs feature programme: Why is the US Fed chair criminal probe causing global alarm? The context is the conflict between the Federal Reserve Chairman Jerome Powell, versus the man who appointed him to that role, President Donald Trump. In the sense of this conflict, Powell is the archetypal technocrat (the spokesperson for his craft guild), and Trump is playing the role of the democrat (the spokesperson for the American people).

(We note that, in New Zealand, something similar but different is happening; effectively a conflict – for a tiny slice of the historical narrative – between former Reserve Bank Governor Adrian Orr and the current Minister of Finance, Nicola Willis. It may be said that power is held by those who control the money, and by those who control the narrative.)

The format of Inside Story is that of three remotely-located expert or otherwise-interested interviewees, interviewed by a news-anchor studio interviewer. (Former Newshub newsreader Tom McRae serves as one such interviewer.)

For this episode, the interviewer was Adrian Finighan. The interviewees were: an American political commentator, Eric Ham; a London-based commentator representing the finance industry, Justin Urquhart-Stewart; and a celebrity Irish monetary economist, David McWilliams. (McWilliams was speaking in New Zealand last October; claims have been made that he is the “Attenborough” of economics.)

It is to McWilliams that I particularly wish to focus my comments; so, below, I have transcribed his contributions to the panel discussion. (I will confine my comments re McWilliams to his contributions to the Al Jazeera programme, and not to his writings or other presentations.) But first I have transcribed opening words from Finighan, Ham, and Urquhart-Stewart. There are also comments from Jerome Powell, reporter Fintan Monaghan, and German Chancellor Friedrich Merz. (To maintain focus the transcriptions have been slightly condensed; the original interview is available, see above.)

Finighan, Ham, and Urquhart-Stewart

Finighan: “A criminal investigation into the Chair of the Fed, Jerome Powell … could have implications well beyond the US … a swift and sharp response from central banks around the world, a joint statement expressing solidarity with Powell.”

Powell: “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President … [through] political pressure or intimidation.”

The general tone here is that Powell – the chairman of a committee – is the good guy, and Trump the bad guy. In this sense the discussion falls into the trope that if there’s a bad guy [ie Trump], then the bad guy’s adversary must be a good guy. Note how Powell presents himself as the ‘man of the people’, even though in reality he is anything but.

Of course, it goes without saying that a narrowly focussed criminal law investigation is not an appropriate forum for discussing democracy and monetary policy. And there is no doubt that President Trump is intimidating, and has a tendency for ad hominem flights of fancy. We should note, for clarification, that the criminal charges referred to relate to the expansion of a building, and not to misconduct in the setting of interest rates.

Reporter, Fintan Monaghan: “The two [President and Chairman] have been at odds over the setting of interest rates for most of the past year. Trump wants cuts. That might give the economy a short-term boost by bringing down the cost of borrowing money, but Powell has resisted because it could cause inflation. … Heads of major central banks around the world, including the ECB’s Christine Lagarde, have voiced support for Powell and the independence of the Fed. Central Banks have traditionally operated separately from the central government. That keeps long-term decisions about the health of the economy separate from short-term political [aka democratic] interests.”

Friedrich Merz: “I hope there will remain a broad consensus that central banks must remain independent because independent central banks are a guarantee that a currency can remain stable in the long term.”

We may note these themes are emphasised by those who we might call ‘monetary policy hawks’; and most central bankers are monetary policy hawks in that they emphasise the notion of raising interest rates as the sine qua non [without which not] of anti-inflation purgative emulsions.

To claim that Reserve Banks have traditionally operated separately from the central government, indicates that some commentators have a very short sense of history. Most central banks operated as a long-arm of government for most of their histories (and most are less than 100 years old; the RBNZ has existed since 1934). The American Fed is usually regarded as having been independent since 1951, though it’s always been a political organisation with politically appointed leaders. Most Reserve Banks have a single shareholder; the Government. During Abenomics, Japan’s central bank was fundamentally a part of Shinzo Abe’s macroeconomic program. As was New Zealand’s Reserve Bank in, say, the late 1930s, when it played a crucial role in implementing the economic policies which launched New Zealand into the position of a global exemplar for a modern egalitarian economy.

We note also that central bankers generally favour the cynical word ‘political’ over the much happier word ‘democratic’. And we note that Friedrich Merz may be confused. He appears to be referring to a national or imperial ‘currency’ such as the Euro, whereas monetary policy at its highest calling seeks to protect the internal value of money; not its external value. (The internal value relates to inflation and deflation; external value relates to currencies’ exchange rates.)

Eric Ham [author and political commentator]: “… that very independence which has actually fuelled United States’s monetary growth.”

Justin Urquhart-Stewart [chairman of an investment platform]: “There is one vital word that central bankers have to give out and that is confidence … this is the first time that I’ve seen central bankers getting together almost as a ‘trade-union’ … [in response to] political interference.’

Ham, like most political commentators, is all-at-sea when trying to comment on monetary matters. I presume that he meant to say ‘economic growth’ rather than ‘monetary growth’. Certainly the wizards of money – ie the Lords of Finance [in the 1930s, the Bankers Who Broke the World] – believe, or claim to believe, that central bank independence fuels long-run economic growth.

Yet, I have a sneaky suspicion that Ham meant what he said. In the mercantilist worldview, a worldview upheld by President Trump, ‘monetary growth’ and ‘economic growth’ are tantamount to the same thing. New Zealand’s Prime Minister, Christopher Luxon, is also a businessman who believes that making hard-won money represents the economic purpose of human life.

In the golden age of mercantilism, from around 1500 to 1800, money was understood to have been legitimately made by mining, exporting, or stealing. (Queen Elizabeth the First was the monarch best known for having resorted to the latter; she boosted the Royal navy for that purpose.) In this view, only mining represents a legitimate addition to the global money supply. Kings and Queens however sometimes resorted to a fourth method, ‘debasement’; modern monetary bankers are still fighting that battle of yore, with ‘public debt’ representing their principal concept of debased money.

On the ‘other side of the coin’ from monetary philosophers – or is it the ‘other side of the ledger’ – there were accountant bankers. One of their clever tricks was double-entry bookkeeping. Another closely related trick was fractional banking. These (along with a clearing-mechanism developed from medieval Italian banking) became the central technologies of modern banking practice. (Many of the earliest bankers were goldsmiths, who on-lent other people’s gold and silver deposits – albeit by issuing receipts, the forerunners of paper money – without telling the depositors. When in trouble, these fractional moneylenders required a fast horse, and contacts who could smuggle them out of the country! The final piece of the modern-banking puzzle was limited-liability status, facilitating an appropriate amount of risk-taking. These are the initially-disreputable technologies that lubricate capitalism and give it its dynamism. Bankers were not alchemists trying to make money independent of the economies it serves.)

Re Urquhart-Stewart, he emphasised the role of confidence – ie belief – in monetary policy. A word widely used by monetary economists is ‘expectations’. Thus, the role that twentyfirst century monetary authorities have assumed is to manage public expectations, even if they have to resort to some kind of poker trick to do so. An important part of this is to maintain a druid-like sense of authority; to tell a good collegial story – not necessarily an accurate story – in order to give themselves an arcane aura of credibility. Democratically-elected politicians – among others – are required to believe their story.

This may be the first time that Urquhart-Stewart has been aware of central bankers getting together as a union or college or guild; but their recent “joint statement” is by no means their first rodeo. Central bankers of the world – like staunch cowboys – regularly get together at a place called Jackson Hole in Wyoming, USA. (And the lords of finance of the late 1920s – the preeminent central bankers of the United Kingdom, United States, France and Germany – were all in regular contact with each other.) On this note, New Zealand’s own Reserve Bank governor, Anna Breman, was one of Urquhart-Stewart’s unionists; and, for her efforts, she had her fingernails clipped by Nicola Willis. (In the recent state of New Zealand’s political cycle, Willis and Luxon have been more in Trump’s camp than in Powell’s, expressing frustration with an unnecessarily slow process of lowering interest rates. This runs counter to their position in the summer of 2023/24; then the new government’s first act in Parliament was to raise the monetary policy bias in favour of generally higher interest rates.)

In the earlier days of central banking, central bankers were more likely to have been well-connected bankers. Nowadays they are more likely to have been economists, specialising in monetary economics and finance. The division between these two cultures goes back at least as far as to the disputations in the 1840s and 1850s between the economists’ Currency School, and the bankers’ Banking School. While the Banking School may have had the better of the argument, as demonstrated by the ongoing development of monetary practice, the Currency School won the culture war.

Before I go on to reveal economist David McWilliams’ substantial contribution to the Al Jazeera programme, we should note that the setting of interest rates through monetary policy is a fundamentally interventionist overriding of the market determination of a price; it represents an exception to the sanctity of the price-mechanism which is fundamental to economics. Neoliberal anti-interventionists tend to show strong support for interest rate intervention; just not intervention by kings or queens or presidents or ministers of finance; they favour intervention by someone they have confidence in. It is part of a wider belief on the part of economic liberals that it is good for our health that money (unlike sugar) should always be scarce; and that the technocratic authorities, if they must err, should err on the side of money being too scarce.

David McWilliams’ ‘Testimony’

I transcribe McWilliams several contributions to the Inside Story programme:

Contribution One: “I’m speaking to you as a former central bank economist … authoritarian leaders from Nero to Lenin, from Hitler to Henry VIII have always tried to interfere with who prints the money, who gets the money and at what price. … This issue is about who gets to set the growth rate of the American economy. Is it the Federal Reserve or is it the President? … Typically, it is the Federal Reserve that gets to set the growth rate, consistent with a low rate of inflation, is going to be X, and were going to drive our monetary policy and our rate of interest according to that. Politicians are always wanting to put their foot down on the accelerator, more growth, more election success, more people feeling good in the very short term. Central bankers push their foot down on the brakes … because we are worried about the rate of inflation. … The central bankers get [their extraordinary power] because they are concerned about the long-term rate of inflation. Politicians are not concerned about the rate of inflation, and as a consequence they want things to accelerate quicker. … The rate of inflation, which affects poor people more than rich people, will go up. The long-term rate of interest, which affects your mortgage rate, will go up. I think, for the world in general, the idea that the people who actually manage and preserve the integrity of the US dollar are no longer concerned about the integrity of the dollar and much more concerned about short-term politics; that will scare people, not just in the High Street, but also in financial markets.”

