Devaluation is burial of our current slim social economic structure

BY: Chier Akueny Anyithiec, JUBA, MAY/02/2015, SSN;

Suggestion of currency devaluation is a total nightmare that it would be the best way to destroy the lingering economic quickly. By a continuing process of inflation, the solution wouldn’t be at the first place a suggestion of currency devaluation.

It was a useful proposal, but I felt like, I wonder in other way if I list down the shortcoming when suggestion is adopted. The proposer would send me an academic paper showing that devaluation currencies were often associated with shrinkages or running away economy.

I would write responding that I wasn’t disputing that; instead, I was saying that devaluations made economic adjustments easier; this is simple and its simplicity complicates everything in the process.

Is it showing that devaluations would little bit help relieve the situation? The inflationism (devaluation) has serious impoverished effect, not less than of the proletariat (people employed).

As the inflation proceeds and the value of the currency fluctuates wildly from time to time in frequent, all permanent relations between debtors and creditors, which form the ultimate foundation of entrepreneurship, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a bet and a raffle.

There is subtler here; is there no surer means of overturning the existing problem in the country than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in this Country will able to establish influence.

The quotation of well known Economist Keynes is perfect here. It does such a good job of succinctly describing why currency devaluation is a destructive policy, both economically and socially because it undermines both sides in such confused and fragile economy like such of South Sudan today.

It seems that Keynes understood the problems fashioned by policies designed to debauch (devalue) the currency, the modern-day economic followers never see this one the solution to shrinking economy.

Instead, the degree of sense has been discarded by the Keynesians of today in favour of a total focus on “aggregate demand”.

If you wrongly believe that economy to be a vague blob driven by changes in “aggregate demand”, then you are looking at the economy through a quilt that creates such a distorted view of the world that what you perceive is the opposite of reality.

When looking through such medium, currency-devaluation policy can appear to be unjustifiable process economic anodyne.

Yes, we know that currency devaluation makes local exporters more competitive; but what are we exporting from this country?

I think, according to my meager knowledge of economic; a country devalues the currency to promote her local exports. The problem immensely, we are consumers rather than exporters and so, it would seriously be at our EXPENSE as consumers and importers.

There can be no net benefit to our trembling economy and indeed such act may lead economic to total oblivion.

The reason is that a persistent reduction in a currency’s value on the foreign exchange market requires relatively high monetary inflation, which leads to rises in domestic prices that not only counteract any benefit to exporters from the exchange-rate decline, but also distort relative prices in a way that makes the overall economy less efficient.

The real policy stands that you devalue your currency in some stable countries in case to increase the exports if reaches her trade deficits but are we trading/exporting?

According to orthodoxy of real economists, every dollar that flows out of the country due to a trade deficit is a dollar less of spending within the domestic economy, which, in turn, leads to a weaker domestic economy and higher unemployment.

Indeed, even-though our employment rate is at nutshell, then it would be better for us to maintain the same tract and make sure we adjust some misplaced policies for us to regain.

There is a need for the redirection of these policies to make sure that consumers and importers are favoured and by doing this; we made sure there is a reduction too to net loss of jobs. I always wonder to why people jump the same hole in this country because this very same hole will be forcing you to unnecessary/wanted hurdles.

The first face of economic reform would be support of local productions that include set employment policies of the country to make sure that there are little bit itches of inputs to our society.

Here if currency devaluation is achieved then, it would be a veracity that you have added hands to killing real wages and thus gets around the problem that the nominal price of labour tends to be ‘sticky’.

The idea is that insignificant wage rates are excessively slow to fall in response to reduced demand for workers, and that currency devaluation helps by furtively reducing the real price of labour. So, are we intending to reduce the price of wages or to increase wages in this dilapidated war torn country?

I request the real economists to assist me here!

Second, the sticking of wages is not only the problem such severe economic downturn but we have to unequivocally consider another point that government indirect payments to the unemployed can reduce the incentive for able-bodied people to accept lower wages to re-enter the workforce. In other words, if nominal wages are problematically ‘sticky’ it is because of government intervention.

Third, the knowledge that modern money relentlessly loses purchasing power over time would tend to make nominal wages ‘stickier’ than they would otherwise be but how do we lose the purchasing power? The answer is low value of the coin you have at hand.

