Weekend briefing: Warsh warns US Fed still has ‘work to do’ on inflation

Economy / news

Warsh hints he is turning hawkish; US economic data weaker; Canada growth evaporates; Japan has a surprise; eyes on China Vanke; Bathla details uglier; UST 10yr at 4.73%; gold drops and oil eases slightly; NZ$1 = 59.1 USc; TWI-5 = 62.6

29th Aug 26, 8:55am by David Chaston

Storm and wind in Wellington harbour. [Photo by Dave Allen, NIWA]

Here's our summary of key economic events overnight that affect New Zealand, with news investors now expect US interest rates to rise after Kevin Warsh's speech earlier today.

In that Jackson Hole speech, he flagged that inflation in the American economy is too high but he offered no indication whether he favours keeping interest rates at current levels or pushing them higher. But he did restate that 2% is their inflation target. He gave no indication of rate policy but the inflation warning was enough for financial markets to conclude rate rises are more likely. Especially as he likely doesn't have the votes for a hold or cut.

In the real American economy, the Chicago PMI fell sharply in August to a contraction. The fall was driven by declines in New Orders, Order Backlogs, Production and Supplier Deliveries. It was their first fall in four months and discouraging, suggesting the the stockpiling trend may be ending.

Meanwhile, the US non-farms payrolls data has gone through their annual adjustment. That says their previous reports of job growth were overstated by -79,000. And that is an adjustment of weak results in the first place. It is another discouraging signal.

And the University of Michigan consumer sentiment August survey was updated too, confirming its early month reading, falling about -6% from last month and landing about -11% below a year ago. They noted continued worries that inflation will remain elevated for the foreseeable future. Current levels are near the post-pandemic lows. In fact they are near the low points this survey got in the pandemic.

In Canada, they reported a revised Q2-2026 GDP expansion of +3.3% for the year. They noted that their household saving rate reached 3.7% in the quarter as growth in disposable income (+2.1%) outpaced nominal household spending (+1.7%). But they also flagged that the July expansion has vanished, no expansion in this latest month. Given the problems with their southern neighbour, it is hard to see an expansion continuing.

Japan reported a 2.4% jobless rate in July, their lowest in more than a year and their second lowest since before the pandemic.

And it seems Japan can still surprise. Births from January through June were 342,068, up +0.8% (+2,788 more) from the same period in 2025. It was their first rise for the first half of the year in 11 years.

Malaysia said producer prices there rose at a very fast +9.7% rate in July, their fastest since the pandemic and before that since early 2017.

India reported that its industrial production eased back from a +9.5% expansion rate in June to +7.3% in July. But this was still a better result than anticipated. Meanwhile, Indian bank loan growth has stayed extraordinarily high, up +18.3% from a year ago.

In China, mirroring the Evergrande disaster, China Vanke’s first-half loss widened to -¥16 bln as sales slumped and debt pressure built. Upcoming debt maturities may trigger the end of it.

And the EU released the August results of its business and consumer sentiment surveys. The net outcome is improving sentiment, especially business sentiment. Only consumer sentiment remains low but it is marginally less so in August.

In Australia, it is becoming clear that the Bathla collapse is centered on loan fraud and false documents to private credit providers. The cascading impact on them is very concerning. Perhaps it should not be surprising because of the wider mortgage fraud problems that banks are facing via their broker channels.

The UST 10yr yield is now just on 4.73%, up +6 bps from yesterday at this time, down -1 bps for the week. The 30 year yield is at 5.22%, up +3 bps for the day, down -6 bps for the week. The key 2-10 yield curve is now at +38 bps (down -6 bps). Their 1-5 curve is now at +34 bps (-3 bps) and the 3 mth-10yr curve is at +98 bps (+2 bps). The China 10 year bond rate is unchanged at 1.70%, up +1 bps for the week. The Japanese 10 year bond yield is now at 2.92%, up +3 bps, up +4 bps for the week and a 30 year high. The Australian 10 year bond yield starts today at 5.09%, up +1 bp from yesterday, up +6 bps for the week. The NZ Government 10 year bond rate is now at 4.77%, also up +1 bp, and up +1 bp for the week.

Wall Street is down -0.3% on the S&P500 but up +0.6% for the week, while the Nasdaq down -0.5% but up +1.3% for the week. European markets were firmer overnight between London's +0.3% rise and Paris's +1.0% recovery. Yesterday Tokyo ended up +0.4% for a weekly +0.7% gain. Hong Kong firmed +0.1% yesterday for an end to its week down -0.8% while Shanghai dipped -0.1% yesterday to end up +1.3%. Singapore rose +0.3%. The ASX200 ended its Friday session up +0.6% to end the week unchanged. The NZX50 ended down -0.8% to end its week down -1.5%.

