Over the last two weeks, this writer has been undergoing a short course on the intricacies of monetary policy due to all the brouhaha in the media about the looming ‘currency war’.
Some of the more interesting terms learned over the last fortnight was ‘quantitative easing’ and ‘competitive non-appreciation’, fancy terms that in normal parlance stand for printing of more money to buy government bonds and a Central Bank’s decision to keep a currency devalued respectively. Amazing what one can pick up by reading The Economist or the business section of Reuters.
The gist of the currency war that is supposed to befall the global economy anytime soon is that the Americans are unhappy with monetary policies of some of the ‘Emerging Economies’, most especially China, for keeping their currencies from appreciating.
The Japanese are unhappy with the depreciation of the American Dollar because this has meant that their own Yen has appreciated by 15% and the Europeans are divided as to whether the Euro should be depreciated to make Euro exports more competitive or whether it should appreciate, or at the very least not lose any value, to prevent the onset of inflation.
The economic theory at stake here states that where a country’s currency depreciates in relation to other currencies, its exports become cheaper and its imports become more expensive thereby giving that country an edge in achieving a positive Balance of Payments.
Following two bad years in the global economy, the wealthy economies have looked on with some envy as the emerging economies kept growing and exporting even during these trying times. Faced with restive and impatient electorates at home, China and friends have become the convenient scapegoats.
Most publications that I have read proclaiming the advent of ‘The Currency War’ where Central Banks, Legislatures and Tax authorities of the belligerent nations will toss retaliatory trade and monetary sanctions and tariffs at each other have inevitably ended their articles by stating that the war headlined is unlikely to happen.
It just seems like the headlines were meant to convey a message to their electorates that their governments are doing something about ‘those Chinese’ while at the same time adding urgency to talks on monetary policy that are likely to be featured this week in the G-20 Summit in Seoul, South Korea.
In the meantime, the news from late last month that Europe had relinquished 6% of its voting quota to emerging countries was drowned in the cacophony of the contrived currency wars. It seems that all this could have come out of a book for diversionary tactics 101.
In Rwanda, the shock news came out of the town of Butare where last month, a member of the Local Defence Forces felt that the appropriate punishment for a group of school girls who had trespassed into a forest reserve was to order them to strip and cane them while they were in their Eve’s suits.
Even as a parent, if you ordered your teenage daughter to strip before caning her, this would earn you a lot of attention from the Gender Based Violence people at the National Police. Now, as a gun-toting man in maroon, this goes beyond the inappropriate into the criminal.
The Ministry of Local Government should pay more attention to the training afforded to the Local Defence Forces because, as a personal observation, they seem to be overly eager to use disproportionate measures to get things done.
Anyone who has watched them unleash their canes on street hawkers, who often include women selling fruits, and their destructive handling of the confiscated goods has to wonder about the briefings they get every morning. Does someone order them to ‘go forth and wreak devastation and humiliation on all offenders’?
I wonder what the going punishment, as meted by the Local Defence, is for treading on city lawns or littering. The stockades?
One should be well advised not to try and find out but if experimentation and recklessness are in your nature and you go ahead and try to attract the wrath of the boys in maroon, kindly write about your experiences and send it to the address below.