In a lot of African countries, economic stability is nothing new. Ever since a lot of them became independent they've been struggling to get back on track. This is mainly caused by a lot of corrupt individual s that have failed massively in moving the countries forward. Therefore a decentralized network that is inflation proof is extremely interesting for countries not only in Africa but in parts of Asia and South-America as well.
As someone that has seen up close the terrible effects of economies mismanaged by their governments by printing to much monopoly money I agree, governments through history have showed time and time again they are not to be trusted with the power to print currency and neither banks can be trusted since they print money every day as well, so bitcoin and decentralized currencies as a whole can be the answer to this problem that has been around for that long. 
Topic: [2018-01-23] Bitcoin Can Bring Respite to Africa’s Inflation Problem (Read 115 times)
January 24, 2018, 02:07:26 PM
January 24, 2018, 12:47:28 PM
In a lot of African countries, economic stability is nothing new. Ever since a lot of them became independent they've been struggling to get back on track. This is mainly caused by a lot of corrupt individual s that have failed massively in moving the countries forward. Therefore a decentralized network that is inflation proof is extremely interesting for countries not only in Africa but in parts of Asia and South-America as well.
January 24, 2018, 12:35:08 PM
This is a very good article which outlines how bitcoin can offers market based solution to ever increasing inflation in African countries reference to Nigeria, Ethopia, Egypt and Congo.
From my own point of view the ease of use of bitcoin has been a stumbling block towards achieving such a solution, the public enlightenment of the people towards the use of bitcoin is absolutely in non existence except within some few people who constitutes less than 5% more so it is an herculean task to start sensitizing the people about the benefits of bitcoin due to government regulations and monetary policies in those countries.
From my own point of view the ease of use of bitcoin has been a stumbling block towards achieving such a solution, the public enlightenment of the people towards the use of bitcoin is absolutely in non existence except within some few people who constitutes less than 5% more so it is an herculean task to start sensitizing the people about the benefits of bitcoin due to government regulations and monetary policies in those countries.
January 23, 2018, 11:28:54 AM
This is expected. Generally, naysayers would always see the negative first before they see the positive. In fact, they will dwell so much on the negative and blow it out of proportion to destroy the image of something they do not believe in. These bunch believe they are the best hence they are out to destroy those that are beyond its league.
In all things we come across with, there will always be positive and negative about a certain subject. It just depends on how we look at things. While I am a Bitcoin believer, I do not deny there are some negative aspects about it too. More so do I shut my eyes to the good it brings to a lot of people. I hope we all see things squarely for the greater good.
In all things we come across with, there will always be positive and negative about a certain subject. It just depends on how we look at things. While I am a Bitcoin believer, I do not deny there are some negative aspects about it too. More so do I shut my eyes to the good it brings to a lot of people. I hope we all see things squarely for the greater good.
January 23, 2018, 06:29:54 AM
Essentially, it comes down to the same debate that a lot of macroeconomics is about. Who is better at allocating? The collective analysis of millions of market participants or a few government officials, lobbyist and bureaucrats? I side with the market and I think Africans will eventually as well.
Wait, didn't anyone tell CNN that Austrian Economics and Bitcoin are racist? They'll soon change their minds about saying free markets are better at running the economy than a bunch of politicians are. I'm sure Africans will see the same thing and refuse this racist free-market economics (that empowers regular people) and monetary freedom (that empowers regular people).
Although CNN are strangely correct about the economic principles forming their main arguments in this article, the sad thing is that we still can't take CNN seriously as free-market advocates. If you watch CNN, they constantly prop up the idea that the "professional price-setters" on Wall Street and the other financial markets IS free-market economics in action (when in fact, regular people simply cannot get direct access to those markets, because "it's not safe, they might get hurt", lol).
January 23, 2018, 05:41:00 AM
Inflation runs high in Africa and bitcoin could be a potential alternative to regional currencies. African central banks have consistently followed policies that have eroded the purchasing power of their citizen’s money. As a result, bitcoin will offer Africans a choice and another option for money as a store of value.
