Well I just read the funniest thing in the paper the other day please read this first and tell me what you think http://t.co/9ClMiiMo .I am not the foremost expert on monetary economics but this does not make sense. Our government is thinking of reintroducing a currency that was not actually accepted as a form of trade when finally was withdrawn. Well I can't think that this is an immediate strategy, however, I fear for the recovery of the economy if this is the case.
The key factors that led to the decline of the Zim Dollar are still very present in the economy un-competitive export regime, large demand for imported luxury goods, the economy is dominated by government and psuedo-government operations, and large parts of the manufacturing industry survived on protectionist policies to allow them to operate. All this is added upon by the fact that political players from the main political parties are so polarized, that making a decision to act for the good of the country often falls a very distant third in their priorities. First and second in their priorities are political points and accumulation of wealth. Think I am joking? A few weeks ago government was held to ransom by parliament who threatened to delay passing of the budget if they did not get their perks (cars and sitting allowances). This despite the fact that they have yet to address civil servant concerns... but I digress.
Before we can argue for or against the return of the Zim dollar. I must explain the role of money in a society. Money has three main roles, namely:
1. medium of exchange - a means to determine value during the exchange of goods and services.
2. a unit of account - a means to compare the values of goods and services.
3. a store of wealth - used to maintain the value of a transaction over time.
So if you look at the role of money, quite simply all you need to do to return the Zim Dollar back into the is to legislate it. But will it be good for the economy? There is consensus that for money to be considered good it must have the following ba characteristics.
1. Acceptability - Everyone must accept it to purchase goods and services
2. Durability - It should last a long time
3. Portability - Easy to carry around
4. Scarcity - Scarce enough to be valuable, not common such as sand or pebbles on a beach
5. Divisibility - Can be divided into small units
Read more: http://wiki.answers.com/Q/Characteristics_of_good_money#ixzz1gKirOq00
The key factors that led to the decline of the Zim Dollar are still very present in the economy un-competitive export regime, large demand for imported luxury goods, the economy is dominated by government and psuedo-government operations, and large parts of the manufacturing industry survived on protectionist policies to allow them to operate. All this is added upon by the fact that political players from the main political parties are so polarized, that making a decision to act for the good of the country often falls a very distant third in their priorities. First and second in their priorities are political points and accumulation of wealth. Think I am joking? A few weeks ago government was held to ransom by parliament who threatened to delay passing of the budget if they did not get their perks (cars and sitting allowances). This despite the fact that they have yet to address civil servant concerns... but I digress.
Before we can argue for or against the return of the Zim dollar. I must explain the role of money in a society. Money has three main roles, namely:
1. medium of exchange - a means to determine value during the exchange of goods and services.
2. a unit of account - a means to compare the values of goods and services.
3. a store of wealth - used to maintain the value of a transaction over time.
So if you look at the role of money, quite simply all you need to do to return the Zim Dollar back into the is to legislate it. But will it be good for the economy? There is consensus that for money to be considered good it must have the following ba characteristics.
1. Acceptability - Everyone must accept it to purchase goods and services
2. Durability - It should last a long time
3. Portability - Easy to carry around
4. Scarcity - Scarce enough to be valuable, not common such as sand or pebbles on a beach
5. Divisibility - Can be divided into small units
Read more: http://wiki.answers.com/Q/Characteristics_of_good_money#ixzz1gKirOq00
Now the Zim dollar died a natural death when it failed the first characteristic. The economy naturally rejected the Zim dollar to the extent civil servants couldn't purchase anything with their salaries. Soldiers even rioted in town when their money couldn't buy anything.
Essentially the Zim dollar cannot return until the central bank leadership has changed. whether they were right or wrong, the economy doesn't trust that team to manage the currency. We must just admit one thing. The currency will remain dead for some time yet even if the government will want to restore it. the currency will only be used for government transactions and repaying loans if it is returned in this current set up.
Just my thought
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