by Wayne Chen (Gleaner 2009)

The recent rapid slide in the Jamaican dollar and hike in interest rates have heightened fears of a future of economic instability and the global financial meltdown has only served to turn fear into despondency.

Back in 1995, Jamaica was faced with low growth, high inflation, high interest rates and a sliding dollar. Seeking to be proactive in the face of a looming crisis, the Private Sector Organistion of Jamaica commissioned Alternative Monetary Regimes For Jamaica by Steve H. Hanke and Kurt Schuler.

They proposed three options to stabilise Jamaica’s economy: full dollarisation, joining the Eastern Caribbean Central Bank, or establishing a currency board.

Given what has happened to our economy since 1995, miasmic growth, a financial sector crisis, and regular bouts of instability, I believe that Jamaica needs seriously to consider the options proposed, but personally I am in favour of full dollarisation.

buoyant economy

A few months ago, flying into Panama City, I was struck by its ultra-modern skyline, an amazing development in a country that was poorer than Jamaica not too long ago and in a city that had been racked by conflict as recently as 1989. My taxi driver boasted proudly that there were over 80 high rises under construction in the city. I could not help but wonder whether its use of the United States (US) dollar, legal tender since 1904, was a significant contributor to Panama’s buoyant economy.

I believe that full dollarisation, discarding the Jamaican dollar and adopting the US dollar as our legal tender, would reduce Jamaica’s “country risk premium”, the surcharge we all pay as insurance against exchange rate risk, high inflation and our other macroeconomic ills that make long-term planning virtually impossible.

Today, I favour dollarisation over the other options because it is the most resistant to political interference and once established, the most difficult to undo.

Adopting the US dollar would immediately protect our savings and pensions by ending devaluations and bringing inflation and interest rates down toward those that obtain in the US. Ending the devaluation and inflation expectations would eliminate speculative attacks on our currency and provide a stable, credible and secure economic and investment climate. This would lead to a more stable capital market less vulnerable to sudden capital outflows and a balance of payments less prone to crises.

Lower country risk would enhance Jamaica’s attractiveness to local and foreign investors and increase the possibility of more stable longer-term investments and sustainable economic growth.

Many Jamaican businesses and individuals already use US dollars or denominate transactions in US dollars to protect themselves against devaluation of the local currency. They have already internalised the US dollar as a measure and store of value and marker of financial performance.

Full dollarisation would mean further integration into the US, and by extension, the world economy. It is significant to note that despite all the talk in recent years of the US being replaced by the Euro Zone or the BRIC (Brazil, Russia, India, China) countries as the engine of the global economy, the rest of the world is looking to the US and President Obama to pull us out of the recession.

But the most powerful argument for full dollarisation may be that it would enforce fiscal discipline on present and future governments and enhance policy credibility by preventing the printing of money to finance spending.

Of course, there are also significant disadvantages to full dollarisation. If Jamaica gives up the power to print money, it loses control of its monetary policy to the US Federal Reserve and consequently, important tools to respond to economic crises.

The Bank of Jamaica would also lose the ability to collect seigniorage, the profit gained by issuing the Jamaican dollar. When El Salvador dollarised it lost an estimated 1.3 per cent of gross national product annually due to the loss of seignorage profits and the loss of the interest it would have earned on its net international reserves.

The Bank of Jamaica would also lose its role as the lender of last resort to the Jamaican banking system. This is an important point as while the central bank may be able to provide short-term emergency funds from its reserves to help troubled banks, it could face a serious challenge to cover withdrawals in the event of a wide-scale run on bank deposits.

Jamaica would also have to meet all of its debt obligations, including those currently denominated in Jamaican dollars, in US dollars. If the reserves were insufficient this would mean having to borrow the money by running a current account deficit or accumulating a current account surplus.

The final disadvantage of dollarisation would be the loss of the Jamaican dollar as a symbol of independence and sovereignty. The Panamanians retain the right to mint their coins and we could do the same. Our national heroes may not be on the paper notes, but I suspect that they would not mind being on coins that retain their value for years to come.

El Salvador implemented dollarisation in 2001 as an extension of the free-market policies implemented since the end of its civil war in 1992. It was pushed by business and financial interests and supported by the conservative ARENA party. Unlike Ecuador, which dollarised in 2000 to quell hyperinflation, El Salvador had a stable, growing economy and the relatively low interest rate of 4.3 per cent the year before full dollarisation.

The real reason El Salvador dollarised seemed to have been the fear that the leftist FMLN party was gaining popular support and would have undone the economic policies that had tamed inflation and spurred growth.

So far, dollarisation has been a mixed blessing for El Salvador and there are useful lessons for Jamaica as we are both small, middle-income, developing countries with relatively open economies struggling with many of the same challenges.