The Fear & Greed index is still in the 'neutral' zone from a week ago.

The price of gold is now at US$4462/oz, and down -US$142 or -3.1% from yesterday at this time, down -US$159/oz for the week. Silver has fallen -US$2.50 to just on US$66.50/oz and a -US$3 weekly fall or -4.3%.

Oil prices are down -50 USc from yesterday at just under US$83.50/bbl in the US, while the international Brent price is just on US$88/bbl and down -US$2. A week ago these prices were US$87/bbl and US$94.50/bbl respectively Hormuz transits have held low with six ships exiting over the past 24 hours (4 dark with transponders off) and six entering for new loads (2 dark), almost all Iran linked. The Red Sea activity is lower than yesterday with less than 20 each way at the Yemen chokepoint.

The Kiwi dollar is down -40 bps from yesterday at just on 59.1 USc, down -70 bps for the week. Against the Aussie we are down -10 bps at 82.6 AUc. Against the euro we are also down -10 bps at 51 euro cents. That all means our TWI-5 starts today at just over 62.6, down -30 bps today, down -70 bps for the week.

The bitcoin price starts today at US$77,663 and down -3.4% from yesterday at this time but up +0.4% from a week ago. Volatility over the past 24 hours has remained moderate at just on +/-2.6%.

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27 Comments

by Yvil | 29th Aug 26, 8:59am 1787950761

Will Warsh's bite match his bark ?

by Yvil | 29th Aug 26, 9:13am 1787951586

I don't think the Fed will raise in September but uf it does, it would really screw up Bessent's attempts at keeping the Bond yields down. It would be a little like a "F U" from Warsh to Bessent. Is Warsh indépendant enough from the US government to do that...? We're about to find out. I personally think not.

by JimboJones | 29th Aug 26, 1:02pm 1787965367

I don't think the market is stupid enough to care what the fed does. If a rate increase is needed, the market knows the fed will eventually deliver it and price accordingly

by Palmtree08 | 29th Aug 26, 11:06am 1787958383

"Births from January through June were 342,068, up +0.8% (+2,788 more) from the same period in 2025. It was their first rise for the first half of the year in 11 years."

More sardines for the tin. Oh joy.

by Colin Maxwell | 29th Aug 26, 11:27am 1787959676

Thank you for your report, David.

Re specifically your analysis of the market's reaction to Federal Reserve Chair Kevin Warsh’s Jackson Hole - I'm afraid it is impossible for me to look at any of this policy or related announcements without questioning the core validity of the metrics guiding the Fed.

While the market panics over whether a hawkish tone will trigger more rate hikes to hit a strict 2% target, a growing body of alternative economic data suggests that official CPI calculations heavily understate real-world cost pressures.

For the working class, the daily struggle to afford basic essentials, without enduring ever more spiraling debt, shows a stark disconnect between Washington's spreadsheets and the every day realities of the real economy.

To understand why official inflation feels like a fiction, we have to look at how the calculation methodology was quietly rewritten since the 1980s and 1990s, shifting the index from tracking the cost of maintaining a constant standard of living to a highly manipulated "Cost-of-Living Index."

This suppression is achieved through explicit mathematical gimmicks, starting with substitution bias, which assumes that if a primary good like steak becomes too expensive, consumers simply shift to hamburger - the model then lowers the weighting of steak, mathematically hiding the price spike.

Furthermore, through hedonic quality adjustments, if a car or a smartphone increases in price, statisticians use complex regressions to declare that the price did not actually rise because the consumer is receiving more technological "quality." The consumer still leaves the store with significantly less money in their pocket, yet the spreadsheet records zero inflation.

This illusion is finalized via Owners' Equivalent Rent, a metric introduced in 1983 that completely stripped actual house prices, property taxes, and mortgage interest rates out of the primary housing CPI metric, replacing them with a subjective survey asking homeowners what they think their house would rent for. This arbitrary substitution completely insulates headline inflation from real-world real estate booms and skyrocketing borrowing costs.

Also, a similar critique can be leveled at the Fed’s second mandate - maximum employment. The headline U-3 unemployment rate is arguably even more misleading than the inflation figures because it completely ignores structural underemployment. It masks the true economic pain by excluding discouraged individuals who have given up searching, as well as millions of part-time and gig workers who desperately need full-time hours. When you look at the broader U-6 metric, or factor back in those who have dropped out of the labor force entirely, the narrative of a robust job market completely collapses.

Compounding these contrived metrics is the structural flaw in the Fed's timing - its heavy reliance on lagging indicators. Metrics like CPI and unemployment do not look ahead - they report on casualties that have already manifest in the productive economy months prior.