I would agree with proposer to disagree with him that the primary problem with currency devaluation is that it always leads to non-uniform changes in prices throughout the economy.

In effect, the of devaluation policy send false price signals into the economy, which leads to more investing mistakes than would otherwise happen. As a result of the greater number of investing mistakes, there ends up being less wealth to the country, but are we ready stand with less wealth when we do not have wealth already?

I remember the policy of economy on the proverbial “slippery slope; I think you want to put this country to this slippery slope if you are longing for currency devaluation.

In summary, Keynes wasn’t right about much, but early in his career he was absolutely right about currency devaluation. It is a process that engages all the hidden forces of economic law on the side of destruction, and it does it in a manner that not one man in a million will be able to diagnose.

The currency devaluation policy is the root cause of worldly fixation on “inequality”. Unfortunately, none of the most popular writers on this topic understand the cause of the perceived problem.

But we can you do, you have to go ahead with you suggestion of solving one problem so that you get more problems. Therefore; I don’t support currency devaluation at the expenses of average consumers.

BY: Chier Akueny Anyithiec,
Currently living in Juba,
Reach me at: chieryako@gmail.com
Phone: +211954201211

20 Comments

  1. S. Sudanese VP calls on region to save his country’s economy

    AhahahhaAHAHAHAHAHAAAAAA!!!!!!!

    Cry Baby Cry!
    Idiot, didn’t we telling you don’t you ever mess with the “Original Real Founding Fathers” of ROSS???
    Do you remember your exact words prior to the 2013 NLC appeals for reforms?
    Now what do you visionless looters see, now that you have completely burnt your life-saving bridges??

    http://www.sudantribune.com/spip.php?article54820

    QUOTE & Quote:
    “Reinstatement of Riek Machar, his deputy Alfred Lado, Taban Deng Gai and all the FPDs. Unfreezing of their assets and accounts. Granting them, general amnesty. Announcement of unilateral ceasefire from the side of the government and so on and so forth,” vice-president Igga outlined them in the statement as position of the government to end the war.
    Did I read the above correctly? Help me somebody……

    Ahahhahahhhaaaa …. ###3 ahah — &.,,.$$$$$ ahahhaa
    Oh My God!
    Ngundeng is reallllll!!!!
    https://www.youtube.com/watch?v=_XQkRZyb1L0

    AHAHAHAHAHHAHAHHAAAAAAAAA!!!!
    splm-io Oyeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee!!
    Sweeping Reforms Oyeeee!!!
    The War against the “Liberators-turned-Opressors” is already won in advanced.
    WAR & PEACE – choose One!
    Let all of Us Choose Peace!

    • Chol Majok says:

      Dagany;
      How old are you? Who spelled the actual sound of laugh on paper or online to show he or she is truly laughing? This shows how little you knowledge is as far as your experience is concern!
      Bear in mind Dagany; you’re going to wait for Riek Machar to be president of South Sudan until the end of Riek’s life in South Sudan!

    • obulejo says:

      The economic malnutrition of south Sudan is not easy to be fixed like a say of word. I do know we are subject to suffer by few individuals who claimed to be leaders of today and tomorrow till the coming of the son of Mary. the innocent majority are the daily losers whose hopes are left with nothing except God. who knows that south Sudan will be a country with Love as other countries in the world? who is the solution to south Sudan? Sorry for the local people who suffer both by war and poor service delivery.

    • Lavina Lual says:

      Chier Akueny Anyithiec-

      “I PRESUMED” you are the dollar blood suckers of this baby economy of the RSS who are still intact and controlling access to the foreign reserve making it a commodity when everyone has lost trace including the Central Bank Top Officials themselves; could you be the son of Kiir or Koriom, and even if so, have you thought once in your life time “about nationalism” or “inclusive socio-economic development for all”?? .

      Your post suggested that you are the chief cashier of back marketers who are illegally trading exchange rate business at the expenses of the economic development for all South Sudanese, and of course you must defend your fake business that is killed by the so called fix exchange rate, by saying “Devaluation is burial of our current slim social economic structure”. Even if you never gotten chance to attend any economic class like your kins who were trading the dollars openly in the black market with no business language of communication with customers (as most do not Arabic, English, Kiswahili or any business language except “jieng”), please ask your jieng sisters and brothers in the BOSS or go to the IMF International experts to give you some few lectures on how many billions of reserve the RSS had lost and is still losing for thugs in the black market using this fake/fixed exchange rate regime from 2011 to date, and yet you got the gut to defend the ailing economy publicly. Once again go to the World Bank and find out from International lenders how much concessional development fund the RSS missed due to this parallel rate???