Since dollarisation, El Salvador’s financial and business sectors have done very well as lending rates have fallen and exchange rate risks have been eliminated. However, the poor has struggled to keep up as prices have risen faster than wages, imports have grown faster than exports, the economy has grown at an average rate of 2.6 per cent since 2001 versus 3.6 per cent average for the six years before and there has been no windfall of foreign investment.

Today, the challenges of persistent poverty, relatively low productivity and high levels of gang and drug violence continue to offset the benefits of dollarisation.

The El Salvador case demonstrates that dollarisation may well be necessary to “lock in” the benefits of macro-economic stability, but not be sufficient to guarantee economic growth and development.

economic catastrophe

If we were to opt for full dollarisation, we would have to prepare well and proceed with caution as any mistake in our assumptions or implementation could foment an economic catastrophe.

We would have to address important issues such as whether the current level of foreign reserves is sufficient and there are significant costs associated with discarding the Jamaican dollar that would have to be assessed.

In the end, dollarisation is neither a panacea for fiscal indiscipline and macro-economic instability, nor a one-size-fits-all prescription for economic ill. It would not automatically make Jamaica more attractive to investors or make our businesses more competitive in the global marketplace. The Government would still have to do a lot of hard work and spend a lot of political capital to ensure that the public and private sectors are efficient and competitive. But this does not mean that the debate, discussion and planning should not proceed with urgency.

Wayne Chen is president of the Jamaica Employers’ Federation. Feedback may be sent to



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  1. Magical thinking at work here. Just one change and abracadabra everything is fixed. I refer you to this…..

    • Delano Seiveright

      Actually it is a pretty balanced piece. Outlined the pros and cons. Nevertheless it is worth thinking on. Cheers i read your piece. Interesting!

    • Wayne Chen

      I did not compose the headline, which is misleading. Of course, dollarization is not “the” answer but it may be a part of the answer. There is no panacea to fix Jamaica’s many challenges but we should dispassionately consider the options that could be effective in moving us forward. Dollarization has helped other developing countries stabilize their economies so we should not dismiss it out of hand.

  2. Thanks for your reply Delano….We don’t want ‘balance’, we want objectivity. Dollarisation can never be the solution when we have fiscal mismanagement, growth in govt, Govt Ponzi schemes (ie bonds, T-bills, etc) and a lack of political and economic freedoms for the masses.

    Maybe you’d like this piece as well…

  3. Brian

    Adopting the U.S dollar as a legal tender is a stupid and short-sighted thing to do. The U.S economy is in big trouble, and there is no end in sight that the U.S is ever going to get out of debt. This means that high inflation at best is what is in store for the U.S. But based on what is going on within the U.S, the end result will be that its economy is going crash, not only because of what I said above, but in addition pretty much everything in the Country is going up, expect for the average person’s income. So when the U.S economy comes to a screeching halt, and it will, so would the Jamaican economy. There is going to come a crisis of the dollar, and when it happens it is going to have a global effect because so many Countries are using it for trade. But the Country that is not dependant on using the dollar will do better, especially if they are putting more effort into strengthening and developing their local economy.

    The problem with Jamaica is that the Country lacks real leadership, and that those so-call leaders are not, and cannot serve the Jamaican people because they are severing foreign interest. How can an economy grow if it is importing so much of what it consumes? And as long as that continues the Jamaican dollar will continue its down-ward slide. This problem cannot be fixed with the clowns that are in office…..they all need to be replaced with people with good vision put the people’s interest ahead of party.

    • Noel Richards

      What you don’t seem to realize is that should the US economy collapse, so goes the rest of the world. Do you realize that without US financing through private Corporations that China’s economy will grind to a halt. Plus should Americans stop importing the products its Corporations have produced in China, Chinese workers will be idled. US Corporations have invested Trillions into China’s economy since the 1970’s, China did not emerge simply through its own industry, it is being exploited, and is actually in more debt relative to wealth, than the US Government. China’s only game is the Chinese Government’s US$3 TRILLION foreign currency reserves (that is the Chinese savings everyone refers to). Most of that money is actually invested in Dollar based securities for a critical reason that I cannot explain here. China has been “printing” money, unknown to most, lending most of it to Chinese companies to try to maintain some growth, without which they will not be able to employ Chinese citizens, an imperative, leading to revolt. This debt is enormous, and too much of it is already bad, they have created a real estate bubble of unprecedented proportions, building empty cities and pride projects that will see no return on investment. It exists, you just don’t know about it.

