Intricate Strategies or Pure Money Management Discipline?

Contributor: Mr. Panache
Credits: Mimzy & Mohamed_Hassan

Deep & Complex SA Problems

Unless the times have not changed or my insinuations that we’re a copycat country is true; We’re talking about 9 years ago when the USA was in deep financial crisis and the country’s GDP was said to be contracting at the fastest rate. What only comes across is the loudest noise politicians make, calling each other “Leadership” and to some extent you would swear the crisis SA is in, was pre-meditated judging from the behaviours of our leaders. It comes across as though, the government of the day has always known of such QE tactics, bail outs and strategies, attesting that with SA as different as it is, we’re copying even strategies that might potentially not work.

SA economic problems are deep and complex, and with saving money being an entrenched mindset in government; we can surely gain control of the ship again. South Africa needs more than just new administration or new monies into the money supply. We need change of hearts, declaration of certain individuals as no longer useful and to do away with deliberate fallacies. Perhaps I am yet to see effects of QE and lower interest rates on growth and inflation, in as far as our unique land; SA is concerned.

When there is crisis for a country, affecting its relation to the rest of the world; different strategies would apply in contrast to when the crisis is within the country. Using the SARB to fight battles through unconventional monetary policy would, without doubt; increase the money supply and encourage lending and investments into the SA land. However, in a country looming with economic pressures, all mechanisms are ought to be seen as effective just to relieve the stress. With so much analysis into the country’s situation and pressured new dawn, it remains unclear whether SA Reserve Bank really needs to even purchase bonds and other financial instruments as part of the recovery plan.

Government, the Reserve Bank and all SOEs do not need cleaners to come and dust off dirt from the premises, only to find them back there again. Perhaps we shouldn’t rush or aggressively push in the QE direction just yet, again if the country is still on that thought process with recent bail out on the part of SOEs. But, really think hard enough about the real purpose of the Private Sector from which leadership wants to purchase these bonds. Yes, cannot take away the possibility that with necessary aggression, the interest rates could be lowered for bond replacements; where even the aspiring investors might be encouraged to spend.

People ask, how thin will the SARB monetary policy be stretched to push for lowering of interest rates? To implement the QE and let alone improve the state of the economy, monetary policy will need consulting and as independent as the SARB is according to the new administration; the move will merely be going from one room to another where the Selective Credit Control mechanisms were and are still employed. In this room, where we currently are; the purchasing of consumer durables like houses, furniture, electric and household appliances is regulated. Would we start by changing regulations in this regard first?

Again, under stress, SA has reputation for moving into any feasible direction, employing any strategies seen to be effective. Looking at Eskom for one, the organisation has been limping from one crisis to another and devising strategies which have all failed. There is so much conviction that private sector can drive the country out of this crisis, but only if business is left to execute its inherent mandate; the very cultural mandate in Genesis 1:28. The government should not pose as an entity that sells things, they are or should not be designed for that. The only purpose they have is to create a conducive environment for business to thrive, and manage monies through collection of taxes.