What Obama Can Learn From Mugabe that Ron Paul Did

Hard to imagine it was just four years ago that pundits across the globe were slinging harsh and vilifying attacks against Zimbabwe’s President Robert Mugabe. They asserted that Mugabe under the banner of populism and black sovereignty had run and was continuing to run the country's economy into the ground. Inflation's was at an unimaginable rate of 100,000 percent which eventually grew to 231 million percent.The shelves of many stores were almost empty and prices were constantly increasing due to hyperinflation. For the general population, it was estimated that four out of five people were unemployed and that the situation was so bad that about 3,000 people a day were reported to be crossing Zimbabwe's borders into neighboring countries.

This no longer is the case, thanks namely to policies put in place and established by the same supposedly villainous Robert Mugabe. No longer does the African nation suffer with the highest rate of inflation in the world. Now just a few years’ latter goods are back on the shelves of local stores. Why, because of the government's decision to replace the Zimbabwe dollar with the South African rand and the US dollar.

The Zimbabwe's economy has produced economic growth for two successive years due to positive policies and strong commodity prices, and this according to the International Monetary Fund. Although this southern African country's economy was beaten down by hyperinflation (drops in value) which reached 500 billion percent in 2008 and grew 5.7 percent in 2009, now as it stands, Zimbabwe has a budget surplus and demonstrates additional signs of improvement. The economy of Zimbabwe grew close to 8 percent in 2010 is expected to grow near 10 percent this year.

The question for many remains how did this happen after being vilified by the United States and Europe just 5 years ago for not doing enough to improve the economy and the nation’s policy for land redistribution from Europeans to native Zimbabweans? How is this possible when once the rest of the world was saying that the people of Zimbabwe were not capable of self-government? First higher gold and platinum prices have boosted exports and government revenues in 2010. In addition, not being the victim of severe droughts as other African nations around the horn have resulted in conditions contributed that have led to increase in agricultural output. The policies of Mugabe targeted several areas including but not limited to reducing rigid labor market constraints, establishing security of land tenure, clarifying ownership requirements under the indigenization legislation, and addressing concerns about governance in the diamond sector. They also implemented other reforms including actions that have resulted in a more than 50 % increase of livestock folds across the country. Last but not least, there were the strict reforms imposed in the banking system.

Given all of the aforementioned, I often wonder why have these occurrences in Zimbabwe and imposed by President Mugabe received vapid coverage in mainstream western media and not openly discussed and acknowledged by President Obama? After all it was just last year when the nation‘s central bank introduced a $50 billion note (at the time enough to buy just two loaves of bread). It was implemented to avoid cash shortages because like our dollar, theirs was virtually worthless. The simple lesson for the President should be to learn from what we observe transpire in Zimbabwe, but he will not. Some economist have suggested that with the Federal Reserve Bank incessant use of quantitative easing (printing fiat money willy nily), that the U.S. economy will enter “hyperinflation” similar to what we saw in Zimbabwe. Why because no matter what, the artificiality of the US economy will be subjected to the reluctance of the Federal Reserve to raise interest rates. We are already seeing large increases in everything from commodities to basic goods and with government debt growing so much, inflation has to start to accelerate at a dangerous rate.

From a policy approach it is obvious that Obama doesn’t comprehend, understand or believe the aforementioned as being a tenable outcome. Dr. Ron Paul does since he understands and states that “a thriving economy is not the but the result of a free people.” The actions of the President and a House that currently only serves to manage economic forces in an effort to mandate how business should be conducted, fail to egage the larger picture. Although not completely flawless, Dr. Paul’s economic principles rest on the idea that humans have the right to choose how to interact with one another. The clearest example concerns how we conduct foreign policy as nation and how these actions inherently impact our potential for economic growth negatively. For him, there is no reason to provide $3 billion to Israel annually while at the same time give their Arab neighbors and enemies and $12. Paul is the only current politician who has stated the reality of the US economy being considerably in worse shape than Europe.

First we owe Japan more than a trillion dollars, not to mention we are in worse shape than Japan, even after their natural disasters since they do have major exports to lean on and higher rates of savings available. The question should be why are US politicians from the President on down not addressing the citizens of this nation honestly about our economic conundrum? What are we doing to maintain our competitive edge in the world while all other nations are acting? Nothing, we fuss and bicker and Obama doesn’t show the will or ability to work on this from a serious purview and neither do Republicans. While Zimbabwe is going through with their plans for a gold-backed currency and China Becomes World’s Largest Gold Buyer, our economy is slowing down and we applaud an artificial stock bubble like it means we are back on track. Things that Paul openly supports.

As opposed to trying to solve our problems, our federal government only attempts to spends, borrow, and print money our-way out of debt so much that the dollar is null. Why, because our politicians figure the best way to grow (which isn’t growth) our economy is by printing new money to pay its debts, and borrows hundreds of billions abroad in the form of Treasury obligations that someday must be paid. All of this even when they know such is in contradiction to the laws of economics. From what has been said and written, it is pellucid that Dr. Paul understands this as well as Robert Mugabe. The query is does or can President Obama and can he learn from them both?

preparing america for hyperinflation

this aint Zimbabwe

Ok, you know me, its all about the economy folk. I have been looking over the back of Geithner and Obama, at least as much as I can suppurate from their statements and documented economic proposals. My problem remains the same – it cannot work with increasing unemployment, inflation, believing that some corporations are too big to fail and more importantly, having no policy designed to stabilize and or empower the US dollar.

