Land of Bondage, Land of the Free Essay

Land of Bondage, Land of the Free Essay.

Ladies and Gentlemen: The tao does not come here tonight to be judged, but to judge, Hear then his accusations and his sentiments. I indict the Spanish encomendero for inventing taxes impossible to bear. I indict the usurer for saddling me with debts impossible to pay. I indict the irresponsible radical leaders who undermine with insidious eloquence the confidence of my kind in the government. You accuse me of not supporting my family. Free me from bondage and I shall prove you false.

You accuse me of ignorance.

But I am ignorant because my master finds it profitable to keep me ignorant. Free me from bondage and I shall prove you false. You accuse me of indolence. But I am indolent, not because I have no will, but because I have no hope. Why should I labor if all the fruits of my labor go to pay an unpayable debt? Free me from bondage and I shall prove you false. Give me land.

Land to own, land unbeholden to any tyrant, land that will be free. Give me land for I am starving. Give me land that my children may not die. Sell it to me.

Sell it to me at fair price – as one free man sells to another – and not as a usurer sells to a slave. I am poor, but I will pay for it. I will work, work, until I fall from weariness for my privilege, my inalienable right to be free. But if you will not grant me this last request, this ultimate demand, then build a wall around your house. Build it high, build it strong. Place a sentry on every parapet. For I, who have been silent there three hundred years, will come in the night when you are feasting – with my cry and my bolo at your door – And may God have mercy on your soul!

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Land of Bondage, Land of the Free Essay

The Evolution of the Philippine Monetary Policy Essay

The Evolution of the Philippine Monetary Policy Essay.

I. Introduction

* The chief monetary authority of the Philippines is the Bangko Sentral ng Pilipinas or BSP. Bangko Sentral ng Pilipinas, established in June 1948, is considered as the main monetary authority of the Philippines because it acts as a policy guide to the direction of money, banking and credit. It is here to control operations of banks and implements administrative powers over non-bank financial institutions. It manages aggregate demand from growing fast causing high inflation, or from increasing too sluggishly that would result to high unemployment.

The main aim of BSP is to stimulate price stability since it has power over the circulation of money in the economy.

The policy-making group of BSP was the Monetary Board in 1991. It comprises of the governor of the Central Bank as chairman, the secretary of finance, the director general of the National Economic and Development Authority (NEDA), the chairman of the Board of Investment, and three members from the private sector. BSP controlled the marketable banking arrangement and the country’s foreign currency system to achieve its functions.

* Severe recessions occurred in the modern macroeconomic history of the Philippines. Especially in the 1980s and 1990s, the contemporary macroeconomic history of the Philippines has been manifested by periodic balance of payment dilemmas together with immense devaluations that result in high inflation. As a prerequisite for the discharge of emergency funds, severe monetary and fiscal programs were employed by the IMF that followed these issues.

* A supply gap, domestic saving averaged 25 percent of GNP which was about 5 points in percent less than the yearly gross domestic capital formation, was occupied with foreign capital from 1975 to 1982.

* On the average, GNP’s domestic saving proportion decline between 1893 and 1989. The weakening of domestic saving during this span was due to the effect of the economic dilemma on personal savings that progresses more because of poor government saving. This also led to the deterioration of investment, which only means that for three years span, gross investment was surpassed by domestic savings.

* BSP interfered widely in the country’s financial life starting from the moment it created operations until the early 1980s. When modified for inflation, interest rates on both bank deposits and loans were set negative. Through a widespread system of rediscounting, central bank was stretched to commercial banks. With BSP’s assistance in the 1970s, the banking system decided to choose foreign credit on agreements’ that in general, disregarded foreign-exchange risk.

The association of these factors alleviated against the expansion of financial intermediation in the economy, the increase of long-term saving in particular In 1980s, the contributing financial factors to financial chaos is the reliance of the banking system on funds from BSP at low interest rates.

II. Body

* In the beginning of the 1980s, the government presented a number of monetary measures to augment the banking production’s capacity to offer adequate amounts of long-term finance. Through promising mergers and consolidations, efforts were applied to increase the gap of capital base of banks. To augment the competence of the banking industry and to improve the inflow of long-term saving, unibanks or expanded commercial banks was established. Banks with a capital base exceeding P500 million were considered as qualifying banks which were allowed to develop their operations into a variety of new activities, merging commercial banking with activities of investment houses. This functional partition among other groupings of banks was condensed, wherein rural banks and thrift banks were eliminated.

