₦airaland Forum

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.

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.

ionsman:
Her babalawo strong.

Lol

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.

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?

APC at work. Why do these stoop so low even after they have won the elections?

Obasanjo destroyed usage of coins in Nigeria

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

Exactly. It is just the fear of the unknown and nothing else.


Note: It was Nixon that suspended the convertibility of the dollar not Lincoln

jaysniggs:
My take is to kill the naira and breed a new currency that is backed solely by gold.
That of course comes with a short term pain but a long term benefit.

Kill the naira? Naaa!

No currency in this planet is backed by gold and no currency ever will.

mikolo80:
until it becomes unsustainable.you cannot cheat economics(nature). even as an ss1 student i suspected that there was something fishy about "fiduciary" issue.Paper money not "even" backed by gold. One big asss ponzi scheme. Just hope i'm not around when it goes splat

It can be sustainable if it is managed properly.

jaysniggs:
Something similar to what Lincoln did in the 19th century.
This man is pointing to the CBN!

Its a brilliant idea. We don't need to sell oil and earn dollars before we fix our roads or build infrastructure.

mikolo80:
Printing money is a baaaad idea. ask zimbabwe and the usa.Its only a matter of time 'for the chickens come home to roost,and man is the roosting biblical in its proportions

methinks lots and lots of tractors and power supply and credit facilities to productive sector will solve our problems economically speaking

Printing money to spur productivity is not a bad idea. As long as money is used to facilitate the production of goods and services, it will boost the economy enormously.

The new appointee
Mrs Uju Hassan Baba

https://boinigeria.com/wp-content/uploads/2014/05/hassan-baba.png

Obasanjo is not capable of giving advice even to a 9 year old. Buhari should stay away from Obasanjo if he knows whats good for himself. Obasanjo is a despot, a cheat, an egomaniac, a tyrant, a manipulator, a hypocrite and a snake.
Obasanjo is the father of corruption in Nigeria.

In summary, Tinubu wants government to print more naira to support and develop critical infrastructure. He thinks that government should not depend on revenues from crude oil to develop critical infrastructure, government should rather print money to build infrastructure like roads etc.

I like the idea but I doubt Buhari will.

Slump in Oil Prices: A Progressive Way Out

A wash in the great tide of politics, we must not forget why politics can be a noble endeavour. It leads to governance. When done correctly, governance can reform a nation and improve the lot of the people. In the hands of the ignorant and the mean, governance cast abundant misfortune upon a nation and upon the welfare of its citizens.


This commentary concerns governance and policy more than it does politics. I offer it to generate debate on an important economic issue. No matter who is in power, we must do whatever is in our capacity to steer the nation away from economic woe. The people have suffered too much hardship already. Neither side of the political divide should seek to purchase transient advantage at the high price of dousing the people in greater economic calamity. Thus, I suggest this progressive’s position on how best to shape economic policy during this period of falling oil prices. I state this hoping those in charge will take pertinent advice from any quarter. My prayer is that they are not so stubborn as to adhere to a strategy that will deepen the economic misery of our people even when better policy measures are proffered.


I confess to writing this also for a reason essentially political but non-confrontational. It accentuates the distinction between the conservative Peoples Democratic Party (PDP) and the progressive All Progressives Congress (APC). The nation faces momentous elections when next year turns to its second month. The choice is a stark one; but many people do not believe as such. The differences are vast especially regarding economic policy. On the one side, the PDP champions a conservative, elitist economic model based on the theory that wealth money must first go to the already rich and well-heeled who shall determine how small a fraction of it will trickle down to the rest of society.


On the progressive side, we believe government can fillip economic growth and development in such a way that brings the fairness of prosperity to all of society. We don’t seek to penalise those who already have but we will do our utmost to remove from the clutch of poverty the bulk of our people. We seek to turn the hungry suffering of our poor and working classes into a dignified livelihood that provides a dignified existence for all.


Global oil prices have fallen from over $100 a barrel to approximately $80 per barrel. This slide has caused a corresponding drop in government’s dollar revenues. With this, the federal government claims it has less money at its disposal and the paucity of dollars necessitates austerity measures. Most people accept this position as gospel; debate about its correctness has been nil. Yet, the stakes are much too high to assume this subjective position as an economic certitude or uncritically accept its propriety. What they proclaim as policy is not based on any unassailable economic principle. It is statement of economic bias that beckons to the wealthy while auguring unnecessary hardship for most Nigerians.


Look at jobless and poverty levels as well as the diminished status of our middle class. After viewing these statistics, most objective economists would conclude Nigeria is mired in a long-term, secular depression. Forget the rosy GDP numbers. They signify a great economic and financial segregation between those who have and others who have not. If we continue with the policy preferences of the current administration, the haves shall become the “have–mores” and the “have-nots” shall become the “have even less.”


