For this particular article he had 57 likes, 50 comments and 14 restacks because it was so clever.

It contained a graph from the MBIE that showed our total energy from all sources combined has been declining since 2019.

You can see how most of it is attributable to the declining gas supply in New Zealand. Ah well, that is why they are mothballing the Methanex plant in Taranaki.

It also contained a graph showing how, in electricity use, the total use by industry has been declining and has been overtaken by the total use by residents. So we have been deindustrialising as a nation for the last few years.

And thirdly, he showed that real GDP from 2021 to 2025 has grown infinitesimally. In fact I worked it out to be a mere 0.34% growth. But you thought GDP had grown more? Yes, but real GDP is defined as GDP adjusted for inflation. So that now makes sense.

The Energy Blind Commentators still outnumber the others.

Today on Morning Report we heard an excellent piece from Bernard Hickey commenting on the latest Reserve Bank interest rate rise of 25 basis points.

Good though this was, he missed the whole energy issue.

You only have to understand that GDP growth goes hand in hand with energy growth and it all falls into place.

No other explanation is required.

We haven’t had real GDP growth to note, simply because we have had a total energy decline.

Please Bernard, get hold of the energy issue and how it relates to GDP growth, and you will be invaluable.

Read Larry’s full article please!

The Minister for Local Government has announced legislation to restrict council rates rises to between 2% and 4% a year.

Phew!

But there are exceptions. Councils will apparently be able to apply for time-limited exemptions in exceptional circumstances, such as natural disasters, or where they can demonstrate prudent financial management and a justified need to operate outside the target range.

That sounds reassuring. But it also raises a bigger question.

Why are our councils so financially weak in the first place?

The growing washing machine of unfunded mandates

Central government has enormous taxing power. Local government does not.

In 2024–25, central government collected about 14 times as much tax revenue as councils collected in rates.

Yet central government continually requires councils to do things that cost money.

Auckland Mayor Wayne Brown has described this as a growing “washing machine of unfunded mandates from Wellington.”

The examples keep coming.

When water regulation levies were introduced, Nelson Mayor Nick Smith complained that the financing method unfairly shifted central-government costs onto local ratepayers.

When central government required councils to hold polls concerning Māori wards, Palmerston North Mayor Grant Smith was outspoken about the costs and the principle involved.

And when the Coalition Government reversed speed-limit changes, Kāpiti Mayor Janet Holborow argued that councils would be left with another bill — for consultation, legal work, new signs and physical changes to roads.

There is a particularly absurd feature to this.

One government can require councils to spend money implementing a policy. The next government can reverse the policy — requiring councils to spend again.

Unfunded mandates been happening for decades.

Meanwhile, extreme weather events are becoming more frequent and costly. Councils are expected to respond to floods, storms, fires and other disasters, even though many of these events are beyond anything they could reasonably have budgeted for.

Back in 2024, Labour leader Chris Hipkins explicitly promised “no unfunded mandates”, saying that if central government wanted councils to do something, it should bring a funding solution with it.

That is a sensible principle.

But perhaps we should go further.

Time to give local councils another superpower

We live in extraordinary times. Extraordinary times require us to consider ideas that once seemed unthinkable.

Councils have a legislative power to levy rates on homeowners.

But they cannot issue money.

The Reserve Bank can.

As Reserve Bank Chief Economist Yuong Ha put it to broadcaster John Campbell on TVNZ Breakfast in May 2020:

“It’s our superpower.”

He was talking about the Reserve Bank’s ability to create money.(yes it was during Covid)

He contrasted this with the Government’s superpower: the ability to levy taxes and change them.

So why couldn’t councils have a carefully constrained form of monetary power?

The Hamilton experiment that went nowhere

This isn’t a completely new idea in New Zealand.

In 1976, Hamilton Mayor Bruce Beetham proposed financing municipal projects with “rates vouchers.”

Beetham was also leader of the Social Credit Party and had studied the history of currencies in New Zealand and overseas.

His proposal was ingenious.

Hamilton City Council would pay salaries partly in rates vouchers to employees and contractors who agreed to accept them. The vouchers could then circulate within Hamilton, effectively becoming a local means of exchange.

Beetham proposed issuing vouchers equivalent to up to one-third of the total rates collected.

He argued that the scheme could reduce the council’s reliance on overdrafts and expensive borrowing.

But the legal establishment was not impressed.

The Reserve Bank Governor warned that the Reserve Bank had the sole authority to issue bank notes and considered the proposed vouchers to be contrary to the law. The city solicitor found a host of other legal obstacles.

The scheme was eventually abandoned.

But something fascinating happened while it was being discussed.

A local radio station found that 36% of Hamilton residents understood the proposal — and 59% of those people supported it.

Why?

Because people could see the obvious attraction: a way of financing local activity without putting as much pressure on ratepayers.

The lesson from a tiny Austrian town

Hamilton wasn’t the only place to experiment with alternative money.

There are many examples throughout history and my 2005 book Healthy Money Healthy Planet describes a wide range. Some lasted centuries.

During the Great Depression, the Austrian town of Wörgl tried something remarkable.

In 1932, Mayor Michael Unterguggenberger had read and understood the writings of German-Argentine author Silvio Gesell.

“Only money that goes out of date like a newspaper, rots like potatoes, rusts like iron, evaporates like ether, is capable of standing the test as an instrument for the exchange of potatoes, newspapers, iron and ether”.

So he put aside 20,000 schillings as backing for a local currency called Work Certificates.

The notes had twelve spaces on the back. Each month, a stamp had to be purchased and attached to keep the note valid.

In other words, the money lost value if it wasn’t spent.

This gave people a powerful incentive to keep it moving.

People spent the notes quickly. Taxes were paid early. In 15 months the town was able to undertake public works, including roads, a bridge, a reservoir and a ski jump.

Unemployment fell dramatically while unemployment remained severe elsewhere in Austria.

People came from far and wide to see what became known as the “Miracle of Wörgl.” Many councils planned to copy Wōrgl.

But the experiment lasted only about 15 months. Under pressure from banks, the Austrian government eventually declared the currency illegal.

The experiment was over.

What if the money itself encouraged spending?

Today we don’t need to print paper vouchers.

A local currency could be digital.

Imagine a council issuing rates vouchers, electronically, which could be used to pay rates to that council.

The crucial difference from ordinary money would be that the vouchers would be designed to circulate rapidly within the local economy.

They would be a spending currency, rather than a saving currency.

This is where the ideas of the German-Argentine economist Silvio Gesell become relevant.

During the Long Depression of the late nineteenth century, Gesell argued that money should not be infinitely hoardable while goods deteriorate.

His provocative idea was that money should somehow share the characteristics of the goods it represents.

Money, in other words, should move.

“Buy local” on steroids

Consider how a council currency might circulate.

A council employee receives some rates vouchers as part of her wages.

She spends them at the local dressmaker.

The dressmaker spends some at the wine shop.

The wine shop owner buys fruit trees at the garden centre.

The garden centre spends some at the local dairy.

The dairy accumulates vouchers and uses them to pay its rates.

The same money may pass through several local businesses before returning to the council.

That is the point.

One dollar of local currency could generate many dollars’ worth of local transactions.

The conventional national currency would continue to perform its familiar functions — including paying for imports such as petrol, machinery, coffee, spices and cars.

The local currency would have a different job.

It would be designed to circulate locally.

But wouldn’t this cause inflation?

This is where safeguards become essential.

A council shouldn’t simply be given an unlimited ability to create money.

There would need to be strict controls on how much could be issued and what it could be used for.

One possibility is to limit the proportion that could be used for wages and other expenditure.

Wörgl provides an interesting warning. Its currency circulated so rapidly that the town eventually had to withdraw about a third of the notes because spending was pushing up prices.

A second control would be to adjust the rate at which the currency lost value.

The Wörgl currency initially had a very high rate of decay — around 12% — which proved too strong.

A modern system could use a much more carefully calibrated rate.

There could even be elected local currency control committees to monitor circulation, prices and the amount of currency in existence.

This would be a monetary experiment, certainly.

But it would not have to be a reckless one.

And there is another danger

The late Jeanette Fitzsimons raised an important objection when she was asked about this kind of local currency.

She worried that the incentive to create economic activity could result in the last trees being cut down, the fish disappearing and the rivers being dammed.

She was right.

A currency designed to stimulate local economic activity could also stimulate environmentally destructive activity.

So a local currency experiment would have to be accompanied by strong resource taxes and environmental limits.

Otherwise we could end up solving one problem while making another much worse.

A different kind of council power

The public debate about money creation has largely concentrated on the Reserve Bank’s quantitative easing programme and its purchase of government bonds.

But there is another monetary variable that receives far less attention:

the velocity of circulation.

How quickly does money move from one person to another?

A local currency with an incentive to circulate could increase that velocity dramatically.

Imagine receiving money on your phone that gently reminds you: Spend me.

Not because you are being encouraged to consume more imported goods, but because the currency is designed to support the businesses and workers around you.

It would be “buy local” on steroids.

From powerless ratepayer to active local economy

This isn’t an argument for abolishing rates.

Nor is it an argument for councils having unlimited monetary sovereignty.

It is an argument for asking whether the current division of financial power makes sense.

Central government can tax.

The Reserve Bank can create money.

Commercial banks can create deposits when they lend.

Councils, meanwhile, are expected to maintain roads, pipes, libraries, swimming pools, parks, sewage systems and other essential infrastructure — while being increasingly squeezed between rising costs, demands from Wellington and pressure not to increase rates.

Surely we can do better.

If we want resilient local economies, we need more than slogans about “buying local.”

We need mechanisms that actually make local money circulate locally.

The Hamilton experiment was dismissed as illegal.

The Wörgl experiment was shut down.

But neither experiment should simply be forgotten.

Perhaps the time has come to revisit the idea — with modern digital technology, proper inflation controls, strong environmental safeguards and democratic oversight.

Councils need a new superpower.

Perhaps the power to issue a carefully designed local currency should be one of them.

ANZ, Willis St, Wellington, like all properties in Wellington, should be paying rates calculated on land value alone, and it was until a decade or two ago.

The other day I read a tweet from Helen Clark which showed she didn’t like the Opportunity Party’s land tax. I was duly surprised because she is an educated intelligent woman who once studied politics…

Read more

From cereal fields to vineyards, orchards and vegetable plots, repeated heat and drought are reducing yields, damaging quality and pushing up the cost of food.

Europe’s 2026 summer has brought a succession of intense heatwaves, beginning unusually early and returning throughout June, July and August. Temperatures above 40°C have been recorded in several countries, while rainfall has remained well below average across large parts of the continent.

The danger is not simply one exceptionally hot afternoon. Repeated heatwaves, combined with depleted soil moisture, are disrupting the entire growing season. The European Commission’s Joint Research Centre reports that heat shortened the grain-filling period of winter crops, bringing harvests forward and reducing yield forecasts.

The effects are now being felt across agriculture, horticulture and fruit growing.

The grain harvest is shrinking

Cereals are among the most important crops affected. Wheat, barley and other grains need sufficient time after flowering to fill their seeds. Excessive heat accelerates maturity before the plants have accumulated their full potential yield.

The European Union and United Kingdom are expected to lose approximately 9 million tonnes of grain compared with earlier forecasts. The estimated value of the lost production is around €2 billion.

Summer crops have suffered particularly severe stress. Forecasts for EU grain maize and sunflower were reduced by approximately 6–7%, while maize in northern and central Italy was damaged by heat during flowering. In France, the maize crop may be the smallest in half a century.

The situation is also serious in Romania, where more than a million hectares of crops have reportedly been lost or severely damaged. Restrictions on irrigation have added to the pressure, leaving farmers unable to protect fields at the point when water is most needed.

These losses do not necessarily mean empty supermarket shelves. Europe can import food and draw on stored grain. But reduced production across several countries at once tightens markets, raises prices and increases dependence on imports at a time when other regions are also experiencing drought and heat.

And just yesterday we learnt that Kenya is importing one million 90kg bags of maize because its own crop had failed.

Britain’s fields are turning brown

The United Kingdom has not escaped the crisis. Parts of England and Wales have experienced prolonged dryness, falling reservoir levels and repeated heatwaves. The effects are increasingly visible in fields, orchards and market gardens.

The UK National Drought Group reported that farmers were harvesting cereals earlier than expected and warned that yields would be lower than anticipated. Spring barley has been particularly vulnerable because it entered critical growth stages with inadequate rainfall. Grass growth has also weakened, reducing the supply of forage for livestock.

Industry forecasts suggest that the 2026 UK harvest could be historically poor. Wheat, spring barley and oat production are all expected to fall, while oilseed crops are also under pressure. The Energy and Climate Intelligence Unit estimated that losses could cost farmers hundreds of millions of pounds.

Horticultural growers face a different but equally serious problem. Vegetables such as broccoli have grown slowly or stopped growing during the hottest conditions. Some growers have struggled to irrigate crops because of water restrictions, while others have faced quality problems caused by heat stress.

Fruit trees are also vulnerable. Apples may stop growing when temperatures remain above 30°C, and growers have reported expectations of substantially lower fruit volumes. Heat can produce small fruit, premature ripening, sun damage and poor storage quality.

The result could be reduced supplies of British vegetables and fruit, higher prices and increased reliance on imports.

France’s fields and orchards are scorched

France has been one of the hardest-hit agricultural regions. The country’s maize crop is threatened by a combination of extreme heat and drought, with some analysts warning that production could be the lowest in 50 years.

The effects extend well beyond grain. France’s agriculture ministry reported serious losses in vegetable production, including the destruction of as much as half of some young carrot crops. Some hop fields suffered losses of up to 60%, while around one-fifth of fruit orchards were considered affected.

In the Loire region, blackcurrants were effectively cooked on the plant, producing an estimated 70% loss in a region responsible for about half of France’s production. The heat also damaged leaves, disrupted pollination, reduced milk production and placed poultry under severe stress.

This illustrates an important feature of climate damage: the losses are not confined to staple crops. Horticulture and fruit growing often have higher financial value per hectare, but they can be less able to withstand abrupt changes in temperature and water availability.

Italy: crops, vineyards and rice under pressure

Italy has endured repeated heatwaves, with temperatures above 40°C in parts of the centre and south. Water shortages and high temperatures are placing rice fields at risk, while maize, tomatoes, vegetables and fruit are suffering from heat stress and sunscald. Irrigation costs have risen as farmers use more water and fuel to keep crops alive.

The Po Valley, one of Europe’s important agricultural regions, is especially exposed. Fruit trees, vineyards and summer crops require water during precisely the period when rivers and reservoirs are under greatest pressure.

Heat can also cause fruit and vegetables to ripen too quickly. That creates a difficult market problem: produce may arrive all at once, be too small or sun-damaged, and have a shorter shelf life. Crops may be harvested early but still deliver lower quantities and poorer returns.

Wildfire has added another layer of destruction. In Sicily, fires have destroyed olive groves, eliminating not only the current harvest but also future production where trees have been badly damaged.

