Clyde Mascoll’s Insight to the Barbados Economy
History will first remember Dr. Clyde Mascoll as an aspiring politician who misread the tea leaves when he failed to accept the return of the late David Thompson to lead the party. Then only will his study of economics and other academic achievements be referenced. BU however will always define Mascoll as the quintessential economist. Few if any of his profession understand the numbers behind the Barbados economy the way he does. His many years spent at the Central Bank has prepared him for the role as chief spokesman on the economy.
BU recommends Mascoll’s recent column reproduced from the Nation newspaper.
WHAT MATTERS MOST: Double worry over debt
The doubling of Barbados’ national debt over the last seven years has not been in response to the kind of financial crises that characterised several European countries in the recent past.
In fact, the Barbados debt crisis was about consumption, not investment, and is now revealing that it is a threat to the non-private financial sector that is predominantly made up of the Central Bank of Barbados and the National Insurance Scheme (NIS) to a lesser extent.
The threat is very much related to their holding of debt to accommodate excessive Government spending and further its need for compulsive purchasers of Government paper.
As far back as September 29, 2011, the Central Bank admitted that “. . . banks have expressed little appetite for further investment in Government long-term securities”.
The thinking behind such a sentiment is that the banks are uncertain about the long-term viability of the economy and so they prefer to invest over the short term.
Since this period, the Central Bank has been forced to increase its stock of Government debt from $223.7 million to $610 million as at December 2014. Yet the governor of the Central Bank, while admitting that the bank has made losses, continues to deny that it is printing money.
Where would the bank have found almost $400 million to invest in Government paper in the last three years when the bank is making losses?
The money printed to purchase the Government securities has nothing to do with the overdraft facility of the Government at the bank which is determined by an act of Parliament.
There is an established limit of ten per cent of estimated annual revenue for the overdraft facility, which is also known as temporary advances, that go through the Central Bank’s ways and means accounts. It must be easy to see the three different ways in which the printing of money can be addressed in the previous sentence – overdraft facility, temporary advances, and ways and means accounts.
Fiscal crisis
In essence, the language can be used to mask the printing of money. But a rose by any other name is still a rose.
At the same time in 2011, the board was invited “to approve a temporary increase in the limit of primary issues [Government treasury bills] held by the bank from $120 million to $250.0 million until March 31, 2012”.
The invitation was for a temporary increase. However the holding of treasury bills was $418.5 million at the end of last year, while the holding of debentures was $191.6 million for the same period. The latter was kept at $75 million for the period 2009 to 2013.
Time has shown that the Central Bank has become a casualty of the Government’s fiscal crisis. When the NATION reporter published that several workers would be set home from the bank in the near future as part of a restructuring, the response of the governor was to stop the representatives from the NATION from attending the Press conferences. Soon after, a decision was taken to abandon the Press conference altogether. But time is longer than twine.
In recent weeks, the same governor has admitted that several workers will in fact be going home in 2015. What is remarkable about the bank’s current circumstances is that in all previous economic recessions in Barbados, the bank made healthy profits. Between 1981 and 1982, the profit was $20.6 million. Between 1990 and 1992, it was $45.6 million. In contrast, since 2009 inclusive of 2014, the bank has made one small profit in 2010.
In the previous recessions, interest rate policy was used to help dampen consumption, as opposed to excessive taxation that has been the policy variable of choice since 2008.
While there is an argument that could have been made for holding local interest rates low in the face of what transpired in the international environment since 2008, the incidence of the excessive taxation and its implications for economic growth would have merited some alternative consideration. For sure, the decision to suppress domestic rates was taken purely to protect the cost of borrowing to the Government.
In the circumstances, the NIS income was also impacted as it was forced to hold Government debt.
In 2011, the bank also noted “the NIS’ inability to sustain financing at the 2010-11 levels because of off-budget pressures”. It is also known that the NIS has historically provided the most funding in the first quarter, primarily in relation to Government’s need to cover supplementaries. The tangled web continues.
Barbados Underground 
No big mystery about the Barbados economy David, that requires pundits and pseudo-experts. No family, business or country can continue to spend more than they earn, plain and simple.
No need for big-words and economic theories, we simply need to produce and sell more internationally to earn more FX than we use for imports, and for that we need entrepreneurs non economist who after all the talk NEVER create a single job or business.
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Nothing good about that name in the government , no better th
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a lot of hot air and bloated intervention ..that, all
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BU is interested in Mascoll’s intervention as it relates to the role of Central Bank printing money which is not supported by the international lending agencies but the Governor is supported of the policy. Lastly the impact of senior Central Bankers leaving the organization, continuing losses and the extent this may impair quality of decision making.
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the outstanding bills with bloating interest rates had to be paid along with other financial/ economical /social/ giving way for good reason (as)to seeking remedy and keeping the country running,
Until mascoll and all the other economist who see no hope but everlasting failures for the country.s future while having no viable solution or alternatives
There words would been seen an melancholy! melodramatic! like the haunting sounds of the wood dove ,
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@Artax and others minded about the economy
How has the Governor’s difference on printing money impacted current policy. Are we seeing confidence in the private sector returning i.e. BCCI etc?
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Another issue touched on by Mascoll, what about lack of confidence by ordinary Bajans by not buying government securities/bonds? BU believes this is the biggest indication of Bajans frustration.Never in all our years have Bajans not want to by government bonds.
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@ David
Bajeabroad is right.
The REAL issue here is not Dr. Mallet correctly complaining about spending more than we earn, it is about how we can have so many OTHER JACKASSES who seem incapable of understanding what most simple householders know….
Only spend what you earn….or your ass will belong to someone else…
One DOES NOT need a doctorate or a weekly column to know that simple fact.
It is now clear to all that Stuart is a total fart and it has been clear for a while now that the Governor of the Central Bank is an idiot….. when he made that speech about the Bds/US $ currency exchange rate Bushie was ashamed…… and he did it with a straight face too…
He needs to RETIRE and go play with his cars…..or whatever.
Clearly, NONE of the other parliamentarians get this point about spending either, so here is the question…
HOW THE HELL, AFTER SPENDING SO MUCH MONEY ON EDUCATION, CAN WE HAVE REACHED SUCH A LOW POINT THAT A MAN EXTOLLING THE VIRTUE OF LIVING WITHIN OUR MEANS CAN BE A MESSIAH….?
…some shiite is wrong with Bajans.
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@Bushie
Didn’t ordinary households in the not too distant past take on debt to support personal development?
The gist of Mascoll ‘s column is the questionable tactics of the Governor and MoF.
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@ Prodigal Son:
It seems a lot of BU’s cognoscenti are now getting around to what we knew all along.
Check out Bush Tea’s perspicacious remark:
“It is now clear to all that Stuart is a total fart and it has been clear for a while now that the Governor of the Central Bank is an idiot….. when he made that speech about the Bds/US $ currency exchange rate Bushie was ashamed…… and he did it with a straight face too…
He needs to RETIRE and go play with his cars…..or whatever.”
One wonders how much in addition to the $300 million in foreign reserves have gone missing since that garden gnome has been in charge of the country’s monetary affairs.
How can Bajans continue with this incompetent lying shite government in place. It really boggles the mind.
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@ David
Yes, borrowing to promote development is an acceptable practice. Such borrowings have to be within one’s ability to repay; to be investments in future growth; and to be EXCLUSIVELY used for the developmental purposes intended.
Since the time of our great economist PM, we have been using such loans to support a champagne taste instead of funding national development. Arthur got away with it because at that time lenders were still reeling out the line…
This current set of idiots seem to have thought that that situation was an ongoing norm and that lenders would ALWAYS want to throw money at them…
The joke is that Arthur saw the problem back around 2004, when he made a big stink and one of his ‘national consultations’ about the need to cut back the deficit …. of course that was only talk.
While Bushie can understand why the politicians and their lackies would want to continue the shiite (since they have devised various methodologies of squeezing their back-hand cuts from these borrowed funds)
…WHY DOES ORDINARY “EDUCATED” BAJANS ACCEPT THIS…?
…don’t mind Mallet, he is only singing this tune now because he has switched sides, he sings in both shiite choirs – depending on what is in it for him….
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@Bush Tea
Let us agree Mascoll made some errors in political judgement, do not let it colour your judgement about his economic analysis.
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The same old same old talking points by bushsite offers no alternatives just a load of coated words that is worthy of rumshop talk.
The Fact is that any household finding itself in financial juggernauts with little or no room for fiscal “breathing room” seeks financial remedies as an”aid”not as a cure until their current circumstances can be dealt with within a climate that is advantageous and beneficial to seeking better resolve
The question/s which Mascoll and the Blp along wid the two faced brassbowl hypocrite professor Bushshite must answer and most likely is clueless
How does govt avoid using strigent/irregular measures with limited resources to tackle debt and keep govt running at operating cost
We all know how we arrived.However economic solutions cannot be answered through the lenses of political hogwash and soundbites
Have a nice day
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This always seems like a lose-lose situation. While the recent economic history has some importance in understanding present circumstances we can’t see how that paradigm could be the only or superior view. When are these people ever going to be able to see the future, a different future.
We are surprised that BU continues to be misguided by titles, degrees and honours. Certainly, it is highly possible to have a PhD and still not understand matters of more gravamen that the central national economy model.
David, we remain convinced that neither a mis-education nor one year’s experience 15 times over will be of any real help in understand or more importantly getting out of this mess.
None of these commentators ever makes contact with the deeper issues. In essence their thinking ends up relying of the actions of others, elsewhere. On a perverse arithmetic. But their analysis never says these things. Yet they continue to build their fanciful theoretical houses without foundations. And would ask you, David, to say how pretty they are.
This morning you have again obliged them!
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@Pacha
Academics have a role to play in any progressive society.
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millertheanunnaki January 23, 2015 at 8:26 AM #
@ Prodigal Son:
How can Bajans continue with this incompetent lying shite government in place. It really boggles the mind.
+++
I guess the same way populations of other countries support their incompetent, lying governments.
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@ David
Again you have made two (2) mistakes. We are not aware that Mascol is any academician. Secondly, have never found anything particularly progressive in the society about which you write. LOL
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And what are Mascoll’s solutions?
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@Pacha
Are you saying Mascoll is not an academic?
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@David
No, we’re saying we don’t know.
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David, David, David
That is the problem with Barbados today, we are so straight-jacketed to think within the confines of a text-book or printed theory only (my argument again for too many blasted precedent trained lawyers) that we just cannot use common-sense or simple reasoning when we do it with our own household management. We keep debating purely trivial side issues that make us look “bright” and “learned” while we remain stupid to the fact that with all these bright folks walking around with PHds even after 6 years we still can’t figure out how to create jobs, how to properly manage grass (sugar), how to be more creative with tourism? We simply have no creativity or the ability and confidence in ourselves to apply common sense solutions to fix our dilemma. I will NEVER enter a debate on economic theories because this is a BYPRODUCT of real activity and not a driver of real activity. We keep mixing up that fact. Name one economist, or central bank governor who is a real job creator. Just more puerile talk that amounts to absolutely nothing in the real economy, just occupies time on call-in shows, blogs and makes us feel big, learned and important. Mean after all this time David we still can’t see the facade.
I am waiting to debate and discuss real job creating issues. And to let you know I am serious I will start with one idea for debate. Where are global tourist going these days and why?
