Currency devaluation and Keynesian economics – Part 2

Continued from yesterday

After engaging aggressive enemies in a four-year no-holds-bared warfare, which practically wiped out their industrial capacities, the economically exhausted conquering nations were now to face an aggressive international market. The reason they had committed so much men and materials to the war was to maintain their international trading advantages and, if possible, enhance these advantages; now, after winning the war, the conquerors lost the trophy they had laboured so hard for.This realisation must have in part blinded the conquering nations to the consequences of insisting on the unsavoury terms contained in the Treaty of Versailles.

Meanwhile, the feeble attempts to pay the prescribed reparations to the conquering nations had led to steady draining of the world’s supply of gold into U.S. vaults, where it was ill-advisedly kept for fear of producing uncontrollable inflation in America (!) Typically, the U.S. had lived up to its established tradition of magnifying issues, be they good or evil. The very act of hoarding desperately needed funds to rehabilitate sections of the
human race that were unfortunately circumstanced magnified the inherent ills in the Treaty of Versailles. The depressive consequences of this unhealthy build-up of gold in the U.S. vaults first became manifest in the Wall Street in 1929. Less than four years following in 1933, the world had to contend with the crisis of excessive money (in a section of the world), thus entered the Great Depression or the “crisis of plenty”; the global
consequences of the Great Depression dovetailed into the out-break of World War II in 1939.

Hoarding, for the sheer sake of accumulating material wealth is the evident reason why the superpowers insist on unequal terms in international transactions. Karl Marx, another famous economist, had termed it “primitive accumulation.” I agree; otherwise it ought to have been obvious that a huge part of that idle wealth in U.S. vaults should have been deployed to reconstruct the war ravaged European nations and World War II might have been averted.

Had Japan not carried its dare-devilry proclivity to the extreme by dispatching suicide bombers to U.S. Pearl Harbour, on Oahu Island in Hawii, the U.S. might have contented itself with the role of providing finances and weaponry in World War II. The wealthy U.S. economy was founded and rests on a formidable military-industrial complex. The U.S. was belatedly dragged into the war as hostilities rapidly drew to a close in Europe, the epicentre of the war. World War II ended in Europe in 1944, but continued outside of it until August 1945 when touch-as-teak Japan eventually capitulated following the novel atomic bombing of its two cities of Hiroshima and Nagasaki.

The underlying lesson in the foregoing narrative is that the superpower nations, led by the U.S., are heavily biased towards military industrialism, this superiority had stood them in good stead when it was “fashionable” to secure international trading enclaves by prosecuting wars with perceived competitors. But the 21st century arrived with a significant paradigm shift. Trading enclaves are today won and secured through superior manufacturing productivity: quality products at competitive prices. More tellingly, this paradigm shift was pioneered by no other nation than self-same tiny Pacific nation whose two cities had received the last poundings of World War II: Japan.

Many sensible countries have since borrowed a leaf from Japan, but the old war horses still insist on pursuing their “might is right” policy in international transactions.

While religiously applying Keynesian economic philosophy of tempering market forces with enlightened social programmes for the weaker segments of their respective citizenry, the superpower nations bully militarily weak nations to do the opposite, advocating such anti-people policies like mass retrenchments of workers (sans safety nets), accumulation of huge foreign exchange reserves (with grossly inadequate domestic infrastructure), jumbo foreign loans, massive currency devaluations, etc.

In words of a syllable, the superpowers manipulate weaker nations to subsidise their economies, nay unrealistic lifestyles. Arithmetically, I do not see that the US dollar could ever be composed of a higher productive quotient than Nigeria’s naira, what with the U.S. trillion-dollar zero–revenue recurrent expenditure on her military/intelligence infrastructure across the world, and the hard-to-justify perquisites for U.S. corporate executives. It’s ,therefore, absolutely absurd that today one needs over N300 to acquire one US dollar, (the dollar was worth less than 80 kobo in June, 1986). The 1986 devaluation was a very costly mistake; revaluation of the naira to its rightful status relative to the US dollar is a task of emergency proportion.

Emerging evidence suggests President Buhari is convinced this task constitutes a significant part of his presidency; may God grant him the courage of his apparent conviction.

• Concluded
• Nkemdiche, an engineering consultant, wrote from Abuja