56. Poor Countries Do Not Need Rich Money.



Poor Countries Do Not Need Rich Money.
Bob Komives
::

One said: The Guatemalan government does not seem to have extra quetzales.
Can it lend them to itself
or, for that matter, to anybody else?

said Two: Yes, the government in the United States of
America does not seem to have extra dollars.
(Its accounting sheets seem to show negatives
where extra dollars are supposed to be.)
Yet it lends new dollars to other nations
and invests them in its own.
It also uses them to wage war.

One said: I know such irresponsible practice is long since condemned.
Have not those United States long since prospered?

said Two: Yes. Meanwhile poor countries long since work
to avoid such irresponsible practice,
and those poor countries long since remain poor.

One said: So, if the United States of America
lends and profits,
invests and profits
with money that they are supposed not to have,
might Guatemala try to do the same?

said Two: Yes, and it should.

||

If you can accept that the system for lending to sovereign nations is invalid there is yet another practical question: do not poor countries need dollars or some other strong currency to participate in the international marketplace? Politics, tradition, and organizations such as the World Bank and the International Monetary Fund can prevent countries from using their currency easily in the world marketplace, but there is no economic justification. The beauty of marketplace is that it adjusts prices to allow trading in products of different value. Imagine a farmers' market in which tomatoes from many farmers --varying in quality and kind-- cannot be traded except by using as currency the prized tomatoes of a few powerful farmers. This is unnecessary and unacceptable.

Guatemala, Brazil, Mexico, the USA and any other country can finance good projects with their own currencies. Within the country, venders of goods and services must accept the national currency without question. Such is the history of money. For off-the-shelf international purchases, project managers can buy what they need using local money converted to the foreign seller's preferred money at the current exchange rate. For international orders and long-term contracts, project managers and sellers can agree to a price tied to some standard such as dollars, marks, francs, yen, or a composite index. They can still make payments in national currency in an amount adjusted according to that standard.

Wealthy as well as developing nations will experience setbacks that create prejudice against their currency in world markets. A crisis in Guatemala may cause most of the rest of the world to stop for awhile accepting the quetzal. Guatemala might flood the market with quetzales by making too many international purchases in too little time. The value of the quetzal could drop dramatically. However, trade will resume. The marketplace can establish an efficient exchange rate. If the USA or an international organization wishes to help, it could offer in-kind aid or political support. It should never lend money. A loan will reinforce prejudice against the borrower's currency. Why should we accept a troubled country's money when we know the country has just received more familiar currency from a rich country?



I saw them working in a field one day.
He was swinging his machete.
I only looked for a moment,
probably because I didn't really want to believe it's possible.
He swung his machete all that day and many days since--
his friend working beside him.
I would like to think
that the boy does a little more than his share,
but it's probably just the opposite.

They walk home looking no different than when they came.
The boy does not require conversation of his old companion.

The first time I passed,
the sound of a gringo-ish "a dios!"
caused him to turn his head to reply.
Now, salutations to me
are the same as to the other familiar voices on the road
--uttered quietly in the rhythm of the resigned pace.
On occasion, I have passed without saying anything
--an irrational form of sympathy.
But he passed giving no notice to me,
maybe a little relieved that his attention was not diverted
--his attention on the road just two paces away.
However, why should I walk by him in sympathy
when his companion walks with him in respect.
It takes a great man
to have worked that hard for that long.
Maybe, in reality,
he still can carry a good-sized load on his back.
And the boy too is looking just two paces ahead
--at that man he wants to emulate.

After all, you see him every day
on the road to work in El Rosario.
At least he was there yesterday.

Passing




:: Bob Komives, Fort Collins © 2006 :: Plum Local IV :: 56. Poor Countries Do Not Nee Rich Money ::
With attribution these words may be freely shared, but permission
is required if quoted in an item for sale or rent

::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::

No comments: