There are no economic reasons for the Reserve Bank’s failure to intervene to serve and save this economy at such a crucial momentAs SA awaits the government’s next economic move there is considerable disquiet about the efficacy of the existing R500bn relief package and what will be announced next. Finance minister Tito Mboweni puts the package at R800bn.
A look at the composition of the package shows that the main question focusing the government’s mind was “Where do we get the money?” and not about the current state of the economy; the Covid-19 shock’s likely impact; its transmission channels; the interactions between the channels; and how to financially contain both the recession and the pandemic’s economic fallout in one fell swoop.
As there are no economic reasons for the SA Reserve Bank’s failure to boldly intervene to serve and save this economy at such a crucial moment? Could its resistance be ideologically innocent? And why does SA permit this? History shows that international organisations appear very aware of what provides the widest opportunity for increasing foreign ownership in a country
This erroneous thinking is based on the long-discredited loanable funds theory, the financial intermediation theory of banking and their linked credit or money multiplier model. That these have no empirical foundation is well established in critical literature. The coronavirus-induced crisis and the recession should not be used as a welcome opportunity for government to deliver what would ordinarily be difficult to justify to the public: structural reforms that seek to dispose of national assets and entrench foreign ownership of the SA economy. Going to foreign institutions for money while domestic firepower is readily available is one such opportunity.
National interests dictate that monetary financing by the Bank is critical and urgent. The use of the Bank’s asset side of its balance sheet is critical for the conduct of monetary policy. For the Treasury, bonds issuance should be stopped and focus put on the use of domestic bank loan contracts, which also helps strengthen the banking system. Market-based finance should be avoided at all cost.
In Africa we define it differently from Europeans and it worked for us for many years until you arrived. The problem is that you want to impose your own definition of economy on us. If its not defined ur way, its not it. And you manage to confuse many
Sounds as if the headline is the wrong way round and it is the writer who misunderstands.
CyrilRamaphosa
Elucidating and well reasoned piece!
When commies rule .... 🤷🏽♂️
We are led. We are sinking.
No. No no. The article is 'the ANC displays profound misunderstanding of macro-economics'
Finance Finance Latest News, Finance Finance Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: ewnupdates - 🏆 30. / 53 Read more »