Our tourism product is stale because we are not ATTRACTION based only destination based, and that is not enough of a differentiator in this world today, it has become a commodity, so you have to offer more for the squeezed global middle-class to pay more money when choosing Barbados. We need to become ATTRACTION based as we offer too little by way of destination only. Disney World has no problem attracting visitors from as far as Australia (18 hr flight to Dallas and 2 hr flight after connection to Orlando). Why? Because it has world renowned ATTRACTIONS. Given our talent for entertainment and music…….we should be offering the BEST, CARIBBEAN brand entertainment shows many times weekly, involving, plays, music, dance, art, cuisine, craft, history. Not simply a music concert but co-ordinated ATTRACTIONS that showcase the best of Caribbean culture across various forms. So day 1 (idle Kensington oval), a tourist can experience the Caribbean in food at one venue, day 2 (idle gymnasium area) – experience the Caribbean in music, day 3 (museums, pelican village) the caribbean in art. Day 4 (holders hill) experience the best Caribbean plays, short-stories and interactive cultural activities etc….and this can be venues on the cruise ship itenary as well. We have to give the tourist some attraction to get them here, and get them out and SPENDING. This also creates/increases jobs in an area that we already have a strong talent base. (So please…don’t get UWI involve to do “research” here). My vision for Barbados is a place that I can experience the CARIBBEAN more so than any other destination via food, music, dance, art etc. I can also do the touristy things e.g mini-golf, bowling, go-karts, water sports, etc. (which we need more investment in as well)
Imagine if as part of our Caribbean showcase, we can actually give the tourist a better interpretation and experience of what Cuba is like, by working with actual Cubans to re-create the experience,….then who needs to go to Cuba when you can come to Barbados AND EXPERIENCE the Caribbean (man use the slogan if you want). Isn’t it funny that I can go to central florida where there is no snow nor beaches but DISNEY can make be forget that fact and convince me via the best beach recreations and alpine mountain re-creations? Works for the 30 million tourist that visit Orlando every year.
Man I gone…..back with another suggestion in 2 weeks and not just pure trivial talk that don’t deal with the real issue
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Just like their leaders, the D’s on here don’t have a clue on the country’s economy except to sit, wait, do nothing, and everything will be fine. There leaders certainly don’t help by looting the country’s coffers, or embarrassing the office they’ve been entrusted to uphold. Tell us D’s what would you do differently to get the country moving!
For the B’s I don’t see them coming forward with any answers either, are they waiting 3 more years as well. As for the independents have they offered up anything.
Someone put a step by step plan in front of us to debate on without slinging mud. I think @bajeabroad has started!
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@bajanabroad
Agree with some of what you stated but solution oriented approaches must not be done at the expense of al class of persons. We have a problem we have to solve today that requires our best brains to analyze and generate options, then we have other strategies as you have outlined we must pursue. We have to move forward together if not why educate our people?
On Friday, 23 January 2015, Barbados Underground wrote:
>
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You sure Bajeabroad, your suggestions sound good but are they new? Plantation floorshow aint shut down? What about all the local bands on the hotel and club circuit? What about the nightclubs?
My solution remains a cohesive caricom tourism product, but that requires proper inter island transportation…instead Gonsalves focusing on a big airport.
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As a simple experiment just keep track of all the Barbados dollars you spend in a week and then calculate where the items you spent it on came from. Hopefully you did not buy a new iPhone, tv, computer, car, clothes, shoes, medicine, gasoline, car parts or imported food. However I suspect that most of what you will spend will leave the country to pay for things. Multiply that by the number of inhabitants on the island and you will get some clue as to how much FX is drained weekly. Then ask yourself one question, “where we going to get the FX income to cover that amount because it is dam large number”. And if you can figure that out you should be the GOB.
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When all is said and done we have to agree the mental models we apply to solving todays problems may have become dated. The challenge is how do we jolt ourselves onto another track of thinking. The déjà vu feeling has reached suffocation level.
