Go Lean…Caribbean

Go Lean Commentary

Inflation is not always bad…

Rise in prices equal to a rise in the economic growth. In parallel, a drop in prices could translate to a drop in the economy. From a macro perspective, this scenario – deflation – is bad. Thus there is the need for a stimulus.

The following news article aligns with the book Go Lean…Caribbean; it serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU) and Caribbean Central Bank (CCB) to provide better stewardship, to ensure that the economic failures of the past, in the Caribbean and other regions, do not re-occur here in the homeland. The purpose of the Go Lean book/roadmap is economics, and important methods to elevate and empower Caribbean society. In total, the societal elevation roadmap has these 3 prime directives:

• Optimization of the economic engines in order to grow the regional economy to $800 Billion & create 2.2 million new jobs.
• Establishment of a security apparatus to protect the resultant economic engines.
• Improve Caribbean governance and industrial policies to support these engines.

This AFP article here reports on the move by the European Central Bank (ECB) to mitigate negative movements in the regional economy. Economic news from Europe is germane for Caribbean consideration as that region is our largest trading partner after North America; plus the Dutch and French Caribbean member-states are directly impacted. Lastly, the Go Lean roadmap is modeled after the structures of the EU and the ECB. See the full story here and VIDEO below:

Title: ECB unveils 1 trln euro stimulus programme
By: AFP – Agence France-Presse – Paris-based Global News Agency – (Posted 01/22/2015) –
http://www.economist.com/blogs/economist-explains/2015/01/economist-explains-13

Frankfurt (AFP) – The European Central Bank on Thursday unveiled plans for a massive programme of bond purchases to avert the threat of deflation in the euro area.

After the ECB held its key interest rates at their current all-time lows at its first policy meeting of 2015, central bank chief Mario Draghi said a programme would be launched to buy 60 billion euros of private and public bonds per month starting in March.

“The combined monthly purchases of public and private sector securities will amount to 60 billion euros ($70 billion). They are intended to be carried out until end-September 2016 and will in any case be conducted until we see a sustained adjustment in the path of inflation,” Draghi told a news conference.

Critics had expressed concern that European taxpayers would have to foot the bill of such a programme, known as quantitative easing (QE), if any one country defaulted on its debt.

But the plan had been designed so that only 20 percent of those risks would be shared, with the other 80 percent to be shouldered by the national central banks of the countries concerned, Draghi said.

QE is regarded as the central bank’s most powerful tool yet to ward off deflation in the single currency area, where consumer prices actually started to fall in December.

These issues are huge in world economics.

The Switzerland Nation Bank made a controversial move last week of unpegging their currency (franc) from the Euro in anticipation of this move. Even oil prices are affected, as the wholesale price of oil rebounded in internal exchanges also in anticipation of this ECB move.

A previous blog/commentary delved into the topic of inflation, but this time, the issue is deflation. In economics^*, deflation is a decrease in the general price level of goods and services.^[1] Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). Inflation reduces the real value of money over time; conversely, deflation increases the real value of money –- the currency of a national or regional economy. While on the micro basis, deflation allows one to buy more goods with the same amount of money over time, on the macro, Economists generally believe that deflation is a problem in a modern economy because it increases the real value of debt, and may aggravate recessions and lead to a deflationary spiral.^[3]

Deflation is caused by a shift in the supply and demand curve for goods and services, particularly a fall in the aggregate level of demand. That is, there is a fall in how much the whole economy is willing to buy and the going price for goods. Because the price of goods is falling, consumers have an incentive to delay purchases and consumption until prices fall further, which in turn reduces overall economic activity. Since this disposition idles the productive capacity of a society, investment activity also falls, leading to further reductions in aggregate demand. This is the deflationary spiral.

Deflation was present during most economic depressions in US history. ^[23] A decline in production and investments always signals fewer jobs.

An answer to falling aggregate demand is a stimulus from a central bank authority, as being facilitated now by the ECB, by expanding the money supply.

Whether you realize it or not, the issues in this commentary have a bearing on the disposition of the Caribbean economy. The region is mostly a service economy with little manufacturing/production businesses, so the dynamics of supply-and-demand bare heavy on the dynamics of our society. Our trading markets consume our products and services when their economy is growing, but defer spending when the economy is unsteady – the Caribbean and much of the western world are still reeling from the Great Recession (2007 – 2009). Early in the Go Lean book, the need for careful technocratic stewardship of the regional Caribbean economy was pronounced (Declaration of Interdependence – Page 13) with these statements:

xxiv.    Whereas a free market economy can be induced and spurred for continuous progress, the Federation must install the controls to better manage aspects of the economy: jobs, inflation, savings rate, investments and other economic principles. Thereby attracting direct foreign investment because of the stability and vibrancy of our economy.

xxv.    Whereas the legacy of international democracies had been imperiled due to a global financial crisis, the structure of the Federation must allow for financial stability and assurance of the Federation’s institutions. To mandate the economic vibrancy of the region, monetary and fiscal controls and policies must be incorporated as proactive and reactive measures. These measures must address threats against the financial integrity of the Federation and of the member-states.