Driving a multi-trillion-dollar economy by looking exclusively in the rearview mirror guarantees a destructive policy-lag. By the time the Fed observes a clear signal to pause or cut rates, the real economy has already been over-tightened into a downturn, transforming their policy adjustments into reactive damage control rather than proactive management.

To fully comprehend this disconnect, one only has to look at the name of the institution itself, which functions as a dual hoax. It is not "Federal" in any democratic sense, but rather a 100% privately owned banking cartel structured to protect commercial balance sheets over public interests.

Equally misleading is the word "Reserve," which has been rendered an absolute fiction since the Fed permanently slashed commercial reserve requirements to exactly zero percent.

This allows private banks to manufacture credit completely out of thin air via digital ledgers, leaving the working class to absorb the resulting inflation as these unbacked, manufactured dollars actively devalue the currency.

Both pillars of the Fed's dual mandate rely on deeply distorted numbers, meaning the mandates themselves are practically moot while central bankers fiddle around with the font of the breakfast menu on a financial Titanic.

This distortion doesn't just damage America - it directly corners the RBNZ. If the RBNZ attempts to aggressively lower local interest rates to rescue our own buckling domestic economy, a hawkish Fed forces the Kiwi Dollar down, instantly pumping imported inflation straight onto New Zealand supermarket shelves and petrol stations.

Ultimately, it feels entirely apt that this privately owned, constitutionally illegal pilfering machine (Dah Fed) holds its annual meeting at Jackson Hole. That is precisely where the real U.S. economy currently sits, in a massive hole.... and yet this central bank just keeps digging it deeper.

by JimboJones | 29th Aug 26, 1:58pm 1787968721

For many NZ households the real problem is the increase in cost of borrowing not general inflation. Rates and insurance increases are nothing compared to the increase in mortgage payments.

by Colin Maxwell | 29th Aug 26, 4:18pm 1787977091

No, the "real problem" is that the collective Western-centric financial architecture, (AKA the FIC), which is mathematically predestined to fail miserably anyway.

The model is purpose-built in order to fleece the working classes, plus the real economy, and to line the deep pockets of the 0.000035% cohort of humanity that make up the billionaire club.

The silent tax, in the form of inflation, and the cost of borrowing are both integral component's in this grand heist, but IMO sitting well and truly at #1 is that ~97% of broad money is created by private monopolies as a debt instrument, where they get to thieve hundreds of billions of dollars from us in the form of unearned economic rent.

The two factors that you mention are a manifestation of the underlying #1.

I won't repeat my theses here... as it was already recently outlined in this comment...

https://www.interest.co.nz/economy/139963/us-data-weakens-canada-retali…

by Let me be Frank | 29th Aug 26, 5:23pm 1787981023

While agreeing that private banks are the problem and knowing you will take exception the real problem is multiple currencies and trade imbalances (and human failing)....something Keynes tried to overcome with Bancor....also something that floating currencies is theoretically supposed to address but is incapable of due to those human failings and time.

Then there is the fact that no system can account for overshoot after the fact.

There is a short tail in the distribution of humans (please note the distinction, not nationalities or ethnicities) whose ambition will override their morality (assuming they have some)..and from around the eighties we abandoned suppressing that cohort and began to glorify it. It did what can be expected and grew reaching a critical mass whereby sufficient institutions are now overseen by the amoral and we are reaping the results. There is no guarantee that a hegemonic China (or Russia) will avoid the same temptations....history suggests they will not.

As suggested previously...people are strange. Most do not place ambition above morality....but some sadly do, and they can be successful.

by Colin Maxwell | 29th Aug 26, 6:11pm 1787983869

This general debate, Frank, surrounding the flaws of the Financial-Industrial Complex (FIC), often splits into two camps - those who blame the mechanics of domestic money creation, and those who blame international trade structures.

While you counter the private-banking narrative by introducing Keynesian trade imbalances, perhaps it could be argued that your premise misses the connection between the two.

The structural flaws of the post-1971 global financial architecture actually prove that Keynes’s Bancor was one of his very few correct insights, while also exposing the fundamental fragility of modern fiat systems.

Far be it for me to ever stick up for Keynes, but we need to clear that he was not a proponent of the unconstrained spending structures. Instead, his presentation of the Bancor at the 1944 Bretton Woods Conference was an attempted hypothesis in long-term systemic equilibrium.

Keynes anticipated that a single national currency serving as the global reserve asset, which ultimately became the US dollar, would create an unstable, asymmetric system.

The Bancor was designed as a supranational, non-fiat clearing unit.

Crucially, it penalised, not just countries running trade deficits, but also those hoarding massive trade surpluses. By forcing surplus nations to lose their excess Bancor bank balances if they did not spend them back into the global economy, Keynes sought to prevent the structural hoarding that stalls global growth - full marks on that account.

