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Zimbabwe's New Currency: If your Government is honest here is the Solution

05 Jan 2019 at 08:34hrs | Views
Let me sell you a million dollar worth of game for a dollar ninety-nine, The economic data released by the government at the end of the fourth quarter shows we aren't deep in the quagmire as we think but trust me the Market place seems to be in chaos. I will explain the data provided and possible solutions as far as Currency is concerned. Once I finish I am sure you will agree!

On the 5th of January state media reported that fidelity printers and refiners reached an all time high of 33,2 tonnes of gold received.This was presented as a fact and a record breaker form 27 tonnes in 2017. 33 tonnes of gold are wort $2,1 billion dollars. To have curb the cash crisis Zimbabwe needs a minimum of 900 million dollars as calculated by the central bank and they were right. If we collecting more than double of that amount from 1 commodity it makes sense to say someone doesn't know what they should be doing or there is no 33 tonnes of gold reasonably the gold collected should have been less than the previous year, why ? Gold miners had an industrial action of their own because they weren't being paid in forex, we had harmonized elections for christ's sake anyways absolve me for being skeptical we all are.

Let's say it's true, $2,1 billion of gold a year means we could have a gold backed currency. Here is how it goes. I am here to tell you

Gold standard that is a monetary standard under which the basic unit of currency is defined by a stated quantity of gold and which is usually characterized by the coinage and circulation of gold, unrestricted convertibility of other money into gold, and the free export and import of gold for settling of international obligations.

How It Works
Paper currency is actually a "legal note," i.e. a debt between the currency holder and the government. In theory, currency represents the obligation to make a payment of the stated amount when presented to the government. When the gold standard was in place, an individual could present a $10 bill to a federal bank and receive $10 worth of gold in return. Gold was used as a base, because it was durable, rare, and almost universally valued.

The price of gold became a barometer for the underlying value of an economy. But because gold is a tangible asset, the price of gold can rise and fall rapidly. It's also subject to speculation, discovery and theft. As a result, the value of currency based on gold depends on the value of gold.

In the last century, the world's economies grew too quickly to be accurately represented by the world's reserves of gold. Therefore, gold standards have been abandoned by almost all economies. The United States abandoned the gold standard in 1971.

Why It Matters
While the gold standard regulates the value of exchanges throughout the economy, it also limits a central government's ability to make monetary adjustments in the current global economy.

The problem we have with our own central bank , The Reserve Bank of Zimbabwe is their policies are a bit off innit, one can tell after their last monetary policy presentation which unpegged the bond and RTGS you know how that turned anyways there is $9 billion of that the solution of fixing it is my own pull and lock this is how it works.

The 2% tax that was introduced on every wired transaction be set aside to pull out and lock away the RTGS balances available in the market that is to mean 50 times transactions worth $500k RTGS are repeated that amount will have been pulled and locked away into heidies never to see light of day. This actually serves the government costs of decommissioning the RTGS , this will take at least 3 financial quarters meaning 9months but a back up currency will need to be prepared at the very end of that period, Meaning a new currency backed by gold reserves stacked up for those 9 months will be rolled out we might start with just 40 tonnes of gold , Name the currency responsibly , parade the gold reserves on state media commission a documentary of currency making , one thing about successful countries they have learnt a lot from Edward Bernay's teachings on propaganda. Propaganda is a tool which works well in the hands of a skilled artist, Right now the country's Information ministry seems to be run by clueless individuals who don't know how much power they wield. A documentary for the process of putting up a gold standard will help invoke a spirit of confidence and value of the new currency, the decision of how much of an ounce should be represented on paper should be given to those who would have studied the concepts of exportation as well because we still need to export and import since we don't eat paper(currency) or Gold, I recommend SB Moyo he is back fit as a fiddle he is one of the few ministers in that government who know what they are doing at least according to most analysts.

When the currency is good trust me it becomes easier to plan ahead both on a Macroeconomic level and microeconomic level straight to people's households quoting Former President R.G Mugabe Sustainable development should be people centered, we can have a budget surplus but as long as people are struggling it doesn't mean much.

"We need to revise our economic thinking to give full value to our natural resources. This revised economics will stabilize both the theory and the practice of free-market capitalism. It will provide business and public policy with a powerful new tool for economic development, profitability, and the promotion of the public good" quoting Paul Hawken

Source - Simplisio Mudzingwa Muvunde
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