* In the early 1980, the government implemented monetary and fiscal policies to subsidized huge intermediation margins that pertain to the difference between lending and borrowing rates. BSP sustained comparatively high reserve requirements in excess of 20 percent. For example, in 1988, 16.8 percent was the averaged of loan rates wherein rates on savings deposits were only somewhat further than 4 percent. But in 1990, revision of the reserve requirement was done proportionally twice, from 21 to 25 percent. Furthermore, both a 5 percent gross tax on bank receipts and a 20 percent tax on deposit earnings were levied by the government to aid budget deficits and to absorb excess growth in the money supply.

* By January 1983, all interest rate ceilings had been obliterated due to the liberalization of interest rates. Since interest rate ceilings were abolished, rediscounting privileges were decreased and rediscount rates were correlated to the cost of competing funds. The initial response seemed positive but despite that, in the long run, there were variations in the ratio of the country’s money supply. Primarily, his comprises of savings and time deposits to GNP that was around 0.2 in the 1970s to 0.3 in 1983. Soon, it cut down to 0.2 again in the late 1980s, the lowest ratio in Southeast Asia..

* Under the supervision of IMF, money targeting was employed in the Philippines as the first monetary framework.

Monetary targeting is applying an intense monetarist thinking supported by IMF. This approach is grounded on the supposition that there is a steady and likely connection between money, output and inflation. On the whole, it is believed as subsidizing to the complexity of declines in the Philippines in the last 25 years. There is a long-run relationship between money and output with interest rate which makes the economy return to their equilibrium state even if it experiences shocks. This only means that changes in the money supply is directly proportional to inflation or price changes. BSP is expected to identify the level of money supply that is needed with the anticipated level of inflation that is dependent with the growth of the economy. With that being said, BSP indirectly controls inflation by targeting money supply.

* Philippine banks presented considerably diverse rates for deposits of different amounts. In 1988, the interest rates on six-month time deposits of huge depositors averaged almost 13 percent while small savers only got to earn only 4 percent on their savings. There was a 1 percentage difference between the rates offered on six-month and twelve-month time deposits. This was also the same with the difference between foreign currency deposits of all available maturities.

There was high probability interest rate discrimination by the marketable banking industry between minor, less-informed depositors and more affluent savers since savings deposits accounted for almost 60 percent of aggregate bank deposits and substitutes for small savers. To ease capital flight, interest rates were bid up. The Philippine economists and the World Bank charged the Philippine commercial banking industry as highly oligopolistic due to the discrimination joined with the big intermediation margins.

* In attempt to improve the efficacy of the monetary policy, BSP implements a modified framework from June 1995. Supplementing monetary aggregate targeting with some form of price increase targeting, BSP implements a modified framework to improve the effectiveness of the monetary policy in applying greater importance on price stability. The main key modifications include: a. permits base money levels to go outside target as long as the inflation rates are met; b. an excess of one or more percentage points of inflation over the program prompts wiping up procedure by the BSP to convey down base money to the previous month’s level.

With aggregate targeting framework, the BSP repairs money growth so as to reduce expected inflation. In contrast, with the new framework, the monetary policy is set to the price level where it is not zero and zero in expectation, not including latter shock. However, the policy was further modified due the fact that aggregate targeting did not account f or the long-run effects of monetary policy on the economy.

Through this, BSP can surpass the monetary targets as long as the actual inflation rate is maintained within program levels and policymakers observe a greater set of economic variables in creating decisions about the suitable stand of monetary policy.

* The Philippines officially implemented Inflation Targeting as the framework of monetary policy. Since January 2002, the Philippines officially adopted Inflation Targeting as the framework of Monetary Policy. This involves a public declaration of an inflation rate that a country will aim to target for the next years, or in a given period of time. It emphasizes on sustaining a minimal level of inflation, which is considered to be ideal or at least would permit the country to have abundant economic growth. Its main goal is to attain price stability as the final end goal of the monetary policy.

* Through Consumer Price Index, the Philippines’ inflation target is measured.

III. Conclusion

* Throughout the years, the Philippine monetary policy encountered a lot of difficulties and here are the major issues that continue to prevail. Exchange rates have a huge influence on inflation rates and play an important role in monetary transmission. Even though BSP chose to apply the inflation targeting approach, it may be lured to inexplicitly target exchange rate to accomplish its low inflation target. This dilemma is the degree of the exchange rate pass-through to domestic prices since having a high level would oblige BSP to shift its attention to the stabilization of prices through exchange rate movements.