Re “printing money”, it’s an intentionally pejorative label for money creation through banking based on double-entry book-keeping. Before ‘printing’, there was ‘minting’, which has been the necessary historical privilege of all kings; not just Nero and Henry VIII. McWilliams conflates printing with minting. When money was principally coins, it was the ‘head’ of the king on the coin that gave the public confidence in that coin; the minted coins represented the liability of the kings to the public. It’s not the place here to comment on the monetary policies of Lenin and Hitler. But, re Henry VIII, I recommend the book Gresham’s Law, by John Guy. Thomas Gresham served as banker to four of the Tudor monarchs, in the middle decades of the sixteenth century. Securing additional public debt for Henry VIII – ie, additional to the minted coinage – could be a difficult and hair-raising experience; actually tantamount to smuggling.

McWilliams posits that the technocratic monetary Tzar, Powell, has – and should have – the power to “set the growth rate of the American economy”. This assertion is problematic in that it is neither accurate nor democratic. Attributing the GDP of the United States to one man does a huge disservice to the other 330 million Americans, and grants Powell more concentrated power than Nero ever had. McWilliams doesn’t mention the word ‘productivity’ once, which is unusual for a media economist; it is more common to hear that long-term growth is determined by productivity than by central banks.

McWilliams goes on to say that elected politicians want economic growth rates higher than what monetary economists think they should want, effectively claiming that democracy is inherently inflationary, that inflation is the greatest of all economic sins, and that “politicians are not concerned about inflation”.

The whole discussion reveals overemphasis on a false conflict or dissonance between ‘long-term’ and ‘short-term’. In reality the long-term is no more than a sequence of short terms. We, all of us, all the time, live in the short-term.

His incorrect argument that inflation adversely affects poor people more than rich people is patently false, made most obvious by the facts that higher interest rates clearly favour the receivers of interest, and that past inflation has played a major role in establishing the wealth of today’s rich. We should note that active ‘inflation-fighting’ does not necessarily mean that prices become lower than they would otherwise be; central bank inflation-fighting is a costly process that contributes to the cost-of-living. If we are constantly inflation-fighting in the short-term, and the long-term is a succession of short-terms, then the cost of inflation-fighting becomes a ubiquitous presence in our lives.

Basically, his argument is that if we [ie people like himself] don’t put interest rates up [in the short-term] then interest rates will go up [in the long term]. We need to raise interest rates in order to lower interest rates, he claims. This illogical argument is essentially that inflation necessarily connects low interest today with high interest tomorrow (and vice versa); that interest rates act like an unlubricated seesaw in which one end is labelled ‘short-term’ and the other end is labelled ‘long-term’.

In his last two sentences above, McWilliams claims that a political appointee to replace Powell – compared to a career appointee – would undermine the “integrity of the US dollar”. There is a sense that the US dollar should be the master of the world economy, not its servant. By the way, all appointments by politicians are political; democracy is political.

Contribution Two: “Central backers are charged with – dully obsessed with – the rate of inflation. The rate of inflation is in effect the value of your take-home pay. … The second thing is of course ‘distribution effects’, who pays most. What you find is that, when the rate of inflation goes up, poor people pay more than rich people. Because a higher percentage of a poor person’s income is going to be going on basics … everybody is affected badly, but the poor are affected worse. And then the final point is that for anyone who has a mortgage … inflation means that interest rates will go up. Donald Trump is so keen to reduce interest rates because he is an endemic debtor. There’s always a split in the world between those people who are creditors, who lend money, and debtors, those people who borrow money. As a general rule those people who borrow money want the cost of borrowing to be as low as possible. And if you’ve spent your lifetime defaulting, borrowing, defaulting again, then your DNA will be biassed towards lower not higher interest rates. But who rewards the saver if the rate of interest is artificially low?”

Central bankers, but not McWilliams, make a virtue of themselves being dull technocrats.

The rate of inflation is not the value of your-take home pay. Inflation is an increase in prices, not a level of prices. Inflation, meaning a decrease in what a dollar will buy, strictly affects all prices, including wages; and including luxuries as well as necessities. What McWilliams is arguing is that inflation, though itself not about relative prices, nevertheless has a biased impact on relative prices. Relative prices are in fact caused by market forces; changes in the demand for and supply of different commodities and factors of production. Certainly, changes in interest rates represent a change in relative prices, because the rate of interest (comparable to the wage rate) is the price of a factor of production. If inflation is the only thing that’s going on, a four percent increase in prices will be matched simultaneously by a four percent increase in wages, so the value of your take-home pay is unchanged. All inflation does is reduce what a person’s money-in-the-bank will buy, and make it easier for a person to repay debts. It’s true that markets will respond to inflation by raising the money cost of future debt. Do markets really need help from the monetary druids who claim that interest rates should be raised in an interventionist manner, not only in response to inflation but also ahead of what they claim is expected inflation.

The line from people like McWilliams is that debt is akin to a form of sin, whereas squirrelling money away at four percent annual interest is a virtue. This is religious metaphysics, not science. How many people who have made a lot of money did so simply from squirreling away their wages? Not many. Rich people, except those who simply inherited from daddy, incurred debt to become rich. Rich nations incurred debt – private and public debt – to become rich. Debt has played and continues to play an absolutely fundamental role in economic and civilisational development.

Even in nature the squirrels are not rewarded. They earn no interest on their nuts, and they are subject to a ‘use it or lose it regime’. Nuts which are saved for too long become inedible, or simply go missing. Yes, savers should be rewarded when capital is scarce and people with unspent income need to be induced to take investment risks. In the twentyfirst century, however, the world has been awash with private stashes of idle money; central bankers should not be using public policy to serve the interests of the owners of these stashes.

Contribution Three: “Is the institution stronger than the personalities? I think what we are talking about is a power grab, and we know there’s nobody more powerful in society than the person who controls the money. Money is the glue that gels society together. It is an awesome weapon on the part of governments, which is why I suspect central banks have been independent for so long. We’ve largely seen a revolution of the central banks in the 1970s; by the 1990s with the exception of the UK most were independent.  … This is about power and the exercising of power; and I would say that money is a far more powerful tool than ideology, than even warfare, than certainly all sorts of other weapons in the hands of presidents. So, what we are seeing here is a man who doesn’t really understand – or isn’t bound by – the rules of the game, so he’s tearing up the rules as we go along. This is a particularly acute tearing-up. Why? Because he’s actually affecting financial markets, corporate interests, Wall Street’s interests, so there may well be a massive pushback. But to answer your question, if there is a patsy at the helm of the Fed it will undermine the credibility of the United States dollar at a time when the dollar is under credible threat. The United States is no longer the overwhelmingly dominant economy in the world; it is technically number one, but it is being gradually dragged back downwards by China and in the long term by other countries as they grow. So, I think President Trump doesn’t understand the exorbitant privilege that the United States has as [having] the reserve currency of the world. There is nothing more powerful than that you can print money for free as the reserve currency, and people have to give you real stuff to buy that currency that you print for free. How amazing a deal is this? And for the Americans to self-sabotage from the White House seems to be the politics of idiocy.”

Here McWilliams reveals the power agenda of the monetary church. Money should be controlled by the church, themselves; not by the people through their elected or unelected representatives. Henry VIII struggled with the Rome-based Catholic Church in the 1530s. Henry won. What we see today, in McWilliams’ words, is the new church in another power struggle; a struggle – possibly a struggle to the death – that the new faith is probably winning. Who should we trust; the king or the church? The “rules of the game”, by the way, were set by the monetary economists – the currency school – of the nineteenth century. Those rules went quiet in the 1930s, but they started to reassert themselves in the 1970s; in the mid-1980s in New Zealand.

McWilliams does understand the power of double-entry bookkeeping as applied to banks – the power to “print money for free”. And he is correct that Trumponomics – Trumpian mercantilism – is an unwitting policy to self-sabotage the United States’ economy. But to transfer power to a college of druids is not the answer, either. Rather, lay people should all be better educated about money; but not so-educated by these monetary Jesuits. Henry VIII was taught statecraft by Cardinal Wolsey. He overthrew Wolsey – his mentor and his tormentor – but was unable to seek, let alone find, a better counsellor; Henry lost his way. Today we have democracy; a civilisation-project that is still immature, a project whose survival cannot be guaranteed. For all Trump’s faults, he is nevertheless more sensitive to ‘the people’ than are the technocrats who, while really serving the church of sacred money, claim to “serve the public”.

Contribution Four: “I would like your viewers to just remind themselves that the key word here is ‘trust’; what keeps money sacred, almost has an alchemic value, is trust. I trust it, you trust it, we trust each other. Now if you chip away at that trust, which is ephemeral, entirely in our heads, you begin to chip away at the very foundations of the system that we all have in, that system remains stable. So once you put the trust in the currency in the hands of somebody who is untrustworthy you begin to open all sorts of dilemmas about what’s the value of money, who prints it, will it buy what it says it buys, and can I save it. These are massive, massive issues.”

I can say here that ‘sunlight is the best disinfectant’, that delegating our credulity to a college of wizards and metaphysicians is not our best way forward. What David McWilliams (and the people he speaks for) says here, while more Hogwarts than hogwash, perhaps belongs in the Age of Aquarius; like Christian Hawkesby’s ‘North Star’ (refer Reserve Bank cuts OCR 25 basis points, RNZ Morning Report, 29 May 2025). That, of course does not redeem President Trump.

In an important sense, McWilliams is correct. Money is free; freer than a piece of paper. But it’s always an accounting liability; a liability incurred by whoever’s signature or head is on it. Neither kings nor bankers have an incentive to overcook the money supply. It’s their heads that are on the line. The secrets are to always have enough money in circulation; and that it is better to err on the side of too much than too little. Value can seemingly be created from nothing; that’s always been so. But money, and any other form of promise, is not itself ‘value’; rather money is a set of claims on value. The alchemy perception is that a piece of paper with a signature – or a metallic disc with a king’s head etched on it, or a deposit entry in a bank account – may have intrinsic value, may in itself be wealth. But no, such things are only promises. If promises are to be kept, then sabotage – including self-sabotage – should be avoided.

(As an aside, it has often been believed that a destructive weapon of war was to flood a country’s economy with credible counterfeit money. The Germans allegedly tried it in the United Kingdom in World War Two, but to no avail. The Japanese also tried it in the Philippines; I have actually seen a case of counterfeit money recovered from a Japanese crashed aircraft in Mindanao, Philippines. Fascinating!)

