Are Our Foreign Reserves Under Threat?

Submitted by People’s Democratic Congress (PDC)

Central Bank of Barbados

In Barbados, there are many economic myths that are peddled by the likes of DLP and BLP spokespersons on so-called economic affairs of the country.

One such set of myths is their stating that whenever many individuals, households, firms and other entities in Barbados go and purchase goods and services on cash/debit terms from stores/bonds, or go and purchase goods and services on credit terms/less the full amounts, or hire purchase/lay a way merchandise less the full amounts from the same stores/bonds – in those latter cases with the full amounts to be paid in various sums over various periods of time – THESE INDIVIDUALS AND THE OTHER INDIVIDUALS ON THE BEHALF OF THE OTHER ENTITIES REALLY GO AND DO SO WITH MONEY, DEBITS, CHEQUES, ETC.

Truth is that long time ago we in the PDC used to think so too. But through serious critical thinking, deep philosophical searches, powerful synthesizations and divine guidance we have been able to successfully evolve from believing in those and other types of Westernist influenced myths.

In these regards, we are strong believers in the philosophy that once we the members of the PDC could have made such behavioural changes, so could many others make them too.

So, with regard to these myths and misconceptions – where it has been necessary too – we have come up with many modernized concepts, theories and building blocks to somewhat describe and explain some of those same political economy and service industry sectoral circumstances over which some of these so-called economists have used those kinds of myths and misconceptions to really help prevent many countrymen and women from knowing as much as possible about the false and putrid ideologies, philosophies, psychologies and political policies behind such circumstances, the unsavoury and deplorable agencies and instruments behind their constituent production, distribution and financial processes, their contrived manufactured results, and the entire social and human settings within which they have been happening.

Thus, in cases where many people continue to falsely misthink that we – persons, households, businesses and other entities in Barbados – are actually paying for goods and services, let us in this PDC “party” for the umpteenth time state most categorically, and with the support of the relevant facts/estimations, that we are in fact paying for the USE of the Barbadian people’s money.

Furthermore, it is outrageously BAD that we are paying for the use of OUR OWN money – money which has already been bought by us to be used as primarily a medium of exchange in the commercial business and financial arenas of the country. And what is egregiously WORSE is that we have been and are still being forced to pay for the use of OUR OWN money by some damned robotic gatekeepers and guardians of those Barbadian political governmental regulation and socialization institutions and processes that have long set such false doctrines in motion.

The fact is that we have already paid for each Barbados note or coin that was made overseas and that is in circulation in this country – by sending to the makers of such monies the appropriate amounts of foreign exchange derived from the production, distribution and financial processes in the country.

But, the established fundamental principle has been that, in this country, where any persons/entities would have become owners of ownable properties, that they must NEVER after becoming owners of such begin or continue to pay for them, or begin or continue to be charged by anyone for owning or even using them – and, yes, even though such a principle has been severely breached in many ways for a long time by esp. the government of Barbados.

Hence, any practice or process that has in any way violated that very axiomatic principle must be regarded with total contempt and derision for having trampled on the property rights of the owners, and must thereafter also be visited with efforts by the relevant people to seriously overturn it.

Therefore, all the people in Barbados that are still forced to pay for the use of such monies in the political economy and services industry sectors of the country, and that continue to do so against their own fundamental freedoms, interests and aspirations must get up and suppress this wicked heinous practice. For, greater freedom and relief from this brutish cost of use of money dispensation must be part and parcel of the essentialist logic that is helping to drive us along this current ideological philosophical trajectory that will itself help bring us to that point where we will become liberated from such foolishness.

So, here is it that nearly 275 000 Barbadians are the owners of this Barbados money yet at this stage we are being forced to pay 83% out of every dollar worth of income, payments and transfers that we own for the use of our own dollars in every dollar denominated transactions in this island. What a sick tragedy!!!

These are the types of facts – and many more too – that we strongly believe must be ever so often made known to virtually every adult person in Barbados, for them to evaluate and assimilate, and to use as intellectual bases for taking the necessary and appropriate political/electoral action against these very destructive myths and the institutions and processes that use them to assist in the bringing about the greatest harm and distress possible to the broad masses and middle classes of people of this country.

Moreover, this very scandalously high cost of use of money dispensation has at long last been starting to have serious and profound implications for social harmony and development in this country. On its own intensification and expansion, it has also been having very serious bearings too on the maintenance of many treasured cultural traditions in this country, as well as it has been having very gross repercussions on the cost of maintaining and preserving the family, the school, the church, historical relics, symbols and practices and such like. So, check how household poverty has gone up in Barbados again? Check how the standard of living has dropped significantly in Barbados?? Check the UN Development Index for Barbados’ rank at this stage? Check how certain owners of buildings of historical and architectural interest have been bemoaning the higher maintenance costs of them?

