We have got to turn the cash around.
I spent last weekend in the Nyanga Mountains doing nothing and a bit of fishing. After two days of rain and mist, the weather cleared and at about 11.00 hrs I was able to get down the Lake and throw a line into the water with a fly on the end. For two hours I caught rainbow trout – eight in all, putting six back and keeping two for dinner that evening. When the fish are hungry, fishing is great.
While up there we paid a visit to a friend who runs a small farm and over tea she told me about her experience over the past 30 years, she said had learned that to survive “you have to turn the cash around”. Like many in Zimbabwe she does not have a bank account and simply operates on a cash basis.
When I got back into Parliament I was told that the Governor of the Reserve Bank had issued a Monetary Statement and as soon as I could I read through the document – nearly 100 pages of it! Strangely the Governor quoted another author who said the same thing as my farmer friend – quoting Lynne Twist who said “money is only useful when it is moving and flowing”.
Money is only a recognised form of exchange between buyers and sellers. It has a crucial function as a store of accumulated surplus and can be used to transfer wealth and value between countries, companies and individuals. Just this morning I watched the news about Venezuela where shortages of just about everything are besetting the economy. We have been there and I do not have to read a report by the Reserve Bank in Caracas to know that the reasons are linked to how the regime in that country is managing its money.
If you have exchange controls and try to manage what people do with their money, they simply go underground and shortages and distortions become the norm, often associated with widespread corruption. Remove the controls – as we did in February 2009, and overnight the shortages disappear. Money, real money not printed paper, suddenly emerges from the underground economy and the markets do the rest.