Devaluation if good for Jamaicans. Cement prices up 30% since 2013

I am no economist and I may not have all the facts at my fingers, but one thing is I know bull crap when I see it.

It has been postulated by many who have been “schooled” in economics here in Jamaica are of the belief and continue to suggest that devaluation of the Jamaica dollar vis-a-vis the US $ will make good produced in Jamaica more competitive and will have long-term benefit for the country.

The school of economics suggest that if your dollar is low in comparison to your trading partners, the cost of goods exported will be cheaper and that should lead to greater levels of export, which will bring in more foreign exchange.

There is some truth to the above, but there is a caveat, which they have more than often not told the public, but we know because we feel it. The caveat is the above and it  holds true if the producing country adds significant value to what it produces and is a net exporter pr has significant exports.

Japan is one such country, which has very limited resources, imports most of what is required for production, but adds significant value and exports a tremendous amount of goods. One Japanese Yen is worth US$0.009 or  1US$ = Y103.4.

The lower the Yen the cheaper Japanese exports and the more valued is its goods on the export market. This is what has driven growth in the Japanese economy for years and years.

What does Jamaica export and how much value to we add to what we produce for export.

If the proponents of the devaluation theory for Jamaica was correct, how was one therefore explain the reason for the Jamaican economy doing so poorly from 1972 to today. The Jamaican dollar in 1972 was approx US$0.78 ( ie worth more than the US$) and the economy was doing well, before our experiment with the bad PNP policies.

The rate of exchange today is hovering around $110 to one .

During this period of time the Jamaican economy has experienced little or no growth and has seen more periods of decline that actual growth.

I know the same economist, will say  the cost of production and adding value is not solely tied to the dollar, there are other issues such as the cost of insecurity, low worker productivity, high cost of electricity due to poor power plant efficiency, low skill level of workers etc etc.

Now if the above is true, why the continuous fixation on the competitiveness  (as the call it) on the exchange rate, since fixing the other issues would do more good that the constant movement or devaluation of the local currency.

With cement prices moving up another 1.6% today for an overall increase over 30% between 2013 to now, the cost of “affordable” housing would have increased substantially as in addition to all those construction projects currently taking place including highway 2000.

Flour, rice , cornmeal, bake products, animal feed, chicken and other meat products are set to move up also, given movement in grain prices plus a 16% increase in used for March, which will be reflected on the bills we are set to receive in April.

So the dollar is not competitive and needs to be devalued further so our export can become more competitive and Jamaican will become the economic giant of the Caribbean.

If you all believe that, then I can sell you a fire-place for your home to keep you warm in the Jamaican winter.

I suggest those who can convert your Jamaican to US $ so you can all benefit from the rapid devaluation of the local currency. This is what those with wealth in Jamaica is doing and would have gained over 23% on their funds solely from the change in the rate over the last two years.

If you want to be rich( legally) you have to think like those who have figured out how to create wealth from legitimate means.

$120 :  $1 by year end ?

This means 10% earnings, which is better than most investments out there and 10 x better than the 1% you get on your local currency in your bank.

Go for it !