After transferring to inflation targeting, monetary aggregates were not utilized by the BSP anymore since its statistical data has seemingly deteriorated in the recent years. It is also expected that a shift of approach was essential because of the fact that money aggregates are not good indicators of impending economic policy necessities due measurement inaccuracy.

Inflation targeting aids in achieving lower and stabilize inflation rates. Thus, the consumer price index should be enhanced since having few percentage points have greater consequences when rates are low. Having inaccuracies in the CPI measurement could lead to inappropriate and ineffective monetary policy response by the BSP which can be disadvantageous for the aggregate economy.

Liquidity trap is also an issue arising from monetary policies when the inflation rate deteriorates too much that causes a threat of deflation. It is a situation where zero nominal interest rates, persistent deflation and deflation expectations are present. When this happens, bonds and money receive a similar real rate of return that makes people indifferent towards keeping bond or excess money.

The government is concerned about paying high interest on its borrowings and crowding out in the market given high budget deficits. To elude borrowing huge sums from the market, the government could increase tax revenues. Despite that, the government chose to borrow from the international capital market. Even though, rates are minimal, these have smaller maturity and the continuance of the country’s outstanding external debt to move to a less ideal location.

To identify the price-level, the factors that matter are not the non-interest bearing money but the aggregate nominal liabilities that is comprises with bearing notes and future fiscal surpluses based on the fiscal theory of price level. Without this policy discipline, there is no assurance that the BSP can maintain a stable nominal anchor. It basically means that a trustworthy commitment on the part of the National Government is needed to successfully emphasize on price stability to reduce aggregate fiscal deficits by a large portion.

The Evolution of the Philippine Monetary Policy Essay

Any Kind Checks Cashed, Inc. v. Talcott Essay

Any Kind Checks Cashed, Inc. v. Talcott Essay.

According to the UCC, a holder in due course is a holder who takes an instrument for value in good faith and devoid of notice of assured claims, as well as defenses on the instrument. It is imperative in the case of ‘Any Kind Checks Cashed, Inc. v. Talcott’ to determine if the holder of the instrument acted in good faith, in fair dealing as is compulsory in order to be considered the holder in due course. According to the Commercial Law Article 3-103 (a) (4); good faith refers to sincerity or honesty in fact and the adherence to logical commercial standards of fair dealing (Twomey, D.

, & Jennings, M.).

Apart from this, the court upholds the trial court finding that Any Kind did not act in good faith when cashing a check for $10,000. However, Any Kind had been in good faith in later on cashing one more check for $5,700. I agree that ‘Talcott’ was responsible for the $5,700 even despite the fact that he was illegally persuaded to issue a check (Legale .

com).

The procedures in place at Any Kind Checks Cashed, Inc.states that a supervisor that has the power as well as authority to approve checks over $2,000. However, the supervisor should have been more cautious due to the unusual amount of the check of $10,00.00. When the second check of $5,700.00 was presented the check cashing company had been in contact with Talcott getting his verbal approval for cashing a check. As a result, Any Kind Check Cashed Inc. satisfied the good faith prerequisites for a holder in due course. In reviewing if, the tellers actions where in accordance with good faith and acted reasonable within the commercial standards for accepting and processing the check. The fact is that the clerk did take action and question the intent of the check of $10,000.00 by calling the maker of the check Mr. Talcott, but was not able to reach him.

As a result of not reaching Mr. Talcott the, the supervisor relied on her judgment and experience to make her decision to cash the check. Using her judgment coupled with appeared to be evidence the FedEx envelope showing that the FedEx was sent from Mr. Talcott the supervisor was acting in good faith but not in accordance with a the reasonable commercial code. There should have been some level of suspicion that someone would pay a 500.00 fee to cash a check and not go to his or her bank and collect the full amount of the 10,000.00. To a reasonable person this type of behaviour may raise a red flag as to the desperation of the person (payee) to cash such a large check.

