4Play:
Printing money only makes sense in a deflationary environment. If you artificially increase the supply of Naira, you reduce its value. This devalues the currency and increases inflation.

Just because money printing is going on in the West does not mean Nigeria can cope with money printing.

Printing money may devalue a currency but money printed if properly used to increase capacity utilization will minimise the depreciation of Naira since imports will drop and rise in exports will creep in the long term.

AgentOfAllah:


I'm astounded you seem to think gold has some inherent value

It "does".not to me personally cos I'm rational but it is a useful (non eroding)and even cavemen(me excluded of course) like shiny things so yes it does have some inherent value. Obviously not as inherent as say a bag of rice or salt but still valued by modern man

Let sb tell dis dude he is nolonger in d opposition bt d ruling party come may 29, and he hs 4 gud yrs 2 bring 2 play dis his self 'nigeria father of economics solution" stop telling story act action is wot we need. oga

mikolo80:
That's my point. Even usa is abusing that power imagine what our profligate leaders will do

How exactly is the USA abusing the policy?

hamilton62:

what will be the productivity if the property of money (scarcity ) is reduced without additional increase in naira value i.e more money chasing fewer goods....
naira will worth less than Zimbabwe dollar... that is a bad news.

Tinubu never said the money should be used for discretionary spending. Rather, it should be used to infuse capital into the real sector. For instance, some federal roads needs to be fixed. If the contract to fix all federal roads in Nigeria is given competent Nigerian engineers or firms to build at naira value, the naira infusion would create employment and in effect, reduce poverty.

We can never be like Zimbabwe in 2008. Thats impossible.

voltron:


I sincerely doubt Tinubu has the smarts for this write up but worse, the motivation to see it through. Lest we forget the Austerity Measures introduced by the IBB regime. Fiscal Polices aimed at curtailing the demand for Naira.. It would have worked but what did IBB through the WAYS & MEANS Facility of the CBN do? He started printing more money for corrupt intentions.. this is the reason why we are where we are today.. and some he-goats will praise IBB, worse; praise his advocates.. If it is Tinubu.. he reeks poisonous corruption - we all are aware that there is a liquidity squeeze but the people are worse hit than the government.. cut recurrent expenditure by 70% to reflect the reality of the times and see what happens.

I doubt if Tinubu championed this idea himself. Like you rightly said, printing money that will end up in the accounts of corrupt politicians is a recipe for disaster. The idea will be feasible if corruption is curtailed.

xandy84:
It sounds like a good idea on paper but believe me, printing more money increases the flow of money in circulation without adequate increase in production of of goods and services hereby causing hype inflation. Greece would have love to print money to bail out the economy than asking for European union bailout.
Printing more money will crash the value of naira and even make the economy worse off.

If this is the kind of information being passed around on the forum as intellectual discourse and facts then i cringe at the kind of misinformation anyone without an idea in a subject matter would have gobbled up as the holy truth on this forum.

Please, you would do well to stop making some very erroneous statements. First, Greece is part of the European union and the local currency is Euro which is controlled by the European Central Bank. ECB. Greece can not print money because they aren't in charge of printing and the currency belongs to the Union. You don't expect Nigeria's central Bank to print US dollars. This is because they share same currencies with other countries with a centralized framework.

If they would want to achieve that, they first have to declare bankruptcy and go into a default.Next is to pull out of the European Union and have their own local currency. This is not easily achievable because the other European Union members would not allow this because Greece owns them a tonne of money which won't be paid if they are allowed to go. Greece has little or no assets that can be seized to repay the loans so it's more sensible to continue propping them up with bailout money than to allow them default. ALSO, The shockwaves of a Greek default is enough to pull the economies of other European Union member countries suffering from same problem like Portugal, Spain and Italy who are barely surviving on the fringes under immediately. This can ultimately lead to the end of the Union which would be disastrous for most member countries.

You should please get your facts right when next you are posting. If you don't have an idea as regards a topic, there's no harm staying away or just reading through.

As for the topic. Sounds interesting but we all know most of our development projects are tied to the dollar as almost everything used in building materials for these same infrastructure we want to develop and shore up to spur growth is imported. This would put enormous pressure on the local currency and may lead to hyper inflation. The only way around it I would advise is for whatever Quantitative easing they may want to undertake not to EXCEED 10% of our GDP. Other areas should be looked into for raising cash for developmental projects from areas like curbing wasteful spending and corruption which should be vigorously pursued.

deflover:
this man is a joker......we should open the printing press while the wages of the so called elites stay high....how can you print more than you earn....that means we will have monopoly money where it would have little or no value....