The global economy however took the opposite path. When US President Richard Nixon closed the gold window in 1971, the international monetary system transformed into a pure, unbacked fiat regime.

This shift fundamentally altered the rules of money. Without an anchor like gold or a balancing mechanism like the Bancor, the US dollar became the undisputed global reserve asset, allowing the US to run permanent, unchecked deficits.

This 1971 pivot bridges the gap between my critique of private bank monopolies and your focus on trade. Once currencies became completely decoupled from physical or systemic constraints, the creation of money was fully outsourced to the commercial banking sector through debt.

Without the discipline of a Bancor-style clearing union, floating currencies did not naturally correct imbalances as theory suggested. Instead, they allowed advanced economies to accumulate astronomical debts, transforming the global financial system into a machine driven by speculative capital flows rather than real trade.

You argue that "no system can account for overshoot after the fact.", yet the current economic overshoot is not an accident of human nature - it is a direct mathematical consequence of the post-1971 fiat framework.

When 97% of money is generated as interest-bearing debt by private monopolies, the money required to pay back the principal is created, but the money needed to clear the interest is not.

Therefore, the system demands continuous, exponential debt expansion just to prevent liquidity collapses. This systemic requirement forces continuous resource exploitation and economic "overshoot."

IMO, you are spot in noting that the status quo is wrecking the global economy, but you also appear to miss the fact that these are symptoms of the disease that I identified.

The destruction of systemic anchors in 1971 handed the keys of money creation over to private banking monopolies. Keynes’s Bancor was a rare, valid blueprint for a self-correcting global economy.

Without it, the world is left with a fiat-driven, debt-based architecture that cannot mathematically sustain itself, ultimately validating the claim that the system is structurally doomed to failure.

by Let me be Frank | 29th Aug 26, 6:32pm 1787985138

K....my first dispute is "yet the current economic overshoot is not an accident of human nature - it is a direct mathematical consequence of the post-1971 fiat framework."...i would suggest that is where PDK is correct...the overshoot is not financial (though it presents as so) it is a real overshoot is the ability of the economy to deliver....the mathematics is divorced...you are arguing the mathematics of money (a construct) whereas PDK (and others) argue the mathematics of resource.

Secondly , a gold based currency regime does nothing to address the restrictions imposed by resources, it is simply another disconnected metric.

As I have tried to explain previously, no matter the method, trade will occur...the problem is the methods are subject to human construct and when there is insufficient for a large enough group conflict will occur....not existential previously, but it is now....and that ignores CC

by Colin Maxwell | 29th Aug 26, 7:58pm 1787990311

The False Dichotomy of Money and Material - Why Monetary Architecture Drives Resource Exploitation

The long-standing debate within economic philosophy regarding global instability often fragments into two isolated domains. On one side stands the structural analysis of financial architecture, which attributes systemic failure to the mechanics of debt-based fiat currency creation.

On the other side sits the ecological school of thought, frequently championed by resource-determinists, which insists that the ultimate crisis facing humanity is entirely physical, governed by the unyielding laws of thermodynamics, resource depletion, and entropy.

When critics attempt to minimize the role of banking systems by claiming that economic "overshoot" is strictly a material phenomenon rather than a financial one, they create a false dichotomy. In reality, the mathematics of money and the mathematics of resources are inherently unified - the global monetary architecture operates as the foundational software that dictates physical hardware behavior.

To argue that resource overshoot is independent of financial engineering is to misunderstand how human systems respond to structural incentives. Money is undeniably a human construct, but within a globalised economy, it serves as the central nervous system of production, distribution, and consumption.

When that nervous system is corrupted by a flawed design, the physical body of the economy behaves erratically. The critical pivot occurred in 1971 when the international monetary framework abandoned the last vestiges of physical constraints, outsourcing the creation of approximately 97 percent of broad money to a private commercial banking monopoly operating an international debt cartel.

Because these institutions generate only the principal of a loan but never the interest required to clear it, the aggregate global debt burden is mathematically hardwired to compound exponentially. To prevent mass bankruptcies, systemic liquidity collapses, and immediate deflationary depressions, the money supply must expand continuously every single year.

This expansion cannot occur in a vacuum; it requires an equivalent escalation in real-world economic activity to back the newly issued debt. Consequently, the physical economy is forced into a state of structural hyper-exploitation, driven not just by organic human greed, but by the relentless mathematics of an interest-bearing fiat system that demands infinite growth on a finite planet merely to survive.