The check cashing store should have verified with the issuing bank to ensure that there was enough monies in the account to cover the check and verify that the check is good (no stop payment was issued). When Mr. Guarino presented a second check to the check cashing store for $5,700.00, the store reached out and spoke with Mr. Talcott asking him to verify the check for $5,700.00, which he verified. The check cashing store never mentioned the first check of $10,000.00. Perhaps they presumed that since Mr, Talcott approved the second check that and never said anything about the first one being of issue it may have seemed as a nonissue. If Any Kind processed the $10,000 check with proper caution and procedures beyond making a phone call and not getting an answer from the maker of the check.

Any Kind should have contacted the bank the check was drawn on to verify that there was no issue with the check and not rely on experience and a FedEx cover. In order to ensure that they and preserved their status of the holder in due course status. The courts determined that Any Kind was not the holder in due course due to the manner in which they did not ensure that the check was valid before cashing and processing it. I agree with the court’s decision in finding that Any Kind is not the HDC for the $10,000.00 since they were really negligent in the handling and processing of the check. I agree, with the court’s ruling in favour that Any Kind is the HDC for the $5,700.0. Since ‘Any Kind’handled the process in good faith and within accordance with reasonable commercial standards according to the UCC 3-419[3] (Legale .com).

References

Cornell Law: Uniform Commercial Code. Retrieved Dec 30, 2014.
http://www.law.cornell.edu/ucc/3/3-419
“Federal Reserve Bank: Regulation and compliance guide.” Federalreserve.gov. Retrieved Dec. 28, 2014. http://www.federalreserve.gov/bankinforeg/reglisting.htm
ANY KIND CHECKS CASHED, INC. v. TALCOTT | Leagle.com. (n.d.). Retrieved from http://www.leagle.com/decision/2002990830So2d160_1973.xml_br Twomey, D., & Jennings, M. (2014). Kinds of Instruments, Parties, and Negotiability. Business Law: Principles For Today’s Commercial Environment (4th edition ed., pp. 567- 568). Mason: Cengage learning.

Any Kind Checks Cashed, Inc. v. Talcott Essay

5 steps to the Adjudication Process Essay

5 steps to the Adjudication Process Essay.

The purpose of adjudication is to resolve disputes so that you don’t have to have an expensive and long process in court. It is a process of the examination of claims and determining the outcome of these claim benefits. When the claim is filed and received goes through a 5 stage process to determine how the claim should be paid, (1) initial processing, (2) automated review, (3) manual review, (4) determination, and (5) payment. The purpose of this flow chart is to show you the steps you must take and explain the process of each step and what the purpose is for.

5 STEPS OF THE ADJUDICATION PROCESS

START

PAYERS FIRST PERFORM INITIAL PROCESSING CHECKS ON CLAIMS, REJECTING THOSE WITH MISSING OR CLEARLY INCORRECT INFORMATION: This will determine if reimbursed each insurer has their own way of claim approval but the process is basically the same.

CLAIMS ARE PROCESSED THROUGH THE PAYER’S AUTOMATED MEDICAL EDITS: Once claim is received it has to go through a comprehensive review that is performed by a computer software program that is designed to find errors or discrepancies on the claim form by scanning each claim to make sure information is correct and all necessary information is present on the claim and it conforms to the insurer’s policies.

This is called editing and any errors found can cause the healthcare provider not to be reimbursed by the insurer.

A MANUAL REVIEW IS DONE IF REQUIRED: This process is done only if the claim fails it can be denied or sent to an insurance examiner for review this is done manually.

THE PAYER MAKES A DETERMINATION OF WHETHER TO PAY, DENY, OR REDUCE THE CLAIM: After the completion of the adjudication process the insurance company sends a letter to the one who filed the claim detailing the outcome of their claim. This is called a remittance advice that includes the statement of whether or not the claim was denied or approved. If denied, the insurer has to send an explanation of the reason why it was denied it is a regional law for them to do so. An explanation of benefits that includes detailed information of each service that was settled that is mentioned in the claim.

PAYMENT IS SENT WITH A REMITTANCE ADVICE/EXPLANATION OF BENEFITS (RA/EOB): As a result to the adjudication, the insurance company may only pay half and by law they are required to send an explanation of the reason why they are only making a partial payment, explanation on benefits, detailed information of how each service was settled and the payments will be sent out by the insurance company to the providers or their billing service if claims are approved.

FINISH

Provide a one-sentence summary describing how claims adjudication is important to the medical billing process.