      The debt you see in the US system is public debt that is the construct of a corrupt system that transfers money from the public to mostly private Americans, who then hide that money Offshore in the US$67+ TRILLION Shadow Banking System. That US$16.8 TRILLION Federal Debt is mostly American held, about US$11 TRILLION. The real problem with the US system is that it is improperly run, not that it is bankrupt, it is far from that.
      The big mistake being made by observers is misinterpretation of the warped Federal implementation of public policy to mean bankruptcy. Unlike too many countries, US wealth cannot be judged based on its Government or the local economy. Those in charge believe that they can continue to Outsource the Industrial base, allow Corporations and private individuals to Offshore the proceeds, while using the Federal Reserve to make up the difference in Federal budgetary deficits. This is why there will be a harsh reconstruct as Americans turn to investing their money in the US versus the current paradigm of “everywhere else but the US”. But if you believe that Jamaica will be better off by itself or attached to another country, versus being strongly attached to Americans (not the Government) through cooperation with specific States (not the Federal Government), then by all means go that route. It will be a big mistake.

      Look at Brazil, that country is seeing inward flows of large amounts of US money for quite some time now. Lula was a pragmatist who realized that he could not provide for Brazilians with just the desire to be socialist, he knew that he had to figure out a means of attracting foreign investments and using it for the best interests of Brazilians, while allowing the investors a satisfactory return. The World Cup and Olympic Games being rewarded to Brazil were not coincidental. Right now the US Federal Reserve’s US$85 Billion/month virtual money creation program is keeping the world economy afloat. US$45 Billion is for QE3 for the US Federal Government and US$40 Billion is for the purpose of purchasing bad debt form the banks (sub prime loans), relieving them of a millstone, freeing them to lend, stimulating the real estate sector in the US. It has worked somewhat, but it is artificial and cannot be sustained (the Fed has doubled its asset holdings in less than a year from US$1.6 TRILLION to US$3.1 TRILLION), and much of that money has flown to the BRIC’s, especially Brazil, overheating the Real and causing the Brazilians headaches. The US$ is also greatly undervalued, and should it hit its true valuation, the Jamaican $ will fall off a precipice.

      • Brian

        The U.S needs the rest of the world more than they need the U.S. If the world decides not to do trade with U.S dollars, and use their own currency instead the U.S economy would collapse. The Europeans can always trade with each other….the Caribbean Nations can work with each other, and so on.

        Nations thrived and existed long before there was a Country called the United States of America, and they will exist even when the U.S as we know it ceases to exist. No Nation is indispensable……history should have taught you that.

      • Noel Richards

        Brian, I will let you in on a secret, the rest of the world required the US Federal Reserve to bail it out during the crisis that occurred beginning in 2007. Your idea that the US needs the world more than it needs the US is an opinion not based on fact, it’s about what you don’t know, but you are entitled to your opinion anyway. There is a lot you are not privy to, such as the fact that Europe required the assistance of the Fed to the tune of almost US$2 TRILLION between August 2007-April 2010. US Banks received another US$5+ TRILLON, much of which was dispersed throughout the world in investments. Had the Fed not taken this action, many banks would have collapsed around the world, not to mention Governments short of US Dollars, creating a major domino effect. You are also unaware of something called Central Bank Liquidity Swaps (I suggest you look it up) that the Fed used to prop up the Euro, without which it would have failed. The PIIGS owed US banks approximately US$1 TRILLION alone, that is Portugal, Ireland, Italy, Greece and Spain, if you tally the EU in total it comes to many TRILLIONS more. The “City” of London is Wall Street’s “Gateway” to trading that is not approved by the SEC in the US. You will never see the US needing the IMF, and I’m sure you don’t even know that Britain required the IMF in the 70’s. Most of Europe still owes the US TRILLIONS in today’s Dollars from debts incurred during WW One, Britain alone owes almost US$500 Billion, Finland is the only country that repaid its debt. I could list the TRILLIONS that the US gave Europe during and after WW Two, but I won’t. The amount of time that a country has existed has absolutely nothing to do with this discussion and it only goes to highlight some form of animosity towards the US, unjustified or not, that succeeds in clouding your view.
        Europe has consistently descended into chaos and war because of its centuries old conflicts and animosities, which is why the US decided to not retreat to it’s prior isolationist stance, becoming the glue that has held Europe together. The US has been deathly afraid of another major conflict caused by Europe, which is why it has been NATO since shortly after the end of WWII. I know you don’t see it, but it exists. The EU and the Euro were ideas and constructs of the US working with Europeans. The OSS (Office of Secret Service), precursor to the CIA was working a plan hatched in DC during WWII to get Europe to cooperate after the war through trade, rather than go to war at the drop of a hat, as was the norm. Note that military might, but primarily the ability to project it is as important as control of the financial system, even more so.
        I’m sorry to see that fairy tales form the foundation of the world you see relative to the world economic system, but it is understandable, especially considering what I know from experience and the horse’s mouth. I have no desire to convince anyone of anything, just to impart information. Keep on down the path that has not worked, destroy another generation of Jamaicans, I already know that it is the intellectual norm for far too many Jamaicans to stick to failure.