Greece: vineyards and olives face a harsher climate

Greece is confronting the combined effects of heat, drought and wildfire. Seven Greek islands declared drought emergencies in July, while water shortages affected farming and other local needs.

Santorini’s famous Assyrtiko vineyards provide a striking example. Grape production has fallen dramatically in recent years as low rainfall and extreme heat have intensified. Vines suffer from dried leaves, water stress and reduced fruit formation, threatening both wine production and the livelihoods connected to it.

Olive growing is also vulnerable. Very high temperatures can dry out pollen and interfere with fertilisation, while drought reduces the tree’s ability to support fruit development. Wildfires near Athens have burned farmland, and fires across the Mediterranean can destroy orchards that take years to replace.

Spain is badly affected

Reuters has reported, “Wearing headlamps and equipped with secateurs, workers at a winery northwest of Barcelona light up ​the vineyards before dawn and start picking grapes at ‌3 a.m., as the Catalonia region marks its earliest grape harvest on record due to the scorching summer heat.

At Gramona, a winery in the ​Anoia area, labourers have begun the harvest several weeks ​ahead of the traditional August dates.”

Heatwaves Put Europe’s Livestock Under Pressure

Europe’s 2026 heatwaves are affecting sheep, beef cattle, pigs and dairy cows through heat stress, inadequate pasture, water shortages and declining feed intake.

Sheep and beef cattle are suffering as grasslands dry out. In the Alps, streams and pasture have deteriorated so severely that some farmers brought cattle down from mountain grazing earlier than usual. Others have had to buy hay during summer, using winter feed stocks months ahead of schedule. Similar conditions threaten sheep, particularly in southern Europe, where a lack of shade, water and nutritious forage can cause weight loss, poor reproduction and higher mortality.

Beef cattle eat less during extreme heat, reducing weight gain and lowering the value of animals sent to slaughter. Heat stress can also impair fertility and weaken resistance to disease. Research indicates that cattle production is increasingly exposed to longer and more frequent heatwaves across Europe.

Dairy cows also reduce their feed intake and produce less milk. In Belgium, farmers reported cows standing rather than lying down, eating less and suffering reduced milk yields during the June heatwave.

Pigs cannot sweat effectively and are highly vulnerable in hot, humid conditions. Belgian farmers reported slower growth of approximately 150 grams per day, reducing meat output and increasing costs.

These pressures will feed through into higher prices for milk, meat and animal feed, while making livestock farming less financially secure.

Food resilience starts with water

The common factor linking Europe’s grain fields, vegetable plots, orchards and vineyards is water.

Heat increases evaporation and crop demand just as rivers, reservoirs and groundwater supplies are declining. Irrigation can save a crop in the short term, but it cannot compensate indefinitely for a drying climate.

The European Commission recommends improving soil organic matter, maintaining ground cover, reducing unnecessary cultivation, harvesting rainwater, diversifying crops and developing heat-tolerant varieties.

These measures will not prevent every failure. But they can slow the loss of soil moisture and give farms greater capacity to withstand extreme weather.

Europe’s 2026 heatwaves are therefore more than a warning about future harvests. They are a present food-security crisis—visible in smaller grain forecasts, damaged vegetables, scorched fruit, failing grass and threatened vineyards.

The question is no longer whether farming must adapt to a hotter climate. It is whether adaptation, water protection and emissions reduction can happen quickly enough to preserve affordable food and viable farms.

We could grow lentils in New Zealand – it fixes nitrogen and reduces the need for fertiliser. Thanks to Pexels

New Zealand likes to tell itself a comforting story: we “feed 40 million people,” we grow mountains of dairy and meat, and we are therefore secure. But that story hides a more fragile reality. We export huge volumes of food, yet we import many of the staples that actually shape everyday diets and resilience, including nuts, beans, oats, barley, rye, wheat, tea, coffee, spices, lentils, and chickpeas. We also import nitrogen fertilisers, herbicides, pesticides. That gap matters, because food security is not just about how much food a country produces overall; it is about whether people can reliably access the right foods when global systems wobble.

For a country as exposed to shipping, fuel prices, and climate disruption as New Zealand, food security should no longer be treated as a side issue. It should become a cornerstone of our transition to a lower-energy economy. We need to reduce dependence on long, fragile supply chains and rebuild the local capacity that gives a small island nation real resilience.

Farming has changed to industrial farming

We need to reshape agriculture with fewer imported synthetic inputs, and stop ending up with polluted streams, lakes and groundwater.

The fact that 80% of our arable land is used to produce animal-based food is also problematic. Only 2% is used for horticulture. The overall evidence is that plant-based foods use less land, much less water and generate less pollution per unit of nutrition produced. And a large part of that pollution is emissions. As British Professor Paul Behrens has repeated,

“Agriculture is both a victim of climate change and one of its causes.”

Whereas during the 1950s we had many mixed farms in Canterbury with sheep, cattle and crops growing wheat, barley and oats mostly for humans, but by 2025 as dairy became the dominant land use the grain was used for animal feed.

The export boom, the import blind spot

We have a food system that is profitable but not necessarily resilient. We export vast quantities of dairy, meat, fruit, and processed foods, while importing much of the grain, pulses, nuts, and other plant-based food that supports household diets and food manufacturing. MPI notes that in the year to March 2023, food exports were worth $45.1 billion, while food imports were worth around $7.8 billion. New Zealand exports over 80 percent of food produced, which means the domestic market is not the priority in the way many people assume. Ironically, the milk powder we export is mostly used for making ultra processed foods, some of which we import back.

All this creates a paradox. We are a major food exporter, yet we rely on imports for a significant share of nutritious, shelf-stable foods. Research comparing exports and imports found that New Zealand’s exports are dominated by high-volume dairy and protein, while imports are dominated by grains and other foods like nuts.

That is a structural vulnerability, not just a trade pattern. If shipping is disrupted, oil prices spike, port access is delayed, or overseas harvests fail, our food system gets thinner very quickly. Over the last five months we have learnt what disrupted shipping feels like with the Strait of Hormuz closed.

From where do we import food?

Walk through any supermarket and you are taking a journey around the world.

Our coffee may come from Brazil, Vietnam or Colombia. Tea arrives from India, Sri Lanka, Kenya or China. Lentils often come from Canada or Australia. Chickpeas are sourced from Australia, Turkey or India. Dry beans come from China, Canada and the United States. Almonds are largely grown in California or Australia. Cashews originate from Vietnam, India and West Africa. Peanuts are imported from Australia, Argentina or China.

These countries are not immune to climate change. In fact, many are already experiencing severe impacts.

California has endured prolonged droughts, devastating wildfires and increasing pressure on irrigation water. Australia faces more frequent droughts and heatwaves. India alternates between crippling droughts and destructive floods linked to increasingly erratic monsoons. Brazil’s coffee-growing regions have suffered both frost and record-breaking heat, reducing harvests. Vietnam’s Mekong Delta is threatened by saltwater intrusion and changing rainfall patterns. East African tea-growing regions are experiencing shifting rainfall and rising temperatures.

Climate change is no longer a future risk. It is already reducing harvests, increasing price volatility and making global food supplies less predictable.

New Zealand is connected to every one of these climate risks through our shopping basket.

Peak oil, shipping, and the end of cheap distance

Food security cannot be separated from energy security. Modern trade assumes abundant cheap fuel, reliable shipping, functioning ports, and stable international finance. That assumption is becoming weaker. Whether one frames this as peak oil, energy transition, or simply the end of permanently cheap transport, the direction is the same: moving food around the world will become more expensive and more fragile.

New Zealand is especially exposed because we are geographically remote and deeply dependent on maritime transport. If fuel prices rise, shipping insurance tightens, global supply chains fragment, or a major route is disrupted, imported foods become costlier and less reliable. In that context, food security is not a technical farming issue. It is a strategic national survival issue.

The logical response is to shorten supply chains, reduce dependence on imported inputs, diversify domestic production, move towards a plant-rich diet and stop treating export growth as an unquestioned virtue. A resilient food system would value stability, nutrition, and access over sheer export volume.

What a resilient transition would look like

A lower-energy New Zealand would not try to replace every import with domestic production. That would be unrealistic and wasteful. But it would absolutely aim to grow more of the foods that are easiest to store, easiest to distribute, and most important for public nutrition. We need a land-use policy that prioritises food over low-value export expansion where appropriate.

New Zealand could clearly produce more. Parts of Canterbury, Marlborough, Hawkes Bay and Southland have suitable soils for many pulse crops. Lentils, chickpeas and several dry bean varieties could all be grown more widely if there were stronger market incentives. They also have significant benefits in crop rotations because, as legumes, they fix nitrogen and reduce the need for synthetic fertiliser.

There is a huge range of actions Government could take.

These include:-

· research and development in choosing suitable chickpea and lentil varieties suited to our conditions

· grants for seed and establishment assistance in purchasing harvesting equipment

· crop insurance against poor seasons

· guaranteed purchasing by hospitals, schools, prisons, Defence Force, public institutions

· Tax incentives e.g. accelerated depreciation, tax credits for introducing nitrogen fixing crops

The point is not self-sufficiency in a narrow nationalist sense. The point is resilience: the ability to feed people well when the world is less predictable, less energy-rich, and less forgiving.

A different measure of success

New Zealand has spent decades measuring success by export earnings. But export earnings do not fill empty shelves if supply chains are broken. They don’t protect us from overseas crop failures. And they don’t guarantee that people can afford nutritious food at home.

If we are serious about the future, food security should sit at the centre of economic planning. Not as an afterthought. Not as a rural sideline. As core infrastructure for a society learning to live with less energy, less distance, and less dependence on fragile global systems.

All this will lead to a saner relationship with the food we need to live.

A friend recently told me that Richard Heinberg had died suddenly after a two week illness. I was shocked because he has been such an important figure in the Limits to Growth movement and has written so much on the topic. Richard was Senior Fellow of Post Carbon Institute for nearly twenty years and was the author of 14 books.

He came to New Zealand for a Living Economies Conference where he spoke on energy, the economy with a money system that requires growth. He was prominent on the topic of peak oil. I remember him playing the violin at a party too.

I looked through my books and found several including one called The End of Growth 2011. It seems that Richard really understood the growth imperative. He also understood the need to argue against the illusion of green growth.

A second writer who understood the growth imperative is Jason Hickel. There is a memorable chapter in his 2020 book More is Less called Will Technology Save Us? I wholeheartedly recommend it for the best explanation of why complete transition to renewables is just a dream, and the best explanation of why green growth won’t save us.

P141 in that chapter has two excellent illustrations so I reproduce them now. He has just explained that we are going to run out of key minerals. He says it is going to exacerbate an already existing crisis of overextraction.

“Take silver for instance. Mexico is home to the Peñasquito mine, one of the biggest silver mines in the world. Covering nearly 40 square miles, the operation is staggering in its scale: a sprawling open-cast complex ripped into the mountains, flanked by two waste dumps each a mile long, and a tailings dam full of toxic sludge held back by a wall that’s seven miles around and as high as a 50 storey sky-scraper. This mine will produce 11,000 tons of silver in 10 years before its reserves, the biggest in the world, are gone. To transition the global economy to renewables, we need to Commission up to 130 more minds on the scale of Peñasquito. Just for silver.”

“Llithium is another ecological disaster. It takes 500,000 gallons of water to produce a single ton of lithium. Even at present levels of extraction this is causing real problems. In the Andies, where most of the world’s lithium is located, mining companies are burning through the water tables and leaving farmers with nothing to irrigate the crops. Many have had no choice but to abandon their land altogether. Meanwhile, chemical leaks from lithium mines have poisoned rivers from Chile to Argentina, Nevada to Tibet, killing of whole freshwater ecosystems. The lithium boom has barely started and it’s already a catastrophe.”

Remember these two examples were written six years ago.

Hickel also reminds us that emissions are only one part of the crisis. If we had more renewables, we would raze more forests, trawl more fish, mine more mountains, build more roads, expand industrial farming and send more waste to landfill. Switching to clean energy will do nothing to slow down all these other forms of ecological breakdown. He spends the last three pages of that chapter explaining that we can’t decouple GDP growth from resource use. He cites three big studies showing absolute decoupling is not possible on a global scale because resource use and energy use keep going up. Nor will increased efficiency save us because of Jevons Paradox.

“The problem we face doesn’t have to do with technology. The problem has to do with growth. Over and over again, we see that the growth imperative wipes out all the gains our best technology delivers.”

Hickel finishes the chapter by addressing the politics of all this.

“What is striking about all of this is that people are willing to go to extraordinary lengths to justify the continued pursuit of economic growth. Whenever there appears to be a conflict between ecology and growth, economists and politicians opt for the latter and try every more creative ways to get reality to conform to it.”

Nowhere is this more evident than New Zealand where the NZ First Party proposes spending $1 billion searching for fossil fuels when the last time anything significant was discovered was in 2006. As for the UK, Donald Trump stated that Andy Burnham told him he plans to open up North Sea production, contrasting with the previous administration.

Green growth was and is a pipe dream.

Absolute, sustained decoupling of GDP from both emissions and resource use at the global scale remains limited.

Other notable authors criticising green growth are Tim Jackson, Kate Raworth, Herman Daly, William Rees, Vaclav Smil, Nate Hagens and Simon Michaux.

NZ First recently announced it wants to spend $1 billion dollars searching for oil and gas. That made me think how desperate politicians are becoming to deny peak oil and how much they want economic growth. They know that a billion dollars has already been spent looking for fossil fuels to no avail and the last significant find around New Zealand was in 2006. They know that economic growth and total energy are closely correlated. They know how vital energy is.

Yes politicians are increasingly desperate for economic growth. Larry Blair in his excellent substack piece discovered a graph on the MBIE website revealing our total energy supply has been steadily declining since 2019. No wonder we are not getting much economic growth. In 2024 the economy declined. In 2025 it only increased 0.18%.

The second piece of recent news was that the coalition government was to give $60 million to Fletchers’-owned Golden Bay Cement works to save it from closing down its Northland factory. Fletchers is one of NZ’s biggest companies.

It made me think about the four pillars of civilisation

In terms of physical materials and infrastructure, modern industrial civilization relies on four indispensable products:

• Cement: The foundational material for virtually all urban infrastructure, concrete enables the construction of durable buildings, dams, and transit systems.

• Steel: The most widely used metal in the world, valued for its strength and versatility in construction, transportation, and manufacturing.

• Plastics: Essential for modern life, heavily utilised in manufacturing, healthcare, and safety equipment.

· Ammonia: The basis of synthetic fertilisers, which is vital for the global food supply and sustaining the massive populations of today’s civilizations.

Cement is one of those four pillars. A discussion on RNZ and subsequent interviews revealed that there are few objections to this corporate welfare. This wouldn’t have happened twenty years ago. They discussed the possibility of helping the steel industry.