Bitcoin has been portrayed by many as a medium of exchange for illegal and unground activities. Less attention has been devoted to the use of bitcoin as a way for people to circumvent disastrous, governmental policies that are so common around the world. We know bitcoin demand has been strong in Venezuela and Zimbabwe. How have the most populous African countries managed their fiat money stock?
Fiat currency, or money that has value by government decree, has been created out of thin air by central banks around the world. For the most part, rich western democracies have done an OK job of managing monetary policy. Remember, the two most important goals of a central bank are stable prices and economic growth.
That’s not to say the Fed has been perfect. There is tons of academic literature that argues Fed policy pushed a normal recession into the Great Depression. In addition, Easy Al’s policies can be blamed for artificially low-interest rates in 90’s which created the housing bubble and the Great Recession. Furthermore, Austrian Business Cycle Theory is devoted to explaining that wild swings in the business cycle are caused by central bank mismanagement of the money supply. This creates a perverse interest rate price, which leads to malinvestment and misallocation. Analyzation and critique of the Fed is a different article.
This article will look at the 4 most populous African countries and examine how they have managed monetary policy. We will look at inflation rates for these countries and assess how the monetary authorities have fared with the intended goal of stable prices.
Inflation
The Federal Reserve has targeted an inflation rate of 2%. They feel that 2% is perfect for stable prices and economic growth. The consequences of high inflation are many. High inflation eats into people’s savings and makes it difficult to plan and invest. It makes long-term financial decisions impossible and high, persistent inflation leads to a shrinking production possibility frontier. This amplifies the burden of scarcity. With less planning and investment, there is less capital stock. Less capital stock in the hands of workers leads to less productivity and more poverty.
The following graphs illustrate recent inflation rates in the 4 most populous countries of Africa. Once again, 2% is the goal here. The first graph is for the United States. Nigeria, Egypt, Ethiopia and The Republic of Congo are the others.
Monetary Mismanagement
Nigeria, Ethiopia, Egypt, and Congo have all been a monetary disaster in the last year. Congo’s inflation rate has hit around 70 percent. Egypt’s is in the 30’s. Nigeria is in the high teens and Ethiopia is in double digits. The four most populous African countries’ monetary policies have been a financial catastrophe.
The people have been let down in these four countries by their financial authorities. Milton Friedman essentially won a Nobel prize proving that sustained inflation is always a monetary phenomenon. In the end, it’s always too many dollars chasing too few goods. Increased monetary growth increases prices but doesn’t increase real output. Increasing the money supply does nothing in the fight against scarcity. Friedman argued that inflation is always and everywhere a governmental failure.
There is lots of economic writing on why governments would be this bad with their money. Many governments have not separated the regime in power from the central bank. They have used the fiat printing press as a personal bank account. Regimes have also used expansionary monetary policy to get incumbents elected in elections. In addition, governments have monetized their debt and spent newly printed fiat on earmarks to attract voters and allies.
Market-Based Solution
The population of these four countries is approximately 450 million people. These citizens are having their savings eaten alive almost daily. They can’t plan, save and invest in their futures. Bitcoin offers a hope to these people. One does not need a bank account, an ID, or a national social security number to use bitcoin. Bitcoin will continue to take market share from regional fiat currencies for use as a store of value. People are tired of watching their purchasing power vanish due to inflation. These four countries alone produced over 800 billion dollars of GDP per year. Bitcoins market cap today is around 300 billion.
Bitcoin still fluctuates wildly but as more participants enter, the volatility will smooth out. The market is smart and disciplined. Prices will ultimately reflect the collective knowledge and groupthink of millions of people. Essentially, it comes down to the same debate that a lot of macroeconomics is about. Who is better at allocating? The collective analysis of millions of market participants or a few government officials, lobbyist and bureaucrats? I side with the market and I think Africans will eventually as well.
https://www.ccn.com/african-inflation-and-bitcoin/
Bitcoin has been portrayed by many as a medium of exchange for illegal and unground activities. Less attention has been devoted to the use of bitcoin as a way for people to circumvent disastrous, governmental policies that are so common around the world. We know bitcoin demand has been strong in Venezuela and Zimbabwe. How have the most populous African countries managed their fiat money stock?