This structural reality exposes the fundamental blind spot of the purely ecological, entropy-focused school of economic analysis. By viewing resource consumption as a static, linear depletion of fixed stockpiles, material determinists routinely omit the dynamic variables of human ingenuity, technology, and demographic evolution. They overlook two verifiable counterweights that historical progress has consistently demonstrated.

(i) First, they ignore the demographic transition - whenever living standards, security, and technological deployment improve within a society, birth rates naturally plummet, leading to stable or contracting populations.

(ii) Second, they fail to recognize that capital and technology possess the capacity to radically optimize the physical world. Targeted investment does not simply exhaust resources - it drastically increases the efficiency of their usage, unlocks advanced extraction methodologies, and establishes closed-loop recycling systems that transform waste back into productive inputs. Human ingenuity is fully capable of mitigating material limits, but its ability to do so depends entirely on where capital is directed.

The Pivotal Post 1971 Framework

Under the post-1971 financial framework, the tragedy is that capital cannot be allocated toward long-term sustainability because it is trapped in a permanent cycle of debt service. When an international banking monopoly extracts trillions of dollars in unearned economic rent from humanity through the mechanics of money creation, it starves the real economy of the resources needed to build efficient infrastructure.

Governments, corporations, and individuals are forced to prioritize short-term, resource-extractive assets because they need rapid cash flows to feed the exponential interest monster. Therefore, referencing a gold standard or a supranational clearing mechanism like Keynes's proposed Bancor is not an appeal to a disconnected metric.

The entire purpose of such monetary anchors is to serve as a structural governor on an engine. By restricting unchecked, speculative credit expansion and penalising systemic trade imbalances, a balanced monetary framework removes the artificial compulsion for exponential growth.

Ultimately, attributing the current global crisis exclusively to resource scarcity or an abstract flaw in human nature is an exercise in misdiagnosing the disease.

The physical exhaustion of the global ecosystem is a direct symptom of a predatory financial architecture. Those who argue that resource mathematics are divorced from monetary constructs, miss this point entirely.

Humanity cannot even begin to solve the physics of resource calculation until it corrects the mathematics of the financial cartel that drives it.

by Colin Maxwell | 29th Aug 26, 8:09pm 1787990962

And to address your second point, Frank...

The Triffin Trap and the Multipolar Commodity Basket: Why the West Misunderstands the New Global Order

Your assertion that a commodity-anchored currency system is "simply another disconnected metric" that fails to address resource limits completely misinterprets the mechanics of the emerging multipolar financial paradigm.

You appear to view the future through an obsolete, twentieth-century lens, assuming that any new system must merely swap one dominant, singular national reserve asset for another.

Furthermore, this perspective reveals a deeply rooted, almost xenophobic projection that rising powers like China and Russia are simply waiting for the opportunity to emulate the predatory hegemony of the West.

This outlook ignores both the explicit economic structural design of the Rest of the World (RoW) model and the brutal mathematical reality of the Triffin Paradox..

The Death of the Singular Hegemonic Reserve

The fundamental flaw I see argument is the assumption that a stable monetary anchor requires a single, monolithic asset. The architecture currently being constructed by the multipolar world is not a return to a rigid, nineteenth-century gold standard, but a transition to a supranational clearing framework backed by a highly diversified, variable parcel of durable commodities, industrial materials, and precious metals.

In this new multipolar paradigm, sovereign central bank portfolios are no longer required to hoard a single, weaponisable fiat currency to facilitate international trade.

Instead, nations are constructing tailor-made, variable mixes of trusted trading partner currencies, explicitly engineered to exclude politically compromised or easily confiscated Western assets.

Because this system relies on a broad basket of real-world commodities and localised currency pairs, it entirely negates the historic liquidity challenges associated with a single reserve asset.

There is no longer a need for a monumental supply of a global reserve currency, because the currencies themselves are not hoarded - instead, only the net trade imbalances are settled out at agreed-upon intervals using the immutable value of the underlying commodity basket.

Far from being a "disconnected metric," this ties money directly to real-world production, acting as a natural stabilizer.

The Mathematical Impossibility of Emulating Western Predation

The widespread anxiety that China or Russia intends to seize the mantle of global monetary hegemon is not only historically inaccurate but also counterintuitive to their own economic survival.

To assume these nations wish to replicate the American model is to project Western predatory behavior onto states that have spent decades actively suffering under and engineering an escape from that very system.

This is precisely where the Triffin Paradox becomes an unassailable economic barrier. The paradox itself dictates that for a single nation’s currency to serve as the global reserve asset, that nation must run permanent, massive trade deficits to supply the rest of the world with the liquidity needed to conduct trade.

Running a permanent deficit requires a country to hollow out its domestic manufacturing base, export its industrial capacity, and transform its economy into a financialised, debt-driven consumption engine.