Conclusion

The monetarists’ essential argument is that if the policy objective is to have future lower interest rates you have to have higher interest rates now. That is, the preventative for high interest rates is high interest rates! (By ‘monetarists’, I refer to the monetary bankers and the growing numbers of ‘finance-experts’ of the new Currency School, distinct from the now-scarce practical banker-accountants of the old Banking School.)

Mysticism about money is rife, and ripe, especially within the guardian church. The Church of Money is a part of the New Technocracy that is surreptitiously overwhelming the institutions of democracy.

Re John Maynard Keynes, on the short-term versus the long-term. Keynes said: “In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again”; meaning that actual life is always lived in the short-term, and that the distinction between the short-term and the long-term is essentially vacuous.

The monetarists’ view is normative; that in the event of an economic stagnation or decline, those who had already built ‘nest eggs’ (portfolios of financial claims) should have priority access to diminished goods and services; priority over the workers and capitalists who would be producing those goods and services. That is, priority access to a diminished ‘economic pie’ should be given to rich old gentlemen and gentlewomen, with the greatest priority to be given to those with the biggest portfolios regardless of how those nest eggs were obtained. This is not a policy to benefit the poor.

Further, the implementation of neoliberal monetary policies – today’s Currency School or Currency Church, which favours intervention on the side of less money and dear money – substantially increases the likelihood of national and global economic decline, in the short-term and in the long-term. Just as a car with insufficient lubricating oil will not go well. Such a car may complete a short run, albeit inefficiently; but it will not complete a long run.

*******

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.

Labour Party Policies

Last month the New Zealand Labour Party announced two policies: a second sovereign wealth fund, and a capital gains tax on non-owner-occupier real estate. For me, both are worrying, representing further steps in the financialisation of an already over-financialised economy. Then yesterday, I heard a story (Report highlights benefits of Kids KiwiSaver scheme, RNZ 13 November 2025) about a group philosophically in tune with the Labour Party lobbying for compulsory KiwiSaver accounts for children; accounts to be opened at birth (and presumably, for those not born in New Zealand, from the date of their being granted permanent residence) and subsequently subsidised. Further promotion of KiwiSaver would be a third financialisation policy.

To understand the issues that I am concerned about – issues about capitalism as understood by mainstream western parties including, indeed especially, Labour parties – a useful metaphor is a ‘mansion’. Our mansion has four spaces: a downstairs commons, a mezzanine, an upstairs casino, and – at the top – a penthouse. The spaces become progressively less inclusive with their elevation.

We note that Aotearoa New Zealand has, since the mid-1980s, become the world’s poster-child for neoliberal finance capitalism. And many, including myself, would argue that New Zealand’s relative (and now absolute) economic decline since the 1980s has been due to its even greater commitment – compared to other western capitalist nations – to the neoliberal financial project.

The Mansion

Money circulates in the downstairs commons (the real economy where goods and services are demanded and supplied) and the upstairs casino (where existing assets are traded, and where derivative assets are created). The casino has an exclusive penthouse annexe – an upper casino – for high rollers.

To our metaphorical mansion we may add a mezzanine, consisting of the government and the banks. We can think of these as regulating the flows of money between the commons and the casino. Money is a special kind of asset – a liquid asset – which flows throughout the mansion, facilitating all the different kinds of trade which take place there. The mezzanine is an active mediator; a pump, a valve, and a sump.

Markets in the commons are primary markets; places where goods and services are produced and bought. Markets in the casino are secondary markets; the casino is a place of trading and speculative gambling. The mezzanine connects the two principal spaces within the mansion.

Though I’m mainly concerned here more about the normal casino, not the penthouse, there is a narrative common among many Labour policy people – many of whom are nine-percenter elites, people in the political class who are not one-percenters – that the ills of society can be placed upon the one-percenters, the penthouse dwellers. These Labour people want the penthouse to be super-taxed, regarding the penthouse as both a fount of grabbable wealth and a place of entitled behaviour. Tax the bads, not so much the goods; and tax capital, not labour. They say. Tax the high-rollers and the landlords. The one-percenters have become a scapegoat for capitalism’s economic failings, allowing the nine-percenters to bask in a bourgeois bubble of self-declared virtue.

Generally, a policy of taxing ‘bads’ for the purpose of raising public revenue must be a policy of supporting those bad activities in order to protect the bad revenue stream. (An ideal tax on bads will generate zero revenue, because it will eliminate those bads.)

While the mansion is a metaphor for a nation’s grand economy of outputs, markets, and money, we note the complication that money also comes and goes through the front and back doors; out of and into other nation’s economies. (While this complication is not unimportant, we can pull away from this by considering the global economy as a complex of commons, casinos, and mezzanines; but no entrances or exits. The global economy is a closed economy. For my purposes here, so is the mansion economy.)

Relationship between the Commons and the Casino

When inequality is high or growing, more money flows from the working classes to the top-ten percent – the ten percenters – than flows the other way; the casino grows faster than the commons. Much of that money being pumped upstairs is profits, royalties, rents; including managerial ‘profits’ in the form of oversized salaries and bonuses. This is income saved rather than spent, meaning it migrates from the commons into the casino.

A significant proportion of income goes into the mezzanine: taxes, savings, debt-repayments, interest payments. Banks and governments then make key decisions about cycling such income back (ie downstairs) into the commons – the economy – or forward (ie upstairs) into the casino. Or it may sit, parked, in the mezzanine.

Thus, the mezzanine has monetary conduits into both commons and casino. Governments spend and save and borrow. When borrowing, governments issue new bonds which are subsequently traded in the casino; but the money raised is generally spent, by the borrowing government, into the commons. Banks may lend to either the commons or to the casino. When, in the judgement of the banks, the economy of the commons is not looking too flash, the profit-seeking banks will lend less to the commons (meaning lending less for the purpose of spending, including genuine investment) and more to the casino (meaning lending more for the purpose of ‘investing in’ existing assets or new derivatives).

We note that, through the processes of production and commerce, economic wealth – useful stuff – is created in the commons. And through the processes of saving and asset trading, financial wealth is created in the casino. The two forms of wealth, commonly conflated, are fundamentally different from each other. Economic wealth – actual wealth – includes both hens and their eggs. (Not golden geese nor golden eggs!) Financial wealth is claims on actual wealth (or on other claims). Gold – except in its industrial and dental and purely artistic uses – is an example of financial wealth; a claim on economic wealth, as are all forms of money. Traded artworks, too, are financial wealth.

We note that employees within the finance sector themselves operate in the commons economy, selling and buying goods and services; albeit, financial services.

Circular Flow

In traditional economic description, the injection of investment spending (controlled mainly by banks) offsets the outflow of saving. And the injection of government spending offsets the outflow of taxation. This is known as the circular flow, and was modelled in the 1950s by the hydraulic moniac machine, invented by the economist Bill Phillips who had worked as a teenager in the early 1930s on the Waikaremoana hydroelectric scheme. (Detractors of descriptions of economies which emphasise the circular flow over the price mechanism, may refer to Phillips’ hydraulic Keynesianism.)

The main impetus to economic growth – growth of activity in the commons – occurs when injections slightly exceed outflows; creating excess demand. (This is refuted by the neoliberal advocates of supply-side economics, who believe that growth is natural regardless of demand, but may be hampered by price distortions and other cost impediments.)

Other injections into the commons from the mezzanine or the casino include dissaving – ranging from the withdrawal of money from savings’ accounts to the sale of assets for the purpose of buying goods or services – and new consumer debt. Consumer debt can take place through the wealth effect, meaning that people with increasing financial wealth are encouraged to borrow against that collateral in order to purchase goods and services in the commons.

Price inflation can stimulate the spending of money parked in the casino or the mezzanine. With inflation, the purchasing-power of money erodes, creating incentives to spend it ‘downstairs’. But inflation also creates incentives to deploy money ‘upstairs’, by buying non-money assets with expected returns above the rate of inflation.

Goods’ types

The ‘bread and butter’ of developed, industrialised, economies is the production of ‘wage goods’, essentially meaning the goods and services that working class people buy; indeed many fortunes have been made from selling wage goods, especially addictive goods, which enjoy economies of scale. The most important wage goods are food, rental housing, clothing, transport, basic personal services, and entertainment.

The wealth effect, however, tends to favour ‘bourgeois goods’ over wage goods; in that sense we may say that money from working-class taxes and savings is ‘laundered’ through the casino, re-emerging in the commons as discretionary middle-class spending. Another part of the economy, which connects the commons directly to the penthouse, is known as conspicuous consumption – ‘vanity goods’ – basically spending which can only be undertaken by aristocrats and other one-percenters; think the ‘gilded age’.

A fourth category of consumer goods produced in the commons are military goods, built by the military-industrial complex, and principally facilitated by governments.

A fifth category is ‘illicit goods’ – goods and services which are either illegal outright, or are otherwise disreputable; the most obvious examples are the consumption of illicit drugs and sexual services. An important and understudied aspect of this fifth category is the extent that elites and counter-elites – the ten-percenters – generate demand for illicit goods. Economic theory treats illicit goods as any other type of consumer goods.

In addition to consumer goods, in the circular flow there are investment goods, which are important for economic growth. Investment goods become, for general purposes, the built environment. The demand for investment goods is largely derived from the demand for wage goods.

The two main threats to the sustainability of capitalism are excess flows – net flows – from the commons to the casino; and spending flows from the casino to the commons which undermine the demand for – and hence production of – wage goods. Capitalism is at its healthiest when workers are also consumers; and when workers don’t have to incur debt in order to buy wage goods.

When outflows into the casino exceed injections into the commons

This is a state of systemic unbalance, likely to happen when wages fall behind productivity; ie likely to happen when the incomes of the upper income-decile increase the most. The casino gets more populated with money, with the commons less populated. More play for some, and less pay for others!

Such unbalance leads to a form of structural recession; a shrinking of the real economy as the financial emporium upstairs expands. In such a structural recession, the commons starve – or at least suffer malnourishment – whereas the casino bloats and inflates.

The attraction of the casino is ‘financial return’, which has two components. The first component is yield, which is revenue extracted from the commons by asset-holders participating in the casino. The second component is capital gain, which derives when demand for existing assets exceeds the supply of existing assets, pushing up the exchange prices of those assets. This quest for – indeed the gamble for – capital gains is the reason why it is appropriate to call the upstairs financial room of the mansion ‘the casino’.