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@ David January 23, 2015 at 6:50 AM #
Another issue touched on by Mascoll, what about lack of confidence by ordinary Bajans by not buying government securities/bonds? BU believes this is the biggest indication of Bajans frustration.Never in all our years have Bajans not want to by government bonds……………………………………………………….
David,
I would say only the ac type dems have confidence in this government. I had some money invested in government bonds………….as soon as they matured, I took them to my bank and cashed them in! Not taking any chances with these morons.
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Our tourism was always linked to what we made and sold extra regionally.Sugar had dubbed Barbados to be the brightest jewel in the English crown,linked with its excellent quality.It gave Barbados an iconic status.Our tourism now is in reverse gear where we have nothing of high repute to offer on the world market to preserve that reputation.The best approach to rejuvenate tourism would be to attract interest to the island by the strong branding of our products sold overseas.I do not know why when we advertise our island we do not link it to our strong brands like in rum,beer and biscuits.It would create mindshare for our tourism industry and increase our foreign exchange earning capability through manufacturing.
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Basically, the economy is severely shafted, no end in sight and Government strategy, fiscal policy, taxation policy or any other policy, is helping.
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Errata, should read, and none of….. are helping.
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@David
“Let us agree Mascoll made some errors in political judgement, do not let it colour your judgement about his economic analysis.”
Clyde Mascoll’s role as a Nation newspaper columnist is 100% POLITICAL . Do not be fooled with the Bull Sh*t about economic analysis.
Case in point – When Mottley said that we should put a tax on people’s water bills to pay for garbage, Owen Arthur called it ABSURD. I waited to see if Mascoll’s had the balls to call a spade a spade in his weekly article and tell the public if he agreed with Arthur that Mottley was talking foolishness . That was a great opportunity to put economics above politics and show his intellectual independence, if he had any.
The coward Mascoll’s ran from that debate because he is a political spin doctor and an economist. He could not afford to call a spade a spade and offend his political masters.
He is no Wendell McClean.
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Anybody is better than Magoo and Stinkliar.
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The irony of BU posters overwhelming condemnation of Froon and the DLP while singing fulsome praises of Mia and the BLP is that if elections were called today the BLP would come second. The BLP would be the biggest loser.
Peter Wickham and George Belle the two self appointed top pollsters around are challenged to prove that postulation wrong. Both Wickham and Belle have been embarrassingly wrong on national election polls but they soldier on as if their reputations were not impacted by their polling debacles of 2013 and 2008.
The BLP backed by Wickham has the legalization of same sex marriages on its discussion agenda. That subject on its own would contribute to the defeat of Mia and her troops if elections were called. Like Mascoll the BLP has put forward no credible recommendations to turn the economy around and the people know that. Bajans are not stupid. The lack of fresh ideas is a hot button issue that will ensure the defeat of the BLP. The hate filled internal strife raging in the BLP will be another contributing factor to a BLP defeat.
The gauntlet is thrown down to Belle and Wickham to test the theories put forward.
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”Togetherness January 24, 2015 at 2:00 AM # ”
If election were called today BLP would be second? To who? PDC?
Where you living, under a rock?
And yes, we see you ‘jump’ on same sex marriages, you really think bajans give two wukups about same sex marriages when the dinner table empty?
Idiot.
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It is an irony that with the economy in the toilet we have those who are ready to defend the government’s stewardship based on non economic issues.