For real-economy powers like China and Russia, whose geopolitical strength is entirely rooted in industrial productivity, manufacturing dominance, and tangible resource ownership, emulating the US model would be economic suicide.

No productive, real-economy-based power would ever be foolish enough to seek a dominant, singular national reserve currency status. To do so would mean deliberately destroying the very industrial engines that allowed them to challenge Western financial hegemony in the first place.

Conclusion

The emerging multipolar global order (by definition) is not trying to crown a new king - it is destroying the monarchy altogether.

By shifting to a decentralized, multipolar system where trade is settled via variable commodity-backed baskets and localized currencies, the global South is bypassing the structural flaws of both pure fiat and rigid single-commodity standards.

Your projected fear of a new Eastern hegemon emerging misses the entire structural point of the post-fiat evolution - the new system is being specifically designed so that no single nation can weaponise the global architecture ever again.

by Let me be Frank | 29th Aug 26, 8:37pm 1787992669

I understand your argument but refute your conclusion.....as did Keynes. The temptation remains and the model retains the potential for hegemony....as long as that potential exists it will ultimately be used.

As always the aside remains....we are past the point where we can trade our way out of overshoot in any case.

by Colin Maxwell | 29th Aug 26, 10:16pm 1787998608

Talk about shifting the goalposts from structure to apocalyptic fatalism/nihilism.

Frank, by retreating into the vague assertion that "the temptation remains," you have completely vacated the structural and economic debate.

Unable to challenge the mathematical reality of the Triffin Paradox or the mechanics of decentralised commodity-basket net settlements, you now revert to pure fatalism. In doing so, you have not only mis-characterised pivotal historical economic events, but you have also missed the defining feature of systemic design.

First, your claim that Keynes would refute my conclusion is historically backwards. As I have already explicitly laid out, Keynes did not design the Bancor because he believed hegemony was an unpreventable law of human nature - he designed it specifically as an architectural engineering solution to prevent hegemony.

Clearly, Keynes recognised that the temptation for national dominance arises precisely when a system contains structural vulnerabilities that can be weaponised. The entire premise of the Bancor was to remove the capacity for hegemony by stripping away a nation’s ability to run persistent surpluses or hoard global reserves.

The emerging multipolar order is executing the modern iteration of this exact logic. By using a decentralised commodity basket and localised settlement pairs, the system removes the structural vacuum that a single hegemon could fill. You cannot exploit a "temptation" if the underlying architecture mathematically deprives you of the tools to do so.

Second, your repetitive pivot back to the PDK-style refrain that "we are past the point where we can trade our way out of overshoot" is a classic exercise in shifting the goalposts.

No one is suggesting that humanity can blindly "trade" its way out of ecological constraints. The core of this entire discussion is about the direction of capital and the structural commands of our monetary software.

Under the post-1971 fiat framework, humanity is trapped in a model that mathematically forces continuous, short-term, destructive resource extraction just to service the interest on exponentially growing private debt.

When you claim that resource overshoot renders monetary architecture irrelevant, you are looking at a runaway vehicle and declaring that fixing the faulty brakes is pointless because things are already moving too fast.

The multipolar shift toward a commodity-anchored, non-hegemonic clearing system is not a magical plot to "trade our way out of overshoot" -it is the vital, long-overdue application of the mechanical braking system. By dismantling the exponential private debt-printing press, the world can finally stop the structural compulsion for infinite, forced growth.

Only when the predatory mathematics of unearned economic rent are removed can global capital finally be redirected toward the massive technological efficiencies, closed-loop recycling, and demographic stability required to begin to manage our physical resource limits.

Humanity cannot navigate a finite planet while operating a financial system that demands perpetual and monumental tribute. Surely a positive approach, is at the very least, still worth a try.

by Let me be Frank | 30th Aug 26, 8:35am 1788035701

it appears am not explaining myself very clearly....I do indeed agree that a new approach is needed and that what you outline is a better approach, but I suggest the mechanics of it do not guarantee the outcome you suggest as inter currency trade still demands valuation and that valuation rests upon demand. The "predatory mathematics of economic rent" are not therefore removed simply reconfigured.Success to the successful is still in force.

The (always) aside of overshoot is not part of the argument per se, and may well be fatalistic, it is simply an acknowledgement that no trade/monetary system can overcome the fact that if there are insufficient resources there is not enough for everyone no matter how you attempt to distribute them.....and that tends to result in all agreements being abandoned.

by Colin Maxwell | 30th Aug 26, 9:22am 1788038553

How Structural Mechanics Can Break the Power Loop

Frank, I appreciate the clarity and the explicit concession that the multipolar, commodity-anchored clearing system is a structurally superior approach to our current fiat-debt model. Acknowledging that the status quo is broken is the vital first step in any meaningful economic debate.