The claims adjudication process is important to the medical billing process because once a claim goes through the adjudication process and it is completed the insurance company sends the remittance letter and explanation of benefits with detailed information about how each service that is mentionioned in the claim was settled and then that is when the medical billing process will know what to do whther send payments out or not and this process is called Medical Billing Advocacy.

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5 steps to the Adjudication Process Essay

The Farmers’ Grievances Essay

The Farmers’ Grievances Essay.

It is historian John D. Hicks’ thesis that the Southern and Western farmers suffered greatly in the new industrial system and blamed their suffering on the railroads, the trusts and low prices, the money-lenders and the bankers, and the money and banking system.

Western farmers blamed many of their troubles upon the railroads, which sent all western crops to the markets. The farmers had no choice but to use these roads. The railroads naturally exacted high rates. The local freight rates were particularly higher than the long distance rates.

Railroads, fortified by monopoly and supported by politics, were accused of controlling freight and fares at their own pleasure to the oppression of the farmer according to the principle, “take as much out of the pockets of the farmers as we can without taking it all”. It was believed that the practice of stock-watering had much to do with the high rates. The capitalization of railways was 3 to 4 times higher than the normal rate.

The farmers also believed that the railroads were stealing their priceless heritage of free lands.

Farmers saw that low prices led to their lack of prosperity and that trusts joined with railroads and politicians to pick people’s pockets. Prices dropped in certain sections of the country and later proved that farming was carried at an actual loss because it was over the cost of production. A western farmer had to sell his corn for eight to ten cents a bushel when the eastern broker demanded more than a dollar for it. Trusts dominated the market by buying raw material at their own price, then selling the finished product at any price they wanted. Trusts furnished the farmer with clothing, with the machines he had to use, with the fuel he had to burn, with the materials for living.

Money-lenders and bankers increased the farmers’ burden with debts, high interest rates, and taxation. The widespread dependence upon the crop-lien system increased the burden of debt for farmers. They believed that the eastern capitalists were conspiring against them. Interest rates, already high, rose still higher. The western farmer was mortgaged literally for all he was worth and his fruits of labor. Taxation was inevitable for the farmers because of the land they couldn’t hide. Farmers represented one-fourth of the nation’s wealth but paid three-fourths of the taxes unlike the railroads who refused to pay taxes. The farmer was convinced that he was the helpless victim of unfair, unreasonable, ad discriminatory taxation. The local farmer was getting poorer and poorer every year.

Finally, the farmers believed that their chief grievance was against the system of money and banking. The value of the dollar was greater than it once had been. It would buy two bushels of grain where formerly it would but only one. The overproduction theory, low prices of goods and high interest rates added together with the commissions, debts and mortgages made the rising value of the dollar a serious matter for the farmers. By 1879, the greenback currency reached a full value with gold. This allowed the money-lenders and bankers to prosper while agriculture languished.

The Farmers’ Grievances Essay

Major causes of inflation in Zimbabwe Essay

Major causes of inflation in Zimbabwe Essay.

Introduction

Inflation can be described as a tendency for the general price level to increase over a given time [http://www.ntsearch.com/search.php?q=time&%3Bv=56] period. It can also be viewed as a case where too much money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] is chasing few goods. Inflation is usually measured by the Consumer Price Index (CPI) where a representative basket of consumer goods is analysed for changes in the price level over a defined time [http://www.

ntsearch.com/search.php?q=time&%3Bv=56] frame.

Generally, inflation results from demand pull, cost push and imported inflation. Demand pull arises due to supply side bottlenecks which will be outweighed by increased demand. Cost push inflation results when manufacturers and producers of goods and services pass the increases in the costs of production to their customers and this is reflected in the price increases. Imported inflation results from increased costs in the acquisition of forex and this will be passed to the customers as higher price.

Causes of Inflation in Zimbabwe since 1999

Rise in the international oil prices

The rise in the oil prices led to general increase in prices of most commodities [http://www.ntsearch.com/search.php?q=commodities&%3Bv=56] in the country as fuel is a major input in most manufacturing and transportation sectors. The rise in the oil prices occurred in the third and fourth quarter of 1999. Zimbabwe does produce oil, so it depended on imports, so an increase in the price on the international market as result of OPEC cartel agreements, will drastically increase prices of most goods and this is a classic example of imported inflation.