Fiat currency, or money that has value by government decree, has been created out of thin air by central banks around the world. For the most part, rich western democracies have done an OK job of managing monetary policy. Remember, the two most important goals of a central bank are stable prices and economic growth.
That’s not to say the Fed has been perfect. There is tons of academic literature that argues Fed policy pushed a normal recession into the Great Depression. In addition, Easy Al’s policies can be blamed for artificially low-interest rates in 90’s which created the housing bubble and the Great Recession. Furthermore, Austrian Business Cycle Theory is devoted to explaining that wild swings in the business cycle are caused by central bank mismanagement of the money supply. This creates a perverse interest rate price, which leads to malinvestment and misallocation. Analyzation and critique of the Fed is a different article.
This article will look at the 4 most populous African countries and examine how they have managed monetary policy. We will look at inflation rates for these countries and assess how the monetary authorities have fared with the intended goal of stable prices.
Inflation
The Federal Reserve has targeted an inflation rate of 2%. They feel that 2% is perfect for stable prices and economic growth. The consequences of high inflation are many. High inflation eats into people’s savings and makes it difficult to plan and invest. It makes long-term financial decisions impossible and high, persistent inflation leads to a shrinking production possibility frontier. This amplifies the burden of scarcity. With less planning and investment, there is less capital stock. Less capital stock in the hands of workers leads to less productivity and more poverty.
The following graphs illustrate recent inflation rates in the 4 most populous countries of Africa. Once again, 2% is the goal here. The first graph is for the United States. Nigeria, Egypt, Ethiopia and The Republic of Congo are the others.
Monetary Mismanagement
Nigeria, Ethiopia, Egypt, and Congo have all been a monetary disaster in the last year. Congo’s inflation rate has hit around 70 percent. Egypt’s is in the 30’s. Nigeria is in the high teens and Ethiopia is in double digits. The four most populous African countries’ monetary policies have been a financial catastrophe.
The people have been let down in these four countries by their financial authorities. Milton Friedman essentially won a Nobel prize proving that sustained inflation is always a monetary phenomenon. In the end, it’s always too many dollars chasing too few goods. Increased monetary growth increases prices but doesn’t increase real output. Increasing the money supply does nothing in the fight against scarcity. Friedman argued that inflation is always and everywhere a governmental failure.
There is lots of economic writing on why governments would be this bad with their money. Many governments have not separated the regime in power from the central bank. They have used the fiat printing press as a personal bank account. Regimes have also used expansionary monetary policy to get incumbents elected in elections. In addition, governments have monetized their debt and spent newly printed fiat on earmarks to attract voters and allies.
Market-Based Solution
The population of these four countries is approximately 450 million people. These citizens are having their savings eaten alive almost daily. They can’t plan, save and invest in their futures. Bitcoin offers a hope to these people. One does not need a bank account, an ID, or a national social security number to use bitcoin. Bitcoin will continue to take market share from regional fiat currencies for use as a store of value. People are tired of watching their purchasing power vanish due to inflation. These four countries alone produced over 800 billion dollars of GDP per year. Bitcoins market cap today is around 300 billion.
Bitcoin still fluctuates wildly but as more participants enter, the volatility will smooth out. The market is smart and disciplined. Prices will ultimately reflect the collective knowledge and groupthink of millions of people. Essentially, it comes down to the same debate that a lot of macroeconomics is about. Who is better at allocating? The collective analysis of millions of market participants or a few government officials, lobbyist and bureaucrats? I side with the market and I think Africans will eventually as well.
https://www.ccn.com/african-inflation-and-bitcoin/
Jump to: