Why a weak rand sucks for SA

[rpm]

Why a weak rand sucks for SA

Economist Mike Schussler believes that, contrary to common belief, the weak rand is not going to lead to any significant economic growth in South Africa.

 

[farcry]

A weak Rand raises the costs of fuel which raises the costs of anything that depends on transport/fuel.

The largest cause of the weak Rand is the corporation which produces the money used by us.
ZeroHedge.com had a very interesting article that shed light on just how much "new money" the corporation called "The South African Reserve Bank" has put into circulation since 1994. Its quite an enlightening read.

Basically, the Rand is effected by social and economic factors, but in our case the money printer is playing a huge role in the Rand losing its value by introducing billions of Rands of new currency each year.
That influx waters down the value of the Rand.

 

[Keeper]

Basically, the Rand is effected by social and economic factors, but in our case the money printer is playing a huge role in the Rand losing its value by introducing billions of Rands of new currency each year.
That influx waters down the value of the Rand.

Bingo.

We need a currency that doesn't have people in control of unlimited money printing.

 

[Drunkard #1]

A weak Rand raises the costs of fuel which raises the costs of anything that depends on transport/fuel.

The largest cause of the weak Rand is the corporation which produces the money used by us.
ZeroHedge.com had a very interesting article that shed light on just how much "new money" the corporation called "The South African Reserve Bank" has put into circulation since 1994. Its quite an enlightening read.

Basically, the Rand is effected by social and economic factors, but in our case the money printer is playing a huge role in the Rand losing its value by introducing billions of Rands of new currency each year.
That influx waters down the value of the Rand.

No, printing money can be easily offset. Look at how the first world does it.

The Rand has gone to **** because the country has gone to ****. Nobody wants to produce anything here any more because government's anti-business actions (corruption, incompetence, jobs-for-comrades, legislation, etc.) and labour's entitlement attitude increase the cost of doing business to ridiculous levels. Everything we consume can be produced cheaper abroad, so we'd rather import. And there's no hope on the horizon. Schussler is right - the skills and motivation needed to reverse the decline have left the country, or taken a "**** everyone, I'm looking out for me" approach.

It's a pervasive, systemic problem, and until excellence and achievement are rewarded (not threatened), there's no hope of improvement. We live in a third world ****hole - adjust your mindset.

 

[Jola]

Unfortunately the above is all correct !

 

[Space_Chief]

No, printing money can be easily offset. Look at how the first world does it.

The Rand has gone to **** because the country has gone to ****. Nobody wants to produce anything here any more because government's anti-business actions (corruption, incompetence, jobs-for-comrades, legislation, etc.) and labour's entitlement attitude increase the cost of doing business to ridiculous levels. Everything we consume can be produced cheaper abroad, so we'd rather import. And there's no hope on the horizon. Schussler is right - the skills and motivation needed to reverse the decline have left the country, or taken a "**** everyone, I'm looking out for me" approach.

It's a pervasive, systemic problem, and until excellence and achievement are rewarded (not threatened), there's no hope of improvement. We live in a third world ****hole - adjust your mindset.

Printing money is only going to buy you a temporary reprieve. And you can only do it if you're the world's reserve currency and everyone wants your bonds and dollars for trade.

The problems with SA are obviously what you say. We're mainly a service driven industry these days. And almost everyone is a parasite on someone else, with relatively little exports to earn foreign revenue.

The still relatively high gold price helps us out, but once gold tanks (as it cyclically does) we'll be really screwed.

 

[chicken247]

No, printing money can be easily offset. Look at how the first world does it.

Please elaborate.

Nobody wants to produce anything here any more because...

All i know is labour got 20% cheaper (inUSD) from last year.

 

[Arthur]

"new money" the corporation called "The South African Reserve Bank" has put into circulation since 1994. Its quite an enlightening read.

Basically, the Rand is effected by social and economic factors, but in our case the money printer is playing a huge role in the Rand losing its value by introducing billions of Rands of new currency each year.
That influx waters down the value of the Rand.

