Letter in Cape Times: 3rd February 2016: Aim for Zero Inflation

Letter in yesterday's Cape Times:

Title: Aim for Zero Inflation

Recent letters and articles by economists in the Cape Times and in the business section explain that the only lever that the Reserve Bank has to control inflation is interest rates.

Another lever is controlling banks' reserve margins. Banks are allowed to lend a multiple of the actual funds they have in cash or on deposit or in other investments. Increasing the banks' reserve margins forces banks to slow down their lending and, importantly, does not affect borrowers, especially business borrowers who need money so that they can expand, employ people, etc.

Furthermore, in the South African environment, it is the government which is creating most of the inflation with its very high price increases. Think electricity, water, rates, petrol, diesel, transport, sewerage, waste, taxes, red tape, etc, which all push up inflation, yet aren't caused by the consumer. These inflation pressures are caused by the government wanting to do everything itself, rather than by a government creating an enabling environment for business to do business. The Reserve Bank can maintain its independence by criticising government spending!

And yet another lever is for the Reserve Bank not to print money for the government to spend on things such as over-inflated budgets, corruption and unnecessary expenditure. If the Reserve Bank stopped printing money then inflation would slow down, and we might even have deflation, supposedly a "bad" thing, but actually a good thing as our money in the bank and our earnings become more and more valuable, rather than less and less valuable.

Two more tiny points: One is that the Reserve Bank controls the definition of inflation and every now and then it changes what is in "the inflation basket". The Reserve Bank should ignore the effect of government-induced inflation! And, secondly, the Reserve Bank sets the upper limit on what it deems to be "prudent inflation". At the moment the upper limit is 6 percent. Nowhere have I read that the Reserve Bank sees inflation as a "bad" thing and wants to reduce inflation, or that the upper limit should be increased to 8 percent. In fact, the Reserve Bank has a range of "good" inflation, ie between 2 and 6 percent.

The Reserve Bank should state that it wants to reduce inflation to zero percent. Then things won't increase in price any more and our costs will actually start going down!

Does anyone know what R100 Billion is?

R100 Billion is R100,000,000,000 or 1 with 11 zeros after it or 10^11 in scientific notation.

Can you picture 100,000,000,000 centimeters?

What is 100,000,000,000 centimeters?

The distance to the moon is 384,403 km which is 384,403,000 metres which is 38,440,300,000 cms which is 38 billion which is still less than 100 billion!! So 100 billion centimeters is about 3 times the distance from the earth to the moon in centimeters.

We are continuously told by government that there's no money, but if we think differently we will suddenly find we have ample money.

The South African government spent R7 billion on consultants last year to mainly write reports which are never going to be used or implemented. The R7 billion could have bought 700,000 R10,000 Solar Water Heaters. The R7 billion could have paid proper teachers salaries.

One way to find the money is to use the R100 billion for the Medupi power station in a different way. Stop the Medupi new power station development, pay the fines, and use the remaining R70 billion (my guess) for R30 billion of Solar Water Heaters (20GW of energy instead of 5GW of energy), R7 Billion for the teachers, and "change" for: feed in tariffs; zero VAT on renewable energy products; 30% rebates on all solar water and renewable energy installations; tax credits; R10 billion for training and skills transfer from Germany, Spain, USA, Australia, etc.

I had a meeting with an accountant today and did a presentation about thinking differently and mentioned the R100 billion. He said what can we do & we should concentrate on the "small numbers" that we can do something about. I said what's the turnover of your biggest client? He said R200 million. I said that is 500 times less than what the government is spending (on 1 power station and we need 4 more in 5 to 10 years and another 16 after that!! - if we don't change our thinking) and accountants have a huge amount of education and annual courses, exams, etc. The government employee probably doesn't have this level of financial knowledge. How is it that she can understand a figure 500 times more than he can?

The point is that the citizens of the world pay these huge figures when we really don't need to. The governments of the world have as much money as they need. They just print it. It's called inflation. Let's use some of this money to rectify our mistakes so that we don't need a cost of living anymore - and so that we can have real deflation where our money is worth more each day instead of less each day.

Please visit My Power Station for more information about how you can reduce your personal carbon footprint today. Then please read "David Lipschitz Facebook Campaign to Make South Africa a Better Place" and write to our ministers and get the rules of the game changed. Email addresses are provided in the Facebook article.

Ke Nako
The time is now.
Solar Regards,
David