Fiscal deficits

Budget deficits have been increasing more rapidly since 1997 after payment of the war-veterans gratuities which were not budgeted for in the national budget. This was followed by the entry into the DRC war which was estimated to cost billions of dollars for the two year stay. The effect of high budget deficits as well as fiscal expansion resulted in debt-trap because of higher interest payments. This could lead to printing [http://www.ntsearch.com/search.php?q=printing&%3Bv=56] of money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] to finance [http://www.ntsearch.com/search.php?q=finance&%3Bv=56] some of these activities and results in inflationary environment.

Rapid Money [http://www.ntsearch.com/search.php?q=Money&%3Bv=56] supply growth

According to Milton Friedman “inflation is always and everywhere a monetary phenomenon”. The quantity theory of money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] (MV=PT) leads us to agree that the growth in the quantity of money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] is the primary determinant of the inflation rate since V(velocity of money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] circulation) and T (the number of transactions within an economy) are assumed to be constant. This view implies that periods of high money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] growth tends to have higher inflation rates. Increase in the money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] supply was experienced by the involvement in the DRC war as well as the high budget deficits which are now in excess of 10% of GDP.

Property [http://www.ntsearch.com/search.php?q=Property&%3Bv=56] Price Bubble

Zimbabweans in the diaspora were investing [http://www.ntsearch.com/search.php?q=investing&%3Bv=56] in property [http://www.ntsearch.com/search.php?q=property&%3Bv=56] such as houses [http://www.ntsearch.com/search.php?q=houses&%3Bv=56] and given the fact that there are more than 2million Zimbabweans living outside the country this created to much demand and forced the prices up. From 2001 banks [http://www.ntsearch.com/search.php?q=banks&%3Bv=56] also started investing [http://www.ntsearch.com/search.php?q=investing&%3Bv=56] in property [http://www.ntsearch.com/search.php?q=property&%3Bv=56] as a way of hedging against inflation as well as for speculative reasons and this further fuelled property [http://www.ntsearch.com/search.php?q=property&%3Bv=56] prices.

The acquisition of property [http://www.ntsearch.com/search.php?q=property&%3Bv=56] led to liquidity problems for most the banks [http://www.ntsearch.com/search.php?q=banks&%3Bv=56] as their money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] was tied up in assets which are proving difficult to off-load quickly. People [http://www.ntsearch.com/search.php?q=People&%3Bv=56] who had properties were encouraged to spend more as they were observing their assets appreciate in value thus creating an additional aggregate demand within an economy, this has an inflationary tendency.

Land Reforms

The implementation of the land reforms or farm invasions in 1999 resulted in supply-side bottlenecks in terms of output produced. Output was low due to the disturbances in the farming sector and this was further worsened by uncertainty in relation to land-ownership rights. The uncertainty led to reduced farming activity as this led to reduced agricultural output. Demand for food [http://www.ntsearch.com/search.php?q=food&%3Bv=56] outweighed supply and this resulted in shortages and the birth of parallel market which translated to higher prices thus contributing to inflation levels. Land reforms also initially disturbed other cash crops such as tobacco which is the major export earner for the country.

Drought

This is also another supply-side constraint that was experienced in 2001-2002 agricultural seasons. The droughts resulted in low harvests and the supply of food [http://www.ntsearch.com/search.php?q=food&%3Bv=56] was low and this forced people [http://www.ntsearch.com/search.php?q=people&%3Bv=56] to compete for the available food [http://www.ntsearch.com/search.php?q=food&%3Bv=56]. The effect was the mushrooming of the parallel market which led to higher prices for food [http://www.ntsearch.com/search.php?q=food&%3Bv=56] related commodities [http://www.ntsearch.com/search.php?q=commodities&%3Bv=56].

Monetary Policy

The monetary policy for 1999 and 2001 advocated for cheaper money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] with the main aim being of assisting exporters as well as other productive sectors within the economy such as construction [http://www.ntsearch.com/search.php?q=construction&%3Bv=56] and mining. This resulted in a negative real interest rate and this encouraged most firms and households to borrow very cheaply. However, this facility was abused as individuals also borrowed for consumption purposes and to some extent for speculative purposes. When interest rates are lower individuals have a tendency of consuming more and this results in the increased demand for food [http://www.ntsearch.com/search.php?q=food&%3Bv=56] and other durable goods, and prices are likely to go up in such a case.