QE1 to QE3 has not helped any govt.....even the Fed has not been able to solve its economic woes by these methods......how do you stop inflation as he said....you have more naira chasing less goods and services.....so inflation will work in like a stroll in the park...

He like OBJ are trying hard to be relevant without talking about the loot they have in their kitty....

this is jungle economics that makes no sense but will sound nice to the kill the rich crowd...let their be soft loans given to SME and let the electricity be fixed and see the cost of production crash while the funds used for production can be put to better use..

Who told you that? QE in the US brought unemployment rate down from 9.9% during Bush regime to 5.6% today.

It also got the country out of reccession. So, how do you want it to work. Now, they have stopped it because it has achieved the purpose for which it was started.

US is now moving towards raising the interest rate because they are satisfied with the results of QE.

I dont understand why folks here are saying that this would lead to hyper inflation. Tinubu is not saying that government should print more than they need. Hyper inflation arises when government borrows more than it receives from its tax revenues or other non borrowing sources.

If Nigeria's non debt income is about 70 billion dollars (50 from oil and 20 from IGR), its not bad if the government borrows about 2 trillion naira from the central bank of Nigeria to augment its income. This 2 trillion naira will be used to enhance local productivity which will also create revenue for the government.

As long as the money is not being used to finance wars or pay the salaries of politicians, it will work just fine.

Tinubu's fomular is a short term solution to our immediate crisis. It would however been a disaster if implemented in a free for all Government like Jonathan's. Restriction on importation and building of local refineries will eventually lead to economic emancipation but a little slip will lead to disaster.

Bevista:
There definitely needs to be more debate around this proposal, though I do agree it has some merits.

My major drawback to Tinubu's proposed QE is the Transmission Mechanism to ensure the new money gets to the Real & Productive sectors of the economy. Else this money will simply find its way into pockets of the 'cabal' and into financial markets - inflating asset prices.

All the same, it's quite stimulating and assuring to hear intelligent debate on sensitive matters like the Economy.

The plan sounds solid BUT since inflation is a high risk factor in this plan, I find it interesting that the consumption pattern of the poor will only help fuel inflation.
Suppose the government prints more money and channels it to infrastructure, this in turn will create more jobs but then the problem is that the wages earned will be spent on buying imported fuel, diesel, kerosene, imported house hold items,imported food items like foreign rice etc, and clothes. The end result will be inflation. Hence government must have a simultaneous approach to this issue if this plan must be followed by this I mean that govt must reduce imports by stimulating growth of local industries that services our basic consumption needs especially in the areas of oil refining, agriculture and heavy metal. They must also simultaneously increase power generation while providing infrastructure to service these industries. Only in this sort of simultaneous manner can this plan be beneficial.

mikolo80:
It "does".not to me personally cos I'm rational but it is a useful (non eroding)and even cavemen(me excluded of course) like shiny things so yes it does have some inherent value. Obviously not as inherent as say a bag of rice or salt but still valued by modern man

Looks like my point is lost on you. Gold only has the value it has because man decides to use it as a standard. There's no reason why gold should be inherently more valuable than steel, for example. In essence, my point is that this value could quite easily be transferred to paper money, as is already the case with dollars...the question Tinubu poses, therefore, is, why stop half way? You might as well substitute dollars with Naira. Granted, dollars is the standard currency of international transactions. Nevertheless, our informal/local economy is much larger than our oil economy, so rather than leave it at the mercy of a currency that doesn't directly impact it, why not just allow it to thrive on its own by enforcing naira as THE independent legal tender?

The advise of a clueless man. You are neither here nor there. Lets face it, the Jagaban is lonely.

Sweetguy25:


Tinubu never said the money should be used for discretionary spending. Rather, it should be used to infuse capital into the real sector. For instance, some federal roads needs to be fixed. If the contract to fix all federal roads in Nigeria is given competent Nigerian engineers or firms to build at naira value, the naira infusion would create employment and in effect, reduce poverty.

We can never be like Zimbabwe in 2008. Thats impossible.

i support what you just said if there be no additional printing of naira theory... if there be printing, then i am afraid that their will be a challenge since more that needed will be in circulation since naira isn't strong enough as a hard currency to be patronized much on internally and in diaspora thereby still having its scarcity property as a legal tendency...

Hmm. Okay.
Everybody is giving advice, lemme go and compile mine

walexy30:
We've heard of Abenomics in Japan; Now Tinubunomics. I go with Nigeria's version of Quantitative Easing. USA did, it worked; Japan and The Eurozone are currently doing it. That is the trend; let us QE joor.

