The rising dollar and the falling cedi; Gov’t clueless
USA, land of the brave, is planning another interest rate hike in line with using their currency powers to destroy Russia. The world powers are at war and they would do anything to win.
Russia played its main card by tying its currency to gold. Just as Ghaddafi planned. Making the ruble the most attractive currency in the world; stronger than the dollar. But if you know America, they would kill to keep their dollar no 1. So America once again went to the printing press.
Printing more dollars to fund its proxy war in Ukraine to teach Russia a bitter lesson.
The impact
Too much dollar in the system. Highest inflation in 30 years.
The solution
Increase interest rates to reduce dollar circulation as it becomes more profitable to keep your cash with the banks than borrow.
The Fallout
All other countries in the world that keep dollar reserves or trade mostly in dollars would have the currency devalued significantly.
The war on Ukraine isn’t good for the global economy but America who since 1970s cannot run out if cash as long as they have ink; is ready to fund it until Russia crashes. The desire to win at all cause.
The Cedi
As for Ghana; the country that introduced keysoap concert party to the world; our leaders haven’t recognized that we are at war.
They keep entertaining these global leaders and their agenda and even allow them to organise their global programs in Accra.
These guys are stabbing you and you only smile and hug them even more. Our cedi may fall further to 12 or 15 if we don’t do a quick shift in our economic policy by declaring a state of emergency.
Impact on national security
There is likely to be some pints of civil unrests in Ghana in the next 3 months if nothing happens. Price hikes are becoming unbearable.
The hooting and throwing of water at the president was the first sign. Nobody should take this for granted.
Economic effect
Since January, prices on almost every consumer item has doubled. Likely to become more during the festive seasons. The real income of workers has fallen by 50%. Workers cannot live into a full 30 day cycle.
Level of savings have dropped. Cash withdrawals have gone high. Some banks are likely to crash unless BoG supports them. Interest rates in Ghana likely to go higher in a big to encourage savings and stabilize the cedi. Unfortunately, the dollar is too big a competition to fight at the moment.
Next 3 months
- Dollar at 12 or 15 cedis
- Increase in unemployment by 20%
- Economic recession
- Bank crashes unless IMF rushes to our aid
Next one Year
- Possible loss of national sovereignty to the IMF and WB [Nkrumah’s worst fear]
- Total surrender of our natural resources to the West
- Crash of cedi, pensions and savings in general(your 30 year savings may become wasted)
What we may need to do
- Plead with IMF to move faster
- Hope the Russia-Ukraine war cease
- Ask America to cease the currency wars
Alternatively we can
- Declare a state of emergency and temporary pass legislation to control repatriation of profits by Multinationals
- Take advantage of the rains to increase food production and storage. KNUST should be tasked with innovative ways to preserve food in Ghana.
- Renegotiate our minerals contracts at least during the conflict
- Take advantage of the loss of attention by the West on the Africa continent to move to a gold standard.
- Increasing support for tech companies in Ghana to produces exortable technology to rake in forex. BoG cease-fire in the fight against local tech
- Tax rebates on tech products
- Encourage ACFTA especially in the tech space for African at the moment.
Conclusion
We can keep on fighting about the volume of the music on the ship whilst the titanic sinks or we can use that time to prepare our life rafts and dodge the impending doom.