The vast majority of the claimed GDP growth has fallen into the laps of those already enjoying obvious luxury. The rest of the people are left to gaze at the enormity of the income and wealth chasm separating them from the cabal orchestrating the discordant political economy. While a small group flourishes, the rest of the nation subsidises their economic bounty. A tight confederacy rides an economic skyrocket while the bulk of the people languish in the swamp. For one group, the economy is effervescent. For the other, it is catatonic. Nigeria is one nation with two economies.


For this government to speak of austerity is to further enrich the affluent while casting the average Nigerian into greater hardship and deeper socio-economic depression. As with the Euro zone the past five years since the global financial crisis, austerity has not solved the dire economic weakness of the nations that employed this sickening remedy. All austerity has done is tighten the grip of the wealthy on the economy while weakening the position of the middle class and the poor.


Austerity weakens aggregate demand, deflating an economy already fatigued and against the ropes. Those with hefty portfolios, profit as the value of their holdings appreciates by the very dynamics of deflation. Those who don’t have, find money even dearer to come by. Jobs and commerce disappear. Debt climbs. Deflation turns a noble but poor household into a committee of beggars and street urchins. The austerity that the current administration offers is an insensitive, myopic policy that lends primacy of favour to meaningless accounting figures instead of the material wellbeing of the people. Austerity undermines our economic pillars and breaks the spirit of the people. Austerity is the merchant of pessimism and hopeless futility. If you desire a nation of thralls, by all means continue this bleak path. If we want a nation of prosperity and economic justice, a different course is our due.


Listen carefully to the position of the Goodluck Jonathan administration as articulated by the finance minister and you shall collide into the barricades of illogic and its weighty consequences. The claim is that government is low on funds because the lower price of oil means fewer dollars are being collected from oil sales. This sounds logical but for one fundamental point. The dollar intake is basically irrelevant to determining the amount of naira the government commands and places into the political economy. This fundamental point reveals the government’s position to be the antiquated relic of a past era. It is the way of the gold standard which ceased to exist over 40 years ago. As such, government’s stance is based more on superstition than on the actual functioning of modern economy with a sovereign fiat currency of its own.


The last I looked, Nigeria operates a naira-based economy not a dollar-based one. There is no legal or moral restriction strictly limiting the amount of naira in the system to match the amount of dollars collected via oil sales. More importantly, there is no economic justification for the close linkage implied by the government. If we take its position at face value, the Jonathan administration is advocating that we effectively place the naira and thus our fiscal policy on a “dollar standard”. The world jettisoned the gold standard in 1971 because it proved unworkable, reducing the policy space in which governments could pursue fiscal programmes promoting full employment and social welfare. We should likewise reject this government’s imposition of a dollar standard on our nation’s fiscal operations.


Under the gold standard, a national government took pains not to incur budgetary deficits that exceeded the dimensions of its gold reserves. This was because the currency had no value by itself. Its value was based on the convention that the currency was backed by the nation’s gold holdings. Those governments that ran deficits had to pay those debts in gold. Given that gold supplies were always and everywhere finite and exhaustible; a nation had to keep its deficits within the confines of its ability to pay debts in gold. Because of this straitjacketing effect, nations would abandon the gold standard during harsh economic times in order to give them the fiscal freedom to rejuvenate their economies. This was the case during the Great Depression with the major economic powers. This should be the case with Nigeria today since the bulk of our people live in conditions redolent of the Great Depression or any other depression for that matter.
Our government persists that it must limit fiscal outlays to the amount of dollars the nation holds. Similar to the operation of the discarded gold standard, following this path is to strap ourselves to austerity and the chronic deflation of austerity produces.

Worse, it serves to enthral the fiscal policy of our sovereign nation to the monetary policy of another country. That nation plies monetary policy to serve its interests and not the economic interests of Nigeria. I am baffled why this government would give such power over the fate of our economic wellbeing to another nation that does not incorporate our interests into its decisional processes. This government makes our nation the economic servant of another so that government may turn about to make the Nigerian people its economic servant. While there is a certain logic to this dynamic, it is a perverse and debilitating one.


Because we operate a sovereign fiat currency the federal government issues at its sole discretion, the federal government can never be rendered insolvent in naira. This means it can run naira fiscal deficits indefinitely. The only outer bound is to ensure the fiscal expansion does not incur damaging inflation rates. There is no logical reason to peg the flow of naira into the economy to the flow of dollars received. The correct perspective is not to mechanistically restrict naira expenditure to dollar intake. This would be tantamount to those crippled with economic blinders forcefully leading those who can see we are heading for disaster. It points to deflation, recession and worse. The better methodology is to ascertain, then achieve, the level of naira expenditure needed to expand the economy and create jobs without causing inflation to rise to dangerous levels. This is how broadly-shared prosperity is generated in a sustainable manner.


In this way, the nation’s economic engineers should focus primarily on allocating value and opportunity to our underutilised labour force and our idle, yet potentially productive capital in a way that promotes wealth creation and expansion of aggregate demand. It is this sustainment of aggregate demand that empowers the nation to rescue itself from the whirlpool of economic contraction. This avenue is more benign than the one the federal administration now advocates. Their way calls for us to forget growth and for government to preoccupy itself with allocating economic misery among those segments of the population too poor and weak to contest the immiserating actions of government against them.


In the face of recessionary headwinds, government should run countercyclical fiscal policy by using its naira sovereignty to fund fiscal deficits. The deficit is not simply for the sake of running a deficit; the funds cannot be spent on non-productive matters. It must be used to fuel infrastructural and other projects that not only employ great numbers of people but enhance the overall productivity of the economy. The funds must be used to backstop state governments in a nonpartisan manner so that each state government may continue to pay salaries and pursue projects essential to that state’s economic critical path.


To accomplish this, the federal government needs to reverse the inimical “dollarization” of the national economy in two ways. First and most importantly, it must abandon the out-dated peg of fiscal policy and expenditures to the dollar intake. The one actually has no correspondent nexus to the other. Any commanding connection we give it is an artifice not an economic necessity. Related to this, we must reverse a trend that has gained momentum under this government. Among government-aligned elite, the fad has been to conduct domestic business transactions in dollars. Policy must “nairasize” the economy by requiring all domestic transactions occur in our legal tender. As this is done, the government’s infinite ability to issue naira will come to outweigh the limitations inherent in the overuse of the finite supply of another nation’s currency for transactions wholly internal to our domestic economy.


Inflation is the major risk of running budget deficits to spur growth. We can contain inflation to acceptable levels by ensuring additional government expenditures are for items that can be supplied domestically, particularly labour. Naira paid to poor and working class people mostly circulates in the domestic economy, spurring additional local commerce and production. This is because their consumption patterns do not approach the level of import expenditures associated with their wealthier compatriots. Related to this, we must decrease our level of superfluous imports.
These measures will place downward pressure on the naira. Devaluation will not be destructive but it will be noticeable. For most nations, such devaluation would be welcomed as it would make export industries more competitive, thus creating jobs and export earnings in the process. However, this will not be the case initially for us because of the moribund state of our industrial sector. Here, government would need to initiate crash programmes aimed at enhancing those domestic industries perched on the borderline of international competitiveness.


In the end, the policy I propose is not without risks, inflation being the chief concern. Yet, if wisely prosecuted, the rewards of job creation and economic growth allocated among the bulk of the populace outweigh the inflationary risk. More to the point, the policy now pursued bears no risks at all. It is certain to toss the average man’s economy into a stagnation that will resemble the onset of a major recession. Saving the people from this unnecessary plight is sufficient imperative to eschew the policies of old and embrace the progressive course.
I offer this advice, this warning, because the people have suffered enough hardship. I offer this advice in the slim hope those in power will ignore the messenger and objectively weigh the quality and humane nature of the message. If so, they will spare the people the grief visited upon a vulnerable people when their government blindly imposes last century’s policies in a modern setting inappropriate to the old strictures.

Regardless of our partisan affiliations, let us consecrate this land by dedicating ourselves to the betterment of the poor, weak, and needy members of our national family. Let this moment not pass like so many others where we have demanded that the most vulnerable among us bear the greatest weight of the national burden. Let us give them the hope, change and dignity they deserve and human decency demands. This is how we make the nation great. When I speak of a common sense revolution, this is what I mean.
• Tinubu is a National Leader of the All Progressives Congress (APC)

http://www.thisdaylive.com/articles/slump-in-oil-prices-a-progressive-way-out/193976/

CC: lalasticlala

So Amaechi, you're indirectly admitting your failure as a governor?

Incidentally, most of the people who were responsible for the bad are in the APC.

Rotimi47:
APC has at least 3 APC governors/States that did better than the best PDP governor's & states.

Name the 3 APC governors

Mynd44:
Woke Soyinka had a third class too.

Next!!!!

I thought he said he didn't grad with a third class.

And this is a country I can travel to with my ECOWAS passport. #Marriage things on my mind.

Why is this thread still up there?

Hmmm

Everybody keeps on saying the same thing

Tinubu was right.

Employment not full or gainful employment. The NBS is right.

Jesus christ! I don't even know what to say. Everyday I wake hoping to acknowledge something positive about this country of ours that will give me hope about our future but the more I try give myself hope and find reasons that this country will change and progress, I see a thousand reasons why this country will continue to go down as a cesspit. Nigeria sucks big time. This country is disgusting.
The level of injustice, hatred, greed, selfishness, impunity, ignorance, anger, prejudice and other disgusting human evils that has been perpetuated and being perpetuated in this useless country is out of proportion and unrivaled by any society in this world.

Amaechi is a failure.

Time to split this useless country.

Lola dey learn work for where that babe dey.

Why should he, and what are his so-called achievements? A voters register filled with under aged voters?

Central Bank of Nigeria and All Nigerian DMB's are also big culprits. Though they ain't government agencies