Withdrawal symptoms of US dollar addiction will be painful

IN Matthew 5 verse 5, the Bible powerfully declares: “Blessed are the meek, for they will inherit the earth.”

If the holy book was talking about nerds, then this has since come to pass.

This world is now well and truly controlled by nerds.

In fact, this has been the case for the longest time, if not for centuries.

We saw it in the late 18th century to early 19th century, when the organisation and material wellbeing of societies were radically transformed by the advent of steam power, mechanisation and factories, which prompted the transition from agrarian economies to industrial ones in a phenomenon that came to be known as the First Industrial Revolution.

We also saw how the invention of the incandescent lightbulb by Thomas Alva Edison in1879 and construction of the first central power station in 1881 led to a literal power revolution that spurred mass production and assembly lines that ultimately changed local and global economic, social and power dynamics.

And they called this the Second Industrial Revolution.

We also saw how the invention of the computer in the 1950s — and the attendant evolution of automation, information technology, digitisation and production processes — led to the Third Industrial Revolution, which essentially accelerated globalisation.

We are currently living through the Fourth Industrial Revolution, where innovations like cyber-physical systems, the internet of things, artificial intelligence and advanced analytics are reshaping the world in ways never seen before and redefining business models, as well as corporate and global power dynamics.

It is not surprising, therefore, that the overlords of Big Tech, such as Elon Musk, Mark Zuckerberg and Sam Altman, have become the new rulers of the world.

In one way or the other, perceptibly or imperceptibly, they invasively shape, control and influence our perceptions, thoughts and worldview.

You only need to reflect on how our society has become addicted to social media, obsessively and slavishly consuming content prompted and churned out through algorithms at the behest of Big Tech.

The evolution will no doubt continue.

Success of failure

But nerds are human like all of us, or are they?

They live, love, die and, most importantly, fail like the rest of us.

As motivational speakers are often given to hyperbole and exaggeration for great effect, it is not known exactly how many times Thomas Edison failed — some say it could have been 1 000 times and others insist it was more than 10 000 times — before he could come up with a viable incandescent lightbulb.

“I have not failed 10 000 times — I’ve successfully found 10 000 ways that will not work,” Edison was quoted as saying about his numerous failures as an innovator and inventor.

This is exactly the mentality and psyche of those who are responsible for disrupting the world.

Today, we remember him for his inventions and not failures.

ZiG caught in crosswinds

We often exalt successful economies but do not take time to reflect on the tortuous journeys and upheavals that preceded their lofty milestones.

Time and again, Bishop Lazi tells the story of bouts of economic instability that punctuated China’s rise from an economic backwater to the giant it has become.

You see, 10 years after Deng Xiaoping began opening up and reforming China, the Asian country was hit by a remarkable bout of inflation that led to growing anxieties among its population.

Following the advice of an American “free markets” evangelist Milton Friedman — the first Nobel Prize winner in economics to visit the country in 1988 — China, which had hitherto maintained a two-track pricing system for state-owned enterprises, whose prices were controlled, and the open market, decided to allow “prices to break on through the pass”.

In layman terms, this entailed a wholesale liberalisation of prices, in keeping with the laissez-faire capitalist gospel and doctrine, which is premised on the philosophy of government’s non-interference in the market.

In March 1988, the so-called “release of prices” began in Shanghai with the removal of price controls on 280 different goods, most of which were basic commodities.

Prices immediately rose between 20 percent and 30 percent.

In May, prices of pork and other meats rose by an average 70 percent.

It was almost catastrophic.

“With expectations of rising prices, people began a frenzy of buying and the panic was nationwide,” wrote one Chinese author and journalist, Wu Xiaobo.

“People started buying whatever they saw in front of them, as if in a daze. They bought durables, but they also bought consumer goods and even what had previously been unsaleable items . . .

“In short order, people began to say that they could not take it; the price increases were too great. Professors in some universities were selling wonton soup, bread, eggs and popsicles on the street — they couldn’t make ends meet by relying on salaries alone.”

For perspective, prices rose faster in 1988 than in any other year since 1950.

You need to reflect on this the next time you hear about China’s economic miracle.

But what could be much closer to our current experiences was the turmoil that characterised Brazil’s currency reforms ever since 1942.

The South American country actually had eight different currencies, starting with the cruzeiro, before it eventually got it right with the real, which still exists as a stable currency today, in 1994.

The period 1981 to 1994 was particularly tumultuous.

However, the eight-year period to 1986, which preceded the introduction of the real, was instructive.

For instance, in February 1986, Brazil introduced the Cruzado Plan, which entailed changing the currency from the cruzeiro to cruzado and lopping off three zeros (Now you see that Gideon Gono was not the first man in the world to lop off zeroes from a currency).

The cruzado was pegged to the United States dollar.

At first, the plan was very successful in taming inflation, but it began unravelling.

Products became scarce and inflation rose. This prompted the authorities to come up with Cruzado II in November 1986.

Again, this did not work, as inflation continued to soar.

Unbowed, Brazil came up with the Bresser Plan in July 1987; then came the “Black-Beans-and-Rice” policy in January 1988; the Summer Plan in January 1989; the Collar I and Collar II plans in March 1990 and January 1991, respectively; and, finally, the Real Plan in February 1994.

It was the latter plan, which interestingly did not have the backing of the International Monetary Fund, that would finally put an end to hyperinflation.

Overall, the plan was designed to reduce deficits, modernise firms and reduce distortions that arose from previous price freezes.

The new currency — the real — was ultimately introduced in July 1994, ending a nightmare of currency volatility, unstable prices and hyperinflation that had plagued Brazil for decades.

Proverbs 14 verse 23 says: “All hard work brings a profit, but mere talk leads only to poverty.”

Throes of currency reform

And, folks, Zimbabwe, which has been in the throes of an elaborate currency reform ever since 2018, finds itself in that historical period characterised by boom-and-bust phases as it engineers a viable and sustainable solution for the economy.

The journey is always going to be tortuous, especially for a country that has been plagued by economic sanctions for the past two decades.

Were it not for the coercive measures, banks would have been able to mobilise lines of credit for local companies, thereby lessening pressure for US dollars on the foreign currency market.

The continued rise in exports to historic highs that we are currently witnessing would have conveniently undergirded the value of the local unit.

But we have to find our way to the promised land, regardless.

It might take some time, but the Bishop is convinced that we will get there.

The de-dollarisation crusade is gaining traction.

Next month, the BRICS+ bloc (Brazil, Russia, India, China and South Africa, together with the newly co-opted nations such as Egypt, the United Arab Emirates, Iran and Ethiopia) will meet in Kazan, Russia, to discuss, among other critical issues, the roadmap to ditching the US dollar, which has increasingly been weaponised by Washington against its perceived adversaries.

There have been rumours that the rapidly expanding bloc is “expected to introduce a new multicurrency platform along with a roadmap for a gold-backed BRICS trading currency”.

BRICS Pay, an alternative to SWIFT, which has become a notorious enforcing arm of Washington’s sanctions programme, is also being mooted.

These are the once-in-a-century changes in the world that we are beginning to see.

Zimbabwe, which has expressed strong interest to join BRICS, has already begun the journey towards de-dollarisation with the accumulation of gold reserves by the Reserve Bank of Zimbabwe and assiduous efforts to defend and shore up the value of the local currency.

As the Bishop always says, the US dollar is like an addictive drug; it can only get us high without delivering the substantive and material changes to our economy that we require.

And the withdrawal symptoms from de-dollarisation will no doubt be painful.

It, however, has to be done.

Forward ever, backwards never!

Bishop out!