The Rand has gone to **** because the country has gone to ****. Nobody wants to produce anything here any more because government's anti-business actions (corruption, incompetence, jobs-for-comrades, legislation, etc.) and labour's entitlement attitude increase the cost of doing business to ridiculous levels. Everything we consume can be produced cheaper abroad, so we'd rather import. And there's no hope on the horizon. Schussler is right - the skills and motivation needed to reverse the decline have left the country, or taken a "**** everyone, I'm looking out for me" approach.

It's a pervasive, systemic problem, and until excellence and achievement are rewarded (not threatened), there's no hope of improvement. We live in a third world ****hole - adjust your mindset.

You're both right. There's no one single cause.

We are debasing the currency through dilution - printing more than the nett value of goods and services.

And government's profligacy, corruption and fecklessness corrodes social currency and this acid ineluctably seeps into the economy.

 

[w1z4rd]

, but in our case the money printer is playing a huge role in the Rand losing its value by introducing billions of Rands of new currency each year.
That influx waters down the value of the Rand.

Could I have a link to a source for that? Never heard thats how our currency was valued. I thought it was valued by the market like other currencies.

Do you have a source for this?

 

[Drunkard #1]

Printing money is only going to buy you a temporary reprieve. And you can only do it if you're the world's reserve currency and everyone wants your bonds and dollars for trade.

The problems with SA are obviously what you say. We're mainly a service driven industry these days. And almost everyone is a parasite on someone else, with relatively little exports to earn foreign revenue.

The still relatively high gold price helps us out, but once gold tanks (as it cyclically does) we'll be really screwed.

Printing money is a normal economic process. Everyone does it, and it works because they've got good economists regulating it, and more importantly a strong, growing economy to support it.

There's nothing wrong with being a service economy. Google sells services, Apple sells services (their service is design and marketing; they barely manufacture anything), as do thousands of foreign companies. South Africa has nothing to offer.

As for gold, that was surpassed years ago. We export more cars than gold. Gold might be number six, or somewhere around there. We're screwed even if gold hits $2000.

 

[Space_Chief]

All i know is labour got 20% cheaper (inUSD) from last year.

Yeah but probably to get that 20% benefit you'll need to import USD equipment and expertise, pay local tax and rely on a workforce which is living in greater amount of squalor while government struggles harder to maintain the infrastructure. Never mind that because of all of this inflation is going up you'll be obliged to increase wages because of that, or face strikes.

 

[w1z4rd]

Does anyone have any real information that SA is printing more money than it should? First I have heard of this and I just wanna make sure this is not another mistruth.

 

[HavocXphere]

We need a currency that doesn't have people in control of unlimited money printing.

nah - thats not the issue. The Res bank knows what they are doing.

The issue is that if you've got a prez talking about witchcraft, most government function near collapse and Malema shouting something about nationalization then the wealthy banker in New York decides...f no lets rather pump money into a factory in China. Against that the Res bank is powerless.

Also...for the record: The Res bank's primary mandate is to keep inflation in check, not manage the ZAR. They manage inflation to the best of their ability & let the Rand float where it may. In my eyes this is a pretty solid approach.

 

[Space_Chief]

Printing money is a normal economic process. Everyone does it, and it works because they've got good economists regulating it, and more importantly a strong, growing economy to support it.

The economy in EU and USA is not really growing much, nor is it strong these days. Watch Max Keiser on how UK pensioners are losing out on their lifetime savings.

There's nothing wrong with being a service economy. Google sells services, Apple sells services (their service is design and marketing; they barely manufacture anything), as do thousands of foreign companies. South Africa has nothing to offer.

There's nothing wrong for those companies themselves you mean. And as long as Apple, Google etc can sell offshore and bring the benefits home to the US there is some benefit for the Americans, although outsourcing manufacturing to East Asia is bad for their economy. If we could sell services ofshore it would also be good. But we mostly sell services to each other, you know like insurance, telephony etc.