      Tell us which country in the world can fix its foreign exchange when it cannot even sustain a two weeks reserve in her foreign accounts, or which country can easily fix a dollar when its only export commodity (oil flow for the case of RSS) is endangered/inconsistent and at the same time depending on 99% import goods?

      JESUS CHRIST!

  2. Defender says:

    Author,

    You are making an argument that would be sound if there is any other option. The situation in South Sudan today is this: devalue currency and the “system” will collapse; introduce quantitative easing, will for sure flood the country with useless SSP. Hence super or hyper inflation. These are the options for the status quo. However, the better solution is that, the current group of Kelptocrats just need to pact it in and let others fix the mess that they created. Otherwise, the train is headed to head on crash. The other option of borrowing provide a false pretence that it will address the shortfall in revenue generation. This is also a temporary fix that may provide the government a small breathing room. But would it address the myriad economic and security needs brought to bear by the client state? No, for sure. But there seems to be a believe in Juba that if we just borrow, we may be able to pay off as many people in the opposing side until the rebellion is brought down and all will return to “normal.”

    This is called searching for hope against all hopes. Aside, the money being borrowed, without transparency and accountability, would just burry future generations in unending cycle of poverty and indebtedness South Sudanese have never seen in comparison to the fifty years of servitude under Khartoum. These are the stark differences that we the citizens are faced with and are forced to accept just because certain people want to cling to power and continue to build a client state the render power to those with power, leaving the innocents and armless to fend for themselves from the spoils or remains of what has been consumed. Sad, to say the least….

  3. Chol Akur says:

    Currency devaluation will keep going down as long as South Sudanese in charge are borrowing and spending loan money for no credible infrastructure and tax systems that will use to pay back the loan. The more South Sudanese borrows money with impunity; currency value will keep going down without control at all!

  4. mindra says:

    Chier,

    i did pass through your articles but it is hard to pick what you are writing about,it seem to me right that you are not an economist period,You really have a point but to put it in economics terms is your problems.
    Take Ur time to analyze in to details why there is economics collapse and what needs to be done to avert it,
    in brief,there is over dependence of the southsudanese on imports goods,rely on oil revenue,
    An overlap between the task team and the individuals within the ruling party,the economy is not fully liberalized and SS has no acees to regional market because there is not single items SS has ever exported to the nearby country.

    Unpredictable and not stable for the investor to invest in SS,because if they do,they would not get there returns
    simple solution,to fully have economy scale,all culture in southsudan has to be harmonized and liberalized
    leaders should be constantly engaged in economics knowledge and information,Be a current leader who always adhered to economic changes anytime and any day
    Willingness to learn,accept mistake,forecasting would give upper hand to be flexible in the economics world,
    next time i would give u economics theory and the graph showing the economics scale and Dis economics scale(depletion)
    Mindra from loa local pageri payam,madi corridor EE,SS
    Economist( Master holder in economics)

  5. False Millionaire says:

    Defender,
    “…the train is headed to head on crash”,is the most probable eventuality.Becouse it’s more than certain that the kelptocrats will never voluntarily,”pact it in and let others fix the mess that they created”.

    • Defender says:

      False Millionaire,

      The reality is setting in now that they are seeing the ugly head of trying to govern by all means. Now the VP is calling on the region to come and rescue them from hell. they seem to think that EAC will rescue them. The verdict is coming soon, but not dictated by the region but the international community.

  6. Charles says:

    Chier, the only way to stop the economy from collapsing is to stop this senseless war. Period. No economic gymnastics can stop the sliding downwards of the South Sudanese pound. We will soon be carrying basketful of pounds to the market to buy food items. This situation happened in the Congo before during the final days of Mobuto Seseko.

    The Vp’s current trip to East Africa to seek help will not bear any fruits, and is a total waste of the few dollars the country has. Wani Iga is now even ready to let go of the vice presidency position for Riek, a position he vowed never to let go of. What an about turn? A plea by the Minister of Finance to the IMF and World Bank to come to the rescue have also been turned down. Things are going from bad to worse. If we are not careful, the economy of the country will be damaged beyond repair.

