Let the dollar slide and find its “true” value !

At what value of the US$ to $J will Jamaican begin to reduce their appetite for foreign imports and why does the economic theory of devaluation and a country’s economy have not brought about fundamental changes in Jamaica.

When the dollar devalues it makes imports more expensive, while at the same time it should make locally produced good more competitive on the export market. This should have resulted in a shift from foreign imports to local production and consumption, but amazingly this has not been the case , why ?

Well, one reason is the local banks have been a very willing bride and so has been the Jamaican public, it lending billions of dollars to the Jamaican Government to support foreign imports which we cannot really afford.

Our banks have billions of dollars invested in GOJ paper and have bolstered their balance sheet over the years, while recording record profits yr after yr on interest come, largely from these paper transaction and no real production is being done to support this.

Successive governments have also been able to convince overseas lenders to give us billions of dollars in loans to purchase their goods, while destroying local manufacturing as well as farming.

In addition, Jamaican overseas have been sending billions of dollars every year to Jamaica to support our lifestyle which we cannot truly afford, but somehow the country continues down this reckless path.

How much longer can we continue down this road, I say not much longer and as such a number of things will have to happen to force change, because if we don’t this entire country could become a wasteland very soon.

The exchange rate is said to be a function of the productivity levels of a country and its ability to earn enough to pay for what it needs. Jamaica has never been able to earn enough to pay for what it needs and has resorted to borrowing to make up the difference, however all of that is now coming to an end.

 

We have gone on for far too long living on other people’s money, its full time the country begin the process of charting a course that will eventually lead to security and economic prosperity, but it will take the collective will of the people of this country to get that done.

 

Firstly we must shun all those politicians who tell us they have our interest at heart and we should put them in power so they can make our life better. Instead we should warn them, that if they refuse to work with who is already their and chart a course that pushes the country off track to push forward their political agenda, them Jamaica has no place for them and ” dem should tek weh demself”.

 

There is simply far too much focus on the dollar, which is really a representation of how we have managed to “manage” the economic affairs of the country.

Our pursuit on a silver bullet to address out problems has gotten us to this point and our currency will continue to slide as out productivity levels continue to fall.

I can tell you this, it will not get better any time soon and I can say with some level of confidence that the Jamaica dollar slide will get worse and will end up between $110 & $115 by the end of this year, as it accelerates between September and November.

By the end of the IMF Agreement in 2016, I would expect and exchange rate of around $150:$1.