NCC workers
Other Public Sector Workers retrenched
Angry citizens still waiting forcrefunds
Business people and others affected by natural gas shortage
The parents of UwI, Cave Hill students
Others
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@ Enuff
Agree that many aspects of the idea are not new. What is new is the recognition and marketing of Barbados as the best way to experience the entire CARIBBEAN culture via co-ordinated displays of all the major and varied CARIBBEAN cultures using different forms e.g. music, food, dance, art etc. Every day DISNEY Magic Kingdom has a parade that highlights many cultural aspects, so we do not have to re-invent the wheel to offer a show or parade etc that reflect things like Trinidad Carnival, Jamaica’s reggae culture, Cuba’s latin culture etc. We are already good a putting on a parade at crop-over, so why limit this type of cultural display to one day only. We should recreate this cultural display and include other Caribbean aspects as well daily. This approach creates sustainable entertainment/cultural jobs and to the tourist you have now created an ATTRACTION that currently no other Caribbean destination offers. The activities and efforts are not random, but all part of the message that a trip to Barbados is a trip to the entire CARIBBEAN. And there is no limit to how creative you can be in developing the activities to highlight the varied cultures on one island. If we keep approaching tourism marketing based on Barbados as a destination only, we will continue to lose. We simply have to offer more compelling and achievable ATTRACTIONS
@Suckabubby
Agree that joint marketing of products and destination would spark some interest in our products and give manufactures more presence given stronger market awareness of the Barbados brand as opposed to the individual product brand. Linking the two would encourage a few curious persons to buy the product.
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How will Barbados do joint destination marketing when it is every turkey for his own craw?
Where is the functional cooperation? It does not exist.
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David,
I will map out the implementation plan in detailed steps shortly and we can all debate whether it is viable or not. Will detailed shortly
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@ Crusoe.
And yes, we see you ‘jump’ on same sex marriages, you really think bajans give two wukups about same sex marriages when the dinner table empty?
Crusoe you nincompoop yard fowl even your man Friday possess more smarts than you. Whose dinner tables empty? Have you seen the lines at restaurants, supermarket delis, fast food places , the street food vans and stalls? It seems people have loads of discretionary income. My wife cooks for my family we couldn’t afford be eat out every day and night as most people do judging from the lines at those places. Even the great economist Mascoll said its the spend at the street food outlets and fast foods that eating up the the GDP. You don’t remember him saying that do you?
That same sex marriage being pushed by the BLP and Wickham and raised in discussion by Abrahms will be a death knell for the Bees at any election. The British billionaires and celebrities who love Barbados don’t see the no hope dismal situation you and your ilk paint for this gem of an island.
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We don’t usually respond to partisan BS from commenters who think by changing their monikers it change the message. Those who listened to David Ellis’ 630 show last week heard Wayne Jackman discussing his feed the homeless program. Then there is the Salvation feed the hungry program as well that has been growing in numbers.Just two examples which tell a story.
January 21st – Wayne Jackman. About the Rt. Excellent Errol Barrow. Michael Carrington’s constituents.
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Ok FractureBLP………….now you been exposed….but it was no real expose’….We all togetherness know a barrel from a bob…
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@Togetherness.
Great, glad you want to discuss issues. Now that you have given your view on same sex marriages, how about;
That would do for a start.
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@ Togetherness said”Crusoe you nincompoop yard fowl even your man Friday possess more smarts than you. Whose dinner tables empty? Have you seen the lines at restaurants, supermarket delis, fast food places , the street food vans and stalls? It seems people have loads of discretionary income. ”
You know, I responded to the economic policy issues, but not the point above. It has been tickling my thoughts since.
YOU ARE AN ARROGANT PRICK.
People ARE having a hard time, and you can waltz about making light of the issue.
THAT is just how this Government is no longer viable, because they have your attitude.
Their response to evating is ‘it does not exist’. A word (I would have said to the wise, but that is not appropriate to you),
Bubbles do burst….
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An ordinary analysis by us – the PDC – of this another of Dr. Clyde Mascoll column pieces, shows that he is again failing to deal with many of the very fundamental issues and problems facing the political economy and services industry sectors of Barbados.
Clearly in this last column piece he is, et al, seeking to somewhat describe and explain the behaviour of many variables which have absolutely no connection with one another.
Hence Mascoll must define for the benefit of the understanding of those reading this one but last column piece what is meant by the Barbados national debt.