    • info@southsudannation says:

      Charles,
      Certainly, the so-called “ruling” or rather misruling junta of Kiir has committed a treasonable crime of economic mismanagement which has culminated in the total impoverishment of the people and theft of billions of dollars.
      The UN now includes this as a crime against humanity and a human rights abuse that is deemed a prosecutable offence.
      The problem is, shall we ever see the day when our ruling criminals of Kiir, Wani-Igga and others in court and being sent to prison for their egregious crimes?
      For instance, the other day on SSTV broadcast to the whole world, Kiir standing with Wani Igga on the podium of that SPLM forum, openly revealed that Pagan Amum ‘stole’ a whooping 60 million dollars which the late Dr. John Garang had personally delegated Pagan as secretary-general of the SPLM party to collect from Sudan president Bashir immediately after the CPA was signed in Naivasha, Kenya in 2005.
      Direct from Kiir’s mouth, Pagan allegedly did receive the money but he, Kiir and Wani Igga, definitely haven’t seen or got any dime of that money since Garang’s death.
      In his characteristic jester to the loudest cheers and bemusement of Wani Igga and the SPLM audience, Kiir told his supporters that ‘Pagan should tell us where is that money?’
      At least now we know Kiir has publicly revealed to us one of those 75 alleged thieves still hidden in his closet.
      Editor

      • johnjerry says:

        Wow,see what is coming up now from the very people who think that one day those thieves will not be revealed to the public.Did Pagan Amum eat that money alone is the question?. All the other 74 Thieves must also be revealed then can we believe in you. What about the alleged taking of the government that led to the death of many innocent Nuer that was proven not have taken place in Arusha,Tanzania. Is that not a crime before God and humanity. All those involved in the crime must face the ICC in the future be they Big or Small Fish as there is nobody who is above the law.It is very unfortunate that the SPLM/A has no reverse gear.If we need South Sudan to develop do not include those already involved in crimes of any form in transitional government of national unity as they are already spoiled onions and should not be recycled in any form in any position in government forever then and only then can we have a cleaner government that is Democractic and free

  7. GatCharwearbol says:

    Sultan-type President – Kiir and Dinka council of Elders are on borrowing spree with ultimate goal of wiping out Nuer tribe is backfiring. I wish the blood of our innocent people can selectively punish those responsible for this mess without dragging the whole nation in to the mud with them. The country is now plunging into toilet’s drain. Who to blame now ya jamaa? Chier, are you still in support of your sultan-type, President? What is your function or business in Juba?

    Don’t be so sad, you can now sell the blood of the innocent Nuer’s children and women to offset your money shortage and to avert your economic collapse.

  8. AGUMUT says:

    Why people should get worry about economy? Elites and Big cites have to sort it out. There is no Social Welfare.

  9. AGUMUT says:

    President had allow Riek Machar to escaped,he should have been put in prison or killed.Garang himself was a Hacker and he has left that to his wife and Riek Machar. He has allowed Riek to abused systems since 2005.

  10. Kwacha says:

    The author of this topic put it right. As we fight, others gain! Riak Machar and his rebels should sign peace agreement instead of signing agreement on cross border with Ethiopia.

    • Nuer-Another Israel in East Africa says:

      Kwacha,

      Riek Machar and his rebels are not the government. The onus is entirely on your Dinka Government; it is then the government that should sign agreement instead of borrowing, hiring mercernaries for fear of one tribe, and signing useless deals with Muslims. Put your thinking cap on my friend. Evading responsibility is not the solution. For how long will you keep on assigning your responsibility to others. Grow up dude!

  11. cos says:

    Ha,ha,ha,just laughing.The worst are yet to come.
    Soon our slogan of “OUR GOVERNMENT,I AM A SOLDIER,WE ARE BORN TO RULE” will soon be a history.
    Watch these:
    Dollar is now high,
    Fuel is no longer available,
    Food item is high,
    Mineral Water shortage,
    Meat is at 70 SSP etc
    keep tune on focus of south Sudan.

    • Ajak Ayuen says:

      Cos,
      Do you truly believe you’re going to have a government in South Sudan in the future without Dinka? Well if you do; then you must be the dumbest person than you think!

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