  4. Noel Richards

    The is a good analysis of the issues of Dollarisation from the Jamaican perspective. I will add a few thoughts, but I won’t give details since most will require too much explanation to give proper context.
    For Dollarisation to work, and it’s something I want to see occur in Jamaica, the GOJ has to become more fiscally responsible, number one. The IMF should see to that. The GOJ also has to find the means for high levels of earnings that are not as readily disrupted by external economic vagaries, which means that Jamaica must enter the realm of scientific intellectual property. There is a vast opportunity waiting just North (not Miami, not NY or the Jamaican centers in the US, look to the heartland) that Jamaica has not come close to recognizing. Jamaica has also not recognized the possibility of true potential partnerships that can be built in the real “Information TECHNOLOGY” world, not the call center arena. That there are ways to get inward investments without selling the silverware to entice the investor. That requires an understanding of how financiers think and how those investors can find their financing from the Federal Government. The key is how to make that a reality. That will require a lot of work, but it will bear fruit if done properly.
    Dollarisation is only part of a process and construct, but it can see Jamaica soar if the right minds apply the right policies. I prefer to trust the JLP versus the PNP with the Management of this process, however, it has to see the entire picture for what it is and not what has been painted for decades, since most of it is actually falsely interpreted (World economic system).
    Agriculture is critical for Jamaica, but primarily to feed Jamaicans. There are niche markets that can be dominated in areas like coffee, but agriprocessing will not make Jamaica wealthy, neither will exports of raw crops. The real money in agriculture lies in the industrial sectors, the machinery and the science. Jamaica makes none of the machinery and is AWOL on the science.
    Getting Dollarisation right is also more important because of the coming economic shocks that will result from the inevitable forced restructuring of the US economy. Mr. Chen is also more on target than he may realize about the issue of the BRIC’s. Many things we take for granted in the world are not exactly as they seem. Take for instance Britain’s status as a world nuclear power, well, it is a bit misleading since their “Independent Nuclear Deterrent” that they call Trident is in no way independent, it is entirely American and the President of the US has one set of the codes required to target and launch the missiles. The US leases the missiles and only gives the British the W76 warhead variant that holds a max of 100 kilotons, while using the W88 (475 kilotons) variant on US Ohio class subs. Trident is the name of the missile developed and built by Lockheed Martin Space Systems.
    There’s a lot more, but the point is that Dollarisation is a necessary step that can ultimately make a huge difference, if done properly.

    • Brian

      If the word need the U.S as you claim then why is the U.S in such great debt? The only thing that the U.S has going for it is that people/Nations are willing to put their trust it’s worthless dollar, that is being consumed daily by inflation caused by the Feds printing money with nothing to back it up. And when

      • Noel Richards

        Here’s why.
        The world has been through this cycle before. Between 1873 and 1880 there was a Great Depression that was later called the Long Depression after the 20th Century Depression was called the Great Depression. At the beginning of that Depression Britain was the world’s richest economy, with the US nipping at its heels and a strong dynamic with China similar to what we see today. At that time there were many trade conflicts and a general attitude of “beggar thy neighbor” when it came to trade. At the end of the Long Depression in 1880 the US became the world’s richest economy, more so due to regression on the part of Britain than growth on the part of the US. China was another story altogether. In the 1890’s, beginning with a Republican President, William McKinley, the Progressive Era began. That’s correct, Progressivism at the very highest levels of politics in the US began with a Republican.This came about mostly because of the knowledge that the unfettered actions and power of the “Robber Barons” could not be tolerated because it led to a constant roller coaster ride economically and socially. This was cemented with the introduction of the Federal Reserve in 1913, driven by the desire to control US money better and to prevent the kinds of panics like the 1907 Banker’s Panic. Unfortunately, the Federal Reserve became the source of funding for far too many things that led to conflict, such as the Bolshevik Revolution (money was borrowed by Britain and channeled to Russia for the uprising). The rebuilding of Germany after World War One was done with Billions of Dollars from the US Federal Reserve and also money that was loaned by Americans through Bond purchases, but which they never got back as a result of the suspension of the calling in of the debt by US President Herbert Hoover in 1931.
        To get a small idea of what took place I suggest reading this article entitled
        “What’s a little debt between friends”