All motorways depend on cement

• Cement requires heating limestone to around 1,450°C in large kilns.

• Iron production in blast furnaces requires temperatures of around 2,000°C.

• Plastics begin with oil or natural gas, which must be refined and chemically processed.

• Ammonia production uses the Haber–Bosch process, operating at high temperatures and pressures.

Historically, this energy has come almost entirely from

• Cement uses coal, petroleum coke or gas for kiln heat.

• Ironmaking uses coke, made from metallurgical coal, which also acts as a chemical reducing agent.

• Plastics are made largely from hydrocarbons obtained from crude oil and natural gas.

• Ammonia uses natural gas both as fuel and as the source of hydrogen.

This makes all four industries difficult to decarbonise.

• Cement: about 7–8% of CO₂ emissions.

• Iron and steel: about 7–9%.

• Plastics: about 3–4%.

• Ammonia: about 1–2%.

Combined, these industries are responsible for roughly

• Limestone is converted into clinker, releasing CO₂.

• Iron oxide is reduced to metallic iron.

• Hydrocarbons are cracked and polymerised into plastics.

• Nitrogen and hydrogen are combined to form ammonia.

Each process requires considerable energy because strong chemical bonds must be broken and new ones formed.

• Cement provides concrete for buildings, roads, bridges and dams.

• Iron and steel provide structural materials, machinery, railways and vehicles.

• Plastics are found in electronics, medical equipment, packaging, textiles and countless manufactured goods.

• Ammonia provides most nitrogen fertiliser, supporting roughly half of global food production.

Every advanced economy depends on continuous production of these materials.

• low-clinker cements,

• hydrogen-based steelmaking,

• bio-based plastics,

• green ammonia made using renewable electricity.

These technologies are promising but generally remain more expensive or are limited by the availability of low-cost clean energy.

• Limestone becomes cement.

• Iron ore becomes iron.

• Oil and gas become plastics.

• Nitrogen from the air becomes ammonia.

In each case, humanity is using energy—predominantly from fossil fuels—to create materials that nature does not readily provide in usable forms.

Warning signs that other pillars may be endangered

During the Iran war we have seen a few problems with a certain type of resin, a product from oil that seals pipes. Fletcher Building’s plastic pipe manufacturer is Iplex. In March and April 2026 it warned customers that supplies of polyethylene (PE) and PVC pipes would be constrained because of global shortages of plastic resin. The warning continues now. The resin is derived from naphtha, a product of oil refineries.

The same resin shortage delayed the rollout of new council wheelie bins in several parts of New Zealand because manufacturers could not obtain enough high-density polyethylene (HDPE) resin. Councils were told that the specialist HDPE resin used to mould the bins was in short supply owing to global oil supply-chain constraints.

I guess it won’t be long before we watch the government subsidise our steelworks.

Over the last few months I learnt an amazing fact and have had it verified.

“Peatlands cover just 3% of Earth’s land but store twice as much carbon as all the world’s forests combined. When drained or burned for agriculture, they rapidly release massive amounts of carbon.”

I thought of the recent subdivision north of Waikanae near me which appeared to be being drained for housing and wondered if they were peatlands.

New Zealand’s wetlands are among the country’s most valuable and most damaged ecosystems. They have filtered water, stored carbon, buffered floods, supported biodiversity, and sustained Māori communities for centuries, yet since European settlement most have been drained, modified, or fragmented.

Why wetlands matter

Wetlands are land areas that stay wet long enough to shape the soil, plants, and animals living there. In practical terms, that includes swamps, marshes, bogs, fens, peatlands, estuaries, lagoon margins, and shallow water areas. Their importance is easy to underestimate because they often look like “wasteland,” but they are among the most productive ecosystems on earth.

Wetlands perform several critical functions that engineered infrastructure struggles to replicate:

Flood buffering: Wetlands act like sponges, absorbing and slowing floodwaters, reducing peak flows downstream.

Water storage: During dry periods, they release water gradually, stabilising flows in rivers and streams.

Filtration: Wetlands trap sediment, nutrients, and pollutants, improving water quality before it reaches rivers, lakes, and estuaries.

Carbon storage: Peat wetlands are among the most efficient carbon sinks on Earth, storing vast quantities of carbon accumulated over millennia.

Biodiversity support: They provide habitat for native species, many of which are now threatened.

When wetlands are removed, all of these services must be replaced-if they are replaced at all-by built infrastructure that is costly, maintenance-heavy, and often less resilient.

Wetlands and peatlands

People often use “wetland” and “peatland” as if they mean the same thing, but they don’t. A wetland is the broader category: any area that is saturated or flooded long enough to influence the soil or vegetation. A peatland is a type of wetland where dead plant material accumulates faster than it decomposes, building up peat over time.

That distinction matters because not all wetlands form peat, and not all peatlands behave the same way. Bogs are usually rain-fed, acidic, and nutrient-poor, while fens are fed by groundwater or surface runoff and tend to be less acidic and more nutrient-rich. In New Zealand, many wetlands began as fens and later became bogs or shrub-and-forest wetland systems as conditions changed after the last ice age.

So here is the fact again:

“Peatlands cover just 3% of Earth’s land but store twice as much carbon as all the world’s forests combined. When drained or burned for agriculture, they rapidly release massive amounts of carbon.”

What happens when peatlands are drained?

Draining peatlands for farming, forestry or housing exposes the peat to oxygen. It begins to decompose rapidly, releasing:

• carbon dioxide,

• methane (in some circumstances),

• nitrous oxide.

Instead of acting as a carbon sink, a drained peatland becomes a major source of greenhouse gases.

Regional wetlands

In the Levin district, flax (harakeke) once grew abundantly in the swampy lowlands and on the margins of the wetlands that covered much of the Horowhenua before drainage and conversion to pasture. Harakeke was not only a familiar part of the landscape but also a valuable taonga for local Māori, who used it for weaving, rope, and many other practical purposes. Later, as the district developed, flax also became part of the local economy, with harvesting and milling contributing to the early settlement history of the area. Today, the memory of those flax lands sits alongside the far more altered landscape we see now, where only remnants of the original wetland flax communities survive.

The Canterbury Plains were once dotted with extensive swamps, marshes and shallow lakes stretching from the foothills to the coast. These wetlands slowed floodwaters from the braided rivers, filtered sediment and nutrients, stored carbon and provided habitat for an extraordinary diversity of birds, fish and plants. During the late 19^th and 20^th centuries, however, most were drained to create farmland and support settlement. While this contributed great to the region’s economic development, it also left Canterbury with only a tiny fraction of its original wetlands. Today, the loss is reflected in declining biodiversity, poorer water quality, and a greater reliance on engineered flood-control systems to perfom functions that nature once provided for free.

The Te Waihora/Lake Ellesmere wetland remains one of our largest wetlands but is only a remant of the vast system that once covered the area, while the Ashburton, Selwyn and Waimakariri flood plains all lost extensive swamps through drainage and river control.

The lower Waikato was once dominated by extensive peat bogs and wetlands. Much has been drained for farming. The remaining peat wetland are now recognised as internationally important because peat stores so much carbon. The scientist DrDavid Campbell specialises in the Koputai Peat Dome.

The Manawatū River floodplain once contained extensive swamps and lagoons. Most were drained. Flood management now relies increasingly on stopbanks and pumping systems.

The Hauraki Plains were once one of the country’s largest wetland systems. Enormous drainage schemes converted them to highly productive dairy land. The loss of flood storage, wildlife habitat and carbon-rich peat has become increasingly apparent.

Some regions retained large remaining wetland systems because their geography made full drainage difficult, while others lost almost everything to agriculture and settlement. Today, nationally important wetlands include Awarua Wetland, Kopuatai Peat Dome, Whangamarino, Wairarapa Moana, the Firth of Thames, Farewell Spit, and the Manawatu river mouth and estuary. These surviving systems matter not only for biodiversity, but also because they represent some of the few large-scale examples of what New Zealand’s lowlands once contained.

And of course the Chatham Islands are 60% made up of wetlands. All 420,000ha of it.

How they formed

Most New Zealand wetlands formed after the last glaciation, roughly from 18,000 years ago onward. As the climate warmed and landscapes shifted, wetlands appeared in river floodplains, coastal margins, dune systems, and basins where water was trapped or groundwater stayed near the surface. Many lowland peat profiles still preserve evidence of wooded wetland phases, showing that these places were often not open swamps but mixed systems of forest, shrub, and herbaceous vegetation.

What happened over time

The broad arc is clear: natural formation after the ice age, Māori modification in some landscapes, then catastrophic loss after European settlement. Since the mid-19th century, New Zealand has lost about 90% of its wetland area, largely through draining for farming. Logging, burning, drainage schemes, grazing, pollution, and weed invasion have all contributed to the decline.

The ecological effects have been severe. Draining lowers water tables, peat oxidises and shrinks, habitats disappear, and water quality worsens downstream. Once a wetland is converted to pasture or cropped land, the original system is often difficult or impossible to restore fully. That is especially true in lowland areas, where transformation has been so complete that an “authentic” historical endpoint is no longer realistic for many sites.

Modern trends

The modern picture is mixed: continued decline, but also stronger protection and restoration. Official reporting on wetland area shows the long-term decline has continued, with freshwater wetland area decreasing between 1996 and 2023 in 15 of 16 regions, while saline wetland area also declined over the same period. Southland and the West Coast recorded some of the largest freshwater losses.

At the same time, conservation awareness has improved. New Zealand has seven Ramsar-designated wetlands of international importance e.g. Farewell Spit. Restoration projects such as Travis Wetland in Burwood, Christchurch show how damaged sites can be partially revived. The Resource Management Act also provides a formal legal definition of wetlands, which has helped place them more firmly within land-use decision-making. Even so, the overall pattern remains fragile: protection is improving, but losses from drainage, land conversion, and degradation still continue in many places.

Why this history matters

Wetlands are not merely scenic leftovers from a wetter past. They are living archives of climate change, land use, hydrology, and ecological adaptation. Their history tells us how landscapes evolve, how human activity reshapes them, and how quickly valuable ecosystems can be lost once drainage becomes the default answer to “unproductive” land.

For New Zealand, the wetland question is now about more than preservation. It is about water resilience, flood management, carbon storage, biodiversity, and how much of the country is still willing to be governed by short-term land conversion rather than long-term ecological value. The remaining wetlands are not just remnants; they are infrastructure for a more climate-stable future. This is particularly so for peatlands.

So when your council is thinking of allowing development on peatlands, just remind them of this fact:

“Peatlands cover just 3% of Earth’s land but store twice as much carbon as all the world’s forests combined. When drained or burned for agriculture, they rapidly release massive amounts of carbon.”

I went to our own council to enquire what constraints there were now, and was mostly greeted by blank looks. “Most of Kāpiti was wetlands”.

I put in a request for an answer and went back to the internet and asked if there are any councils prohibiting building on peatlands. Well, all they seemed worried about was possible subsidence of buildings, not about storing carbon.

I look forward to the answer from Kapiti Coast District Council.

A large diesel powered truck delivering to a building site had to back rather than risk a U-turn

Washed out bridge Wairarapa. Thanks to Stuff

As I write, New Zealand is once again enduring an extreme weather event. Dunedin has suffered a major landslide. Kaikōura has been cut off. Several bridges in South Wairarapa have been washed out. Hardly a television news bulletin goes by these days without images of flooded homes, damaged roads or isolated communities.

Meanwhile, climate groups continue their work. Our Climate Declaration recently held yet another Zoom meeting where a scientist explained the latest estimates of sea-level rise. The science is becoming ever clearer. We know we must stop burning fossil fuels.

Yet our government continues to prioritise economic growth over serious climate mitigation. The warnings become more urgent while the policy response remains inadequate.

The Strait of Hormuz has changed my thinking

The recent disruption in the Strait of Hormuz has made me appreciate something I had perhaps underestimated before: just how completely our civilisation depends on oil.

Oil is not simply another fuel. It is the feedstock for thousands of manufactured products and the foundation of modern transport. Above all, diesel powers the systems we rely on every day—agriculture, mining, freight transport, construction and much more.

When diesel stops, civilisation doesn’t stop immediately. But it begins to unravel remarkably quickly.

The book New Zealand libraries don’t have

A couple of years ago I heard about a book by Alice Friedemann, When the Trucks Stop Running (2016). I asked my local library whether they could obtain a copy.

After some investigation, the librarian regretfully told me that no New Zealand library held the book. Nor could she locate Friedemann’s 2021 work, Life After Fossil Fuels: A Reality Check on Alternative Energy.

I then looked online.

Amazon listed the first book for around NZ$114 for the paperback, with the Kindle edition almost as expensive. The second book was even dearer, and one eBay seller was asking over US$230.

Clearly these are not books that many people will casually buy.

ChatGPT points me in a different direction

When I asked ChatGPT whether any New Zealand libraries had acquired either title the answer was no. But it suggested something even more valuable.

It pointed me towards Alice Friedemann’s website, where much of her research has been made freely available. Among the recommended articles were:

• When Trucks Stop Running, So Does Civilization

• What Would Happen if Trucks Stopped Running?

• Shipping Makes the World Go Round

• Peak Oil and Transportation

• Can Freight Trains Be Electrified?

• All-Electric Trucks Using Batteries or Overhead Wires

These articles explore subjects that have interested me for years: declining Energy Return on Investment (EROI), the limits of electrifying heavy transport, fragile global supply chains, the importance of rail freight, and the need for more local production as we move towards a lower-energy future.

ChatGPT also reminded me that Friedemann wrote much of her work around 2015. Battery technology has improved considerably since then, and electric trucks will undoubtedly play a larger role than she expected. Nevertheless, there remains vigorous debate about the future of long-distance trucking, mining, shipping and aviation.

Her central argument—that modern civilisation depends on continuous diesel-powered freight—remains highly relevant.

One suggestion from ChatGPT particularly struck me. It proposed that someone should write a companion paper titled:

“When the Ships Stop Coming: New Zealand after Cheap Oil.”

As an island nation dependent on imported diesel, fertiliser, machinery and manufactured goods, New Zealand could be even more vulnerable than many larger countries.

Our exports run on diesel

Thinking about Friedemann’s work led me to consider New Zealand’s own economy.

Our export earnings are dominated by the primary sector. Dairy, meat, horticulture, forestry and fishing all depend heavily on diesel-powered machinery.

According to information summarised for me by Perplexity AI, agriculture accounts for around 9.5% of New Zealand’s total diesel consumption. Tractors, harvesters, loaders, irrigation pumps, milk tankers and countless other machines all rely on diesel.

EECA also notes that a large proportion of New Zealand’s diesel is used off-road, with agriculture accounting for most of that consumption.

The point is not simply that diesel is another farm input.

Diesel is woven into the operating core of modern farming.

Reports on New Zealand’s fuel dependence describe both agriculture and industry as being “completely dependent” on imported liquid fuels. The country consumes around 3.7 billion litres of diesel each year.