The Go Lean book, and previous blog/commentaries, stressed the key community ethos, strategies, tactics, implementations and advocacies necessary to regulate and manage the regional financial eco-systems for the Caribbean. These points are detailed in the book as follows:

The points of effective, technocratic banking/economic stewardship, were further elaborated upon in these previous blog/commentaries:

Also, there is the assertion (blogged on previously), that there are 3 kinds of people in the world:

1. Those who make things happen
2. Those who watch things happen
3. Those who wonder “What happened?”

Where does the Caribbean lie in these classifications? How did the region perform in the more recent crises? The Go Lean book reports that “we” failed miserably. The book opens with the declaration that the Caribbean is very much in crisis, many member-states suffered societal abandonment: the brain-drain rate is estimated at 70% with some countries reporting up to 81%; Puerto Rico and their fellow US territory, Virgin Islands, watched as more that 50% of the general population have fled those islands, and now all aspects of their society are in a “pickle”. This disposition is symptomatic of a Failed-State status. But alas, the book relates on Page 8: “a crisis is a terrible thing to waste”.

The concept of “lean” in the title Go Lean…Caribbean brings to the fore the agility and efficiency needed to shepherd the regional economy. The namesake draws reference to a popular 1970’s song entitled Lean On Me (artist: Bill Withers) and these key lyrics; quoted in the book on Page 5:

If there is a load you have to bear, that you can’t carry, I’m right up the road; I’ll share your load, if you just call me.

Needless to say, the issues derived from the foregoing news article about deflation/stimulus in Europe require strenuous monitoring of the world’s economic landscape by Caribbean stakeholders so as to mitigate the risks and threats to the regional Caribbean economy. There was no one performing this heavy-lifting for the run-up of the 2007 – 2009 Great Recession / Financial Crisis. Perhaps they were only watching things happen, or worse, caught off-guard and just “wondering” what happened.

No more! Change has come to the Caribbean. The quest of this Go Lean roadmap is to structure the unified Command-and-Control toolkits to better manage the economic affairs for the people of this region. This God-given responsibility for the leaders of these countries was stated in the Preamble of the aforementioned Declaration of Interdependence (Page 10):

While the laws of nature and of nature’s God entitle us to form a society and a brotherhood to foster manifestations of our hopes and aspirations and to forge solutions to the challenges that imperil us…

Continuing that devotional theme, the duties of Caribbean leaders can be likened to the role of a “Watchman Class”, described in scripture:

Ezekiel 3:17 – “Son of man, I have appointed you a watchman for the house … Whenever you hear a word from my mouth, you must give them a warning from me. (New English Translation).

The CU/Go Lean planners hereby report for duty in facilitating this heavy burden, the oversight of Caribbean economic concerns to facilitate proactive and reactive protections of regional fortunes. The roadmap calls for “watching” and doing – making things happen. The responsible party is the CCB or Caribbean Central Bank. This cooperative will combine the foreign reserves of all 30 member-states and issue Caribbean Dollars (C$) in their place. By technocratically controlling the C$ money supply, the CCB will be able to stimulate and/or curtail growth, inflation and deflation. This type of unified Command-and-Control was needed but missing during previous Caribbean crises.

The Caribbean’s 30 member-states, the people and institutions, are urged to lean-in to this Go Lean confederation roadmap.

Hebrews 13:17 – Have confidence in your leaders and submit to their authority, because they keep watch over you as those who must give an account. Do this so that their work will be a joy, not a burden, for that would be of no benefit to you.

The Go Lean roadmap does not claim any divine inspiration, but it is derived from wise principles codified in the Bible (Page 144); the roadmap serves as turn-by-turn directions, the heavy-lifting, to apply those principles, to move the region to a new destination: a better place to live, work and play. 🙂

Download the book Go Lean … Caribbean – now!

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* Source Reference: Some information retrieved from http://en.wikipedia.org/wiki/Deflation.

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VIDEO: ECB launches 60 billion Euro stimulus program (Preceding Advertisement) – http://www.nbcnews.com/video/cnbc/56842268/#56842256

The ECB’s Mario Draghi, reveals the central bank’s asset-buying program, and interest rate decision.