        Before WWII ended the US realized that the world system of trade and money had to be altered to help prevent conflict. The successor to the League of Nations of 1919, the UN, was on the drawing board, as was the Bretton Woods System, which was established in 1944, but only ratified by Britain and France in 1945 after threatening the US to not do so if they were not loaned Billions. Because the US was the world’s preeminent power at the time as a result of WWII and before, it took the lead in pushing and deciding what would be done, with input from attending nations. Note that the US supported Britain, China, the Soviet Union and a host of other allies with munitions and money during the war. After the war the US instituted loan programs for its allies and the defeated nations, Germany and Japan, with the Marshall Plan being the most well known gift (it wasn’t a loan). Britain received the most from the Marshall Plan and was required to give its colonies the option of independence should they so desire, the real reason Jamaica was granted independence in 1962. Britain could not refuse because it was bankrupt and had been so from before the beginning of WWII. The US insisted on this because it knew that the British Imperial Preference System was the most glaring reason for many of the trade conflicts that existed prior to both wars. All of this had been done as a result of the US ramping up its Depression addled economy to fight a war on two major fronts, Europe and the Pacific (where it had the most servicemen), which was the main reason it got out of the Depression, not Keynesian style policies. The many US steel mills that were dormant before WWII were overworked during the war.
        When the US Dollar became the world’s reserve currency as a result of Bretton Woods, the US had a new responsibility that it had to figure out in real time. It did not handle it well in some instances and as a result dropped the Gold Standard in 1971 (The Nixon Shock). At the same time, Nixon was setting out on a new policy of rapprochement with the Chinese, one that was shaped by a strategic policy that I will not discuss here. That policy was warped by US Corporations as they later realized that they could make more money by modifying the laws in Congress that would allow them to not simply operate in China for the purpose of selling their goods there, something they quickly realized was not on the cards because of China’s terrible economy, but that they could ultimately use the Chinese as cheap labor. That then evolved into making the Chinese themselves consumers, which saw large inward investments into China that were being subsidized by American taxpayers.
        Now we get into the era of what was called MFN (Most Favored Nation Status), later changed to PNTR (Permanent Normal Trading Relations) by Clinton to allay the hostility that had arisen as a result of his support of rampant outsourcing, which he openly said he supported because trade with China would pull the Chinese out of poverty. The rest of the BRIC’s are the recipients of the benefits of this very policy.
        Clinton did many things that led to the current era of unfettered money creation to stimulate the kind of Dollar liquidity that has led to the world going nuts on credit. His signing of the Gramm-Leach-Bliley Act of 1999, the repeal of the Glass-Steagall Act of 1933, was one of the main acts. He also promoted Outsourcing, Offshoring to the Caymans and elsewhere by wealthy Americans for the purposes of tax evasion, NAFTA, and Derivatives trading took off under his watch. At the time it was a US$27 TRILLION industry, now it’s more than one Quadrillion US Dollars. Derivatives trading is the method by which the banks almost destroyed the financial system.
        After all those words, it comes down to this, the US has been financing most of the world economic activity that takes place through the US$67+ TRILLION Shadow Banking System, the US$19+ TRILLION in private Retirement Savings and Federal and State Government spending. The reason for that is simple, the US did not become wealthy by making products for foreign owners of the intellectual property underlying the products, it invented, innovated and created the products it sold. The US came out of WWII so far ahead of every other country that no country has come close to catching up, even with all its mistakes. GDP does not come close to telling the story. What you see is not exactly what is actually taking place. When an American company like Apple has a Taiwanese company like Foxconn manufacture its products in China, using Chinese labor, it cost Apple about US$20/iPhone let’s say. That is the number one benefit to China, except for some of the rare earth metals that are now being mined in China to its detriment (another story). The total cost to manufacture one iPhone is usually just over US$200, with the majority of that going to Engineers in the US, but then they are sold to the service providers for more than US$600 per phone. If I were to say that China even got a total of US$50 from each iPhone, Apple still earns more than $400/iPhone and the US economy, Korea and Japan get most of the US$200 it costs to manufacture the iPhone. So why is the US economy so crappy. Simple, exploitation via a terrible construct, Predatory behavior, not true Capitalism. Most of the money I spoke of is Offshored, not reinvested in the US. Apple alone has about US$137 Billion in cash reserves, with most of it held outside the US because of US taxation policies. Believe me, things aren’t what they seem. Apple is just one of thousands of examples.

        Keynesian style economics is the method by which large Corporations, Industrialists and Bankers take advantage of countries like Jamaica. They provide the money to let those countries put themselves in debt. Once they own you, it is nigh on impossible to release yourself, especially after having accepted the system and goodies provided. There are means to do so however, but you have to know how to do it.

        To end, the US debt is mostly the cause of the very same policies being inflicted on Americans, but within a different context, it is not the same as Jamaica or any other country for that matter. What is occurring is that American money is being used to invest in almost everywhere else but the US, while the infrastructure rots. The US Government allows the outsourcing of the manufacturing base to other countries like China (not because it is actually cheaper, it really isn’t, the retail price does not reflect the true cost to Americans), destroying the tax base, allowing the super wealthy to hide their money overseas, allowing US Corporations to incorporate elsewhere while maintaining US benefits. The debt is based on crass exploitation through the Federal Reserve. I would love to explain how the Fed rips Americans off, but it’s too involved. This cannot last much longer, the vast monetary expansionism that Keynesians love because they see it as the backdoor to Socialism, has to end very soon. As a matter of fact, Austerity is the death of Socialism, it is when Keynesians cannot overcome the fact that they must now earn to spend versus borrow to spend. It is because the US is exhausting itself that the financial system is sputtering and China can come nowhere close to taking up the slack, but the Keynesians still hope to carry on by inflating even more in the face of reality. Read the following.