However, IMO your remaining contention, that this new model merely reconfigures the "predatory mathematics of economic rent", because currency valuation still rests upon demand, misses the exact mathematical disruption that a commodity-basket clearing union introduces.

You are trying to apply the rules of a fiat-reserve system to a commodity-settlement system, and in doing so, you completely miss the fundamental point that I have being trying to make right throughout this entire string.

In our current post-1971 world, "success to the successful" operates as a compounding interest loop. The hegemony prints a fiat reserve currency out of thin air, buys real-world goods from productive nations, and forces those nations to invest their surplus back into it's sovereign debt instruments.

The rent-extraction occurs because the monopoly dictates the supply and cost of the ledger tokens themselves. The demand for the currency is artificially manufactured by systemic design, not by real-world productivity.

A supranational commodity-basket clearing architecture fundamentally breaks this feedback loop.

In this paradigm, currency valuation is not a speculative metric driven by central bank printing presses or Wall Street derivatives. Instead, the valuation is anchored directly to the strict, immutable physical reality of the underlying basket, oil, wheat, copper, gold, and rare earth metals, etc.

Under these rules, a wealthy nation cannot simply print its way to dominance or extract unearned economic rent. If a country wants more clearing tokens to import goods, it must produce and export tangible, real-world value back into the system to earn them.

Furthermore, because a Bancor-style model explicitly penalises the hoarding of persistent surpluses, the system actively prevents the "success to the successful" mechanism from compounding indefinitely.

It forces wealthier nations to redistribute their surplus back into the global economy through trade, rather than financialising it into predatory debt. The mathematics of rent are not reconfigured - they are instead starved of the unbacked credit mechanism required to exist.

Finally, regarding your aside on resources - yes, if a planet physically runs out of life-sustaining materials, all human agreements will inevitably shatter into conflict.

However, there is a profound difference between a system that faces natural physical exhaustion and a system that is being actively driven off a cliff by its own financial programming.

Our current fiat-debt architecture legally mandates infinite, exponential growth just to pay off uncreatable interest tokens, forcing a catastrophic and artificial acceleration of resource depletion.

Moving to a multipolar commodity basket is the act of replacing that predatory software with an architecture that respects physical limits. It stabilises the vehicle so that humanity actually has the time, capital, and stability to manage our finite resource realities.

No entity can successfully extract unearned economic rent when money is tethered directly to physical resources.

Of course, it should go without saying - we cannot survive on a finite planet with an economic system that demands infinite tribute.

by profile | 29th Aug 26, 3:40pm 1787974836

"People don’t realise how close NZ came to a nationwide blackout last Sunday when it looks like lightning took out a big substation in Southland, tripping Manapouri and a lot of power consumers including half of Tiwai. The official notice of the event is on the Transpower SO website here: https://www.transpower.co.nz/system-operator/notices-and-reporting/excursion-notices as the frequency excursion is couched in very minimalist terms. No indication yet as to whether there will be a significant report on the event but I suspect not.

The event must have given a real shock to those running the grid. About 14% of the nation’s generation was gone in an instant, but fortunately, there was about 10% of the load lost at same time to help counterbalance it. Luckily, the situation was kept from disaster by the inertia of the synchronous units on the grid at the time, mainly steam turbines in the North Island. As is usual, wind and solar provided no support and the batteries were only minor contributors.

It is events like this that show why the System Operator has set minimum inertia limits on the grid, keeping even gas or coal units on while shutting down the unreliables. The policy is to keep the system secure for protection against these types of events. Wind and solar can’t do that despite what their proponents say. Batteries can do some of it, but they have to be kept charged up so can’t be used for peak lopping – they can’t do both.

With the new solar farms coming on, the risk of a nationwide blackout increases. Shutting Huntly down to use a wind or solar farm’s uncontrollable output is not a prudent practice. On a minute by minute basis, the solar farms can have a greater than 50% change in output on the frequent cloudy days like that Sunday. Their rapidly changing variability makes control of voltage and frequency very hard, and expensive. It also damages other assets on the grid (plus distribution networks), expending their life so they will need premature replacement."

https://www.kiwiblog.co.nz/2026/08/general_debate_29_august_2026.html

by Palmtree08 | 30th Aug 26, 1:59pm 1788055181

"Shutting Huntly down"

"authors find that warming rates have increased to 0.34-0.42C per decade, across the five different datasets, since the February 2013-February 2014 period."

"tests find that warming is accelerating with more than 98% confidence for each of the five datasets."

https://www.carbonbrief.org/pace-of-global-warming-has-nearly-doubled-s…

by WinHonourHelp | 29th Aug 26, 10:16pm 1787998582

I reckon we need a daily limit and word limit for comments. Very long posts, with zero errors of grammar or spelling, honestly, just post your b****** prompt we all have AI.

