20800: Lyall to Antoine on dollar and dola ht (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: j.david lyall <j.david@lyalls.net>

Well, this isn't hard Guy. When the government doubles the money
supply, by printing
money and issuing credit thru the banking system, the value declines
in relation to
the dollar or the euro. The u$d is declining in relation to the
worlds safest currency,
the Euro now due to runaway credit and borrowing. There is just such
a large cushion
of productive asssets that it takes a while.

Aristide cut the value of the gourde in half soon after his second coming.
I suspect this was deliberate, to reduce the salaries of government employees.
No one got a raise when the haitian dollar went from 4 to one to 10 to one.
It later recovered to 8 or 8.5 to one where they have kept  it more
or less stable.
Your professional salary of 2000 or 2500 haitian dollars per month went from
500 u$d of purchasing power to 250 u$d. Nurses, police officers,
translators make
this kind of wage. Not enough to eat on, in other words.

When a country uses a remote currency unit, like a dollar or pieces of eight
(the worlds currency for hundreds of years) the value is secured by someones
central bank or the mines of mexico and peru.

I think adopting the us dollar would be the same as fixing the gourde at
five to the dollar. Ecuador has local coins for fractions of a dollar.
As Argentina proved, this is no cure all. Internal debt was what killed the
argentines. They kept borrowing money, just like the usa is today, within
the domestic economy. Those peso bonds came due and they could not repay
them.

What is mysterious to me is how the haitian central bank kept the gourde at
5 to the dollar all thru the duvalier regimes. It wasn't until the
first aristide embargo
of 1992-94 that the gou started to fall I believe.

-
J.David Lyall, or
     Jedidiah Daudi
http://www.lyalls.net/