But such circumstances are far from the end of such trials and tribulations for the broad masses and middle classes of people of this country, as they are not only being forced to pay extravagantly high amounts of their incomes, payments and transfers to simply use the Barbadian people’s money in Barbados, but they are also being vice gripped by having  to pay a significant amount to merely use foreign currency in Barbados.

So, whereas there is no cost to be incurred to the incomes, payments and transfers of persons, businesses and others in this island when the governments of countries from time to time go and create more of their own currencies ( because it is the people of these countries that have these currencies that are the ones to do so), it has become the case still that in esp. some sectors of the service industry sectors of the country – Tourism, International Business and Financial Services Sector, the Data processing sub-sector – Barbadians and visitors are paying more and more for the cost of use of some international currencies, esp. the US dollar.

Thus, the latter is in definite and stark contraposition to the myth that Barbadians and visitors are also PAYING for goods and services in US dollar denominated transactions. This is another disgraceful myth that is peddled by those old fashioned unthinking DLP/BLP affiliated and other so-called economists, when, in truth and in fact, such transactions whenever they take place, demonstrate that such persons, businesses and entities are paying for the use of the US dollar in Barbados.

Anyhow, the nominal costs of our using, say, the US dollar in Barbados, in Barbados domestic terms, will not be arrived at without including in them any conversion costs associated with the official exchange rate parity, 1 US = 2 BDS. Hence, two dollars worth of each persons’ business’s or any other entity’s income, payment or transfer, whenever many individuals go and use the US dollar in Barbados in US denominated business transactions.

Still, however, it has to be said that it is inconceivable impossible for the PDC to measure in US dollars, and in US domestic terms, the cost of using the US dollar in Barbados. This is so because the Barbados political economy and service industry sectors are separate and distinct from the US political economy and service industry sectors, and because the Barbados dollar is not tradable in the US. So we will not pronounce on the cost of use of the US dollar in Barbados from a US standpoint.

However, quite normally visitors and other foreign based persons spending US dollars in Barbados are bound to be adversely affected by the extant cost of using US dollars in Barbados.

Very importantly, therefore, the PDC has recently estimated that the real actual cost of Barbadians and visitors alike having, in Barbados, used the US dollar (in the first half of 2010) for purposes of doing local business/trade was 43% (in the said first half of 2010) of whatever parts of their incomes, payments or transfers that were normally spent. So, persons in those sectors – Travel and Tourism Sector, International Business and Financial Sector, the Data processing sub-sector, etc. – that used the US dollar, in 2010, would have found out that automatically when they went and used US dollars here in Barbados then in transacting real business activity, that the real actual cost of doing so was indeed significant (must be higher now though in 2012); and that therefore the level of cost of use of the US dollar in Barbados then had substantially had to do with the relatively small amount of US Dollars in the financial system of Barbados at that given point in time ( were the amount far greater, cost would have been more) this 2010 amount of US dollars in financial system here in Barbados was contrary to what the Central Bank of Barbados wanted many persons to uncritically foolishly believe that at the time the Barbados Government HAD BDS $ 1.5 Billion in foreign reserves).

So, the real reasons why this main foreign exchange earning sector – the Tourism sector – is becoming increasingly in shambles and reeling from gross mismanagement and neglect, and also is feeling the very cumulative adverse effects of all those totally unwise and unsophisticated government fiscal and monetary policies over the years and the very destructive effects of all those inane and devious financial policies of financial institutions for a very long time, have been and are precisely to do with the increasing cost of use of US dollars in Barbados, the increasing cost of use of Barbados dollars in Barbados, the taxation, interest rate and money lending policies of the government and the private sectors.

Therefore, it must be clear to many persons that the very overall sad state of tourism in this country has had little to do with any exogenous effects like the APD, layoffs in the US, UK, Europe, etc, the rising costs of living in these regions and the income and debt crises in these parts.

Finally, with the real actual cost of use of money exploding to an estimated 83% in Barbados, and the real actual cost of using the US dollar rumbling towards 50%, it brings into sharp consideration the state of international reserves of Barbados. As the cost of use of money theory will obviously tell us, with the cost of use of both local dollars and US dollars continuing to rise in Barbados the local activity that is needed to generate greater foreign exchange for the country will become progressively less and less and therefore the foreign exchange earning potential will also lessen tremendously and thus the state of the net foreign reserves will also wither substantially. So, sometime in 2010, the government of this country had only about three weeks realistic import cover of foreign reserves. What about now when there is this very earnest bid at this stage to get the funds from the IADB, while, too, some political zealots focus childishly on seeking to electorally destroy the Prime Minister of Barbados??

  • St George's Dragon

    The price of freedom of religion, or of speech, or of the press, is that we must put up with a good deal of rubbish.
    Robert Jackson

    Like

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