Government policies which facilitate flows of revenue into the casino from the commons are policies which fuel the capital gain process, by generating excess demand for existing claims; in effect creating more claims by making claims more valuable. The capital gains process gives the illusion of wealth-creation; but it is really the creation of financial bloat or inflated wealth, of excess claims. It occurs when speculation gives – at least in the short term – better returns than investment in the commons. It increases the claims on real wealth of the casino class vis-à-vis the incomes of the commons class of mainly working people.

What happens most of the time, however, is that financial wealth is not spent on goods or services; rather it is left in the casino, to inflate. Inequality begets inequality. When capital gains are the norm, the casino operates as an alternative form of compound interest. Regular compound interest occurs when interest yields outpace consumer price inflation; interest payments augment financial wealth while draining the commons of demand for goods and services. Casino compounded interest occurs when capital gains exceed inflation. Leveraged compound interest occurs when casino punters borrow money to buy assets; while risky, the growth of financial wealth made possible substantially outpaces the more ordinary and passive forms of accumulating compounded claims. When leveraged compound interest is taking place, banks in the mezzanine look to upstairs-lending instead of downstairs-lending for more of their profits.

Capital gains, and Labour policies.

We in New Zealand have become most familiar with real estate as the asset class which generates capital gains; so it is that asset class for which there has been most agitation – especially from the established ‘Left’ – for a capital gains tax.

The Labour Party is proposing a capital gains tax on ‘investment property’ as a future revenue source. To achieve revenue from such a tax, there have to be such capital gains, and therefore that part of the casino needs to be nursed to convert this problem into a solution.

Yet, in the casino at present – especially in New Zealand – capital gains are being made from just about every category of financial assets other than real estate. And Labour has no plans to impose a capital gains tax on any of these others: shares, bonds, gold, crypto-currency being the main types. Labour also plans to exempt owner-occupied housing, creating disincentives to labour mobility (homeowners moving to other locations, renting out the family home). But they do not plan to exempt young aspirants to property-ownership who can most easily get onto the property ladder by buying (and letting) houses in towns or suburbs other than where they live and work.

NZ real estate is too overpriced relative to financial fundamentals at present and in the foreseeable future; substantial capital gains seem unlikely to restart so long as the commons is in the doldrums. Though it seems that northern European nations, which kept a lid on property prices in the 2010s, are now ‘enjoying’ the financialisation of housing.

An unremarked-on form of capital gain taking place at present is in the bond market, especially government bonds which are regarded in many jurisdictions as risk-free. When interest rates fall steadily – not too fast, not too slow – then bond prices increase for a period of years; especially the prices of ‘long-dated’ bonds. (Though New Zealand has a rather thin government bond market, given its official aversion to government debt. This chart shows yields on US 30-year bonds; these bonds can be expected to generate large capital gains when interest rates finally fall in the United States.) Falling interest rates do not necessarily restore the downstairs-upstairs balance, boosting consumer spending, as most commentators suggest. The revival of the commons needs to be kick-started by spending – such as government spending – not merely by cheaper debt. As well as stimulating the market for bonds in circulation, lower interest rates create the expectation that banks will lend more funds into the casinoand thereby further boost the prices of financial assets.

If governments tax some forms of capital gain, but not others, they simply distort the financial marketplace, creating more ‘investment’ in those classes of assets not subject to the tax.

Replenishing the Commons

Money that flows into the casino and stays there is effectively withdrawn from the real economy, so the commons need to be replenished by the mezzanine with new money. In essence, that process of replenishment is known as quantitative easing; it’s essentially a process of expanding government debt – creating new liabilities on governments’ balance sheets and new assets on banks’ balance sheets. The requirement is that the new money is lent into the commons, and in the process spent in the commons; not lent into the casino or left in the banks’ sumps.

Super-Inflation

In near-normal times, replenishing the commons depleted of money maintains that normality, and therefore minimises financial risks. It’s normally OK if money – effectively play-money – circulates in the casino, so long as that money doesn’t interfere with vital markets such as the housing market. But such monetary bloat acts like a Sword of Damocles dangling over the commons.

A super-inflation problem comes when there is a sudden and unexpected cascade of reactivated money descending from the casino to the commons. When there is panic in the casino – as there was in 2008 – the mezzanine may replenish the casino with money, in the hope that the panic will ease and the money in the casino will stay in the casino. That’s what happened at the end of the 2000s, indeed with a degree of deflation; yet there was plenty of scaremongering that dramatic inflation might be a consequence of the monetary easing which took place then.

The principal Sword of Damocles which we face today is the world’s corporate casino-dwellers – the many private and public pension funds, and sovereign wealth funds.

Sovereign Wealth Funds

Sovereign wealth funds are funds which ‘invest’ public savings in the global casino. Some such funds may have restrictions placed upon them; these are usually funds which seek to promote certain sectors of the real economy, and are sometimes nationalistic in nature. This is the kind of second fund proposed for New Zealand, and is similar to sovereign wealth funds promoted by Roger Douglas in 1973, and the fund promoted by certain elements of the First Labour Government in 1937. (New Zealand’s present sovereign wealth fund is commonly known as the Cullen Fund, a superannuation fund, and is scheduled for liquidation in the coming decades.)

Countries for which sovereign wealth funds are appropriate are mainly those with large stocks of in-demand export commodities. The obvious examples in recent history are those of the oil-producing countries, such as Saudi Arabia and Norway; these countries have had large trade surpluses. Another country famous for its sovereign wealth fund is Singapore, which also has had large trade surpluses. Singapore borrows money, in Singapore’s own currency, to fund its fund. Singapore has a huge pool of private savings, which are channelled into that country’s public ‘investment’ fund.

New Zealand is the very opposite; it’s a country with a very long history of current account and trade deficits. The New Zealand government, like the Singapore government, effectively borrows to fund its fund. The new Labour-proposed fund is intended to divert certain monies (profits of publicly owned businesses) into this new fund – money that would normally be spent into the real economy and thereby supportive of the commons – and shunt it into the casino. It has been conceived of as a magic-money tree – a compound interest scheme – which will create future financial wealth. In reality, it will simply augment the Sword of Damocles which is already hanging over the economies of New Zealand and like countries.

Likewise KiwiSaver, which is a set of private pension funds, made semi-compulsory, shunting lots of money into the casino, and funded by incomes which could otherwise be being spent into – supporting – the commons. KiwiSaver breaks two of the most commonsensical rules of monetary literacy. It requires working-class New Zealanders to save money while simultaneously incurring debt, and requires them to prioritise this building of casino assets over their paying down mortgage and other personal debt. In addition, it requires New Zealanders to hope that their KiwiSaver balances will outpace inflation; indeed the balances are outpacing inflation in part by policies which boost the casino at the expense of the commons – hence facilitating structural recession – and which require Kiwi savers to take on systemic risks in order to achieve those above-inflation returns.

Magic Money Trees?

For modern mercantilists, the metaphor for money – as a strictly finite commodity – is ‘gold’. (In the mercantilist epoch in the past – the era of merchant capitalism in the sixteenth to eighteenth centuries – the practical metaphor for money was silver.) The mantra of contemporary mercantilists is that “money doesn’t grow on trees” or that there is “no magic money-tree” or that there are “no money-making pixies”.

The mercantilists lampoon the idea of a magic money-tree, while themselves upholding their own implicit (compound interest) concept of a magic-money tree. (The different placements of the hyphen are so important here.)

The people who really promote the casino at the expense of the commons are the ones who believe that money has magic powers. In the end, money can only buy what is being produced at the time that it is spent. If there is a future cascade of casino-money landing in an economy which is in a state of collapse – and it was a near-run thing after 2008, and after 2020 – then saved money will become close to worthless. The only thing that will matter in a collapsed economy is the capacity of the commons to produce the necessaries of life.

The neoliberal financial project is a political programme of liberal-mercantilism; the conflation of private-property interests, governments that support those interests, and the fairy-tale view that wealth and claims on wealth are the same thing. This magic-money view is predicated on the idea that whole societies can become wealthy by destructively mining the world’s resources in order to create claims on the world’s resources. It is a project of linear economics in a world in which real and sustainable economies must, by the very nature of life, be circular. Money’s power lies in its circulation, not its extraction.

Intergenerational Equity

Intergenerational equity is not achieved by funding the casino and the magic-money tree of enhanced compound interest. This is what the ‘financial literacy’ industry claims. Through this approach, the young of today can only expect to be dumped-on tomorrow. Intergenerational equity is achieved by investing in a sustainable commons, not in magical compound interest.

The Global Arms Race

What seems to be happening is that, in addition to boosting the casino, western capitalism is becoming increasingly devoted to militarising the commons, and to forcing non-western countries to do likewise. A degraded militarised commons, with more guns and less butter, is – among other things – a second Sword of Damocles poised over us all. Yet our political classes are conspicuous in the lack of attention they are paying to the problems of militarisation and unsustainability, and most of the rest of us are too busy making ends meet or looking the other way.

Conclusion

The future of western capitalism depends on its investment in – support of – the commons, not the casino. While the casino may operate in parallel to the economy, largely as a sort of irrelevance, it also imposes a kind of severe danger – an avalanche risk, if you will – to the real economy upon which we all (including our elites and would-be elites) depend. The heightened risk is that the casino has been and is being supported by governments – indeed Labour governments – at the expense of the increasingly impoverished commons. The mansion depends on its lower floor; not its superstructure.

*******

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.

The first chart shows annual price increases in New Zealand for businesses (PPI: Producers Price Index) and consumers (CPI: Consumers Price Index), since 1999. We note that the latest CPI datapoint is for the third quarter of 2025, meaning that it’s centred on mid-August. The most recent PPI data is for the second quarter of 2025, meaning that it’s centred on mid-May.

For the whole period, the first important points to note are that the PPI is more sensitive to changing influences on prices than the CPI, and that the PPI tends to lead the CPI. Indeed, annual CPI inflation is a lagging measure of price change; meaning that it’s a poor measure to base policy decisions on.

The other key point to note is the unusually long lag of the CPI after 2022. Using the more sensitive and timely PPI measure of price inflation, we see that inflation in New Zealand troughed in 2023, and that, using the ‘outputs’ PPI, annual inflation in New Zealand was bang-on the two percent policy target at the time of the 2023 general election.

Despite the claims of our Prime Minister that he inherited “seven percent inflation” from the previous Labour government, in the two years since the election, actual inflation (based on the more sensitive PPI) has been rising.