Farms cannot simply postpone seasonal work when fuel prices rise or supplies tighten. Harvesting, planting and transporting stock all have narrow time windows. Fuel shortages or price spikes quickly become higher food prices, squeezed farm incomes and reduced export earnings.

In other words, a large share of New Zealand’s export economy is diesel-enabled.

The building industry is also dependent on diesel

In the building industry, the electric options that are already commercially available or in active pilot use are mainly compact and mid-size machines: excavators, wheel loaders, compact loaders, articulated haulers, some wheeled excavators, cranes, forklifts, and certain material-transport trucks used on construction supply chains. Volvo CE and Caterpillar both show that the range now stretches from mini excavators up to larger medium machines, while some sites are also using electric cranes and construction-material HGVs.

There is even a list of heavy vehicles that can use electricity now so we can expect more as they develop.

Preparing for a future beyond oil

Climate change rightly commands our attention. We must reduce greenhouse gas emissions.

But perhaps we should also pay more attention to another question.

What happens if oil becomes scarcer, more expensive or increasingly unreliable?

Extreme weather and energy vulnerability are not separate issues. They are closely linked.

As we attempt to reduce fossil fuel use to limit climate change, we also need to build a society that can function with much less oil. That means strengthening local production, improving rail transport, reducing unnecessary freight, and making our economy far more resilient than it is today.

Alice Friedemann’s answer is essentially: downscale deliberately rather than assume a like-for-like replacement of today’s energy-intensive society. In practice, that means using less energy, simplifying systems, shortening supply chains, and accepting that some activities now done by machines, long-distance transport, and large centralised infrastructures will have to shrink or disappear.

She does not present a polished “tech fix” pathway. Instead, she argues for adapting by redesigning society around lower throughput: more local production and consumption, less dependence on trucking and global trade, fewer energy-hungry products and services, and a shift toward resilience over growth.

In plain language, her view is that the transition will involve learning to live with less—less mobility, less material consumption, and less complexity—while preserving the most essential functions of society as much as possible.

I suspect Alice Friedemann would have a great deal to say about New Zealand’s future.

Perhaps it is time more of us listened.

The dairy industry, like most agriculture, remains dependent on diesel (Acknowledgment to Stuff)

As you may know, I am a great fan of an industrial product engineer called Balazs Matics from Eastern Europe who writes his substack under the pseudonym The Honest Sorcerer. Recently he has digested the 2026 report of the Energy Institute called the Statistical Review of World Energy.

It is 88 pages long and paints an optimistic picture of the global energy system. Energy supply continued to grow in 2025, solar power expanded rapidly, and the report suggests the world is steadily moving towards a cleaner energy future.

But according to The Honest Sorcerer, the report’s opening narrative leaves out some of the most important facts. It celebrates growth without questioning whether perpetual growth is physically possible. It discusses energy security largely in terms of wars and geopolitics while overlooking the geological constraints that have shaped energy markets for decades. It says little about declining energy returns, ageing oil fields, the depletion of mineral resources or the increasing difficulty of extracting the fuels upon which modern civilisation still depends.

In other words, the report faithfully presents the data but omits much of the context needed to understand what those numbers really mean.

The Numbers Tell a Different Story

The statistics themselves reveal a striking contradiction.

Global energy consumption grew again in 2025, with solar accounting for much of the increase. Yet renewable energy is not replacing fossil fuels. Instead, it is being added to an expanding energy system. Coal, oil and gas all reached new record levels of consumption and still provide around 86% of the world’s energy.

Far from witnessing a genuine energy transition, the world continues to increase its dependence on virtually every major source of energy.

Growth Has Physical Limits

The report assumes technological progress will allow economic growth to continue while emissions gradually fall. But this rests on a powerful assumption—that economic growth can continue indefinitely on a finite planet.

History suggests otherwise.

The oil crises of the 1970s are commonly blamed on Middle Eastern politics and OPEC embargoes. Yet the author argues that a deeper cause is often forgotten: the United States reached its peak in conventional oil production in 1970. As domestic output stagnated, America became increasingly dependent on imported oil, leaving its economy exposed to external shocks.

The economic revival of the 1980s did not restore abundant cheap energy. Instead, under both Thatcher and Reagan it relied heavily on debt expansion, financialisation, privatisation, outsourcing and globalisation. Manufacturing increasingly shifted to Asia while rising debt maintained the appearance of continued prosperity in the West.

Economic growth continued—but much of it was supported by financial innovation rather than expanding supplies of inexpensive energy.

Not All “Oil” Is Equal

Another overlooked issue is that today’s reported oil production is increasingly made up of natural gas liquids (NGLs) rather than conventional crude oil.

These products—such as propane, naptha, butane and ethane—are valuable for petrochemicals but are poor substitutes for crude oil in producing diesel, aviation fuel and many transport fuels.

Meanwhile, refineries have already maximised the proportion of each barrel converted into high-value transport fuels. There is little flexibility left if crude oil supplies begin to decline.

The headline figures may suggest growing oil production, but the quality of that production has changed significantly. “And while NGLs ca still be used as precursors (raw materials) in manufacturing plastics and for filling cooking gas cylinders – they have little or no use in making more road and aviation fuels.”

“See, a physically growing world economy requires more mining, more agriculture, more construction, more goods delivered etc. by definition. In other words, higher oil and especially higher diesel consumption,” he says.

Diesel: The Fuel That Runs the Real Economy

If GDP measures the financial economy, diesel measures the physical economy.

Diesel powers agriculture, mining, construction, freight transport, shipping and much of heavy industry. You can’t easily replace it with electricity using current technology.

The author points out that global diesel consumption has largely stagnated since 2018—well before electric vehicles became widespread. 2018 is before the Covid pandemic so you can’t blame Covid. Global car sales have also peaked, truck sales have weakened and steel production has levelled off.

These trends suggest that the real economy is no longer expanding in the way official economic statistics often imply.

Efficiency improvements have certainly helped reduce fuel use, but they do not explain why demand for the fuels that underpin industrial civilisation has flattened across much of the world.

Energy Is Becoming More Expensive to Produce

A further omission from many discussions about energy transition is the declining energy return on investment.

In the past, every unit of energy invested in finding and extracting oil produced many times that amount in usable energy. Today that surplus is shrinking.

More energy must now be devoted simply to obtaining more energy, leaving less available for the rest of the economy. This is one reason why modern economies struggle to achieve the productivity growth experienced during the era of abundant conventional oil.

At the same time, many of the world’s largest oil fields are ageing (read depleting!). New discoveries tend to be smaller, technically more difficult and significantly more expensive to develop.

Renewables Still Depend on Fossil Fuels

Renewable electricity is undoubtedly essential if emissions are to fall. But the article argues that it cannot simply replace fossil fuels across the whole economy.

Mining, agriculture, aviation, shipping and heavy transport remain overwhelmingly dependent on liquid fuels, particularly diesel.

Ironically, building renewable infrastructure itself requires enormous quantities of fossil fuels. Mines extracting copper, nickel, cobalt, zinc and rare earth elements rely on diesel-powered machinery. Steel, cement, transport ships and heavy trucks all require large energy inputs before a single solar panel or wind turbine begins producing electricity.

Renewables therefore remain deeply dependent on the very fossil-fuel economy they are expected to replace. (I hated reading that owners of electric cars like me just hasten the mineral depletion.)

Minerals Are Finite Too

The report also pays little attention to mineral depletion.

The transition to renewable technologies depends on vast quantities of copper, nickel, cobalt, zinc and other critical minerals. Yet known reserves are finite, ore grades are declining and new discoveries are becoming more difficult.

Simply replacing every petrol vehicle with an electric one does not remove resource constraints—it changes which resources become scarce.

Ignoring these physical limits risks creating unrealistic expectations about the speed and scale of the energy transition.

Preparing for a Different Future

None of this means renewable energy is a mistake. Quite the opposite. Expanding renewable energy remains essential for reducing emissions and improving energy security.

But the evidence presented in the Statistical Review also suggests something far more challenging. Renewable energy is not replacing fossil fuels quickly enough to sustain today’s expectations of endless material growth. Rising extraction costs, declining energy returns, depleting oil fields and finite mineral resources all point towards a future in which physical limits become increasingly important.

After showing a graph from Rystad and Bloomberg, Matics says, “If Rystad’s estimates are correct, about half as much oil will be available than today by 2050.” Think about that situation for our children and grandchildren.

The world may still be pursuing the dream of infinite growth. Yet the numbers themselves increasingly suggest that nature has other plans.

NB to read the original report, download it here.

The Reality of Everything Symposium in Wellington recently attracted 300

In 1972, The Limits to Growth delivered a message that was both simple and unsettling: a finite planet cannot sustain infinite growth. Using computer modelling, the authors showed that population, industrial output, food production, and resource use could all rise for a time, only to collide with ecological and material limits. That warning now looks less like speculation and more like a description of the world we inhabit.

The energy issue sits at the centre of that story. Modern economies run on energy, and not just any energy, but energy that is abundant, cheap, and easy to deploy. That is why declining EROI — energy returned on energy invested — matters so much. When it takes more energy to extract, process, and deliver energy itself, the net gain available to society shrinks. Growth then becomes harder to maintain, even before climate and ecological costs are added.

In New Zealand, this has direct relevance. We depend on imported fuels, long supply chains, and a transport system built around liquid energy. That makes us exposed to global price shocks, shipping disruptions, and the slow tightening of physical constraints. The old assumption that efficiency and substitution will solve everything is too optimistic. Efficiency helps, but it does not repeal thermodynamics.

The political expression of ecological limits arrived early with the Values Party, founded in Wellington in 1972. It was the world’s first national-level Green party, and it tried to move politics away from narrow materialism and toward ecological responsibility, social well-being, and long-term thinking. That was an extraordinary step at the time, but it now reads as a precursor to almost every serious conversation about sustainability and energy descent. I myself was a candidate for Values in 1975.

Since then, a deeper literature has developed around the same basic concern. Richard Heinberg has been especially important here, linking peak oil, energy descent, and the structural limits of industrial civilisation. His work helped shift the debate from whether fossil fuels would eventually become harder to obtain to what happens to economies when high-quality energy becomes scarcer, costlier, and more complex to extract. That question matters more now than ever, because energy decline is not only about geology; it is about system-wide stress.

Over the years I have accumulated books with titles Overshoot by William Catton, The Post-Corporate World by David Korten, How the World Ran out of Everything by Peter Goodman, Under the Weather by James Renwick, Less is More by Jason Hickel, How Everything can Collapse by Pablo Servigne, Peak Everything and The End of Growth by Richard Heinberg, A Banquet of Consequences by Satyajit Das, The Future if Degrowth by Matthias Schmelzer, Andrew Vetter and Aaron Nansintjan, Why Your World is about to get a whole lot Smaller by Jeff Rubin, The Growth Illusion by Richard Douthwaite, The Great Disruption by Paul Gilding, The Great Turning by David Korten, What then must we do? by Gar Alperovitz, An Inconvenient Truth by Al Gore, Surviving the Future and Lean Logic by David Fleming and Fleeing Vesuvius (NZ version) edited by many including Richard Douthwaite.

New Zealand also has a continuing civic response in Wise Response, a coalition of academic environmentalists and allies concerned with ecological and energetic limits. Today it is chaired by Nathan Surendran, an energy analyst, and its emphasis on declining EROI is important because it connects energy economics with the wider problem of resilience. Wise Response argues that policy cannot be built on the assumption of endless material throughput. It has to begin with the realities of energy, land, water, and ecological capacity.

This is why the recent Reality of Everything Symposium in Wellington resonated so strongly. Run primarily by the amazing Catherine Knight, author of An Uncommon Land, it gathered people thinking about climate, energy, finance, food, health, and public policy under one roof, because those issues are not separate. They are different faces of the same underlying condition. A country cannot talk seriously about housing, transport, farming, or regional development without also talking about energy availability, ecological degradation, and the resilience of everyday systems.

Books such as the ones above have helped bring supply-chain fragility into view, while Heinberg’s work has kept energy at the centre of the conversation. The combination is powerful: scarcity is not only a matter of what we mine or import, but of the energy available to do the mining, shipping, manufacturing, agriculture that modern life depends on.

For New Zealand, the picture is especially clear. Our agricultural success depends on fossil fuel inputs and global trade. Our coastal communities face rising risk. Our infrastructure was built for a more benign climate and a more stable world. Our food growing depends on predictable temperatures. Our public debate often treats each pressure as temporary and isolated, yet the evidence points in the opposite direction. What we are living through is not a sequence of unrelated shocks. It is a convergence.

That convergence now has a name: the polycrisis. It describes a condition in which climate change, energy constraints, biodiversity loss, debt, supply insecurity, geopolitical fragmentation, and social strain reinforce one another. The enduring value of The Limits to Growth is that it taught us to think in systems before the systems turned against us. Its lesson, echoed by the Values Party, Wise Response, Heinberg, and the Reality of Everything Symposium, is that the task ahead is not to deny limits, but to organise intelligently within them.

Recently Nate Hagens has outlined what he believes are four possible futures in a full world, one with declining energy, materials and the real threat of accelerating climate change –not to mention a host of other threats.

University teaching is missing vital ingredients. Economics textbooks shamelessly describe banks as intermediaries when they know this is a minor function and that bank’s major function is money creation.

Wealthy land barons, industrialists and bankers used their influence to corrupt economics over a century ago

Fortunately, the story behind the flagrant omission of land as a factor of production has now emerged, while the money story remains for some enterprising researcher in the future to highlight yet again.

An important but rare book called The Corruption of Economics

The Corruption of Economics by Mason Gaffney and Fred Harrison, while free online, is hardly known; as of December 2015 only three New Zealand university libraries and the Auckland Public Library held copies. Yet it tells a very important story.

Fred Harrison describes the phenomenon of Henry George, the San Francisco journalist who took the world by storm with his book Progress and Poverty in 1879. Harrison argues that the benefits of land ownership must be shared by all and that a single tax is needed to fund government – a land tax.

The factors of production are land, capital and labour. “Untax labour and tax land” said George. Poverty could be beaten. Social justice was possible!

Of Henry George, the influential economic historian, John Kenneth Galbraith writes,

‘In his time and even into the 1920s and 1930s Henry George was the most widely read of American economic writers both at home and in Europe. He was, indeed, one of the most widely read of Americans. Progress and Poverty… in various editions and reprintings… had a circulation in the millions.’

Unlike many writers, Henry George didn’t stop there. He took his message of hope everywhere he could travel – across America, Australia, Scotland and Ireland to England. During his 1990 visit to New Zealand he met George Grey and influenced our government of the 1890s which imposed a land tax and gave local authorities the option to rate on land value alone. Leaders implemented national land taxes to discourage land banking and force the subdivision of massive pastoral estates. These lasted in some form till 1967.

Seven years after his book came out in remote California, in 1886 he narrowly missed out on being elected Mayor of New York, outpolling Teddy Roosevelt. During the 1890s George, Henry George was the third most famous American, after Mark Twain and Thomas Edison.