Let Naira flow like Soludo did. Print the money jare.

Remove Japan, so far QE has not worked in Japan. QE has failed to trigger the much needed inflation in Japan, the yen is weaker and costs of imported raw materials are at high levels..And companies can't even pass on these higher costs to their customers..

Mogidi:
How come this guru of economics refused to share his expertise with APC governors?
Some haven't paid salaries for 7 months.

Because inflationary spending prescribe is beyond the power of state governors.

Ttalk:


In 1971 during economic recession in the United State of America, Lincoln the president jettisoned the dollar backed by gold policy, institutes social programmes that is aimed at the poor and create a tax leverage for domestic companies while bridging the gap between the rich and the poor through introduction on taxes on the rich.

Since then the dollar has taken the place of gold while emerging economies became slaves to the dollar. What is then is the fear nairanisation of our economy? It is simply the fear of unknown.

Suffice then to say that this approach is welcome only if the government will depart from the present way of spending in order to reduce inflation that will arise as a result of increase naira, but if the money is targeted toward the poor and middle class, this will increase economic activities and rejuvenate our economy from depression.
To me inflation can be better managed than depression

Brov,I guess you meant to say Nixon.,,,lincoln wasnt the president in 1971,,,...Nice write up i must say

Ttalk:


In 1971 during economic recession in the United State of America, Lincoln the president jettisoned the dollar backed by gold policy, institutes social programmes that is aimed at the poor and create a tax leverage for domestic companies while bridging the gap between the rich and the poor through introduction on taxes on the rich.

Since then the dollar has taken the place of gold while emerging economies became slaves to the dollar. What is then is the fear nairanisation of our economy? It is simply the fear of unknown.

Suffice then to say that this approach is welcome only if the government will depart from the present way of spending in order to reduce inflation that will arise as a result of increase naira, but if the money is targeted toward the poor and middle class, this will increase economic activities and rejuvenate our economy from depression.
To me inflation can be better managed than depression

Brov,I guess you meant to say Nixon.,,,lincoln wasnt the president in 1971,,,...Nice write up i must say.

Gorimakpa1:
you mean Soludo`s naira redomination Yaràdua govt did not allow to materialize?

yes that what i mean they can reintroduce it ghana did this and it work for them.

I just weep for Nigeria..imagine some hypocrites here already celebrating Tinubu for proposing this lame, wicked, dangerous and dumb idea..Print more money To useless the already worthless Naira...The only way out for us now is to reduce our dependency on oil by 70%, explore other source of revenue like mining, agriculture, etc, make politics unattractive by reducing the huge salary paid to politicians by 60%, stabilize the power sector...When this is done, watch the economy boom. Printing more will is like burring an already dead country

felixuzuh:
Tinubu is not being truthful to himself. The truth remains that the only way through which nigeria can come out of her economic woes, is by reducing the salaries of political office holder. Increasing the taxes payed by the rich and wealthy in our country, and also fix the electricity problem we currently experience in nigeria. Believe you me, once uninterrupted power supply is provided for the common man. Nigeria's economy shall automatically be revived and joblessness shall be reduced to the biarest minimum. Tinubu is just beating round the bush, because he knows he's one of those nigerian elite, holding the waelth that is supossed to circulate among the masses.

Bros, your argument is weak. Check

1. Reducing salaries of political office holders - There salaries is the least of their expenditures. More money is spent on recurrent expenditure, even by Jonathan's government. So even if you reduce their salaries, the difference and more finds their way back into their pockets via recurrent expenditures.

2. Increasing the taxes paid by the rich and wealthy - This is the classic ignorant assumption that has been explained over and over again. the rich pay themselves little salaries, hence little taxes. The companies they own shoulder virtually all their tax requirements; as it is taken from the company's gross income. In other words, the taxes the companies of the rich pay becomes a constituents of the cost of doing business. When the cost of business of the rich increases, the market price of their products marginally increases. Guess who pays to marginal increase - the poor. So increasing the taxes pay by the rich is tantamount to increasing the cost paid by the poor.

3. Fix Electricity problem - You right in part here, but if you read and understood Tinubu's argument you would have realized that this falls under his proposition to cut the additional government expenditure to infrastructural development project that will stimulate economic growth

And dont kid yourself, Nigeria's economy CANNOT automatically be revived. It was progressively worsened and will take twice the effort to bring back.