He must also explain why – in the said commentary – he attempted to make a connection between such a false fictitious fraudulent notion of the Barbados national debt (a set of concocted FIGURES and NUMBERS in the main) and consumption ( a variable that is normally used by many people to falsely misleadingly point to a kind of human BEHAVIOUR.
He must also clearly define what is meant by such a foolish term as – the printing of money -when he uses it in the context in which he did in the column, and must explain what is the connection between it and money.
Indeed, Mascoll’s long established characteristic failure to deal with many such fundamental issues and problems with a view of otherwise giving clarification and exposition to what are some of the definitonal intellectual parameters within which ideational references to those said issues and problems are to be placed, shows that – by his continuing to perpetuate many false and inter-disconnected notions and ridiculous and pathetic meanings related to such references – he has not even started to come up with any partial theoretical prescriptions that can be used by many people in Barbados to help solve substantially those same issues and problems.
PDC
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@ Togetherness January 24, 2015 at 2:45 PM
“That same sex marriage being pushed by the BLP and Wickham and raised in discussion by Abrahms will be a death knell for the Bees at any election. The British billionaires and celebrities who love Barbados don’t see the no hope dismal situation you and your ilk paint for this gem of an island”
Man, Togetherness DLP, aka Fractured Fumblelite, don’t you think you are displaying a double dose of hypocrisy laced with poisonous ignorance? Why would you want to lick the financial ass of two billionaires who are citizens of a country that has legalized same sex marriages. How do you know that the same men whose praises you want to sing to high heavens are not pro same-sex marriages and unions in all forms?
Are you prepared to accept similar high recommendations from Andrew Llyod Webber, Elton John and Cliff Richards?
It would do you a world of good if you were to be a bit more broadminded. Do you see any difference between Cliff and Peter W other than you being a fractured dickhead that needs putting back together again?
BTW, Fractured why has your administration not taken up the offer from the two ‘pro same-sex marriage’ UK billionaires? What’s the delay? Is the proposal lost somewhere on Fumble’s desk?
Time is short, my friend. The new fiscal year is 2 months away.
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We hear that the unemployment rate is up to 12.9% to September 2014.
Hmmmm
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At the center of the gross and reckless mismanagement by these two intellectually and politically backward, bankrupt and discredited DLP and BLP factions of the political economy and service industry sectors of this country are these factions’ and the other relevant governmental and private sector institutions’ tremendous and despicable use of false, fictitious and fraudulent accounting figures and numbers which themselves have no basis in dialectical logic and reason and in the commercial use of money.
The disgraceful refusal of these political and ideological decrepit and moribund DLP and BLP factions’, and of those other relevant unthinking governmental and private sector institutions, to make greater and actual use of money, means that, at the same time they are flagrantly refusing to use money commercially, they are refusing to give NOMINAL REMUNERATIONS to the relevant people, businesses and other entities that are providing them with goods and services.
Who gives or provides these NOMINAL REMUNERATIONS therefore instead?
PDC
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When the government runs a budget deficit, obviously, they need to get money from some source to meet current expenses. Printing money to finance the deficit will aggravate the already high inflation rate and may contribute to a weakening of the Barbados dollar.
This increase in inflation would reduce the value of bonds. As is being currently experienced in Barbados, the high inflation rate and the continual credit rating downgrades has caused the value of bonds to decrease in value, thereby making them less attractive to potential buyers. Under these circumstances, the government will experience some difficulty in selling bonds to finance the deficit. Hence, in an effort to attract investors they will have to pay high interest rates on the bonds.
While speaking to reporters the day after of the Central Bank Governor, Dr Delisle Worrell, present the “Review Of The Barbados Economy For The First Nine Months of 2011”, the then opposition leader, Owen Arthur, said the Central Bank had become the principal financier of the Government’s deficit, since, at that time, the bank printed almost $150M to finance the deficit.