Ten years after Progress and Poverty he was influencing a radical wing of the British Liberal Party. Semi-literate workers from Birmingham, Alabama to Liverpool, England read his book. Peasants in the remotest crofts of Scotland and Ireland understood his Single Tax idea.

Wealthy land barons paid money to neutralise Henry George’s influence

Gaffney and Harrison outline how certain rich land barons, industrialists and bankers funded influential universities in America and proceeded to change the direction of their economics departments. He names names at every turn, wading through presidents and funders of many prestigious universities.

In particular, Gaffney, an economist himself, names the economists that were bought to discredit Henry George’s theories. He describes their debates with George and their papers written over many decades.

‘George’s ideas were carried worldwide by such towering figures as Lloyd George in England, Leo Tolstoy and Alexander Kerensky in Russia, Sun Yat-sen in China, hundreds of local and state and a few power national politicians in both Canada and the USA, Billy Hughes in Australia, Rolland O’Regan in New Zealand, Chaim Weizmann in Palestine, Francisco Madero in Mexico, and many others in Denmark, South Africa and around the world. In England, Lloyd George’s budget speech of 1909 reads in part as though written by Henry George himself. Some of Winston Churchill’s speeches were written by Georgist ghosts.’

When he died there were 100,000 at his funeral.

The wealthy and influential just couldn’t let the dangerous ideas spread. Their privileged position was gravely threatened. Henry George must be stopped. But the strategy had to be subtle.

What better route than by using their money to influence the supposed fount of all knowledge, the universities? That would then indoctrinate journalists, politicians and the general public. Nice one!

The story explains how, for their wealthy paymasters, academics corrupted the language to subsume land under capital as a factor of production. They redefined rent, and created a jargon to confuse public debate.

Harrison wrote, ‘For a century they have taken people down blind alleys with abstract models and algebraic equations. Economics became detached from the real world in the course of the twentieth century.’

The wealthy paid money to buy scholars to pervert the science

Gaffney’s rich, whimsical language is a joy to read. He writes to Harrison,

‘Systematic, universal brainwashing is the crime, tendentious mental conditioning calculated to mislead students, to impoverish their mental ability, to bend their minds to the service of a system that funnels power and wealth to a parasitic minority.’

He painstakingly describes the funding of various American universities by such figures as JP Morgan and John D Rockefeller who choose the President who would oblige by appointing suitable head economists to key academic positions. Gaffney trawls through the writings of key figures in neoclassical economics over many decades, quoting numerous pieces attacking Henry George and his Single Tax proposal.

Several neoclassical economists actually debated George in person. These early neoclassical economists were J B Clark, Philip Wicksteed, Alfred Marshall, ERA Seligman and Francis A Walker, who each contributed something to ‘addle, baffle, boggle and dazzle the laity’. J B Clark, for instance, has a bibliography that quotes at least 24 works directed against George over a span of 28 years.

Banker JP Morgan funnelled his wealth through Seth Low to Columbia University in New York, and John D Rockefeller did the same in Chicago. Ezra Cornell, who Gaffney says once held one million acres of land, creator of the Western Union Monopoly, founded Cornell University in Ithaca, New York State.

Leland Stanford of Southern Pacific Railroad (really a land company), funded Stanford University. Likewise John Hopkins, a millionaire merchant and investor funded the University in Baltimore, Maryland.

Each of these benefactors appointed their own president. Hopkins appointed Daniel Gilman as President. Out of that university came eleven Presidents of the American Economics Association. Gilman had a natural hatred of Henry George as he had been hounded out of Berkeley by the crusading young journalist when he uncovered ‘Gilman’s improper diversion of the Morrill Act funds.’

In his chapter entitled The Chicago School Poison, Gaffney writes:

John D Rockefeller funded Chicago spectacularly in 1892, and started raiding other campuses by raising salaries. Rockefeller picked the first President, William Rainey Harper. Harper picked the first economist, J Laurence Laughlin, from Andrew Dickson White’s Cornell (he liked Laughlin’s rigid conservative and anti-populist views.

Harper drove out Veblen in 1906, then died, leaving Laughlin in charge of economics until he retired in 1916. He passed the torch to J. M. Clark, the son and collaborator of J.B.Clark. Frank Knight came to Chicago in 1917 from Laughlin’s Cornell. The apostolic succession is very clear from Rockefeller to Harper to Laughlin to Clark to Knight. …Chicago to this day is still the lengthened shadow of John D Rockefeller.

In terms of numbers, and intensity of feeling generated, Knight probably produced more neoclassical economists than anyone in history. He made no secret of his firm opposition to Henry George and ideas that might comfort Georgists. His enduring interest and his viewpoint are clear from the title “Fallacies in the Single Tax” (1953)

Who would have thought nowadays that Henry George had to be neutralised? After all, he wrote his books and did his public speaking and touring from 1870 to 1897.

The money men involved five universities in the corruption of economics

It was in these five Universities that neoclassical economics developed to the stage where it has almost completely taken over from classical economics. And it was out of these universities that the American Association of Economists was founded in 1885 by Ely, Walker, Edwin Seligman and others. Ely notes they did not welcome ‘reformers’.

In addition, Richard Ely retired after a long career a John Hopkins University, to establish what he called The Institute for Research in Land and Public Utilities whose purpose was ‘to investigate all problems connected with land taxation’. Contributors included utilities, railways, building and loan associations, land companies, lumbermen, farmers, bankers, lawyers and insurance men.

At least two of these academics were wealthy – E R A Seligman of Columbia came from a wealthy banking family. Richard Ely, who was known as the ‘Dean of American economists,’ was a well-connected land speculator, making a small fortune in Wisconsin real estate. He spent his life rationalising land speculation.

To give you another taste of Gaffney (take a big breath): ‘To most modern readers, probably George seems too minor a figure to have warranted such an extreme reaction. This impression is a measure of the neo-classicals’ success; it is what they sought to make of him. It took a generation, but by 1930 they had succeeded in reducing him in the public mind.

In the process of succeeding, however, they emasculated the discipline, impoverished economic thought, muddled the minds of countless students, rationalised free-riding by landowners, took dignity from labour, rationalised chronic unemployment, hobbled us with today’s counterproductive tax tangle, marginalised the obvious alternative system of public finance, shattered our sense of community, subverted a rising economic democracy for the benefit of rent-takers and led us into becoming an increasingly nasty and dangerously divided plutocracy.’

Get universities to turn a blind eye to money and banking too

The omission of the words ‘credit’, ‘banking’ and ‘money’ or the downright distortion of facts in university teaching was also no accident. The publishing in 1906 of Silvio Gesell’s book The Natural Economic Order sparked a decades-long movement.

Gesell has been described by Irving Fisher as a ‘strangely neglected prophet’. Economist John Maynard Keynes wrote, ‘I believe that the future will learn more from the spirit of Gesell than from that of Marx.’

For centuries American politicians and British politicians had been treating money creation as a political issue. Thomas Jefferson and Abraham Lincoln are two president who knew that banks create money. But after the arrival of neoclassical economics in the late nineteenth century, things started to change.

To please the banks who profit from land ownership, economists stopped mentioning the words ‘money’, ‘credit’ and ‘banking’. The widespread influence of both Major CH Douglas from the 1920s and Silvio Gesell before him had frightened the land barons, industrialists and bankers.

Gesell had advocated for a decaying currency. There was a Gesellian movement for three decades after. And then came Social Credit. It was a bit worrying for banks that the Social Credit Party in New Zealand won 12% of the vote in 1953.

So a Royal Commission on Banking and Credit was set up. In 1956 it found that banks were ‘banks of issue as well as banks of deposit’. However, thanks to their spin doctors, politicians at the time managed to misrepresent the findings well enough for the public to believe the Commission had ruled the opposite.

Who knows what mischief went on behind the scenes? Universities fell into line.

Academic teaching on money creation was reduced to a brazenly inaccurate paragraph or two, misleading generations of students. But money is really created by private banks as interest-bearing debt. This, together with the tax system which fails to impose a full land value tax, builds in a growth imperative, ensuring we depend on exponentially growing debt and continue to monetise and privatise the commons.

Universities are a vehicle for spreading misinformation about how money is created. So we can more easily understand the simple and chilling statement of Mayer Amschel Rothschild, “Let me issue and control a nation’s money and I care not who writes the laws.”

Predicting the Global Financial Crisis was impossible with this corrupted economics

The corruption of economics in universities is no trivial matter. Economic crises are serious matters involving loss of homes, savings and jobs and economists need the right tools to predict them so they can deal with them. Tragically only a handful of economists predicted the Global Financial Crisis of 2007-8 and the Queen of England was known to ask, ‘Why didn’t anyone see this coming?’

Professor Steve Keen in his book Debunking Economics spends a chapter summarising the work of a Dutch economist, Dr Dirk Bezemer. After laying down certain criteria for selection, he concludes there were only 12 (two published together).

He named Dean Baker, Wynne Godley, Fred Harrison (UK), Michael Hudson, Eric Janszen, Steve Keen (Australia), Jakob Madsen & Jens Kjaer Sørensen (Denmark), Kurt Richebächer, Nouriel Roubini, Peter Schiff and Robert Shiller. Subsequently Bezemer had the list at three dozen, but out of a total profession of at least 20,000 it is a very dismal record.

If any other profession (e.g medicine) was so wrong in something that affected millions they would be sued. The universities that train economists should hang their heads in shame.

Hyman Minsky claimed that in prosperous times, when corporate cash flow rises beyond what is needed to pay off debt, a speculative euphoria develops, and soon thereafter debts exceeded what borrowers can pay off from their incoming revenues, which in turn produces a financial crisis. He said we moved from a hedging stage where risk is low to a speculative stage and finally to a Ponzi stage.

A key indicator was the growth of private debt as a fraction of GDP. The “Bezemer 12” quoted above had in common that they were concerned with the distinction between the financial economy (making money from money) and the real economy.

Steve Keen wrote in 2009, “Unfortunately after the crisis everything being done by policy makers around the world is instead trying to restart private borrowing.” Sadly, Wikipedia notes that while Minsky’s theories have enjoyed some popularity, they have had little influence on mainstream economics or in central bank policy.

Economics is too important to be left to mistaught economists.

The absence of good, reality-based economic theory in education leaves millions of environmental and social activists – along with the compassionate right – to flounder about helplessly trying to solve growing inequality and the climate crisis.

Universities reply that they all do it

Tackling the veracity of university teaching in economics is no job for a quitter. In 2013 Peter Morgan, a retired engineer started on a mission when he read a Bank of England paper on money creation. Morgan wrote to the Vice-Chancellor of Auckland University, Professor Ananish Chaudhuri:

‘The textbook used by the University of Auckland for its macroeconomics courses is Principles of Macroeconomics in New Zealand, by N. Gregory Mankiw, Debasis Bandyopadhyay and Paul Wooding. It contains several statements that are unequivocally fallacious. By way of example – by no means the only one in the textbook – the following is an example:

“Financial intermediaries are financial institutions through which savers can indirectly provide funds to borrowers.”’

He went on to quote from both the Royal Commission on Banking and Credit in New Zealand in 1956, but mostly from the Bank of England papers e.g. Banks are not intermediaries of loanable funds – and why this matters by Zoltan Jakab and Michael Kumhof.

Back came his answer, which basically says everyone is using that textbook so it must be right:-

“Dear Mr Morgan:

Thank you for your recent letter to the Vice Chancellor which has now been sent on to me via the Dean of the Business School.

First of all, thank you for taking the time to write.

I begin by noting that the questions you have raised go to the heart of the debate raging around the world. There is no question that in the aftermath of the GFC, the state of macroeconomics globally is in a flux with possibly more questions than answers. As you must be well aware leading scholars as well as policy makers are currently engaged in a robust debate world-wide particularly as Greece and Germany enter into a stare-down which may result in the break-up of the European currency union.

Having said that let me make a few points:

First, the textbook at issue is the most popular textbook world-wide including most leading institutions of higher learning. Greg Mankiw is a leading scholar, a professor at Harvard (which I believe also teaches from this text) and was Chairman of George W. Bush’s Council of Economic Advisors. I expect that he is well aware of the state of the art in terms of both theory and policy-making.

There are local editions of this book written by leading scholars in those countries. The Australian edition was done by Joshua Gans of Melbourne and Stephen King (till recently Dean at Monash Business School). Their role is to provide a local perspective and local data but the major intellectual force is provided by Mankiw.

It is important to understand that the scholarship in this area is still very much evolving and therefore a plausible counter-argument is that no matter which text-book we choose to use, it will suffer from some flaws and deficiencies.

Second, while authors do their best to keep up with evolving knowledge nevertheless it takes time to update textbook content, at least partly because it takes time to understand and absorb the lessons of history. As I noted above the state of macroeconomics is in a flux and new research needs to be integrated into future editions.

Third, I would disagree that the book contains fundamental errors. I think this may have more to do with differences in assumptions and philosophies rather than violations of some universally held truths. We and indeed all scholars welcome robust debate on such differences. They are part and parcel of the academic discourse. As the VC has already pointed out, at the end of the day, this is also an issue of academic freedom. I have absolutely no reservations about the use of this textbook in our degree program.”

So having acknowledged that economists have spent a fruitless seven years scratching their heads about what caused the GFC, or the crisis in Greece, the Head of Department, Professor Chaudhuri puts this major issue aside and declares the book valuable. He justifies using a textbook with fundamental inaccuracies by saying other universities are doing it too!

In a subsequent letter, he confesses that he is not an expert in monetary policy. They often do that – claim they are not a macroeconomist. This is rather like the head of a medical school saying he is not an expert in medicine or the head of an architecture school saying he is not an expert in building design.

The sheer nerve of senior economists to think that they don’t need to come to grips with monetary policy when the world is awash with debt would be incomprehensible if one didn’t know their very jobs depend on their pulling the party line. Money is at the heart of economic life.

Perhaps we can get some clarity from Steve Keen here. In a 2014 blog, he explains the three options open to universities after the 2014 Bank of England paper that refuted the loanable funds model.

‘Now if I believed in the tooth fairy, I would hope this emphatic denunciation of the textbook model would cause macroeconomics lecturers to drastically revise their lectures for next week. But I’m too long in the tooth to have such a delusion. They’ll ignore it instead.

Their dominant “tactic” – if I can call it that – will be ignorance itself: most economics lecturers won’t even know that the bank’s paper exists, and they will continue to teach from whatever textbook bible they’ve chosen to inflict upon their students.

A secondary one will be to know of it, but ignore it, as they’ve ignored countless critiques of mainstream economics before. The third arrow in the quill, if they are challenged by students about it (hint hint!), will be to argue that the textbook story is a “useful parable” for beginning students, and a more realistic version is introduced in more advanced courses.’

He seriously doubts if the paper will cause senior economists to change their current position and explains that until you know that banks can create and cancel money, you will never be able to understand how demand rises and falls.