It is very clear that there was a double ‘price spike’ in 2021 and 2022, periods exactly corresponding to the disruptions to global supply chains caused first by the Covid19 pandemic and secondly by the Russia-Ukraine war. Commodity price increases (PPI-inputs) fell almost to one-percent once those global supply disruptions were resolved. After that, the main source of ‘cost-of-living’ increases – suggested by the CPI lag in 2024 – was panicked and counterproductive domestic policy measures.

Historically, we note that, at the onset of the 2008 Global Financial Crisis, inflation in New Zealand was far worse than anyone realised at the time. We also note that, while the 2011 ‘spike’ in CPI-inflation was due mainly to the increase in the GST rate, there was also a spike in producer price inflation at that time. Normally the amplitude of PPI-inflation is greater than for CPI-inflation; because of GST, this amplitude difference did not happen.

Best leading measure of price variation: biannual price change

The most-timely measure of price variation is the quarterly change of the PPI [inputs]. However, quarterly measures are notoriously ‘noisy’, so the first reliable measure of price variation is the six-monthly [ie biannual] change in prices. The measure here takes six months (the two most recent quarters, averaged) compared to the previous six months.

The second and third charts clearly show both the annual and annualised biannual rates of PPI-inflation. The chart clearly shows how the six-monthly (biannual) inflation rate reveals the key inflation turning points first. By the August 2023 release of the PPI data, it was evident that – by the first available measure of prices – inflation in the first half of 2023 was below two percent. Yet, in election year, the Labour Government never mentioned this very favourable piece of economic news! Why was the actual data not being discussed? Presumably because the truth conflicted with the narrative about inflation; the narrative which New Zealand society succumbed to and was cowered by. Part of the problem is the time-poor (and sometimes credulous) media having been, in effect, trained to follow certain statistical indicators but not others.

These charts also plot the Official Cash Rate (OCR), the principal (though typically misplaced) policy lever to push-back on inflation and deflation. They show that anti-inflation policy commenced late in 2021, and peaked in 2023 and 2024. Thus, the ‘anti-inflation’ policy was persevered with well-after the leading indicators had shown that the inflation problem had disappeared.

The fourth chart shows the annual and annualised biannual rates of increase of consumer prices, again showing the OCR as well. Once again, even though the CPI is a lagging price-level indicator, a proper look at the CPI data shows that CPI-inflation was falling markedly in 2023, and that there was no case for anti-inflation policy in late 2023.

The explanation for the unusually long lag of the CPI (compared to the PPI) lies in the fact that the perseverance of anti-inflation policy itself created an ongoing ‘cost-of-living crisis’. If we go back to the first chart shown, it is the long lag in CPI inflation in late 2023 and in 2024 that is in fact the essence of the ‘cost-of-living crisis’. Rather than the crisis being cured by the contractionary monetary policy settings (of the OCR), that extended CPI lag was caused by the anti-inflation policy.

The fifth chart goes back to the PPI-inflation, using the ‘outputs’ measure of business prices, as in the third chart. This chart shows the OCR settings shifted by 18-months, to simulate an 18-month lag. The reason for this is that we are told that monetary policy takes at least a year – with Reserve Bank research in the late 1980s claiming as much as five years – before monetary policy ‘does its work’. If 18 months is the correct lag between policy and outcome, then we should see upturns in the OCR coinciding with downturns in inflation; and downturns in the OCR coinciding with upturns in inflation.

Instead, considering the two years from mid-2023, we see the very opposite, the upturn of the OCR almost exactly coinciding with the upturn of business inflation. We know that the short inflation spike of 2021 and 2022 was caused by global supply-chain disruptions; this kind of causation is probably true of some other inflation spikes. Also exchange rate fluctuations contribute to spikes in price variation. If we look at the late 2010s, we see falling interest rates accompanying falling rates of price increase; contra to the policy narrative. In the early 2010s we see fluctuating inflation while interest rates were essentially unchanging. In the late 2000s, we see interest rate increases matching inflation increases; again, contra to the policymakers’ narrative.

The conventional neoliberal narrative about inflation is that there is a substantial lag in policy effectiveness, and that inflation is principally driven by expectations of inflation. In this narrative, the inflation data should not be ‘spiky’ at all; rather, once set in, inflation supposedly establishes its own momentum or inertia. The PPI data clearly refutes this ‘momentum’ narrative; inflation is not driven by expectations arising from immediate past inflation. And the alleged momentum in CPI-inflation in New Zealand in 2024 is clearly false; rather there was a lag in CPI-disinflation caused by interest rates being too high; not too low. (Disinflation is falling inflation, whereas deflation is falling prices.)

Accepted reasons for an OCR-increase to PPI-outcome lag include the fact that business loans – like home loans – are typically set at fixed interest rates, for say two or three years. In the case of a falling OCR, however, businesses may quickly repay (or break) high interest loans and refinance as quickly as possible with the new low interest rates. So, policy reductions in the OCR are likely to affect outcomes more quickly than increases in the OCR.

It is looking as if anti-inflation policy actually achieves a mix of neutral and pro-inflationary outcomes. My suspicion is that anti-inflation policy is substantially pro-inflationary – counterproductive – with a lag of 15-24 months; and anti-deflation policy is actually pro-deflationary, with a shorter lag.

It is likely that the lag from anti-deflation policy (as in these years: 2001, 2008, 2015, 2019; refer third chart) to consequential deflation is quite short, in large part because the commencement of disinflation commonly precedes the policy. (Like trying to end a war that’s already ending.)

2026 and 2027 will be interesting because the longer outcome lag from high interest rates in 2024 and the shorter outcome lag from falling interest rates in 2025 suggests a wait until later in 2026 before there are marked falls in PPI-inflation, and early 2027 before marked falls in CPI-inflation.

There are at least two disruptors, however, given the global environment in flux. First is the 2025 American-led haphazard disruption to the already disrupted global economy, including the redirection of global supply-chains in favour of military goods and services. Second, for New Zealand, there is the ever-present possibility of a domestic financial crisis which would see a rapid fall in the value of the New Zealand dollar and therefore a 2027 spike in high rather than low inflation.

*******

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.

Last week I looked at how, for modern day purposes, monetary policy started around 1750. It began with the departure from the presumption that money is wealth to the idea that money is a veil and that therefore wealth is something else. That was, in a sense, the beginning of political economy as a branch of philosophy, morphing into economics as a social science. In the then new (now ‘classical’) utilitarian view, wealth came to be seen as useful ‘product’ and money as a ‘veil’.

The liberal view arose that the best monetary policy was no-policy; that is, no policy beyond the steady coin production of each sovereign’s Royal Mint. While no longer the definition of wealth, across the capitalist world, money was understood as central (as a lubricant or a catalyst) to the workings of a self-regulating productive super-machine. Money came to be understood (correctly) as a technology – a flow technology – rather than as wealth itself. The mercantilist idea of money as wealth – and of gold or silver as money ‘to be made’ – never disappeared, however.

With that view of money as a lubricant in mind, we today can understand that a shortage of money is always going to be a bigger problem than a surfeit of money. (A car with an oil leak will eventually grind to a halt. A car with an overfilled sump, on the other hand, will still function; it will function near-to-perfectly if there is a place within the car to park the excess oil.)

This new laissez-faire view of monetary policy changed once it was realised that the mechanism didn’t work in practice as it did in theory. While it didn’t work for multiple reasons, there was a continuation of the pretence that it did work. In order to maintain that pretence, senior bankers and political leaders – the emerging ‘lords of finance’ – turned to interest-rate manipulation within the context of the ‘gold standard’.

Ultimately, what societies’ elites wanted was to have a form of ‘liquid’ wealth that they could store over time, and which would maintain (or even increase, through the ‘magic’ of compound interest) its purchasing power across time. The merchant capitalist mindset came to prevail over the realisations of progressive bankers and economists. The elite-classes still wanted a monetary policy which would operate as if mercantilism was true.

The elite-classes wanted money to come at a cost, so that they could be sure money would remain scarce. Gold and silver mining (and latterly crypto-currency mining) have been the primordial costs of commodity money. Interest rates would have to serve as the entry costs of modern ‘as if’ money.

Modern Monetary Theory

There is a known and substantially correct story in academia – albeit ‘heterodox’ academia – about money, monetary policy, and the relationship between public finance (fiscal policy) and money. It’s called Modern Monetary Theory or MMT. The conceptual relationship between OMT (orthodox monetary theory, though a better name might be PMT ‘prevalent monetary theory’, or even better LMN ‘liberal-mercantilist monetary narrative’) and MMT is akin to the relationship in the 1850s between miasma-theory and germ-theory in epidemiology. (Many people died of cholera in Europe and the Americas because the scientific establishment clung onto the miasma theory, despite the overwhelming and increasing weight of evidence to the contrary.) MMT dispenses with the requirement that money must enter into circulation at a cost; and disposes of the argument that the public and private sectors are each-other’s rivals.

I was fortunate to meet Randall Wray at an economics’ conference in Sydney in 2011, and found that he and his academic collaborators already had a well-developed theoretical framework which matched some statistical work I was doing at the time. I had been exposed to the work of Japanese/Taiwanese macroeconomist Richard Koo, and his studies of the Japanese structural recession of the 1990s and Japan’s recovery from that event. Of importance was Koo’s concept of a balance-sheet recession.

The central idea is that core money is public debt; a set of promises spent into circulation and backed by sovereign governments. A simple example of this is traditional coin money, made from bronze or silver or gold. In MMT, what gives the coin its value as a token of circulation is the depiction of the sovereign’s head, and not the amount of precious metal in the coin. A second example lies in the history of central banking, whereby the original three central banks (in Stockholm, Amsterdam, London – all in the seventeenth century) pioneered central banking through their roles as bankers to their governments; in particular, they managed their governments’ historical war debts. Those debts became private assets; and the core assets on these banks’ balance sheets.

These banks evolved to become bankers to the other banks as well as bankers to the state. Almost all the world’s central banks – ie Reserve Banks – are now publicly owned; they are very much part of the apparatus of the state. While governments sub-contract monetary policy to semi-independent central banks, MMT suggests that monetary policy is in reality undertaken by nations’ Treasuries. As a result of Treasuries’ monetary misunderstandings, modern capitalism risks becoming like an under-lubricated car with leaks.

