LETTER: ‘It’s the economy, stupid’
It is probably just a matter of time before SA’s central bank governor is forced to raise interest rates
“Inflation is transitory” many of our leading economists tell us, echoing the voice of Jerome Powell, chair of the all-powerful US Federal Reserve.
Powell was challenged by former US secretary of state Larry Summers, who postulated that circumstances are such with so much money in circulation — most of it created by Powell himself — that the US is staring stagflation in the face.
Here in SA, Treasury officials are far more conservative, but it’s likely just a matter of time before our talented Reserve Bank governor is forced to raise interest rates. He is fighting a losing battle.
Government spends money it hasn’t got then loses billions to theft and wastage, while our president has economic meetings. There exists no coherent economic policy.
Short-term tax gains are spent as if they will continue indefinitely. Eskom is still in trouble, as are the rest of our state-owned enterprises. Government really believes that taxpayers will bail them out. It won’t happen. The money is not there, commodity prices will stabilise and high net worth individuals are getting themselves and their money out.
Food prices are up much more than we have been told. If you don’t believe it, then visit your local supermarket and check the prices of fruit, meat, fish, vegetables, chicken, nuts, chocolate, coffee, cereals and more. You will be shocked.
Unemployment is rising and government policy is pushing productivity through the floor. Take a look at a brilliant analysis by economist Mike Schussler. This is a tragedy.
Oil is now staring at $100 a barrel. What will that do to prices across the board, especially food? We are not looking at transitory inflation, but very possibly at food riots.
Meanwhile, the president doesn’t know what day it is economically. SA’s biggest problem is not the DA’s insensitive and dumb posters — “It’s the economy, stupid”.
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