‘All the parables of conventional economics fly out the window once you know this. The level of economic activity now depends on the lending decisions of banks (and the repayment decisions of borrowers).

If banks lend more rapidly, or if borrowers repay more slowly, there will be a boom; if the reverse, there will be a slump. If new loans simply make up for old ones being repaid, then there is no effect, but if new loans exceed repayment then aggregate demand will increase.’

The urgency of getting economics right

If universities are failing us by misleading our young people, journalists and politicians, think how critical it is to reverse this. Naomi Klein says that the climate crisis came along at just the wrong time – when neoclassical economics was at its zenith.

No wonder there was a reluctance to do anything meaningful as it simply clashed with the dominant economic paradigm. Klein says, ‘Economics is at war with the planet’. According to many experts there is only a small window to reverse climate change, until 2017.

There is such a long way to go to reverse public thinking. And such a short time to do it. Neoclassical (or neoliberal) economics has a death-like grip on us.

In over a century the doctrine has succeeded in further privatising the commons, dismantling the state, deregulating everything that moves and fooling the public over land and money. The economic theory that ignores the role of money and debt can’t possibly make sense of the economy in which we live. It should be jettisoned.

While the collapse of the global economy will be terribly painful and chaotic, it will certainly reduce carbon emissions dramatically. But as long as the economy holds up we need to get on our bikes and work.

Whatever happens, no future economy should have the flaws we have now. It is time to get cracking, or as the sheep farmers of the South Island of New Zealand say – rattle our dags. We can do it.

Do universities lead advances in economics?

During depressions great thinking is done, sometimes in universities, but more often not. As we have seen, Henry George, a journalist, wrote Progress and Poverty in response to abject poverty in San Francisco (1879 book).

Silvio Gesell, a German businessman, wrote after an Argentinian depression of the 1880 and 1890s and John Maynard Keynes wrote after the Great Depression of the 1930s.

Keynes suggestions were widely adopted after the Great Depression. In 1933-4 Gesell’s currency was put into practice in a small town in Austria with spectacular results. People came from all over Europe to witness the ‘miracle of Wørgl’. But it lasted a mere fifteen months, cut short by the influence of big banks over the Austrian government at the time, who made the ‘work certificates’ illegal.

So despite considerable influence for three decades for his important thinking on currency design (a currency must only act as a medium of exchange and must rot like potatoes and rust like iron), Gesell is now all but forgotten.

Gaffney’s description of how land barons, industrialists and bankers perverted university’s teaching, which in turn leads to misguided government policy, is reminiscent of the story of the history of banking.

Banks have been a powerful influence on governments ever since governments allowed banks to create credit that could be used to pay taxes. This may have happened in Europe centuries ago after the goldsmiths.

To add to our troubles universities, under the influence of neoclassical economists, have all but stopped teaching economic history so no one can study Gesell or George.

The tie-up between universities and neoclassical economists also influences the relationship of politicians to bankers. Nomi Prins in her landmark book All the Presidents Bankers sheds light on the symbiotic relationship of a century of American presidents with the top bankers of the country, and how elite bankers can even dictate foreign policy.

The dust cover of her book says she ‘ushers us into the intimate world of exclusive clubs, vacation spots, and Ivy League universities that binds presidents and financiers.

She unravels the multi-generational blood, intermarriage, and protege relationships that have confined national influence to a privileged cluster of people. These families and individuals recycle their power through elected office and private channels in Washington, DC.’

Bankers finally admit they create money

Of course, the bankers themselves know better than the universities who prefer to be complicit in keeping the secret. Graham Towers, Governor of the Bank of Canada and Lord Josiah Stamp of the Bank of England have been quoted regularly in the monetary reform literature.

Even in New Zealand in 1955 we had H W White, Chairman of the Associated Banks telling the Royal Commission on Banking and Credit:

“The banks do create money. They have been doing it for a long time, but they didn’t realise it, and they did not admit it.”

Of course, after Michael Kumhof got the Bank of England to admit that banks create money, New Zealand Reserve Bank eventually followed. But not till 2023.

Clilly4, CC0, via Wikimedia Commons

The Reserve Bank of New Zealand can create money for Government with no interest

New Zealand faces a huge infrastructure challenge. Our water systems need upgrading, transport networks are under pressure, hospitals need investment, and climate adaptation projects are becoming increasingly urgent.

The country’s infrastructure deficit has been estimated at around $200 billion. The question is not whether we need to invest. The question is how we pay for it.

It’s been said a thousand times – a country’s money supply is not like a household’s.

Whereas the latter can run out of money, the former can’t, because it can create its own money. A sovereign country creates money through its central bank, in our case the Reserve Bank of NZ. The New Zealand dollar is our currency.

A petition before Parliament, from Positive Money New Zealand, is calling for an inquiry into a little-known financing tool called Direct Monetary Financing (DMF). While the name sounds technical, the idea is straightforward: instead of borrowing all the money for major infrastructure projects from financial markets and paying interest for decades, the Reserve Bank could create some of the money directly.

Supporters say this could save taxpayers billions while helping fund the infrastructure New Zealand urgently needs.

The cost of borrowing

Governments normally finance infrastructure by issuing bonds and borrowing from investors. The borrowed money must then be repaid, along with interest.

Positive Money’s submission points out that New Zealand’s Infrastructure Commission estimated in 2022 that around $31 billion per year of investment is needed to address future infrastructure requirements.

At current borrowing costs, that interest adds up quickly. A project financed at around 4.5 percent interest could cost more than twice its original value over thirty years.

A $31 billion investment could ultimately require repayments of about $72 billion.

The extra money does not build additional roads, schools, hospitals or water systems. It simply pays the cost of financing.

Direct Monetary Financing seeks to reduce that burden.

What is Direct Monetary Financing?

Most people assume that governments create all the money in circulation. In reality, most money is created by commercial banks when they make loans.

When a bank issues a mortgage, it creates new deposits and therefore new money.

Direct Monetary Financing works differently. The Reserve Bank creates electronic money directly and makes it available for approved public investment projects. The government then spends that money into the economy.

Supporters argue that if commercial banks can create money and charge interest on it, it is reasonable to ask whether some money for essential public infrastructure could instead be created directly by the nation’s central bank.

We usually do it the wrong way

Importantly, DMF is not the same as Quantitative Easing (QE), which New Zealand used during the Covid crisis. Under QE, the Reserve Bank created money to buy government bonds through financial markets. Direct Monetary Financing bypasses financial markets and channels funding directly into public projects.

You see, if it is done the wrong way, as it was in 2020-21, then the Government has to pay the Reserve Bank interest. That is plain daft in my view. One branch of government paying another interest? Stupid. That is why the coalition government has been complaining that the Labour Govt has left them a huge debt to pay off.

We can do it without using Government Bonds on which the Government has to pay interest. We can do it directly.

We’ve done it before

One of the most surprising aspects of this debate is that New Zealand has used similar approaches in the past.

Between the 1930s and 1970s, Reserve Bank credit helped finance state housing, industrial development and other nation-building projects.

During the late 1930s, Reserve Bank credit creation supported economic recovery following the Great Depression. Similar approaches were also used in countries such as Canada and Japan during periods of major infrastructure and industrial development.

Advocates argue that New Zealand is once again facing the kind of long-term investment challenge that these tools were designed to address.

What about inflation?

The biggest concern is inflation.

Critics worry that allowing governments to create money could lead to excessive spending and economic instability.

Positive Money argues that the risk depends on how the money is used. Funding productive assets such as transport systems, water infrastructure and housing has different economic effects from simply increasing consumer spending.

The organisation is not proposing unlimited money creation. Instead, it suggests a tightly controlled framework with parliamentary approval, independent oversight and strict limits on eligible projects.

In other words, the tool would be reserved for long-term infrastructure investment rather than day-to-day government spending.

A debate worth having

The petition does not call for replacing taxes or government borrowing. Instead, it asks Parliament to investigate whether Direct Monetary Financing could become another tool in the public-finance toolkit.

As New Zealand prepares to spend large sums on infrastructure over coming decades, supporters believe it makes sense to explore every financing option available.

For forty years, New Zealanders have repeatedly been told that governments “cannot afford” major investments. Yet that assumption is usually based on the idea that all funding must be borrowed from private financial markets.

Direct Monetary Financing challenges that assumption.

Whether Parliament ultimately embraces the idea or rejects it, the proposal raises an important question: if New Zealand can create money to stabilise financial markets during a crisis, should it also consider using that power to help build the infrastructure future generations will depend on?

Given the scale of the country’s infrastructure needs, it is a conversation worth having.

For years we were told climate change would be gradual. Temperatures would creep upwards. Sea levels would rise slowly. Extreme weather would become a little more common.

But the 2020s are telling a different story.

The world is no longer experiencing climate change as a distant trend. It feels as if the climate system has suddenly found the accelerator pedal.

Across the globe, records that once stood for decades are being broken by astonishing margins. Scientists are increasingly using words such as “unprecedented”, “extraordinary”, and even “mind-boggling” to describe what is happening. The old assumptions about weather are rapidly becoming unreliable.

Today Nick Young wrote in a tweet “One day of Extreme Heat caused 3,400 excess deaths across India. With temperatures reaching 48°C (118 F) in Rajasthan, India is suffering a deadly heatwave driven by climate change. People are dying and food crops are being destroyed.”

Europe: Summer Temperatures Arrive in Spring

The latest example comes from Europe.

In May 2026, large parts of Western Europe experienced temperatures more typical of the middle of summer than late spring. Britain recorded 35.1°C, its highest May temperature ever. Parts of France exceeded 39°C, while Spain approached 40°C. Some regions were running 10 to 15 degrees above normal for the time of year.

Scientists say a powerful “heat dome” trapped hot air over the continent. But climate change acted like steroids for the event, making it much hotter than it would once have been. One analysis found that weather conditions similar to this heatwave are now up to 2.5°C warmer because of human-driven climate change.

What is particularly alarming is not just the temperature itself, but the timing.

Europe is used to heatwaves in July or August. A heatwave approaching 40°C in May was almost unthinkable a generation ago.

The consequences are already visible. Deaths linked to heat have been reported across several countries. Hospitals have been placed under pressure. Farmers are reporting crop stress weeks earlier than normal. Rivers are warming, ecosystems are being disrupted, and electricity systems face growing demand from cooling.

India: Living on the Edge of Human Tolerance

If Europe offers a glimpse of climate disruption, India shows what happens when extreme heat becomes a way of life.

Many parts of India entered heatwave conditions unusually early this year. Temperatures between 38°C and 42°C were recorded in several regions as early as March. In some areas temperatures were running about 7 degrees above normal.

In Delhi this week, temperatures reached more than 43°C. For people living in air-conditioned homes, that is uncomfortable. For hundreds of thousands of people living in informal housing or on the streets, it can be life-threatening. Night-time temperatures remained above 32°C, giving little opportunity for recovery.

Heat affects almost everything.

Workers cannot safely remain outdoors. Construction slows. Crop yields suffer. Water demand surges. Electricity grids strain under air-conditioning loads. Food prices can rise as harvests are damaged.

Scientists studying India’s heatwaves have found that they have intensified significantly over the past two decades and are expected to become even more severe in the future. Heat-related deaths are projected to rise sharply if greenhouse gas emissions continue on their current path.

And this year, by driving up Pacific Ocean temperatures to extreme highs, the super El Niño typically will disrupt the southwest monsoon, which provides nearly 70% of the country’s annual rainfall.

The biggest danger is not one single disaster, but a combination of heat, drought, water shortages, crop failures, and economic stress occurring at the same time.

Why Does It Feel Like Climate Change Is Speeding Up?

Part of the answer is simple physics.

Every tonne of carbon dioxide added to the atmosphere traps more heat. Oceans absorb much of that heat, but they cannot absorb it forever without consequences.

Warmer oceans mean more energy in the climate system. That can mean stronger heatwaves, more intense rainfall, longer droughts and more violent storms.

Another factor is that we are now moving into a world that is around 1.5°C warmer than pre-industrial times. That may not sound like much, but it represents an enormous amount of additional energy across the entire planet. Small increases in average temperature can produce huge increases in extreme temperatures.

The World Meteorological Organization now says there is an overwhelming likelihood that the world will experience new record hot years before 2030. There is also a very high chance that the average temperature of the coming years will remain above the symbolic 1.5°C threshold.

The New Normal Is Not Normal

Perhaps the biggest mistake we can make is to think these events are isolated.

Europe’s record spring heat. India’s growing heatwaves. Wildfires, floods, droughts and storms elsewhere around the globe are all part of the same story.

The climate system is changing faster than many societies are prepared for.

The phrase “new normal” is often used to describe these events. But there is nothing normal about temperatures approaching 40°C in Europe during May, or millions of people enduring dangerous heat before summer has even arrived.

The 2020s may come to be remembered as the decade when climate change stopped being a warning about the future and became the defining reality of the present.

The question is no longer whether climate change is happening.

The question is whether our infrastructure, food systems, cities and governments can adapt quickly enough to keep up with it.

Echoes of 1877: The Super El Niño of 2026

Climate scientists are increasingly comparing the developing El Niño of 2026–27 with one of the most powerful climate events in recorded history: the great El Niño of 1877–78. Early forecasts suggest Pacific Ocean temperatures could approach 3°C above normal, placing this event in the rare category of a “Super El Niño.” Some models indicate it could become the strongest since the nineteenth century. And it is developing now until July.

The comparison is sobering. The 1877–78 El Niño triggered devastating droughts, crop failures and famines across India, China, Brazil and other regions. Historians estimate that more than 50 million people may have died from famine and disease linked to the event, making it one of the deadliest climate disasters ever recorded.

Yet there are important differences. In 1877 the world had no satellites, no global weather forecasting systems and little international disaster relief. Today scientists can track ocean temperatures in real time and provide months of warning. Governments, aid agencies and farmers have opportunities to prepare that simply did not exist a century and a half ago.

Today’s India has irrigation systems, transport networks, food reserves, weather forecasting, and disaster management capabilities that did not exist then. A famine on the 19^th century scale is highly unlikely. However, a strong El Niño combined with climate change could still produce record heat, severe water shortages, crop losses, and significant economic disruption affecting hundreds of millions of people.

However, there is one major factor that makes 2026 different: the planet is already significantly warmer because of human-driven climate change. Any Super El Niño now develops on top of that extra background heat, increasing the risk of record temperatures, droughts, floods, crop failures of rice, lentils and beans and wildfire outbreaks around the world.

Yesterday the Treasurer Nicola Willis set aside $450 million as a rainy day fund for the situation where the fuel crisis worsens.

Last Wednesday was the day the Ministry of Business, Innovation and Employment published the amount of fuel in the country and on the water. But it didn’t even make the RNZ news or the TVOne news it was so boring.

Yes, as usual nothing to worry about.