Public debt(s) are private assets, just as a bar of gold is an asset. The world’s effectual money supply is the ‘liquid’ – ie flowing or circulating – component of (or derivative of) any monetizable asset; the core monetizable asset being public debt. This chart (from my Governments run financial deficits; it’s their role to do so, Evening Report, 17 October 2023) shows that, this century, public debt – the monetary base – increased each year from 2008 to 2022 by an average of about four percent of global GDP. That’s about how it should be, and with significantly larger injections of money required whenever a financial or economic crisis threatens to undermine the circulation of money in the real economy, as occurred in 2008 and 2020.

The real economy is the purchases of goods and services. The ‘unreal economy’, into which much money leaks, is the ‘casino economy’ whereby money is spent on financial assets; non-money circulating promises such as shares, bonds, and property titles. The ‘upstairs’ casino economy acts as a dynamic treasure hoard, fuelled by leaks from the real economy, with players buying and selling assets at mostly increasing prices.

While according to MMT, public debt (not gold or silver) is the foundation rather than the pariah of capitalism, that is not to say that more public debt is always better than less public debt; just as, in the classical schema, more gold is not necessarily better than less gold. Though in 2025 Aotearoa New Zealand, more public debt would certainly be better than the present constricted amount. The growth of public debt is always limited by tax revenue arising from the circulation of money; as they say, nothing is more certain than taxes. One efficient way to increase public debt – and thereby enhance the liquidity of the economic machine – is through ‘negative income taxes’; for example, universal tax credits (which should act like the credits received in the game Monopoly whenever a player passes ‘Go’).

The prices of money

There are three important prices associated with money: the internal price (which wavers with pure inflation and pure deflation, and does reflect the idea of money ‘as if’ it’s a commodity like silver); the external price (the exchange rate between one form of money and another, eg $NZ vis-à-vis £UK); and the interest rate which is best understood as the price of ‘inter-temporal trade’ (although OMT treats it as the ‘necessary cost of money’).

Inter-temporal trade simply means exchanges when, unlike direct barter, selling and buying do not occur simultaneously. Wage workers effectively sell their labour on pay-day, and buy stuff (say at the supermarket) on another day. When they ‘save’, then it may be months or years before they spend that saved money; that is, months or years before they use it to buy stuff. Alternatively, workers may spend some of their wages in advance; for example, with a payday loan or a credit card. Interest rates are a market-clearing price which – if correctly set in the money market – ensures the balancing of income spent late with income spent early.

People who tend to spend their money before payday are usually net payers of interest. Likewise, people who spend most of their money after payday are net receivers of interest. Thus, interest rates should be high when few people want to spend late and many want to spend early; and low when many people want to save and few want to borrow. There is no reason why interest rates cannot be very low; that is, negative.

Negative real interest rates are indeed commonplace; they occur when the rate of inflation is higher than the interest rate. For example, if the internal price of money is falling by five percent a year (ie annual inflation is five percent) and the interest rate is three percent, then the real interest rate is minus two percent. Under such conditions, interest effectively flows from savers to borrowers; rewarding early spenders over late spenders.

(For a while in the late 2010s, Switzerland had a published interest rate of minus three-quarters of a percent and inflation at minus one-and-a-quarter percent, meaning that the real rate of interest was plushalf a percent. Everything worked fine; interest effectively flowed from borrowers to savers. Switzerland then needed negative interest rates in order to limit the appreciation of its currency the Swiss Franc; otherwise, the external price of Swiss money would have been rising too much. In that episode, all three prices of money came into play.)

Looking at the three prices of money dispassionately, we see that they all play a role in free market capitalism, and that the inflation rate is itself a part of the price mechanism. This indeed has been grudgingly accepted by the mainstream, with today’s monetary policy proposing the optimum annual inflation rate as two percent rather than zero; and there are advocates today for higher inflation targets. The internal price of money should fall, policymakers agree, albeit in a predictable manner. Australia indeed has a higher inflation target than New Zealand.

(If inflation is 2.1% every year for 100 years, two $20 notes put under the mattress today should buy one loaf of bread in the year 2125; $40 would become equivalent to today’s $5.)

One important benefit of inflation is that it encourages the circulation rather than the hoarding of money. The biggest danger arising from large caches of non-circulating money is that such money may reactivate at short notice, creating substantial ‘excess-demand’. Just as we are used to seeing money regularly leaking into the casino, money in the casino can be injected into the real economy at short notice.

Bimetallism as a way of favouring Inflation over Deflation

An early attempt at monetary reform during the gold-standard period was the advocacy of bimetallism.

The United States election of 1896 was fought, in effect, on the issue of inflation versus deflation. At that time, due to gold scarcity, the gold to silver exchange rate was high (16:1) and rising. There was a substantial world depression in the early 1890s; an event that hit Australia very hard, causing New Zealand to resist overtures to join the incipient Australian federation.

In the world of the gold standard, prices were at an all-time-low and many small businesses had become distressed; especially farmers who were selling their produce at prices which were falling even faster. In the United States the free silver movement was prominent, and the Democrat Party chose a candidate – William Jennings Bryan – who favoured that political position. He failed to get elected because there was an effective party split, with many urban voters in opposition to the policy to shift from the gold standard. (As a result of the Democrat split, many Gold Democrats aka Bourbon Democrats voted Republican. The new Republican president was the recently hyped imperialist William McKinley. The gold-silver exchange-rate issue largely dissipated following the 1897 Alaska gold rush.)

The anticipated effect of a switch to a silver or bimetallic standard was that prices and wages would go up, and the highly indebted small businesses would be able to service their debts in an environment of inflation rather than deflation. City workers in 1896 tended to favour deflation; many were unable to make the connection between their future standard of living and the retention of a thriving small-business sector.

As we have seen, this position of favouring inflation over deflation is now mandatory in most capitalist jurisdictions. The largely successful monetary policy attempts in the 2010s to ward-off deflation ensured that there was no general depression in that decade. The policy, strictly, was largely unsuccessful in achieving its inflation target. That’s because of one of the fundamental flaws in orthodox monetary policy; low interest rates generate lower rather than higher costs, and therefore low rates of CPI-inflation.

Examples of ineffective and effective monetary policy from (mainly) New Zealand history

There were antecedents of MMT (and other pragmatic initiatives) in New Zealand and elsewhere during the recovery from the Great Depression which peaked in the early 1930s.

In the 1920s New Zealand had no Reserve Bank. New Zealand’s (mainly Australian-owned) banks did their banking in London, the world’s pre-eminent financial sector. From 1926 until 1928, New Zealand’s Minister of Finance was William Downie Stewart, an economic liberal and a monetary conservative. Gordon Coates – more of a pragmatist, but largely untested – had been endorsed as Prime Minister in the 1925 election months after the death of William Massey.

1927 was a disaster year for New Zealand, exacerbated by Stewart’s unresponsiveness in his role. Australia had its economic meltdown a year after New Zealand, reversing the trans-Tasman migration flow. This made the government even less popular, as unemployment in 1928 was blamed on immigrants. Coates’ Reform Party – the principal precursor of today’s National Party – went from 48% of the vote in 1925 to 35% in 1928, losing power as a result. In 1929 there was a United minority government, initially facilitated by Labour. The winning policy of United – the former Liberal Party – was increased government borrowing. The result was 20 months, in 1929 and 1930, of relatively good times despite the unfolding international crisis.

Reform went into the December 1931 election as junior partner in a United-Reform Coalition (a formal coalition which formed that September). While gaining many more votes and seats that election than United, Reform remained the junior partner. Stewart was restored to Minister of Finance at the worst possible time; going into 1932, the most difficult year of the Great Depression. Labour’s doctrinaire socialism was unappealing to voters, despite the growing unpopularity of the United government in the months following the retirement and death of Prime Minister and Finance Minister Joseph Ward.

As a ‘sound-money’ man, Stewart had been a stickler for the revised gold-standard rules. However, before the 1931 election, Britain’s government collapsed due to the financial crisis. Britain had to suddenly withdraw from the Gold Standard. The ensuing rapid depreciation of the British pound (largely reversing deflation in that country) kick-started the British economy, and also brought the New Zealand economy out of its 1931 ‘free-fall’. But New Zealand, being an agricultural commodity economy facing severe terms-of-trade issues, needed an even bigger (and longer-lasting) currency reset. Eventually, in January 1933, Stewart did the right thing and resigned on a matter of monetary principle. Coates – Stewart’s replacement – now pragmatic and worldly-wise, immediately devalued the New Zealand pound against the British pound, in line with the recommendations of the young generation of economists.

New Zealand’s recovery remained slow, but at least it was under way. The management of New Zealand’s financial reserves in London remained too conservative. Nevertheless, many subsequently iconic new businesses began their lives in 1934 and 1935 (for example Wattie’s, Fisher and Paykel, Sleepyhead).

Coates did two more things of great importance. First, he established a reform-minded Brains Trust made up of three young economists – Campbell, Sutch, Belshaw – who would argue for monetary pragmatism. And Coates established the Reserve Bank of New Zealand in 1934. Though created with conservative monetary principles in mind, the means had become available to introduce heterodox monetary policy in the event of a future government willing to flirt with an alternative narrative.

Another important development was the rise in the United Kingdom in the 1920s of Social Credit, then known as Douglas Credit, a ‘lay’ movement (counter to the political economy traditions of Marshall and Marx) reminiscent of the previously-mentioned American ‘free silver’ movement. Social Credit largely antagonised academic economists, by making anti-orthodoxy generalisations which were simplistic and too broad. Nevertheless, Social Credit gained a substantial political influence, not least in New Zealand; and it did have policy prescriptions helpful for extracting economies from a state of structural recession and inequality.

In the Labour Government elected in 1935, there was a substantial Social Credit faction; and there were a range of other monetary reformers with varying degrees of sympathy towards Social Credit. Social Credit’s central argument was that the orthodox monetary system had a permanent and structural deflationary bias, and that a public institution – such as an appropriately modified central bank – would be required to offset this bias. In effect, Social Credit argued for quantitative easing, and a national dividend (and food price subsidies, called ‘compensated prices’) as means to inject new money into circulation while addressing monetary poverty and inequality. (See A National Dividend vs. a Basic Income – Similarities and Differences, by Oliver Heydorn, 2016.)

Unlike the quasi-Marxian form of socialism advocated by New Zealand Labour from the 1910s until 1933, the party under the leadership of Michael Joseph Savage became infused with monetary radicalism and a desire to unite rather than divide diverse economic interests.

