Reserve Bank of Zimbabwe Commends US and UK Authorities for Following Its Lead

www.nakedcapitalism.com...

SUNDAY, NOVEMBER 30, 2008
The Reserve Bank of Zimbabwe Commends US and UK Authorities for Following Its Lead

You simply cannot make this up. I found a section of this priceless commentary from the Reserve Bank of Zimbabwe via Marc Faber's latest newsletter (hat tip reader Dean), and had to verify it. The original provides an even richer mine of material.

From the Reserve Bank of Zimbabwe (boldface theirs):
As Monetary Authorities, we have been humbled and have taken heart in the realization that some leading Central Banks, including those in the USA and the UK, are now not just talking of, but also actually implementing flexible and pragmatic central bank support programmes where these are deemed necessary in their National interests.

That is precisely the path that we began over 4 years ago in pursuit of our own national interest and we have not wavered on that critical path despite the untold misunderstanding, vilification and demonization we have endured from across the political divide.

Yet there are telling examples of the path we have...For instance, when the USA economy was recently confronted by the devastating effects of Hurricanes Katrina and Rita, as well as the Iraq war, their Central Bank stepped in and injected life-boat schemes in the form of billions of dollars that were printed and pumped into the American economy.

Yves here. The authorities here would counter that the Katrina-related stimulus was appropriate in light of the macro shock, while Zimbabwe has taken a good construct beyond the breaking point. Billions, after all, are not a big deal in a $14 trillion economy. A difference in degree is a difference in kind.

Back to the Reserve Bank:
....the USA economy confronted a severe mortgage crisis... The USA Central Bank again responded by injecting over US$160 billion between December, 2007 and March, 2008.... leading central banks in the global economy are bailing out troubled economic sectors to achieve macroeconomic and financial stability....the Bank of England... providing a £50 billion lifeline to the UK’s banking sector.

Here in Zimbabwe we had our near-bank failures a few years ago and we responded by providing the affected Banks with the Troubled Bank Fund (TBF) for which we were heavily criticized even by some multi-lateral institutions who today are silent when the Central Banks of UK and USA are going the same way and doing the same thing under very similar circumstances thereby continuing the unfortunate hypocrisy that what’s good for goose is not good for the gander....

As Monetary Authorities, we commend those of our peers, the world over, who have now seen the light on the need for the adoption of flexible and practical interventions and support to key sectors of the economy when faced with unusual circumstances.

Of course, in the short-term such interventions are without doubt inflationary but in the medium to long-term they trigger and propel economic growth and development that everyone craves for....(more at link)

Quoted Zimbabwe Reserve Bank document here: www.rbz.co.zw...
See page 8 section 1.15

Original document section goes on to list food riots:
Burkina Faso Fod Riots - February 2008
Egyptian Food Riots - March 2008
Haiti Food Riots - April 2008
Ivory Coast Food Protests - March 2008
South Africa Food Demonstrations - April 2008
Mexico Food Protests - February 2008
Yemen Food Riots - March 2008
"including Morocco, Cameroon, Senegal, as well as several in Asia."

The U.S. is trully on the road to becomming a third world debtor nation.

it looks as if they are making fun of Federal Reserve and Treasury.
rightfully, so.
one can bet his hat off that Chinese Communist Party does the
same. naturally, in a more clandestine manner...

Mr. Paulson - and you wanted to teach Chinese Communists
of free market advantages. how ironic...

reply to post by Dbriefed



That is one scary story - especially since they are printing 100 billion dollar bills now! One egg is now $35 billion dollars there!

Did you know there currency used to be stronger than the U.S.'s dollar - it would cost us $1.47 to buy one of their dollars!!!!!!!!!

Now that is a problem, but sorry to say that is what is coming our way also.

The difference is Zimbabwe tried to increase money supplies of the people..

America is trying to fill a massive black hole in our national Corporate Books.

So where their money went into the market, ours disappear as soon as it's created!

Originally posted by Rockpuck
The difference is Zimbabwe tried to increase money supplies of the people..

America is trying to fill a massive black hole in our national Corporate Books.

So where their money went into the market, ours disappear as soon as it's created!

Hmmm that actually makes sense.

They really aren't increasing the money supply, they are just decreasing the debt.

Hooray for the bailout.

[edit on 30-11-2008 by In nothing we trust]

Originally posted by In nothing we trust

Originally posted by Rockpuck
The difference is Zimbabwe tried to increase money supplies of the people..

America is trying to fill a massive black hole in our national Corporate Books.

So where their money went into the market, ours disappear as soon as it's created!

Hmmm that actually makes sense.

They really aren't increasing the money supply, they are just decreasing the debt.

Hooray for the bailout.

[edit on 30-11-2008 by In nothing we trust]

Actually no. That is not correct at all. They are not decreasing the debt, they are transferring the debt to another part of the economy.

The government is taking on debt to the Federal Reserve. This seriously can only turn ugly.

Originally posted by Rockpuck
The difference is Zimbabwe tried to increase money supplies of the people..

America is trying to fill a massive black hole in our national Corporate Books.

So where their money went into the market, ours disappear as soon as it's created!

Are you sure it's disappearing?

Right now we're experiencing 30% or more deflation of; gasoline, real estate, autos, etc. Governments are trying to get banks to loan again, (re)filling the bank coffers, dropping interest rates, and doing anything they can to restore lost confidence in banks and government.

So, when interest rates are zero, employment goes up, and loans are flowing, what happens to the hundreds of billions or trillions that were pumped into the coffers? Does it flood the market?

The difference is, Zimbabwe didn't and doesn't have the reserve currency of the world. The U.S. has the ability to do this because they are basically the bank of the world because they provide dollars to everyone, especially in this crisis. Also, if the U.S. did nothing, you could have bet that we would have been in a DEPRESSION by now. Extreme deflation coupled with banking losses and foreclosures (sounds familiar? read The Grapes of Wrath for a clue). In normal economies, this would have destroyed their currency, but the U.S. doesn't have a normal economy. Just like some banks are too big to fail, so is the U.S. way too big and important to fail. Nobody cares about Zimbabwe. That is the difference.

Originally posted by Dbriefed
Does it flood the market?

Yes it does. And if it does, it will create inflation. Inflation is much more pleasant and easier to deal with than deflation though.

Originally posted by RetinoidReceptor

Originally posted by Dbriefed
Does it flood the market?

Yes it does. And if it does, it will create inflation.

Only if it trickles down and increases the money supply. Things will only get worse if the rich start giving away thier weath to those who actually need it to survive. I wouldn't be too worried, the rich never give any money away. Once they have it, it won't be passed down to the population so deflation is a sure thing. Hooray for greedy people.

Of course the catch 22 for rich people is that masses numbers of pissed off poor people are very likely to kill them while they sleep. Maybe the rich could pass along thier free government debt relief in the form of increased taxes to the government and the government could redistribute thier money to the poor for them?

[edit on 1-12-2008 by In nothing we trust]