Plenty of diesel, petrol and aviation fuel. MBIE says 45.9 days of petrol either in the country, within our Exclusive Economic Zone or outside it. The figure as at 24^th May, it says, were 25.1 days in the country, 1.2 days within our EEZ and 19.5 days outside our EEZ.

The Strait of Hormuz has been closed for nearly three months now. 1000 ships are trapped. Supplies get delivered to them by ship.

But there is another website, this time from the TaxPayers Union. But it is not so optimistic.

So I asked ChatGPT to explain the difference between NZ fuel stocks as shown by https://www.mbie.govt.nz/about/news/fuel-stocks-update and what is shown by fuelclock.nz. Here is its answer:-

“The key difference is that the MBIE fuel stocks update page and FuelClock.nz are trying to answer two different questions.

MBIE: “How much fuel is committed to New Zealand?”

MBIE reports:

1. Fuel physically in New Zealand tanks.

2. Fuel already on ships inside NZ’s EEZ (Exclusive Economic Zone).

3. Fuel on ships still outside NZ waters but already sailing toward NZ — up to 3 weeks away.

MBIE expresses this as “days’ cover”.

So when MBIE says New Zealand has, for example, “46 days of diesel”, that includes:

• diesel already here,

• diesel almost here,

• diesel still crossing the ocean.

MBIE also uses a standardised demand assumption based on Minimum Stockholding Obligation (MSO) demand levels:

• 8.1 million litres/day petrol

• 10.7 million litres/day diesel

• 4.8 million litres/day jet fuel.

Their purpose is mainly:

• national planning,

• fuel-security monitoring,

• checking whether imports are continuing normally.

MBIE repeatedly says fuel supply is “dynamic”, meaning stocks naturally rise and fall as tankers arrive and unload.

FuelClock.nz: “How much usable fuel is effectively available right now?”

FuelClock.nz takes a much more conservative approach.

According to the Taxpayers’ Union explanation of FuelClock.nz, it:

• starts with MBIE data,

• then subtracts estimated daily consumption continuously,

• and tries to track actual tanker arrivals using AIS ship tracking and port schedules.

So FuelClock tends to focus more heavily on:

• fuel physically accessible now,

• short-term depletion risk,

• timing gaps between arriving tankers.

That is why FuelClock often shows much lower “days remaining” than MBIE.

For example:

• MBIE might count a tanker 2–3 weeks away as part of national stock.

• FuelClock may discount that fuel heavily until the ship is closer and more certain.

The philosophical difference

You could think of it like this:

MBIE view: “Fuel is in the supply chain.” whereas FuelClock says

“Fuel must actually arrive and unload before we rely on it.”

Includes confirmed incoming shipments

Emphasises immediate availability

MBIE is designed to reassure and monitor system-wide stability while fuelclock.nz is

designed to highlight vulnerability and timing risk

Why the numbers can diverge dramatically

The biggest reason is “on-water fuel”.

MBIE currently includes:

• ships within the EEZ,

• plus ships outside NZ waters but already sailing toward NZ.

Critics argue that:

• ships can be delayed,

• rerouted,

• weather-affected,

• commercially redirected,

• or simply not visible on public tracking systems.

MBIE itself notes that public AIS (Automatic Identification System) ship tracking is incomplete and sometimes unreliable offshore.

So the disagreement is partly about confidence:

• MBIE trusts confirmed importer data.

• FuelClock trusts only fuel that is near-certain to arrive soon.

Another subtle difference: snapshot versus countdown

MBIE publishes a twice-weekly snapshot.

FuelClock acts more like a live depletion estimate:

• “If NZ keeps burning fuel at current rates, how long until tanks are critically low?”

That creates a psychological difference:

• MBIE looks stable.

• FuelClock looks urgent.

Which one is “right”?

Both are “right” within their own assumptions.

MBIE is probably better for:

• understanding the official supply chain,

• medium-term fuel security,

• confirmed import commitments.

FuelClock is probably better for:

• highlighting fragility,

• showing how dependent NZ is on constant tanker arrivals,

• illustrating how little physical storage NZ actually has onshore.

In reality, New Zealand’s fuel system depends on continuous maritime replenishment. Both sources agree on that fundamental point. The disagreement is mostly about how much confidence we should place in fuel still at sea.”

So I asked it, “Are there recent cases of any of ships carrying refined oil products that have been commercially redirected? Was it because some other country paid more?

Answer: “Yes — but the evidence is usually indirect rather than a public admission that “Country A paid more.” For refined products, cargoes are often commercially diverted when a ship’s owner, charterer, or trader can get a better net return by selling into a different port or region, especially if freight rates, refinery outages, local shortages, or arbitrage opportunities change during the voyage. In practice, that means a shipment may be re-routed to a market paying a higher delivered price, but the public reporting often describes it as a commercial decision rather than a simple price-bidding contest.

For New Zealand, the more relevant point is that fuel cargoes can be delayed or redirected because the whole supply chain is flexible and price-sensitive. If another destination becomes more attractive, a cargo may be switched there; if a port or refinery is disrupted, the vessel may wait, slow down, or change course. That is one reason official fuel-security reporting can look optimistic: a cargo counted as “on the way” may still be vulnerable to being sold elsewhere before arrival.”

Singapore oil refinery. But what price will they be paying for Hormuz oil soon?

I couldn’t figure out how the government could keep saying, for weeks on end, that there was nothing to worry about with our petrol, diesel and aviation fuel supply. I suspected there was more going on than the official reassurance suggested.

MBIE’s fuel stocks update on 18 May 2026 showed 56.2 days of petrol, 46.3 days of diesel and 47.7 days of jet fuel either in the country, within our EEZ or outside our EEZ. On the surface, that sounds reassuring enough. The ministry also said: “Overall fuel stocks remain well above minimum requirements and within normal ranges, with regular shipments continuing to arrive as expected. Fuel importers have provided good confidence through confirmed orders to late June, with planned orders extending into early August.”

But then I started looking more closely at how oil is priced and traded, and the picture became more complicated.

Futures are not the same as spot

This is where the terminology matters. Oil is often traded through futures contracts, which are agreements to deliver a barrel at a future date. That is different from the spot price, which reflects what buyers pay for immediate physical delivery.

In practice, the physical price of crude delivered into Asia — including Singapore — can sit well above the futures price because buyers are paying not just for the oil itself, but also for freight, insurance, and regional market premiums.

That distinction matters a lot when supply is tight. Futures markets reflect expectations about what will happen later. Spot prices reflect what is happening right now. If traders think a crisis may ease soon, the futures price can stay relatively lower even while prompt physical barrels are expensive.

Why Singapore matters

Singapore is one of the world’s most important energy crossroads. It has no major oil reserves of its own, but it has built a huge refining, storage and trading system that makes it central to Asia’s fuel supply. Much of the crude and refined fuel moving through the region passes through or near Singapore, especially because of its location beside the Strait of Malacca.

For New Zealand, Singapore has become even more important since the closure of the Marsden Point refinery in 2022. New Zealand now imports almost all of its refined fuels, and about a third of those supplies come from Singapore. That makes Singapore’s refining and shipping capacity highly significant for our transport, agriculture and freight systems.

That was part of the reason the New Zealand and Singapore governments signed the Agreement in early May 2026. The deal commits both countries not to impose export restrictions on essential goods such as fuel, food and medical supplies during crises. The agreement is explicitly aimed at keeping supply chains moving when disruptions hit.

The price gap that caught my attention

What really sharpened the issue for me was the gap between Brent futures and the physical spot price. On 2 April 2026, the spot price for immediate deliveries of Brent crude reached US$141.36 a barrel, while the June Brent futures contract settled at US$109.03. That is a very large spread, and it shows how much physical supply pressure can build even when futures traders are still pricing in a possible easing of the conflict

So when people say there is “nothing to worry about,” the answer depends on which market they are looking at. Futures may suggest calmer conditions ahead. But physical barrels delivered into Asia — and into Singapore in particular — can be much tighter and more expensive.

There are three different mines in the Strait of Hormuz and the insurance companies will be cautious

And it will be when the world wakes up to the reality of the obstacles oil tankers will meet when sailing through the Strait of Hormuz. There are three types of mines there. It will take a while to clear them all. Insurance companies will be wary and ships won’t said without insurance. A deal with Iran will always be subject to something going wrong and Iran has everything in place to land some fatal blows.

There are many credible commentators a lot more pessimistic than our Government. One such is The Honest Sorcerer whose recent summary of the situation I wrote about recently.

What this means for New Zealand

For New Zealand, this is not just an abstract market story. We rely heavily on imported refined fuels, and a large share of those imports comes through Singapore. So if the global physical market tightens, the consequences can show up here quickly, even if official stock numbers still look comfortable.

That is why the government’s confidence statements should be read carefully. Fuel stocks may indeed be above minimum requirements. But stock levels are only one part of the picture. The other part is whether the global supply system can keep delivering physical fuel at prices that are manageable.

And in a world where the spot market can move far faster than the futures market, that distinction matters a great deal.

The town was Wörgl.

The year was 1932.

Factories were idle. Businesses were failing. Across Europe, there were workers desperate for jobs and communities desperate for repairs, yet almost no money seemed to circulate. It was one of the great paradoxes of economic collapse: plenty of real wealth and real labour existed, but the financial system had seized up.

Then Wörgl tried something radically different.

Instead of waiting for more national currency to arrive, the town created its own money.

And for a brief 14-month period, it worked astonishingly well.

The depression nobody could solve

Austria in the early 1930s was in deep crisis. Banks had failed, credit had dried up, and unemployment was soaring. Like many governments at the time, authorities responded with austerity. Public spending was cut precisely when ordinary people needed work most.

At the time, the town of Wōrgl faced dire economic circumstances. Out of 4300 inhabitants, about 350 were unemployed, and the surrounding areas accounted for another 1500 unemployed individuals.

Due to the economic crisis, tax collection had stalled, and the town was unable to implement much-needed infrastructure repair, such as the asphalting of the main street which was in a dreadful condition. Roads were crumbling, infrastructure needed repair, and the town carried significant debt.

Its mayor, Michael Unterguggenberger, believed the problem was not a lack of skills or resources. The problem was a shortage of circulating money.

So he turned to the ideas of the German-Argentine economist Silvio Gesell.

Gesell argued in his book Natural Money that ordinary money behaves badly because people hoard it. Everyone tries to save cash rather than spend it. But if everyone saves simultaneously, businesses fail, workers lose jobs, and the economy spirals downward.

So he proposed a form of depreciating money that would lose “one-thousandth of its face value weekly, or about 5% annually, at the expense of the holder.”

His proposed solution was startling: money should lose value if people held onto it too long. There should be a charge for hoarding money.

As Gesell famously wrote:

“Only money that goes out of date like a newspaper, rots like potatoes, rusts like iron, evaporates like ether, is capable of standing the test as an instrument for the exchange of potatoes, newspapers, iron and ether.”

Most economists considered the idea eccentric. But Irving Fisher praised his work and John Maynard Keynes called Gesell a "strange, unduly neglected prophet" and stated that the future would learn more from the spirit of Gesell than from that of Marx.

Wörgl decided to test it.

Changing terminology

There are two other ways of naming demurrage currencies. Margrit Kennedy preferred the term ‘circulation incentive’ instead of ‘penalty for hoarding.’

Charles Eisenstein in his book Sacred Money preferred the term ‘decaying money’ arguing that we need to reclaim the word decay as it is a natural process. It indicates that because money is something with which we buy goods, it should decay like goods.

The birth of the Wörgl Schilling

In July 1932 the town issued what became known as the Wörgl Schilling, technically called “labour certificates.”

The notes were backed by 20,000 ordinary Austrian schillings deposited in a local bank, so they were not completely detached from the national currency. They paid their workers half in Work Certificates rather than Austrian schillings, and on the back of the notes (issued in 1,5, and 10 schilling denominations) were 12 spaces.

The notes contained one revolutionary feature. Every month, the holder had to buy a stamp equal to 1 percent of the note’s value and stick it onto the note to keep it valid.

In effect, the money carried a holding cost.

This “demurrage” charge transformed behaviour almost immediately.

Nobody wanted to sit on the notes for long. Instead, people spent them quickly. Shopkeepers paid suppliers. Suppliers paid workers. Citizens paid taxes early. The currency circulated rapidly through the local economy.

And because it moved so quickly, each note generated far more economic activity than ordinary money sitting idle in bank accounts.

In fact it moved so quickly that there was inflation.

In response they quickly took back Work Certificates and managed with only 12,000.

A town comes back to life

· The effects were dramatic enough that observers from around Europe travelled to Wörgl to witness the experiment for themselves. The Mayor estimated the total expenditure to be in the region of 100 000 schillings. Municipal investment expenditure increased by 219.7%

The town suddenly had funds for public works:

· tax revenues rose by 34.4%

· tax arrears decreased by 53.8% because people preferred to spend the local currency before it lost value.

· 4 miles roads were rebuilt and ashphalted

· A bridge was built and on it were the words Built with Free Money

· street lighting was installed

· public buildings were renovated

· Unemployed workers found jobs.

· Local businesses revived.

· Tax arrears fell sharply

· Their sewage scheme was repaired

· A ski jump was built

· Trees were planted

· An inn was demolished and and rebuilt

· A water reservoir was constructed

· Unemployment dropped by 25% whereas in the rest of Austria it rose 19%

The mayor even remarked that the town was beginning to look prosperous while much of Austria remained trapped in depression.

This was why newspapers began calling it “The Miracle of Wörgl.”

Whether it was truly a miracle is still debated today. Some economists argue the town’s recovery was exaggerated. Others point out that the experiment was small and short-lived.

But even critics generally acknowledge one thing: the local currency significantly increased the velocity of circulation.

Money moved.

And when money moves, economies move.

Why central banks became nervous

The experiment’s success also created alarm.

More than 200 Austrian communities reportedly expressed interest in copying the model. Suddenly, central authorities faced the possibility that municipalities might begin issuing their own functioning currencies.

For the Austrian National Bank this was intolerable.

Modern states guard monetary sovereignty fiercely. The power to issue currency is one of the foundations of political authority.

If local governments could create effective alternative currencies during recessions, what did that imply about the national banking system?

In 1933 the Austrian courts sided with the central bank and banned the Wörgl currency.

The experiment ended.

Soon afterward, unemployment in the town reportedly rose again.

Why people still talk about Wörgl

Nearly a century later, the Wörgl experiment still fascinates monetary reformers, localists, and critics of modern finance.

Partly this is because Wörgl touched a question that remains unresolved today:

What exactly is money for?

In modern economies, money often behaves as a store of wealth. People accumulate it, speculate with it, or hold it during uncertain times.

But Wörgl treated money differently. As Gesell had argued, it treated money only as a means of exchange.

Its designers believed money should circulate continuously through communities rather than pool in financial centres.

That idea still resonates in an age of widening inequality, financial instability, and repeated economic crises.

Modern local currencies such as the Chiemgauer in Germany were directly inspired by Wörgl and by Gesell’s ideas. But none have matched the dramatic political impact of the original experiment.