Your pun at Tinubu, smacks crass ignorance on your part

AgentOfAllah:


Looks like my point is lost on you. Gold only has the value it has because man decides to use it as a standard. There's no reason why gold should be inherently more valuable than steel, for example. In essence, my point is that this value could quite easily be transferred to paper money, as is already the case with dollars...the question Tinubu poses, therefore, is, why stop half way? You might as well substitute dollars with Naira. Granted, dollars is the standard currency of international transactions. Nevertheless, our informal/local economy is much larger than our oil economy, so rather than leave it at the mercy of a currency that doesn't directly impact it, why not just allow it to thrive on its own by enforcing naira as THE independent legal tender?

Its you that's not getting me.maybe am not articulating properly. I said I agree with you that "value" is an arbitrary thing that humans place on "stuff" but abi na "bet" you cannot print value. Its building on a non existent foundation. And it will come crashing down one day. Like I keep saying take a look at Zimbabwe's money printing debacle

Sweetguy25:


How exactly is the USA abusing the policy?

am not good at articulating in text and basically I hate writing.moreso from a cramped phone screen.but google ''dollar crash'' and "zeitgeist" or so and you'll get an idea of how the US is on its way to armageddon.they already can't pay their loans

Check my reaction in blue

PBundles:
On a serious note, printing money for a country like Nigeria would be a terrible idea, because it has no merit and will only lead to further devaluing of the Naira and cause exponential corruption. we can barely manage our government, how much more when we throw open the printing press. Can you imagine the airplane loads of fake Naira that would be coming in from all corners.

It surprises me ( though when I think about it not really, they all need to chop abi) when so-called leaders have no idea what they are talking about and have a lack of ideas. Let me IMHO give the top three things that need to be done:

Stimulate the small and middle businesses by granting well manged loans to ensure the business ideas are fostered. This will lead to an strong internal market, which Nigeria lacks whereas we have a large population. This in turn will spin off jobs etc. - This is already being done by Bank of Industry will little impact or limited success. You might want to ask where the source of monies to stimulate the small and middle business to that scale to impact the economy and the "strong international market" will come from. First off, we have decapitated our external reserve, which China had used to achieve the same thing way back. Secondly as Tinubu (and the economist Henry Boyo) had argued, our dollar dependent economy is subservient to the risk Oil price is exposed to, so in this context, we can only do this in the post $100 crude benchmark era.....which is not realistic and sustainable. My thoughts, you will need a stronger argument than this to rebut Tinubu's proposition

Fiscal and corruption management. Nigerian dont pay tax period,but we complain about the government not doing anything. On one hand I understand since if you see the stealing that goes on and salaries are not paid whereas most high ranking officers are looking plumpy, then its hard to reconcile the two. - Taxes are simply part of the internally generated revenue. I want to believe that taxes are fixed and will stay somewhat constant in the context of this argument. We need to look beyond taxes to stabilize the economy, especially when those revenues are in the threat of decline as proportional to a decline in labour force

Last but not least. Cut down the Government expense by at leats 70-80%. You may think its high, but this is possible. when you see that some offices and departments have been created simply to employ friends and acquaintances, while they serve no useful meaning to the masses, why keep them open. Also reduce the salaries and allowances of the elected officers by 60-70%. The amounts are ridicoulous. Why would a House or Rep or Senator make more than Obama ( Nigeria, we hail thee).

and to think it is receiving attention six month after Tinubu published the article....
If it's about Genevieve sexy wear to an event or Omotola's throwback foto, or some cleavage revealing stuffs.....you can be it speed it takes to make the front page. You wonder why on the average NL struggle with intelligence?

Meiji:
...and a thread for debate on the economy is, quite predictably, as dry and barren as Nairaland's science and technology section.

I guess most people have nothing to contribute because threads like this actually require them to use their brains.

Ok, while I try to get your drift, the problem many of you make is that you can't keep yourselve within the context as laid out by the author. Tinubu right said he wanted to stimulate a debate, as such inviting you to contribute. The issues of True Federalism and SNC are issues outside the purview of this debate and one would have though a basic understanding will suffice to explain that to you...........no wonder may of you fail English comprehension

cocoduck:
useless man
I read everything but found no solution to the economic problems of the Zoo
the solution is this Nigerians should quit running away from their demons and run to them instead and thereby conquere them. He said nothing about True federalism which is the only solution to the problems, He used to make a lot of noise about SNC but now is the time to organize the one he thinks is the best and implement the resolutions reached.
it is very simple, precise and clear even to the common man
anyway common sense is the only thing that is not common in the Zoo

Unfortunately your "smarts" is not convincing and at very best basic here as well.