        “World needs $100 Trillion more in credit”

        Jamaica has to change its path or it will continue to stagnate/regress.

      • Noel Richards

        One more thing. While Hugo Chavez lambasts the US, he is stuck to dealing with it because the oil industry is dominated by the US, something he cannot avoid. It is necessary to understand that most of the technology used in oil exploration and extraction is American, even when it doesn’t appear to be (patents on intellectual property etc). The sea lanes are kept open by the US Navy and most of the oil from the Mid East actually goes to Europe and Asia, very little goes to the US. The Saudi’s actually have a special facility with the US Treasury for the safekeeping of their money.

        Also, a Venezuelan Bank was the recipient of loans under the Federal Reserves US$8 TRILLION loan program between 2007-2010. The bank was Mercantil Servicios Financieros CA. It was one of 407 Banks, Corporations and Governments that borrowed. I have all the official data.

  5. Brian

    The reason why the oil industry is dominated by the U.S is because of corrupt American politicians that were bought and paid for by American oil companies…..this corruption involves the CIA and the military. Any Country that refuse to see to U.S interest will become a target for destabilization or military invasion……it is the policy of the U.S to control as much of the resources, including oil of the world as possible. Shell, is one of the most corrupt oil companies in the U.S…….it has supported and back corrupt governments in the world.

    For starters If you want to learn what you will never hear from the mainstream media in the U.S or in Jamaica, I suggest Google John Perkins, who wrote a book called Confession of an Economic Hit man… that book. You can also watch for free a video done by Aaron Russo by Googling, America: From Freedom to Fascism.

    • Noel Richards

      Brian, I have read his book. I am aware of John Perkins and I know about the actions of people like himself, much more importantly, I know about the actions of the people who send him to do those things, I know why and I know how.
      What I would like you to understand is this, the US Government is a pawn in the workings of the Bankers and Industrialists, it easily manipulates the people of the United States through the Partisan Political System, in other words, the Political Parties. Whenever arguments arise on policy, it is always one against the other, most don’t see another way outside of the prescriptions of each party they adhere to. The parties themselves are dominated by direct and indirect monetary influences that determine almost all policy. Thankfully, there is a large and growing skepticism that has led to many going Independent. The weakness is that they do not yet have good candidates to choose from in a general election because of the political parties.
      Shell is dirty, even though it is not technically a Dutch/British company, but BP (British Petroleum) is also British, but is mostly owned by private American investors after the UK Governments holdings are excluded, as is BAe (British Aerospace). The US Government is dirty, very dirty, which is precisely why Jamaica should try to understand how to engage the people, not the Government. The individual States are the key. Don’t make the mistake of tarnishing most Americans with the actions of the Government, for even though there are many bright minds here, most do not understand how they are being manipulated even though they are fully aware that they are being taken advantage of.
      I hope to not be proven correct, but should the US collapse economically, every other country will realize the hard way just how reliant they are on it for far too much, good and bad. Ironically, the US Government and many Americans are best prepared of all countries for such an eventuality.

      • Brian

        Since you know all this, then why would you think that it was be a good thing for the Jamaican government to embrace dollarization? A smart government would not seek to tie currency to another, considering that the Currency it is seeking to tie its currency to is in danger of collapsing. And even now, it has lost considerable value even against the Canadian dollar……the U.S economy has not improved despite the lies that we hear on TV by politicians and news reporters. But then again, Jamaica is a Country that lacks leadership, and the will to do what it needs to do to get there economy going…….it’s just doing the same old failed policy that it has tried over and over again.

        But like I said, there is coming a world economic crisis, thanks to self-serving politicians in most Countries, who are willing to be used by those wthat are benefiting from the consolidation and concentrating of the wealth into smaller and smaller hands, and the passive masses, it is going to cause people worldwide to accept a system that is going to make the Roman Empire look weak and feeble in comparison.

        It is never and was never a good idea for any Country to be economically dependant on another Country’s or Countries’ economy……or else, when they fall, that economy too will fall. The world is far more in danger of that than it did during days of the Roman Empire. I guarantee you that dollarization will not improve Jamaica’s situation…….the economy is only going to get worse, but not because of dollarization or no dollarization. It will get worse because there are too many courpt people in the government……Jamaica is filled with corupt people that you would be hard pressed to find an honest man.