Perhaps because Wörgl suggested something profoundly unsettling.

The economy doesn’t merely depend on how much money exists. The speed of circulation is also critical.

It depends on how money is designed.

And why do I post this story now?

Because on the news I hear that rising diesel prices have caused the price of electricity on the Chatham Islands to be triple the mainland average.

They are in real trouble and no end is currently in sight, as I argued in a previous post.

Or they may prefer to look at using the design of the Chiemgauer currency. More on that next time.

NB. A better laid out version of this which is more readable is at https://livingeconomies.nz/the-worgl-experiment-terrorized-central-bankers/

A baby weasel hitches a ride on a Green Woodpecker bird (from World’s Amazing Things)

Today we get the usual nonsense from Trump that Iran is begging for a deal. Goldman Sachs says there are only 45 days of gasoline, diesel and jet fuel left in global fuel reserves. The World Health Organisation says there are now more cases of hantavirus. Oh yes – plenty of bad news for everyone who tunes in.

My hairdresser told me today that since the petrol price has risen and she drives 19 km to work, she is changing what she buys at the supermarket. She has moved to beans and lentils for her protein. (a great move in my book as I am whole-food-plant-based myself, other than the odd bit of fish).

So today, on David Attenborough’s 100th birthday I thought I would try and list a few things that can keep us sane.

My favourite is that when I go to X (formerly twitter), I am following someone calling themselves World’s Amazing Things, along with 134,000 other followers. There I find extraordinary images to make me gasp in awe. There are elephant families, pink parrots, auroras in Norway and many wonderful trees.

Believe it or not this is a windswept tree in New Zealand somewhere

There is even a village of 6000 people in Poland where everyone lives on the same street. Marvellous.

I looked to find if there are other such sites.

Yes I follow Science Girl and find a striking photo of crooked tree that lasts longer than a straight one because the latter is useful for timber.

Or I could go to Amazing Nature with 314 thousand followers or Ramblings with 322 thousand followers. I find a quote “Somewhere out there someone is listening to birds instead of breaking news. And the world feels kinder there.”

Back to doomscrolling

I discover Trump has already said five times that we are close to a deal and five times no deal materialised. Oh well, I wonder if his insider-trading family won $1m or so out that one?

I see that Judge Andrew Napolitano said yesterday that “anyone with a double digit IQ can see the Iranians have won the war.” Australians are panicking over fertiliser supplies.

Bernard Hickey appears on YouTube interviewed in Auckland by NZ Herald for the Front Page. Now that is New Zealand. He says 17% of SMEs (small and medium enterprises) have less than a month of cash left.

Fuel is their top cost. He reckons the price of diesel trucking goods around the country will stay high for months, and of course, it feeds through to prices. So fewer goods will be bought. So SMEs have both an income shock and a cost shock. We are at an 11-year high for liquidations.

Bernard’s interviewer says she sent flowers to her mother for Mother’s Day and discovered she had to pay a fuel surcharge from Adelaide to her mother’s home. The florist had put it as part of the shipping costs.

Then, later Bernard says that Iran knows it has to get nuclear weapons or it won’t have a quiet life like North Korea, which does have them.

Back to staying sane again

We all need to feed our souls. There is a great selection of music concerts where I live, and the two concerts I attended last weekend certainly fed my soul.

What activities feed your soul amongst all this bad news? Watching David Attenborough on TV? After all 70 years of his life are recorded. He never lost his sense of awe and amazement at this wonderful world we live in.

David Attenborough, aged 100 today, handles a harvest mouse

The good news is there? Are there species being saved as we reduce our dependence on fossil fuel? Maybe not yet. Are Canterbury farmers moving away from dairy farming that pollutes our waterways? Thank heavens for Country Calendar.

I know someone who follows a good news website. And there are many such sites. But you also need to keep informed. Don’t swing all the other way! Polyannas are not welcome in my world. Sickly.

Harvard Health has published papers on this topic. Try this one for staying sane. The Conversation has quite a good one too.

But whatever you do keep a balance between knowing the facts as they emerge about the world and retaining your sense of wonder and awe.

(The countries in the darkest colours have introduced major policies to reduce energy use)

I have told you before that I admire Balázs Matics from Hungary writing his substack under the name “The Honest Sorcerer”.

He is apparently an industrial product engineer by training, with over two decades of experience in manufacturing, maintenance engineering, project management, and supply chain management for large multinational corporations.

He is considered a “Substack Bestseller” with a significant following interested in energy and ecological issues. But his most recent article was 16 pages long. It honestly blew my mind. So rather than force you to read the long article, here is a short version, courtesy of Chatgpt:

“We’re now a couple of months into the war on Iran, and it’s becoming clear this isn’t a short-term disruption. The blockade around the Strait of Hormuz has settled into something much more dangerous: a long, grinding stalemate with global consequences already baked in.

The key point? Even if the conflict ended tomorrow, the damage is done. Supply chains for oil, fertiliser, food, and industrial inputs have already been hit—and we’re only just beginning to feel it.

A Stalemate No One Can Win

The piece argues that neither side—the US/Israel nor Iran—can decisively win, and neither can back down.

• If Iran escalates, it risks devastating retaliation.

• If the US escalates, it risks regional infrastructure collapse and wider war.

• Diplomacy is effectively impossible because the two sides want fundamentally incompatible outcomes.

So we’re stuck in a high-stakes deadlock. And that means the blockade—and its economic fallout—could last months or even years.

The Real Shock: Oil Is Disappearing

And there’s no easy replacement

The numbers are stark:

• Around 13–14 million barrels per day of oil supply have been disrupted.

• By the end of 2026, losses could reach 2 to 4 billion barrels globally.

• Even in a best-case scenario, a full recovery is slow and incomplete.

Unlike past disruptions, this isn’t just about price spikes. It’s about physical shortages. And without oil, everything else starts to wobble—shipping, manufacturing, food production.

As the article bluntly puts it: no oil, no shipping.

From Energy Crisis to Food Crisis

This is where it gets really serious

Oil isn’t just fuel—it underpins modern agriculture.

The blockade is choking off:

• Fertiliser production (via sulphur shortages)

• Pesticides and herbicides (via naphtha shortages)

• Transport and logistics (via diesel shortages)

Now add in a strong El Niño, bringing droughts and extreme weather.

The result? A looming global food crunch:

• Crop yields could fall 10–15%

• Food prices could surge, especially in poorer countries

• Soil degradation could reduce productivity for years (“yield hangover”)

This isn’t a one-season problem—it could echo through the rest of the decade.

Economic Fallout: A Crash in Slow Motion

Demand destruction is already underway

We’re seeing early signs of a global downturn:

• Factories shutting or scaling back

• Fuel rationing in parts of Asia

• Shipping disruptions spreading

• Financial stress building in governments and markets

Even if the war ended soon, the system wouldn’t just bounce back. Once industries shut and workers are laid off, recovery is slow and uneven.

The author’s conclusion is blunt: a major economic crash is now unavoidable.

What Could Be Done (But Probably Won’t Be)

Governments could act decisively:

• Stop biofuel production and prioritise food

• Ration fuel and energy. (see my note below DK)

• Tax windfall profits and support essential sectors

• Shift to shorter work weeks and less energy use

But the tone here is sceptical—these kinds of coordinated responses are unlikely, especially in Western countries.

What You Can Do Instead

Practical steps for a rougher world

The advice is refreshingly grounded:

• Stock up on non-perishable food, and get essential medicines

• Fix and maintain what you already own

• Reduce energy use where possible, including insulation

• Build connections with neighbours (mutual aid matters)

• Save money and reduce debt if you can

And perhaps most importantly: don’t panic—but do prepare.

The Bigger Picture

This isn’t just an oil shock. It’s a “polycrisis”—multiple stresses hitting at once:

• Energy shortages

• Food system strain

• Climate disruption

• Financial instability

Individually, each would be manageable. Together, they reinforce each other.

The likely outcome isn’t collapse overnight—but something slower and more profound: a forced simplification of modern life.

Final Thought

We’ve spent decades building a highly complex, globalised system that depends on cheap, abundant energy.

This crisis is a reminder of how fragile that system really is.

And once it starts to unravel, there’s no quick way back.”

And from me

There is also something from New Zealand of great value.

You will have noticed Southland-based engineer and energy analyst Nathan Surendran has finally been discovered by the media. His piece on how to prepare is comprehensive. Recently, he presented a superb PowerPoint for a Nelson-based organisation called Our Climate Declaration. Nathan has a superb substack.

Best of all – grow your own food! This is my sister Lesley

(I know the rule here is to put internal links because it takes people away from my substack, but I will certainly break it so that you can follow Nathan!)

And Balázs writes about fossil fuel rationing in the best way – by fully explaining the Tradable Energy Quotas method invented by Dr David Fleming many years ago. I wrote a substack on this earlier.

As I promised in a previous post, I will share my thoughts on a new economic system.

We are standing at the edge of a much bigger change than most people realise. The old system is not merely unfair or clumsy — it is structurally incapable of dealing with inequality, climate change, fossil fuel depletion and the concentration of power in so few hands.
That is why I wrote The Big Shift: Rethinking Money, Tax, Welfare and Governance for the Next Economic System back in 2017. It was the result of four years of discussion by a group called The New Economics Party. Among them were permaculturists, Georgists, monetary reformers, and many others. This concept aligns with my current exploration of economic reform in New Zealand.

The problem is systemic

What we call “the economy” is really a set of interconnected systems: money, land, tax, governance, energy and the commons. If we try to fix only one piece, the rest of the system pushes back. That is why so many well-intentioned reforms produce disappointing results.

The current model rewards debt, speculation and private accumulation, while leaving ordinary people to carry the burden. It also assumes endless growth on a finite planet, which is not possible. If we want a fairer and more resilient future, we need to stop tinkering and start redesigning.

In conclusion, by embracing the principles outlined in The Big Shift: Economic Reform in New Zealand, we can pave the way for a sustainable future that benefits everyone.

Money is not neutral

One of the core arguments is that money is a human invention, not a natural law. It can be designed badly or designed well. At present, most money is created by private banks as interest-bearing debt, which means the economy is built on a treadmill that demands constant expansion just to stay upright.

We suggest a different approach: publicly created money, spent into circulation, with stability built into its design. Money should serve people and communities, not trap them in debt. If we get the money design right, the whole tone of the economy changes. But it does have a problem – land speculation.

To control inflation to 0%, we adjust the amount of money publicly created. Never by interest rates!

Money created as interest-bearing debt widens the gap between net borrowers and net lenders and creates a built-in imperative for economic growth.

In addition, if money is to truly represent the value of physical goods, it must decay at the same rate. Hence, we favour a penalty for hoarding money. That acts as a circulation incentive.

The current false assumptions behind our system

When you read this list, you can begin to wonder if we really are an intelligent species. Each has been arrived at over the centuries after enormous pressure on governments from land barons and banks.

• You can ‘own’ land and natural resources

• Money can be created by commercial banks as interest-bearing debt and accepted by Government for payment of taxes

• The money system we have is neutral

• Government should be top down. Councils and Community Boards must be less powerful than central government

• There should be only one currency in a country

• Inflation can only be controlled by interest rate adjustments

• The main way to raise revenue is by taxing labour, sales and company profits.

• The only way for each person to have enough money is to earn it.

• All big changes come from central government.

The Earth belongs to everyone

Another major shift is to recognise that land and natural resources are not just private assets. They are part of the commons. Yet under the present system, private land ownership allows unearned gains to be captured by a few, while the public misses out on the value created by the community itself.
That is why we argue for collecting a full land rent and resource rent for public benefit instead of taxing labour and enterprise so heavily. This would reduce speculation, ease inequality and create a fairer source of public revenue. It also makes much more sense than punishing work while rewarding monopoly.

A basic income from shared wealth

If we treat the commons as shared wealth, then part of the revenue should flow back to everyone as a dividend. That is the logic behind a basic income. It is not charity. It is a rightful share in the wealth we all inherit and depend on.

A basic income would simplify the welfare state, reduce insecurity and give people a much firmer base from which to participate in society. It would also acknowledge something we often forget: no one builds prosperity alone. We all rely on generations of knowledge, infrastructure, culture and nature.

Change must begin at the fringes

National reform is difficult because commercial banks and corporations largely control and they are too powerful . That is why we think the next system will need to grow from the local level. Communities can create their own currencies, buy up land, charge land rents and resource rents and then share revenue.

So gradually we build a better model alongside the old one.

This is not a fantasy. It is a practical pathway. The permaculture teachers in our group insisted. Small communities can experiment, learn, adjust and cooperate with neighbours. Over time, these local systems can become strong enough to reshape the wider economy. The point is to seed something new while the old system slowly loses its grip. I suspect it will start with small communities like the Chatham Islands, Rakiura (Stewart Island) and small towns like Karamea, which are finally cut off by freak weather events caused by climate change.

Governance should look more like nature

Our permaculture teachers also insisted that governance must change too. Nature does not run on rigid top-down control. It works through interdependence, feedback loops and nested systems. That is a far better model for democracy than the centralised structures we have inherited.

We believe in distributed governance: local decision-making where possible, negotiating where necessary, and genuine accountability throughout the system. Power should flow both ways, not just from the centre. A healthy political economy should resemble a living system, not a machine.

Energy changes everything

We also must face the reality of energy. Fossil fuels powered the growth economy, but they are finite, and their extraction is becoming harder and more expensive. As of late April 2026, maybe 12-15% of oil and gas has been taken from the global energy supply with the Iran war and no end is in sight. Climate change adds another layer of urgency. We cannot continue with a system built for endless expansion when the physical foundations of that expansion are failing.

That means the next economy must be designed for less overall energy. Energy increase is tightly linked to GDP increase. It is unlikely total energy will increase again. So the current model cannot work now that we have declining global energy. This model works after fossil fuel abundance is gone. That is not optional. It is the real world we have now.

The big shift

So the big shift is this: from bank-created money to public money with a circulation incentive, from taxing labour to collecting a full rent from the commons, from domination to partnership, and from centralised control to distributed governance.

It is a shift in institutions, yes. But even more, it is a shift in assumptions. We must stop pretending that the present system is natural, inevitable or permanent. Unfortunately, the system we have now assumes all the things previously listed. It is none of those things. It is a human construction, and it can be replaced if communities and councils reclaim their power.

I wrote this book because I believe that change is still possible. We are not powerless. We can begin with ideas, with local initiatives, with honest discussion, and with the courage to imagine something better. That is what I hope readers will take from The Big Shift: not a sense of despair, but a sense that a more just and workable future can be built — and that the first steps can begin now.

Oh I forgot to put this earlier: If you want to order a very cheap kindle book, The Big Shift – Redesigning Money, Tax, Welfare and Governance for the Next Economic System is at https://www.amazon.com.au/Big-Shift-Rethinking-Governance-Economic-ebook/dp/B075FMLXW4