3 ms·

Are China / the global central banks not colonialist?

mmsimanga 6y ago
Absolutely. Chinese definitely taking over the part of the world I am from. I suppose the difference is Chinese "seem" to stay out of any governance matters. You see them on the ground opening mines and businesses but you rarely see them stating that the African government is corrupt. From the new "revolutionary" politicians the banks are controlled by the former colonial governments. It's the new form of colonialism. Those are not my opinions but widely held views this end of the world.
- raincom 6y ago
  I have a friend, who knows African politics--esp old French colonies pretty well. He also says same thing about West African CFA francs. I know enough monetary economics to see what is going on. Yes, West African CFA is pegged to Euro, now. Earlier, it was pegged to French francs. One disadvantage: countries don't have economic freedom/flexibility to finance public debt. If a country issues its own currency (not pegged to any Western currency), it has flexibility to issue/print money to finance public projects the way the Federal reserve in the USA is doing right now, by buying corporate bonds and treasury notes, etc. The flexibility that the US Federal reserve, the ECB, the Bank of Japan have, can't be exported to African central banks by the mere fact of having own currency; there should be demand for such currency. Today, every Chinese, every African, every Indian, every Latin American (almost 75% of the world population) wants to hold assets in USD, EUR, etc, but not in Kwachas (Zambian currency), not in Turkish Lira. If a currency is not hard pegged, if a currency is issued by a local sovereign central bank, then you can see run away inflation as you can witness in many African countries. This inflation is also bad, and that forces moneyed-locals to keep foreign currencies instead of local currency. The solution: good governance with local currency, not hard pegged to any Western currency. Without good governance, local currency will lead to bad outcomes.
  - mmsimanga 6y ago
    Agreed. So the order in which these things should happen is you start with good governance even if pegged to the Euro. Then once the market has gained confidence with you, you can print your own money. That's the theory in my head anyway. I suppose there all sorts of nuances I don't understand.
    - jjcc 6y ago
      Is is possible that corrupted politicians have much better chance to win the election than those honest politician who are able to working towards good governance? So theoretically the solution is expecting a good leader but pragmatically there's little probability for those kind of leader to win? What if there's some good reasons deep underneath the surface of what happened in so many countries but because of political correctness the researches of the reasons are impossible to start so the real solutions if exists are not available in near future?
      - mmsimanga 6y ago
        I often look to Rwanda and think that is what most African countries need, a benevolent dictator. I know, I know we shouldn't be glorifying dictators. I have heard of abuses of power in Rwanda but I have also heard so many good things. In my home country it is mostly bad things. Rwandan streets are clean, they started manufacturing/assembling cell phones and a whole raft of other good things. So in short I think you are right, for some reason it seems difficult for the "good" politicians to get elected. When they do get elected they often don't last long.
        raincom 6y ago
        That's what rational choice theorems like Arrow's show: dictatorship. Benevolent one is better. Game theory also shows the same: cooperation is better than the non-cooperative Nash equilibrium. In fact, both Arrow's theorem and Nash's equilibrium are proved to equivalent. Once the independence movement is over, once the generation that got the independent dies out, don't expect any cooperation, devolving into "vote for me because the opposition party sucks".

Absolutely. Chinese definitely taking over the part of the world I am from. I suppose the difference is Chinese "seem" to stay out of any governance matters. You see them on the ground opening mines and businesses but you rarely see them stating that the African government is corrupt. From the new "revolutionary" politicians the banks are controlled by the former colonial governments. It's the new form of colonialism. Those are not my opinions but widely held views this end of the world.

raincom 6y ago
I have a friend, who knows African politics--esp old French colonies pretty well. He also says same thing about West African CFA francs. I know enough monetary economics to see what is going on. Yes, West African CFA is pegged to Euro, now. Earlier, it was pegged to French francs. One disadvantage: countries don't have economic freedom/flexibility to finance public debt. If a country issues its own currency (not pegged to any Western currency), it has flexibility to issue/print money to finance public projects the way the Federal reserve in the USA is doing right now, by buying corporate bonds and treasury notes, etc. The flexibility that the US Federal reserve, the ECB, the Bank of Japan have, can't be exported to African central banks by the mere fact of having own currency; there should be demand for such currency. Today, every Chinese, every African, every Indian, every Latin American (almost 75% of the world population) wants to hold assets in USD, EUR, etc, but not in Kwachas (Zambian currency), not in Turkish Lira. If a currency is not hard pegged, if a currency is issued by a local sovereign central bank, then you can see run away inflation as you can witness in many African countries. This inflation is also bad, and that forces moneyed-locals to keep foreign currencies instead of local currency. The solution: good governance with local currency, not hard pegged to any Western currency. Without good governance, local currency will lead to bad outcomes.
- mmsimanga 6y ago
  Agreed. So the order in which these things should happen is you start with good governance even if pegged to the Euro. Then once the market has gained confidence with you, you can print your own money. That's the theory in my head anyway. I suppose there all sorts of nuances I don't understand.
  - jjcc 6y ago
    Is is possible that corrupted politicians have much better chance to win the election than those honest politician who are able to working towards good governance? So theoretically the solution is expecting a good leader but pragmatically there's little probability for those kind of leader to win? What if there's some good reasons deep underneath the surface of what happened in so many countries but because of political correctness the researches of the reasons are impossible to start so the real solutions if exists are not available in near future?
    - mmsimanga 6y ago
      I often look to Rwanda and think that is what most African countries need, a benevolent dictator. I know, I know we shouldn't be glorifying dictators. I have heard of abuses of power in Rwanda but I have also heard so many good things. In my home country it is mostly bad things. Rwandan streets are clean, they started manufacturing/assembling cell phones and a whole raft of other good things. So in short I think you are right, for some reason it seems difficult for the "good" politicians to get elected. When they do get elected they often don't last long.
      - raincom 6y ago
        That's what rational choice theorems like Arrow's show: dictatorship. Benevolent one is better. Game theory also shows the same: cooperation is better than the non-cooperative Nash equilibrium. In fact, both Arrow's theorem and Nash's equilibrium are proved to equivalent. Once the independence movement is over, once the generation that got the independent dies out, don't expect any cooperation, devolving into "vote for me because the opposition party sucks".