Wage to Wage spiral

This refers to case where one sector in the economy awards wage increments that are higher than the others, and this to other sectors demanding such an increment as well. However, the problem arises when the wage increments in all the sectors of the economy are not match [http://begin2search.com/cgi-bin//ezlclk.fcgi?id=12]ed by productivity as this tends to increase the aggregate demand which is not in line with the aggregate supply of goods and services within that economy. The mismatch of aggregate demand and aggregate supply in this case leads to shortages thus inflation. This is the case because increased wages (increases disposable income) are met with either a stagnant or even falling output.

Trade Unions

This is linked to the wage to wage spiral. In this case labour unions (ZCTU) became powerful in 1999 which resulted in the formation of MDC. They advocated for wage increases that were not matched with productivity but linked to the rate of inflation. The effect is the same as in the above explanation.

Policy Recommendations to curb inflation

Fiscal discipline

The most cited case in the Zimbabwean scenario is the payment of gratuity to the war veterans as well as the involvement in the war in the DRC which was financed to the tune of over US$30million per month for most for almost 2 years. The use of unbudgeted expenditure by governments has fuelled the inflation rate as well as increasing budget deficits. Government [http://www.ntsearch.com/search.php?q=Government&%3Bv=56] should desist from spending unbudgeted resources so as to instil financial discipline. The reduction of cabinet ministers as well as ministries will go a long time [http://www.ntsearch.com/search.php?q=time&%3Bv=56] in reducing budget deficits.

Privatisation of parastatals – could save the fiscus a reasonable amount by either commercialisation or privatisation of loss making parastatals like ZESA. The money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] raised could be channelled to the productive manufacturing and service industries. The success story of privatisation has been the commercialisation of NetOne though a lot could be done to improve the service.

Exchange Rate stabilisation and Export incentives

Exchange stabilisation – the abolishment of the 25% of export revenue surrendered at ZW$824 to US$1 will encourage exporters to continue in the export industry. If all the forex is changed at the auction [http://www.ntsearch.com/search.php?q=auction&%3Bv=56] rate, foreign exchange will be stabilised to some extent as compared to the current situation.

Export Incentives – this can take the form of “tax holidays” for Foreign direct investment [http://www.ntsearch.com/search.php?q=investment&%3Bv=56] (FDI) which will revive our export potential. Exports might be increased and this will result in more forex and this can be used to support other imports. Increased export earnings results in the appreciation of the Zimbabwean dollar and the extent of imported inflation is reduced. For local exporting companies the provision of concessionary interest rates might be of help if the facility is not abused. This kind of measure will reduce the burden of interest payment obligations and this will lead to the improvement in export earnings in the long run.

Curbing money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] supply growth

Money [http://www.ntsearch.com/search.php?q=Money&%3Bv=56] supply growth can be curbed by increasing the interest rates and this also calls for the abolishment of the concessional lending rates of 30% to the productive sector. High interest rates discourages speculative borrowing and consumption borrowing and this reduces the money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] supply growth.

Increasing the statutory reserve ratios for the banking institutions will assist in curbing money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] supply growth. An increase in the reserve ration reduces the amount of money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] the banks [http://www.ntsearch.com/search.php?q=banks&%3Bv=56] could lend. This also reduces the money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] multiplier hence money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] creation by the banks [http://www.ntsearch.com/search.php?q=banks&%3Bv=56] is limited hence money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] supply reduced. The reduction in money [http://www.ntsearch.com/search.php?q=money&%3Bv=56] supply will lead to a fall in the prices of goods and services according to the quantity theory of money [http://www.ntsearch.com/search.php?q=money&%3Bv=56].

Structured land redistribution

Land redistributions should be done gradually so as not to drastically change the agricultural output. The process should be stopped and an evaluation and audit done so as to ascertain the number of takers as well as utilisation capacity. If this is not done planning in terms of expected hectarage and output will be biased and shortages will continue to prevail.

External relations

The view that Zimbabwe can do without international agencies (such as IMF/World Bank) is not very valid since Zimbabwe rely on single [http://www.ntsearch.com/search.php?q=single&%3Bv=56] product namely tobacco and to some extent mining sector for the export earnings. This is insufficient given the imported raw materials needed for its manufacturing sector; hence, donor support is needed to improve the balance of payment situation. External support will assist the government [http://www.ntsearch.com/search.php?q=government&%3Bv=56] in reducing its budget deficits as there is no pressure to borrow from the domestic market. If external relations are improved then other foreign owned firms would now find it favourable to invest.

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