LETTER: Hands off money supply

The public protector’s call for a constitutional amendment to bring an end to inflation targeting is confused and confusing. The public protector cannot order Parliament to change legislation. Ending inflation targeting would increase inequality because rampant inflation would hit the poorest hardest since most of their wealth is held in cash. Rampant inflation devastated the Zimbabwean economy. Under inflationary conditions, it is impossible to plan or to make rational economic decisions. People become more concerned with anticipating inflation than with seeking out profitable new production opportunities. Inflation forces individuals to spend almost all their income on consumption and leaves them with very little, if any, to save. Savings are critical for society. They lead to investment, which finances the purchase of machinery and equipment, research and development. Investment enables workers to become more productive and earn higher wages. Inflation also affects the competitiv...