Return of the Zim Dollar?

The Mail & Guardian  reports that the Zimbabwe government is in advanced stages of resurrecting the Zim dollar. I noted to clients yesterday that this shouldn’t be a major problem if the government continues to allow foreign currencies to circulate next to the Zim dollar, but that if the public don’t accept the Zim dollar as payment for goods and services, the government would have to resort to force to get people to use the currency again and ban foreign currencies. This would be very disruptive to the overall economy and could send the economy back into collapse.

Professor Steve Hanke sent two tweets about this yesterday that I thought were good and worth sharing, because I agreed with them. Prof Hanke was an advisor to the Zim government and advocated a complete dollarisation of the economy, which after implementation instantly stabilized the collapsing economy.

 

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FIX IVO APPEAL

My favourite South Africa columnist and writer, Ivo Vegter, has fallen severely ill and getting medical care from a hospital. On a low and volatile freelancer income writing articles with a liberty and freedom slant, he  had to give up medical aid and is now burning through his savings stash to continue to receive medical treatment and recover to health.

Take my word for it, Ivo is doing excellent work in winning the battle of ideas, of communicating to the public that we need less government (i.e. more freedom) in order to see South Africa become a peaceful and prosperous society. If you value this type of world for your and your children’s future, you should consider helping him out, because he’s fighting the most important battle – the battle of ideas and people’s minds – that the rest of us don’t always have the time (or ability) to engage in.

If you have the means to contribute even a little bit to his medical emergency fund, you can get details of how to do so by going to his website, HERE

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Grocery Price Increases in the Past Year

The data comes from the ETM Analytics household price index, where we’ve been tracking a basket of 20 items at four major retailers in the Fourways area of Johannesburg. The infographic was compiled by Grafika24 and published in a Beeld article here.

For foreign readers who don’t understand Afrikaans, following the link below you’ll find a list of translations of the items, in descending order from highest inflation to lowest.

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TV Debate About SA Credit Bubble

I had a mini-debate with Thabi Leoka, RenCap’s SA economist, on SABC Business Review last night. It was only 15 minutes long so I couldn’t get into the real meat of the debate, but I ended the conversation with a hint of where we need to focus: the central banking, fractional reserve monetary system that’s the biggest bubble in the history of the world – and this by its very nature is a credit bubble.

I’ll be writing an article about SA’s credit bubble in coming days where I will back up and strengthen Jesse Colombo’s credit bubble call further. I am busy with three separate research reports at the moment, and this article will take a back seat, but I hope to publish early next week.

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Excellent Book on Austrian Investing

Highly recommended reading, especially for the young investor who’s starting out, but equally useful and informative to the seasoned investor who can’t reconcile the fact of a surging stock market with such a poor real economy. The author, Mark Spitznagel, who himself is a risk-taking practitioner (and a successful one at that), lays it all out in this excellent book. It also comes recommended by the likes of Marc Faber, Paul Tudor Jones II, Nassim Taleb, and Ron Paul wrote the foreword. Read more about the book, here. Available on Kalahari.com for R319.83 (and on Loot.co.za for R352).

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Regarding a Western Cape Secession

With secession fever in the air in Crimea, Scotland, Catalonia, and Venice, Chris Gibbons wrote a blog post at his blog titled “Could the Western Cape Secede?” (Read it here). Chris argues there are too many constraints to the Western Cape being a success un-shackled from the regressing South Africa as a whole, and concludes that:

No, despite the fact that secession might be in the air elsewhere, it really does look as though we South Africans are stuck with each other.

I disagree with this assessment. I believe Chris should focus less on the constraints on the Western Cape as they stand, and more with how the constraints would be lifted under an independent Western Cape. It’s in imaginating a future that doesn’t yet exist, and the policies required to bring this into existence, which is where the Western Cape secession scenario becomes exciting.

I tried to post a comment on the blog but it’s somehow disappeared into the interwebs, so I’ll put my thoughts up below.

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TV Interview with SABC about Today’s Interest Rate Decision

I spoke to Francis Herd on SABC News’ Business Review last night at 8pm about the upcoming interest rate decision today.

The Reserve Bank’s in a tight spot. If they don’t raise interest rates, the rand weakens further (because the market’s pricing around 3 percentage points worth of hikes in the next year), and fuels inflation of particularly staple foodstuffs that impact low income earners and the unemployed, and we get more labour unrest and higher wage demands.

Either way, the economy is in for some tough times. It’s now up to the Reserve Bank to decide how they’re going to distribute gains and losses between different segments of society in the short-term. In the past three years they’ve implemented policy that favoured middle to high income people who take on secured debt (the wealthy), let’s see if they decide to switch in favour of supporting pensioners, low income earners, and the unemployed for a change by raising short-term interest rates further and purging the accelerating price inflation out of the economy.

It’s anybody’s guess, really. I’m of the view they should surprise economists again by hiking today, but I doubt they’ll do this. So most likely we see an unchanged decision. YouTube of the interview follows the link below.

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Jim Rickards: Prepare for the 4th global monetary regime collapse

Excellent interview with one of the smartest global macro and investment strategy advisors in the world, Jim Rickards.

It’s about 40 minutes long but there’s some very good insight given by Jim. In one of the segments, Jim explains why a monetary collapse isn’t unprecedented (indeed as he rightly points out there’s been no less than three in the past century), and shouldn’t be too catastrophic if you’re prepared for it. Download it and listen on your drive to work.

Full interview can be found here.

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