Similar to any other commodity, money experiences the forces of demand and supply. Hence, the supply of money in the economy increases, when the Central Bank prints new money. An increasing budget deficit resulting from increased government spending is soon followed by increased money supply in the market and thus increased inflation.
When the government prints too much money and inflation increases or becomes uncontrollable, investors will lose confidence in the economy, thereby making prospect of borrowing somewhat difficult.
Simply put, printing money does not increase economic output.
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Clyde mascoll collect data like a recycling plant collects trash.
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@Artax
Isn’t the Governor’s position that the Central Bank is supporting the servicing of government’s debt position and not QE which would have a negative impact on forex?
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So that while Dr. Mascoll helped to provide extremely incriminating statements, to use legal vernacular, in his one but last column like ‘the holding of Treasury Bills was 418.5 million BDS at the end of last year, while the holding of debentures was 191.6 million for the same period’, it is evidently clear – from that kind of statement – the very tangled web of confusion Mascoll finds himself in, when he fails to anchor, even partially so, such purported figures, on the use of money by whomsoever, as an expression or representation of NOMINAL REMUNERATIONS.
FOR THEY TO BE SEEN AS SUCH, ALL NOMINAL REMUNERATIONS MUST HAVE THEIR BASIS IN MONEY AND/OR ITS USES – AS A COMMODITY – BY WHOMSOEVER, OR THEY ARE NOT REMUNERATIONS. They are mere false, fictitious and fraudulent figures and numbers used by some people to justify a substantially flawed, improper and deficient accounting process.
What Dr Mascoll must therefore tell many of the publics of Barbados is 418.5 million BDS of what? And tell them too is 191.6 million BDS of what? Given that money is seen by many as a psychological numerical expression of nominal remunerations.
PDC
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Indeed, Dr Mascoll has helped to provide yet another untenable specious statement in his one but last column piece, to wit, ‘As far back asSe . September 29, 2011, the Central Bank admitted that banks have expressed little appetite for further investment in Government long term securities’ – to help give the wholly false impression to many gullible readers of one of his worst column pieces ever, that ‘banks are uncertain about the long term viability of the economy and so they prefer to invest in the short term’.
This is totally wrong. An outlook – and a negative one too – cannot reasonably logically be used as a basis for the banks not doing something as a purported precaution. Primarily, it is that banks, as well as other core financial institutions in this country, have their own EXTANT LIABILITIES to many people, businesses and other entities of the various
publics and sectors of Barbados and beyond, and must therefore manage such liabilities as prudently as can be against other very important real extant factors and variables considered by them.
PDC
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@PDC
Do you read what you write? If banks in the last few years have shifted from long term to short term government investment what does it say? No long talk necessary. Why criticize for the sake of it?
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Interesting analysis by Economist Charlie Skeete.
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David,
For the umpteenth time on here, this person that is currently helping provide these PDC commentaries and posts is NOT the PDC. This person is a writer for the PDC – the political organization.
Anyhow, Dr. Mascoll is entirely and fundamentally wrong on the point we have been making.
Furthermore, Dr Mascoll – in his one but last column piece – fails miserably to point out that the government does think it eminently better for it to do so for supporting political fiscal reasons – though the PDC does know it is absolutely wrong and wicked for it to do so – to have the Central Bank of Barbados and the NIS to step up to the plate and take up more so-called government long term securities ( which are mainly false, fictitious, and fraudulent numbers and figures falsely purporting to represent these securities ) than the banks will do, as they – the latter – have a fundamental duty to manage as well and as prudently as possible the political, legal, fudiciary and other liabilities and responsibilities of their various constituents.
Thus, such has nothing to do with any negative gloomy outlook of the banks about any future long term viability of the political economy and services industry sectors of Barbados.
PDC
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PDC,
I have been trying to read your submissions for a while now and I think you spend too much time being on the defensive or very reactive.Outside of your no taxation view, could you articulate for me your vision for Barbados that could supersede the current offerings?
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