A commitment to monetary reform within Labour in 1935 led many rural voters to vote Labour for the first time ever (including voting for my great-aunt’s husband in Kaiapoi). Those voters remained loyal to Labour in 1938, in light of Labour’s subsequent monetary achievements. Particularly effective was the State Housing programme, politically managed by John A Lee, a working-class monetary reformer. Labour made full use of the new Reserve Bank to create-through-spending the money required. Economic growth boomed (about 25% in two years) while inflation remained low; a big recovery from a big depression.

In New Zealand, Social Credit split from Labour in the 1940s, and formed its own political party. While often polling highly, it could not break the two-party system, and was eventually broken as a political force – in 1984 losing two-thirds of its 1981 vote – after having been lampooned by Bob Jones. Jones was leader of the one-election-wonder New Zealand Party; an ‘unsuccessful’ party which successfully acted as a political catalyst for the return of economic liberalism and the floating-currency version of classical monetary orthodoxy.

While much of what Social Credit claimed as chronic weaknesses of the orthodox monetary narrative has turned out to be true, the successful albeit piecemeal monetary reforms which took place in the middle-third of the twentieth century eventually undermined Social Credit’s critique of monetary orthodoxy. Social Credit had indeed contributed to its own seeming redundancy as an economic force in New Zealand. (There was a Royal Commission on Money in 1954, in which Social Credit had a chance to make a substantial case. Although there had been a near-recession around 1953, after the Korean War, and Social Credit gained 10% of the vote in 1954, there was little evidence then of structurally unsound monetary arrangements.)

A third important development was the publication in 1936 of The General Theory of Employment, Interest and Money by John Maynard Keynes, an already famous British economist. This was a largely technical book which extended and reconsidered Keynes’ earlier views on money and monetary policy (1930 A Treatise on Money), while emphasising the critical roles of public debt and government spending in getting a country out of structural recession. Keynes also recognised in 1933 that import protection through tariffs would help with national economic recoveries, and that national economic recoveries would enable the restoration of the international capitalist economy. Keynes criticised international capitalism in order to save it.

Keynesian analysis led to the pushing a string critique of monetary policy.

It was the Keynesian critique which created the post-war international expansion; underpinned by an emphasis on government spending as a curative for the kinds of unemployment which widely prevailed in the 1930s. But Keynes believed that the problem of the 1930s was more cyclical than structural; hence he argued – in contrast to the MMT argument – that governments should run budget surpluses during periods of full-employment.

Keynes was the architect for the post-war monetary system that might have been. But the alternative American-led version won out, with politics prevailing over good argument, and with Keynes’ premature death.

Keynesian and other insights from the Great Depression of the 1930s informed monetary policy during the global decolonisation period from 1946 to 1976. Newly independent countries emerged, all with central banks. Central banks became, more explicitly than before, an arm of government. In New Zealand, with its substantial historical national debt (a result of imports exceeding exports for around 100 years) the development of import-substituting and export industries became central to economic policy. Interest rates remained below the rate of inflation through sufficient costless money creation. Organisations close to government – especially the producer boards such as the Dairy Board, forerunner of Fonterra; also, the State Advances Corporation which funded mortgages – gained direct lines to practically costless money through their Reserve Bank accounts.

While those monetary reforms worked in their time, future fiscal-monetary policies will need to be more about sustainability and private-choice than through a single-focus on selling more goods in a stormy world marketplace.

Unfortunately, monetary policy from the 1980s regressed into the spirit of 1920s’ economic liberalism and monetary conservatism. The result has been the nonsense of simultaneous economic growth and deteriorating living standards through stagnant wages, overwork, unaffordable housing, and weak environmental stewardship; the inequality norm of the neoliberal era matches that of the early twentieth century.

Money is inherently public. Unfortunately, there is a ‘groupthink’ in the economics profession; the profession which describes economies with a very limited vision of capitalism’s public sphere. Modern monetary theory straddles capitalism’s public-private interface.

Financial Mercantilism and Labour Mercantilism

In the neoliberal counter-revolution of the 1980s, the Reserve Bank of New Zealand was mandated to use interest rates as a weapon to suppress inflation by creating a recession. Although government debt was costless to create, governments were obliged to pay high ‘market’ rates to borrow. A new ‘expensive-money’ era of neoliberal-mercantilism was born, in which money was required to have innate scarcity value. Money reverted to its former status as a commodity to be made and stored.

The neoliberal era is best characterised as a new period of financial mercantilism; an era in which money is king, and the objective of economic life is – through capital or through toil – to ‘make money’.

This neoliberalisation took an unusual path in New Zealand, in that the figure after whom these changes were identified – called ‘Rogernomics’, after Labour Minister of Finance, Roger Douglas – had a deeply set philosophy which can best be described as ‘labour mercantilism’. The philosophy dates to conservative working-class practices in the Victorian era, the Fabian era, and which gave a nod to Marxian class consciousness. In that era of working-class self-help, worker welfare came through worker-funded contributory societies in which all contributors had an equal stake and expected equal benefits, though spread out over time. To be a beneficiary, you had to be a contributor to the fund from which you and your family expected to benefit. Money earned in one period would be paid out much later. Pension-fund benefits, for example, paid out of saved money, needed to purchase new goods and services. While this idea presumes economic growth through the accumulation of physical capital, the initial withdrawal of money from circulation could inhibit such growth.

This funding idea forms the basis of ‘savings-funded’ pension schemes, as distinct from ‘pay-as-you-go’ taxation-based schemes. The savings-funded schemes create huge financial liabilities which must be liquidated in an inherently uncertain future; the fiction is that wealth is stored in the past to be consumed in the future. The current-tax-funded schemes, on the other hand operate entirely in the present tense; a person’s pension is determined by today’s economic conditions, not yesterday’s conditions.

Financial mercantilism is a ‘store-money-today’, spend it decades later perspective. Labour mercantilism is the variation applied to the savings of wage and salary earners.

In the late-1930s’ Labour Government there were three factions, which Michael Joseph Savage (Prime Minister) had to manage. There were the monetary radicals – the radical centre – which included Social Credit. There were the left-wing redistributors, who wanted to ‘tax the rich’ and ‘pay pensions and tax concessions’ to workers. And there were the ‘right-of-the-party’ labour mercantilists who wanted to withdraw money today to build sovereign wealth funds from which future retirement and other benefits would be paid to workers’ families. These last two groups squabbled intensively behind the scenes. (A very useful source is the 1980 book, The Politics of Social Security, by Elizabeth Hanson; another is A Civilised Community, 1998, by Margaret McClure).

That first Labour caucus included Bill Anderton, Roger Douglas’s maternal grandfather (MP for Eden and then Auckland Central from 1935 to 1960; no relation to Jim Anderton, whose father’s surname was Byrne and mother’s birth-surname was Savage, though no relation to Michael Joseph Savage). From 1960 to 1975, Norman Douglas succeeded his father-in-law Bill Anderton as MP for Auckland Central. Norman and Roger Douglas were in Parliament together from 1969 to 1975.

In 1937 there was a push from Labour’s right to abandon the 1935 policy pledge of universal pensions (and other benefits) in favour of an actuarial scheme – what we would today call a sovereign wealth fund – that was conceived-of as a kind of ‘magic money tree’ based on the ‘principal of compound interest’. Minister of Finance Walter Nash, returning from the United Kingdom in 1937, was accompanied by accomplished British actuary George Henry Maddex. Much time was spent with Maddex – some would say wasted – trying to supplant the promised ‘pay-as-you-go’ universal pension with this scheme which promised some people – mainly men – with large benefits in the distant twilights of their lives. Further, because the people who financially contributed the most would get the most, the scheme in essence promised an avalanche of future-spending by people other than those with the most needs. In the end the left and right factions cancelled out, resulting in a universal welfare state funded for current beneficiaries with current money.

Compound interest only works if interest is less than inflation over the medium-long term. In practice such ‘pension funds’ play about for decades in the casino economy, trying to replicate the promise of compound interest. Further, they represent capitalism’s greatest financial risk; the possibility that financial assets, dynamically-parked in the casino of capital gains, will sometime in the future return at scale and at short notice to the real economy. Flooding the future economy with excess demand. Or eventually providing deferred benefits which would buy much less than promised.

Fast forward to 1974, Roger Douglas devised and established such a sovereign wealth fund, which commenced operation in 1975, and was cancelled months later. In the midst of high inflation and a global economic crisis, the greater monetary priority was addressing the issues of that time, not stashing away stocks of money for the never-never. The National Party under Robert Muldoon fully exploited that misplaced priority.

When in power again in 1985, Douglas turned to the redistributive face of Labour, means-testing the ‘universal superannuation’ which had existed in one form or other since 1940.

Nevertheless, still alive and well at 88 – and long-after he established New Zealand’s most right-wing party, ACT – Roger Douglas is still pushing for the same sovereign wealth fund that his grandfather wanted in 1937 and that briefly operated fifty years ago. This time he has University of Auckland Economics’ Professor Robert MacCulloch at his side, claiming this pension fund as a magic bullet solution to New Zealand’s present stagnation (refer GDP drop sparks calls for Willis to step aside, RNZ, 19 Sep 2025). One-again, withdrawals from the ‘circular-flow of money’ will not rejuvenate an economy which desperately needs injections of ‘money-in-circulation’.

Kwasi-nomics

An interesting recent episode was the Fall 2022 rise and fall of Liz Truss as United Kingdom Prime Minister, and her hapless Chancellor of the Exchequer Kwasi Kwarteng. Truss and Kwarteng were right-wing monetary mavericks, willing to expand the United Kingdom’s public debt through ‘unfunded’ tax cuts. Yet the structure of those tax cuts was principally to allow the already rich to become richer, rather than to inject the money into where it was most needed. Subsequent to her effective dismissal, she went on to laud Argentina’s hatchet (aka chainsaw) President Javier Milei whose modus operandi is to drain money from those sections of Argentine society which most need it. Kwarteng and Truss were co-authors of Britannia Unchained, which argued ‘for a radical shrinking of the welfare state in order “to return it to the contributory principle … that you get benefits in return for contributions”. That’s the same quasi-economic principle which underpins labour mercantilism.