  6. Noel Richards

    Fair enough, except that you need more information. The US keeps its currency artificially low for a host of reasons. First is for the large scale exporters from the US like Boeing and Caterpillar, to name a few significant ones. Second, because so many American Corporations have operations overseas, calling themselves Multinationals, when they repatriate their earnings they have a better report to give Wall Street, which makes them seem stronger.
    Canada appears to have a stronger currency, but in fact it doesn’t. Left to inflate naturally, and removing all the impediments to the US Dollar, it would crush many currencies, but that is not in the interest of the Bankers and the Corporations. If we look at Canada in greater detail, they were deemed to have had a much sounder financial system than the US during the crisis, however, they relied on the US Fed to bail out their banks with loans amounting to US$46 Billion, it breaks down this way (Bank of Montreal US$6.8 Billion, Bank of Nova Scotia US$12 Billion, Canadian Imperial Bank of Commerce US$3 Billion, Royal Bank of Canada US$10 Billion, Toronto-Dominion Bank US$14 Billion). Understanding how NAFTA works will go a long way in explaining how Canada has benefited from US Outsourcing and also the huge trade in oil from Canada’s oil sands. US Government spending also finds its way across the border, North and South.

    I see Dollarization this way. Any prospect of an economic calamity should not stop Jamaica from looking to build a truly creative society and economy. The greatest mistake Jamaica has made since 1962 is looking at the US as just a trading partner with potential tourists and from which it can also receive help. The truth is that it can do so much better in partnership with Americans to help itself, and to thrive. Jamaicans really don’t know and don’t understand Americans (not the Government) and vice versa, that can and must change. It is not as simple as Jamaican politicians saying that there is the largest economy just North of Jamaica that it is not being taken advantage of for exports. They should be saying that there is the most innovative, inventive and can-do nation of people that Jamaicans can partner with to innovate and create, benefiting both. By adopting the US Dollar, Jamaica will stabilize itself in such a way that it cannot with the Jamaican Dollar, assuming that it is being responsible in other areas. It must be understood that the Jamaican Dollar at present can only be as stable as the US Dollar allows it to be, in other words, its value is relative to the US Dollar, the world’s reserve currency. Should the US fail, the Jamaican Dollar will mean virtually nothing, most will turn to barter and food will become the most important medium of trade and thing traded. You and I will not live to see the US Dollar replaced as the world’s reserve currency because we are in the era of nuclear weapons. I doubt the world would survive that kind of conflict, considering the power and numbers of present day weapons.

    For too long most Jamaican Governments continue to miss the boat by insisting on capital projects that will ultimately give no return on investment. Too many capital projects have become burdens to Jamaicans. Highway 2000 was a waste. The focus must be on resurrecting and building a heavy gauge freight rail system that can carry large quantities of freight and passengers throughout the country. As freight reaches its destination, it can be offloaded and dispersed through smaller local delivery vehicles, a much more efficient system than large semi’s ripping apart an already fragile road network. JDIP was another waste. Focus should have gone to looking into two things, a quickly implemented method of reducing the importation of oil and the beginning of the medium term implementation of coal fired generators. Natural Gas would have a part to play, I won’t say how yet. This would have gone a long way to bridging the introduction of the “holy grail” of power generation that is currently in the works in the US, nuclear fusion (not fission). These are detailed things that cannot be properly described here, but had some of these things been started, there would have been much more interest in Jamaica as an investment point for some Corporations that would have started its transformation into more than an attractor of hollow FDI’s (Foreign Direct Investments). Having the US Dollar as a stabilizing factor is priceless to investors. Had Jamaica already done some of these things and still found itself needing the IMF, it would have been in a much better boat relative to conditions. The creation of the G20 was for one simple reason, to ensure the prevention of wholesale default by debtor nations around the world. The IMF was granted a large increase in funds to see this was done. Apart from that, the G20 is mostly a facade.

    I live in Boulder, Colorado, one of the main Federal Research centers in the US for NIST, NOAA, NREL and a whole host of others, coupled with private researchers and Corporations that are the major players in the aerospace and computer technology Industries such as Ball Aerospace, Lockheed Martin Space Systems, Level 3, IBM, Oracle etc, and a multitude of hi tech startups. The potential for cooperation with Jamaica is enormous, if done correctly.
    Don’t take my word for it, see where Jamaica is in another decade without having altered its trajectory. I hope to not see that occur, but only time will tell.

    • Brian

      Currency artificially low???? You must be kidding……it’s not artificially low, it’s artificially high……its off the gold standard. When it was on the gold standard the U.S dollar had far far more buying power. And incidentally, the Jamaican dollar had even more buying power than the U.S in the early 1970s. And a few years ago the U.S dollar was higher than the Canadian dollar……it lost value during and after Bush jr and Obama became President. And what basically were those men were doing that was different than those before them? They were printing money that was backed up by nothing. It’s interesting that the Canadian economy is doing a lot better than the U.S, despite your claim that they needed the Feds to bail out their banks…..where did the crisis started? Was it in Canada or in the U.S? It was not about bailing out the banks……it was about consolidation of wealth…’s a worldwide agenda… it transcends National boundaries.