As for gold, that was surpassed years ago. We export more cars than gold. Gold might be number six, or somewhere around there. We're screwed even if gold hits $2000.

The gold helps maintain our higher Rand.

Our cars? Who profits from those though?

 

[Drunkard #1]

Please elaborate.

I'm not going to recite econs101 for you. Buy a book or Google it.

All i know is labour got 20% cheaper (inUSD) from last year.

1. No it didn't,

2. How does that help, when we're earning in Rands, or converting to Rands after our exports are paid for, and

3. Labour is by no means cheap in South Africa, and isn't the only input cost.

 

[HavocXphere]

Does anyone have any real information that SA is printing more money than it should? First I have heard of this and I just wanna make sure this is not another mistruth.

You can google "money supply"...they publish it in brackets...Like M1, M2, M3...etc. One containing a broader definition of money vs the next. (maybe I've got it in reverse)

You'll find what you're looking for easily. I haven't checked but I'd call a preemptive BS on the money printing angle.

 

[Drunkard #1]

The economy in EU and USA is not really growing much, nor is it strong these days. Watch Max Keiser on how UK pensioners are losing out on their lifetime savings.

The US is doing fine. Unemployment is down, buying local (for patriotic reasons) is up and all indicators are in the green. Some parts of Europe are ****ed, but ze hard working Germans are doing great. I don't feel much sympathy for lazy Mediterraneans.

There's nothing wrong for those companies themselves you mean. And as long as Apple, Google etc can sell offshore and bring the benefits home to the US there is some benefit for the Americans, although outsourcing manufacturing to East Asia is bad for their economy. If we could sell services ofshore it would also be good. But we mostly sell services to each other, you know like insurance, telephony etc.

Exactly. We need to sell to foreigners to earn forex. Lower current account deficit = stronger Rand.

The gold helps maintain our higher Rand.

Our cars? Who profits from those though?

Who profits from our gold? Malema isn't right about nationalisation, but he is right about foreign owners creaming off our local profits. A steep tax on dividends and "administration charges" leaving the country would help.

 

[ngwe23]

Does anyone have any real information that SA is printing more money than it should? First I have heard of this and I just wanna make sure this is not another mistruth.

Please don't hold your breath. I read that and I was like . Anywhere, the economy is bad so someone has to blame, right?

 

[Space_Chief]

The US is doing fine. Unemployment is down, buying local (for patriotic reasons) is up and all indicators are in the green. Some parts of Europe are ****ed, but ze hard working Germans are doing great. I don't feel much sympathy for lazy Mediterraneans.

The US unemployment figures are as they are because people who are not looking for work are not counted. As you say the Germans are keeping up but probably not as well as they could but most of Europe isn't. The Germans also don't appear to be too happy about all these bailouts.

Exactly. We need to sell to foreigners to earn forex. Lower current account deficit = stronger Rand.

Yeah but when much of your business is building offices in Century City or selling Nokia phones to poor people and selling them airtime, well I dunno. If we sold this stuff to foreigners, sure. But we sell it to each other and live off each other, while the Nokias and the Windows running in those offices are imported.

Who profits from our gold? Malema isn't right about nationalisation, but he is right about foreign owners creaming off our local profits. A steep tax on dividends and "administration charges" leaving the country would help.

The gold price is tied to the value of the Rand though. Maybe Anglo/De Beers mine it but usually with a higher gold price, Rand usually recovers. Gold is purchased in Rand? Or govt collects some of the revenues in exchange for mining concessions. Why are Nigeria and Saudi Arabia rich even though BP and Shell sell the oil?

 

[ngwe23]

The US is doing fine. Unemployment is down, buying local (for patriotic reasons) is up and all indicators are in the green. Some parts of Europe are ****ed, but ze hard working Germans are doing great.

Wat, US is fine? Are you living up to your name. Remind us again how is their surplus looking like lately.