1. The SAP era, as many of us will vilify it as we like came out with some positives and has helped our economy. A very classic example is the privatisation journey of the banking sector, which has its roots in the policy of that era. Today you have Nigeria owned banks grown and stimulating the economy, dominating the West African space, making presence in Europe and ability to fund capital projects that was not thought of back in those days. What we fail to realise is that, we can learn from our past mistakes, refine it and get better at it rather than throw the baby and the wash water away.

2. I was fully aware in the SAP era and some of the things you wrote seems a distortion of facts. Please provide us with evidence that as part of SAP measure of IBB regime, they resorted to printing money. Note that the proposal and execution of the SAP policy was led by the secretary to the FG then, an LSE trained economist Chief Olu Falae........

voltron:


I sincerely doubt Tinubu has the smarts for this write up but worse, the motivation to see it through. Lest we forget the Austerity Measures introduced by the IBB regime. Fiscal Polices aimed at curtailing the demand for Naira.. It would have worked but what did IBB through the WAYS & MEANS Facility of the CBN do? He started printing more money for corrupt intentions.. this is the reason why we are where we are today.. and some he-goats will praise IBB, worse; praise his advocates.. If it is Tinubu.. he reeks poisonous corruption - we all are aware that there is a liquidity squeeze but the people are worse hit than the government.. cut recurrent expenditure by 70% to reflect the reality of the times and see what happens.

Bros,

A word of advise .......

...........It is better to say nothing and look like a fool than to say something and be the fool...............

Texcoco:
Don't see what the fuss is about.....Jes use half our foreign reserves to purchase gold bullion, then peg a new national currency on the bullion before printing and distribution via the mechanics of soft loans to aid industrilization and export.

@Meiji,

Your argument did not elucidate why you opposed Tinubu. That would have been a good flavour to it. You simply laid another line of arguments which is opened to debate.

1. You're right on the money, all the notable economists from Pat Utomi to Henry Boyo and co has all said it. Our rent-based economic system is our biggest downfall. The only state in Nigeria that is worth calling a viable state is Lagos. It is funny and instructive to know that the same Tinubu laid the platform for the Lagos of today and it was under his government that a true test of Lagos capability to exist and thrive without the FG allocation was carried out.

2. It would seem to me that your second paragraph just reecho the essence of Tinubu's piece.

3. Downsizing the workforce without providing an alternate "industry" this laid off workers can fall into will create more complex problems. Many states in Nigeria are simply "civil servants" states and the multiplier effect on families will be wanton. You may want to consider a modified approach in that. Governor Bisi Akande in Osun state did same with devastating effects.

cheers

Meiji:
For me, I'm a small government conservative, so I oppose Tinubu's suggestion in principle. You can't talk about the failures of state government to pay salaries, for instance, without highlighting the fact that we operate a flawed structure (aptly named "feeding bottle federalism" ) where states gather in Abuja every month to share oil money.

People like me had warned for years that such stupidity would cost this nation dearly when oil prices witness a downward trend. The reason is simple: states that keep collecting oil rents every month would inevitably get lazy and refuse to the hard work of developing and expanding the human and material resources they have.

Look for the states in financial difficulty there's only ONE way out: Downsize the workforce. Lay off workers until their Internally Generated Revenue (IGR) can take care of the civil service personnel costs and other recurrent expenditure. Then ensure that all FAAC allocations are devoted exclusively to capital and infrastructure spending as well as grants for small businesses that will boost the economy and create jobs.

Any suggestion for proper economic management that doesn't mandate the Federal and state governments to bite the bullet and downsize their bloated workforces is a ruse and a hoax.

My two kobo.

mapet:
Unfortunately your "smarts" is not convincing and at very best basic here as well.

1. The SAP era, as many of us will vilify it as we like came out with some positives and has helped our economy. A very classic example is the privatisation journey of the banking sector, which has its roots in the policy of that era. Today you have Nigeria owned banks grown and stimulating the economy, dominating the West African space, making presence in Europe and ability to fund capital projects that was not thought of back in those days. What we fail to realise is that, we can learn from our past mistakes, refine it and get better at it rather than throw the baby and the wash water away.

2. I was fully aware in the SAP era and some of the things you wrote seems a distortion of facts. Please provide us with evidence that as part of SAP measure of IBB regime, they resorted to printing money. Note that the proposal and execution of the SAP policy was led by the secretary to the FG then, an LSE trained economist Chief Olu Falae........

Focus on the issue bruv not my smarts - ok. What then do you call the Ways and Means Advances (if not printing money) the CBN made available to the FG. you cannot have a Fiscal Policy that ius undermined by a Monetary Policy the two don't work together well.