Thanks for keeping your articles human, David, both yours and the contributors. It worth paying for to know it's someone's real life lessons.

by Colin Maxwell | 30th Aug 26, 8:51am 1788036660

Brilliant. That would work swimmingly. To keep it fair, the site could immediately implement strict rules - my suggestion, something like a "Rule of 3", that's easy to remember and ensures that the comment section remains comfortably low-effort:

Maximum 3 posts per commenter per day.
Maximum 3 sentences per post.
Minimum 3 spelling errors per paragraph.
Minimum 3 grammar mistakes per thread.
3 misdemeanors results in an automatic lifetime ban.

Anything failing to meet these standards of mediocrity should be unceremoniously binned. Darn it.... I think I might have already triggered a strike.

by NZGecko | 30th Aug 26, 9:17am 1788038224

Many Thanks CM!

We all appreciate, your newly aquired abandonment of endless Ai content. It was plainly obvious.

Keeping it real, human and actual life experience, is just good.

by Colin Maxwell | 30th Aug 26, 9:31am 1788039110

I appreciate the feedback, NZGecko!
Let’s see how you scored on the new system:

Short and low-effort? Yes.
Spelling error included ("aquired")? Yes.
Grammar/punctuation error included? Yes.

Full marks! - you navigated the Rule of 3 perfectly. Have a great Sunday.

by NZGecko | 30th Aug 26, 9:37am 1788039423

Thanks CM, I take your advice graciously and will try to do better.

Im a spelling sinner. Know it.

In the famious words of Ali G:

KEEP IT REAL MY ..........

by Colin Maxwell | 30th Aug 26, 10:04am 1788041071

NZGecko, FYI, I am 72 years old, 10 years into being diagnosed with COPD.

Health issues aside, like many of my generation, typing on a keyboard, I regularly make multiple basic and annoying typos, especially on my first draft.

I have, for example, already checked this post multiple times.

The reason my final comments appear structured with "zero errors" is not because of an AI shortcut (much of of AI is notorious for errors anyway) - it is because I actually respect the intelligence of the readers on this site enough to sit there, walk away a few times, come back after a time lag, and then proof-read my text two or three times before I leave it be.

I could argue that accusing anyone who takes the time to construct a clear, grammatically correct argument of using a "bot" is just another excuse for lazy writing.

Once upon a time, taking pride in your work was generally regarded a human virtue, not as some kind of contrived software stunt.

by NZGecko | 30th Aug 26, 11:09am 1788044970

Hi Colin, Ok and all the best with the COPD.
Have family with it. (I try to abuse my own lungs, much less than I did in the past.....)

What you write, looks machine perfect. So big ups, if it's from your hand,

In my line of work I get some people, who know a "fraction about a topic", ask Ai the "wrong question or inquiry track" and then apply it stupidly, to the problem we have at hand. They then look very stupid, and I let them know it:)

So, I am Ai wary and maybe a little too much so.

I suggest perhaps:
Keep up the commenting from your experience and maybe just a bit shorter in content? Concise in size.
-it's much more likely to be read, rather than seen as too much text body and people move on.

by Colin Maxwell | 30th Aug 26, 12:23pm 1788049416

Hi Gecko,

Thank you for the well-wishes regarding the COPD. It’s a tough road, and I’m sorry to hear it has touched your family as well.

I understand your wariness of AI. In a world inudated with shallow, automated content generated by people who often don't understand the underlying mechanics, a healthy dose of skepticism is well-warranted.

Regarding your suggestion to keep things shorter and more concise - I appreciate the advice, but the fact remains, some topics simply cannot be reduced to a punchy soundbite.

Dismantling a multi-decade, neoclassical economic narrative that has been institutionalised by central banks needs to be fleshed out. If we limit our critiques to short, casual comments, we play entirely on the home-turf of the orthodox economists who rely on superficial maxim and memes.

Exposing how interest rate manipulation (THE most outrageous wealth-heist in the history of our species) acts as an immediate cost-push penalty on the productive real economy, while structurally transferring wealth upward - this demands a comprehensive unmasking of the mechanics.

For those who find long-form text too daunting, there is always the option to scroll. However for the readers here who genuinely want to understand why the system feels rigged against Main Street, they may just appreciate some more thorough analysis.

Nevertheless,I appreciate the dialogue.

by NZGecko | 30th Aug 26, 12:40pm 1788050414

All good Colin.

Let's trust in new health tech and regenerative therapies for our well-worn bag of bones. We need to keep hope alive.

NZ is on balance, a good place to see in and out our lives.