Article: Ivory Towers
MMJ 20220318
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Climb down from ivory towers once in a while, and feel the pain of the common man
So it seems the good veteran economist does not believe when there is a dip in liquidity there will be no inflation when money is injected into the economy. We would like to remind the good Tan Sri that the RM65 billion - we are returning home to Malaysia. Instead of being there to prop foreign economies it is coming home to roost. And where does TS Navaratnam thinks the RM65 billion is going to end up? In millionaires' bank accounts which shall remain there unmoved, and thus no effect on the economy?
No Sir, the RM65 billion is going into Mr Average Family Men's pocket who will then spend for the upkeep of his long-suffering un-spending family. In my books those are money that will jumpstart and boost our economic growth! And if good old, salt of the earth Mr Average Family Man uses it to pay off his mounting bank debts would that not reduce M3, the nation's money supply? So how would that contribute to inflation of the country? It will of course reduce my well off schoolmate Tg Zafrul's EPF dividends from 6.7% to 6.1%.
I will try hard to shed a tear later, I will. I'm still trying to figure out how bringing home the RM65 billion is going to destroy the economy? Let me see could it be the sacred economists' formula of there must be Savings before Investments? Hmm I think many economists in the world have debunked that a long time ago. The determinant of a nation's Investments is actually the mood of banks' credit committees, nothing to do with the level of savings.
We do hope it is a given understanding by all now, that banks create new money when making loans/financing; banks do not lend from deposits. So, it is ok for us to lose RM65 billion from savings. And if we are worried about a dip in Investments we just need to find entrepreneurial capability in the country and just squeeze our money creators to give them the money. God knows the banks have had a field day being National Chettiars, and giving 70% of loans to personal loans and similar. Now this part the good Tan Sri should be worried, and even help us reform perhaps, for the good of the nation.
Although with 30 years Islamic Muamalat experience, and a Master's Degree in IBF from UIAM, I only have a Bachelor's degree in Economics from Exeter University. As far as Malaysian journalists are concerned, I'm considered not very clever, and not worth a call for views. Perhaps I could interest Tan Sri in the views of Southampton's Prof Wagner and similar. I do urge many of us to climb down from ivory towers once in a while, and feel the pain of the common man.
Muhammad Zahid Abdul Aziz. Dy Chairman Movement for Monetary Justice Malaysia. International Director/Core Group Member, International Movement for Monetary Reform.
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Dikemaskini [Updated]: Sam Ahmad 20230627