The future I see is one of massive government-debt defaults and increased poverty. Yep, poverty. Especially since the debt we have amassed as a nation will eventually be passed on to the US Treasury, Federal Reserve Bank and us regular folk. You can call me crazy if you like but logic and reason remains. Firstly, 1% of Americans own more than 90% of the nation’s wealth, not to mention our debt over the past two years has moved from 11 trillion dollars to almost 25 trillion dollars.

This years annual report on hunger released by the United States Department of Agriculture reported 49.1 million Americans in 17 million households lacked dependable access to food in 2008. This is close to 17 percent of the US population. This tells me more people are below the official poverty level – maybe about 80 million folk. This is not impractical an estimate since the US Census Bureau announced last September that real median household income in the United States fell about 4 percent between 2007 and 2008 alone.

True, I am not an economist but I am no idiot either. The declining state of the US economy is regressing as so at the pace of an avalanche. I suggest we start to watch oil and commodity prices as the real indicator of what is anticipated for the future. I mean you think we don’t have jobs now, there will be less and less if inflation continues to rise, which means prices will increase and folk will be spending less. I hope the President is on to of this, I mean I know he was just in China meeting with our debtors to ensure them that they can keep lending us money. Don’t know if he discussed the dollar for at this rate it will be virtual worthless. This means inflation will only continue as indicated by the recent consumer price index. This suggest to me that if we keep adding to the debt, folk may loose faith in the markets and stop investing all together making this current recession palpable in comparison what may follow. Maybe we need to consider ending floating exchange rates in this country. It is worth a try because in simple terms, money is only worth what folks are willing to exchange for it. This aint Zimbabwe but we may be soon.

ink and paper

Now I really wanted to call this post “Uncle Tom’s Dollar”, but I wanted to show I am not as uncouth, incorrigible and uncultured as I really am. Plus, If I did, I would have to point out how dumb and stupid and ill informed the folks many who may read my blog get they news from (folks on Fox and CNN) really are and I did not want to insult their ill informed and poorly readness (yep I made the word up). Besides I’m sure folk on TV have to spend their time looking at the cathode ray tube unlike me who would rather read a coupla few books and newspapers a week – especially when I don’t have to have a person select and pick what they think I want to hear or worse need to know. Now I have learned from my prior post that folks don’t like reading, even if it is between a page or two in length, and have limited knowledge of history. Well really, I have observed such and have not learned anything whatsoever for I am about to do the same thing again.

I have an affinity for loot, money, the dollar bill. But slowly I am loosing that affinity for it is not able to buy as much as it used too. Frankly I am afraid for if it keeps loosing its ability to get me the things I want, or if I have to use more of them to get what I want, then I speculate we will miss no longer being on a gold standard. I could go back to the Romans, or Hungary or even Serbia to explain what I see from what I know has happened in the past, but I wont. But I will say that what we are experiencing is eerily similar to what happened in Germany before the rise of Hitler and even more recently what has been going on in Zimbabwe. Zimbabwe is the first country in the 21st century that I know of to suffer from hyperinflation. On one extreme, which is extreme, we may find ourselves in the same position of Zimbabwe with respect to their hyperinflation. True, we aint taking land back from white farmers and giving to poor folks who don’t know how to run large farms and end up mismanaging them. But Obama is dead set on this redistribution of wealth as was (is) Mugabe. In Zimbabwe (a place I have been and surprisingly makes great wine also) put so much into spending on printing loot. Why, because the demand for cash was so great. Here, just like there, the depreciation of assets is way greater than investment, which led the to import capital from abroad.

This is very scary for a few reason, namely because they had to replace the Zimbabwe dollar with a foreign currency that was fully backed by a foreign reserve currency freely convertible at a fixed rate on demand. It was so bad there that commercial banks maybe in a position to issue their own private notes without government regulation (as was the case here before the civil war prior to Lincoln issuing the Greenback).

The Germany situation is a lot more closer because the devaluation of the Mark they suffered was the result of waging a war they loss (can you say Afghanistan and Iraq). After WW 1, Germany had to make reparation payment as well as keep its industrial economy running. Problem was that they were no longer on the gold standard. When mark lost value, corporations cut jobs, paid workers less and produced cheaper goods for exports. This is especially true when there is in an economic crisis or a war, the pressure to inflate becomes overwhelming.

Now I don’t THINK we are or will be experiencing hyperinflation. But I do several things I have observed now and before in history. One, that as in Germany, retailers shelves are not selling and are not as stocked as before the recession, meaning its hard for us to make a profit. Two, I see more empty commercial real-estate. Three, the government has no adequate income thus I think will be forced to raise taxes (which they will not collect given the present climate and will have to print more money or worse borrow more abroad).

In essence our government will monetize debt. I mean what else can you do when we build a big azz deficit. All the Federal Reserve does is buys bonds trying to stabilize the market, which means they just printing loot on the invisible security of these bonds. If history teaches anything, it is that government cant be trusted to manage loot as this clock shows with respect to the US. When currency is not redeemable in gold, its value depends entirely on the judgment and the conscience of the politicians. All money is a matter of belief and the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. Problem is that world wide folks getting rid of dollars with the quickness. Even here in the states. Banks are increasing foreign currency holdings and since 1999, holdings in US Dollars have dropped from 63 percent in 1999 to 37 percent currently. Yep, the dollar is almost worthless, but why shouldn’t it be, after all its just paper and ink.