Ricardian Equivalence

Ricardian Equivalence is an idea gleaned from classical macroeconomics which became fashionable within neoconservative economics in the 1980s. It claims that fiscal policy is futile; that increases in government spending are ‘internalised’ in such a way that private spenders adjust by spending less. It has been widely used as an argument for the futility (rather than the centrality) of government spending as an engine to establish a healthy full-employment market economy.

Neoconservatives push the liberal-mercantilist monetary narrative as the only valid macroeconomic policy programme. Ricardian Equivalence, much-touted by economic liberals to justify fiscal conservatism, puts all their policy eggs into monetary policy. Meaning the monetary policy, based on innate money scarcity, of using interest rates to recreate the primordial costs previously associated with gold and silver mining.

Ricardian Equivalence is a ‘straw man’ argument. In as much as the data supports it, that conservative characterisation of government spending does not apply to economies stuck in depressions or structural recessions. Only programmes of active government spending – or waiting for too long – can resolve a structural recession.

And the monetary system always requires enough public debt to act as the banking-system’s ‘modern gold’.

Finally

Modern Monetary Theory is a valid description of money as it actually is (and was), and a policy recipe for economic growth. There are important twenty-first century stories which require money to be something more; in particular, a means to generate higher living standards and productivity without requiring economic growth. This is partly an issue of work-life balance, better enabling those who wish to choose more leisure and less work. And a prosperous future without economic expansion will be a requirement of a future of demographic contraction, as is forecast for the end of this century.

To achieve these ends, we have to go beyond public-debt-induced peoples’ money to achieve ways in which ordinary people – households of people who consume goods and services among other things – can choose their own balances between consumption and other facets of good living.

It can be done. Public equity dividends – dividends arising from public domain capital, equal and unconditional, complementing private incomes – can enable the overworked to work less and the underworked to work more. That could be the future direction of modern money.

*******

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.

New Zealand’s foreign minister Winston Peters announced at the United Nations General Assembly that this New Zealand coalition Government will not recognise Palestine as a state – at this time.

Here, it is important to cite New Zealand’s foreign minister in relevant detail.

Winston Peters said at the United Nations General Assembly:

“We think a future generation when Israeli and Palestinian political leadership is an asset, not a liability, and where other situational variables have shifted the current calculus away from conflict and towards peace would be more conducive for recognising Palestinian statehood.

“There in lies our dilemma over any decision to recognise Palestinian Palestinian statehood now because statehood recognition is an instrument for peace as an instrument for peace also does not play because there are no fully legitimate and viable state of Palestine to recognise.

“Palestine does not fully meet the accepted criteria for a state as it does not fully control its own territory or population.

“There is also no obvious link between more of the international community recognised in the state of Palestine and the aimed objective of protecting the two-state solution.

“Indeed, what we have observed since partners pronouncements reveals that recognising Palestine now will likely prove counterproductive.

“That is, Hamas resisting negotiation in the belief that it is winning the global propaganda war while pushing Israel towards even more entrench military positions.

“Recognition at this time we also think is open to political manipulation by both Hamas and Israel. Hamas will seek to portray our recognition of Palestine as a victory as they have already done in response to partner announcements.

“Israel will claim the recognition toward rewards Hamas and that it removes pressure on them to release hostages and agree to a ceasefire,” Winston Peters said. (Ref. https://www.beehive.govt.nz/speech/new-zealand-national-statement-un-general-assembly-%E2%80%93-%E2%80%98leadership-global-affairs-united )

In essence, I argue, that Peters’ speech kicks the problem down the road. He shifts the responsibility for developing a solution to the Gaza atrocities conditionally on to a future generation of leaders. And it fails to acknowledge that at the current rate of mass killings of Palestinian people, there will be no one left to create nor nurture a future generation of Palestinian leadership.

But the statement nuances a shift in New Zealand’s position geopolitically and within the rules-based-order community of nations. The statement will confuse many observers of global politics, not the least among New Zealanders and peoples who sought asylum in New Zealand far from the paces of their birth.

Let’s consider why.

International Law.

The speech will trigger a cringe for millions of New Zealand citizens and permanent residents at realising how this right-leaning nationalistic three-party coalition government has abandoned and failed to reflect their strongly held positions for human rights principles.

It is human rights principles that have long anchored New Zealand as a strong and unshakable advocate for an international rules based order, for international humanitarian rights, for recourse to international law and justice, and signatories to the International Criminal Court and International Court of Justice.

It was this cumulative support for human rights and justice that compelled New Zealanders to reject the militant wing of Hamas for its atrocities against civilians in Israel on October 7, 2023.

But advocacy for human rights and justice is not a political expression. It isn’t tribal. It isn’t biased in favour of one peoples and not another. Advocacy for human rights and justice is universal and in this sense it is blind to the class or statehood where hate and atrocity originates from.

This is the same universal principle that the International Court of Justice applied when it found there was a prima facie case of genocide being committed by the state of Israel.

It is this same universal principle that the International Criminal Court applied when calling for the arrest of the state of Israel’s prime minister Netanyahu to be tried for crimes.

Peters’ speech to the United Nations General Assembly ignored these bodies and only waved a cursory glance at the ongoing murder of innocent children and peoples in Gaza, an apparent systematic act of mass murder, committed against people simply because they are of Palestinian birth. Peters’ speech failed these victims and rejected, by way of omission, their right to justice.

In a sense, this New Zealand coalition government has reflexively returned New Zealand back to that glitch-period where this nation fell estranged from the international common-good, in breach of the Gleneagles Agreement, and refused to cease engagement with Apartheid South Africa by allowing sporting contact with that murderous regime in 1981.

New Zealanders rejected that government in 1984, and today’s abandonment of New Zealand’s long held positions for rights and justice will certainly be a factor in the 2026 general elections.

Multilateralism is founded on rules and laws. Where rogue states abandon the principles that are universally agreed to by the majority, those nation states fail to advocate for the multilateral institutions that they rely on for social, judicial, and economic progress.

Peters, as the envoy for this current New Zealand coalition government cannot have it both ways. He cannot claim to be a voice for multilateralism and justice when he has delivered a decision that stands as contrary to the 81 percent of the United Nations general assembly nations who have announced and demand recognition for the State of Palestine.

Gaza and the occupied territories of the West Bank have recognised borders. Within those borders reside a peoples that reflect a common culture and a right to self-determination. They have a representative political structure that can engage itself in bilateral and multilateral forum and bodies. It cannot be ignored that it is being prevented from functioning as a state due to the atrocities that have been inflicted upon it by its occupiers.

It is the occupation that must be addressed, and the United Nations General Assembly, by way of a large majority, recognises this fact – ashamedly the New Zealand coalition government and Peters do not.

CANZ bloc and Like Minded Countries

In addition to New Zealand has long contributed to what is called the CANZ bloc at the United Nations.

The CANZ bloc is a group of nations consisting of Canada, Australia, and New Zealand. It has held together due to these nations sharing common values as ‘like minded countries’.

New Zealanders have long heard their representatives citing allegiance with ‘like minded countries’.

This too has been abandoned by New Zealand at a most important time for multilateralism, a time when supposed ‘like minded countries’ need to band together and present a solid powerful bloc on issues such as Palestine.

This is why Australia’s Prime Minister Anthony Albanese visited New Zealand on the weekend of August 9-10, 2025. Albanese sought the position of New Zealand’s current Prime Minister Christopher Luxon on whether New Zealand would recognise Palestine as a state in keeping with ‘like minded countries’ Australia, Canada, United Kingdom, and France. Luxon couldn’t give him an answer. And New Zealanders were left wondering why.

On this issue, New Zealand will have sent a signal to other nations that it cannot be relied on anymore as a true advocate of peace and justice while it fails to life up to its long-held reputation as an honest broker on the world stage standing up for peace, justice and multilateral progress.

This is a day of shame that has dawned in New Zealand. And millions in this multicultural Pacific nation will feel ashamed that their political representatives have failed not only them, but victims of atrocities all over the world.

Failed Opportunity to Advocate for UN Reform

Peters’ speech before the United Nations General Assembly, while acknowledging the UN needed reform, failed dismally to present a reformist plan that New Zealand would advocate for. It was a glaring omission from a once seasoned politician that made his bones on matters of principle and law.

Peters speech also failed to identify the mechanisms and protocols that exist within the United Nations at this current time; principles like the R2P or responsibility to protect protocols that were advanced after UN observers were prevented from protecting victims of Rwanda genocide decades ago.

The United Nations (UN) Responsibility to Protect (R2P) is a global political commitment adopted in 2005 by world leaders to prevent and respond to mass atrocity crimes – namely genocide, war crimes, ethnic cleansing, and crimes against humanity. It holds that state sovereignty entails a responsibility to protect populations within their borders; when a state manifestly fails to do so, the international community has a responsibility to act collectively and decisively, in accordance with the UN Charter. 

All Peters and New Zealand Ministry of Foreign Affairs officials needed to do is indulge themselves for a moment to reflect on this R2P protocol as published by the United Nations office on genocide prevention and the responsibility to protect. (Ref. https://www.un.org/en/genocide-prevention/responsibility-protect/about )

Put simply, within the UN charter there is the framework and mechanism for Peters, as a representative or a once principled nation, to cite and demand be applied to resolving the humanitarian crisis and murder taking place today in Gaza, and indeed in other parts of the world.

And it is this, that illustrates greatest the areas where reform of the United Nations is required and is at a critical juncture.

The United Nations was formed as a body to advocate and restore peace. For decades now, it has shifted its emphasis onto becoming a distributor of assistance and development. This is noble and it is vital in a complex world such as we live in. But it has become moribund where it comes to ensuring a mechanism or framework structured body where nations can cumulatively restore peace and prosperity to nations, peoples, and states that are victims of tyranny.

This is the kernel of need where reformist ideals are developed and implemented. And this was largely ignored by Peters and his coalition government colleagues.

As such, New Zealand faces headwinds. It may now be regarded by our once closest multilateral partners as an unreliable and immoral unjust state that waxes and wanes, dancing on the head of a pin on distorted legalese that offers more smoke and mirrors than principled solutions.

New Zealanders and Palestinian victims deserved to witness the very opposite of what was served up to them today. They deserved to witness a representative and true advocate for – particularly in the case of the Palestinian diaspora here in New Zealand and their dead and dying relatives back in the occupied territories and Gaza – rights to recourse as individuals and as survivors to universally applied justice.

But this current New Zealand government refused them. And as such it has sided with those nations that are a part of the problem manifest in Gaza, rather than being part of the solution.

Doing nothing is complicit.