      The greatest mistake that Jamaica did was abandoning the path that it was on in the 1953, when it was the fastest or one of the fastest growing economy in that region. They should have continued in path the Country was on even after independence. A Country that is dependent on American economy is a Country that will be beholden to do what Washington demands…..look at all the Countries that were filled with American companies…..what happened to them? They ended up being invaded by U.S military, because the leaders were more interested in serving their own people’s interest than in U.S corporations’ interest. Don’t do what they want and they simply find some reason to justify invasion, and come in a take their money out of your banks, like what they did in Haiti…..I think it was called by the Haitians the Great Bank Robbery.

      • Noel Richards

        Remember what I said about Britain and Europe being rebuilt by the US over decades after WWII, remember that the US Dollar has been the world’s reserve currency since Bretton Woods, if you look at world trade figures over many decades you will see that the US has been driving the world economy since WWII. Loom at how the two defeated nations of WWII (Germany and Japan) became the world’s second and third wealthiest economies, look at how China has become the world’s second wealthiest economy (although hollow) by GDP since US re engagement from the 1970’s. Look at Singapore and try not to just brush over it by looking at Lee Kuan Yew, look at the environment he was working in and the decisions he made that had him accept the economic advice of Dr. Albert Winsemius. Look at what Dr. Winsemius did. Look at Taiwan versus China before US re engagement with China. Look at South Korea versus North Korea. Look at Ireland, it has been called the “Celtic Tiger” and the “Irish Miracle”, but let’s look deeper, what created this “miracle”? There is a large Irish population in the US, many of whom are successful business people. They had been prodding Ireland to restructure to accommodate certain types of inward investments. The Irish got the message and began to morph in the late 1980’s. The “Irish Miracle” occurred between 1995 and 2008, seeing extremely rapid average growth of 9.4% between 1995 and 2000, then 5.9% until 2008. What happened in 1995 to trigger this “miracle”? Bill Clinton’s visit to Ireland in 1995 was not coincidental. Many American companies that set up European operations in Ireland did so based on Clinton policy and US Congress incentives. This was all related to the Northern Ireland peace drive. The end of the “miracle” occurred in 2008, no coincidence there either. As of today Ireland has not been invaded by the US.

        Try to understand how having the world’s reserve currency can affect internal and external policy. As the US grappled with providing enough Dollar liquidity to the rest of the world, while keeping its economy on the right track, it experienced what is called the Triffin Dilemma/Paradox in the 60’s. That and the mistakes of Vietnam and Johnson’s Great Society Projects led to the US coming off the Gold Standard in 1971. The problem isn’t that the US and every other country is using a fiat currency, it’s how it’s being used, it’s being inflated at a rate that is reckless now, that is where the problem lies. People have come to believe that persistent and ever growing debt to service recurring expenditure is good. They do not want to accept that human nature will find its limit on this extreme profligacy.

        You need to come to the realization that having had a currency that was higher than the US Dollar at the time of its conversion (1969) from the British currency, while Britain itself was heavily reliant on the US and on the verge of yet another round of bankruptcy, does not tell the whole picture. Ronald Reagan openly devalued the US Dollar when he became President, intentionally lowering the value of the Dollar is a game that has been played in DC for some time now.

        Another thing is accepting that Jamaica is not at all independent of the US, unfortunately, Jamaica is stuck with the US, because of remittances. Remittances drive the micro economies of almost every country in the region (even Cuba relies on it to some extent and money from Venezuela is not independent of the US, Citgo operates in the US), were it not for remittances, most of which originate from the US, Jamaica’s economy would have nothing on which to operate. Remittances allow the person in the street to do business with the shopkeepers of Jamaica, to buy a cell phone and credit for it, to buy food. Let’s look at yearly remittances from the US to China (US$57 Billion), India (US$66 Billion), Mexico (US$20+ Billion), Latin America and the Caribbean, including Mexico and Jamaica (US$66 Billion, 75% from US). This from exporting Jamaicans and Mexicans to the US as policy. Ask this simple question, what would happen to Jamaica’s economy should the US completely suspend the transfers of money to Jamaica? You know the answer.

        Another thing Jamaicans need to understand is how the US came to create its Interstate Highway system. It was the product of s strategic initiative based on the fears of the Cold War. President Eisenhower initiated the project because he was afraid that an attack would knock out the rail system, destroying supply lines across the US. The highway system was intended to circumvent that possibility. The automobile industry grew in leaps and bounds from this project, leading to the destruction of trams and most other forms of comprehensive public transportation that already existed. Jamaica should not have gone the route of clogging its arteries with cars that were discards from Japan. The Japanese were only too willing to sell those vehicles to PJ as they were converting to the international version of the US CAFE standards re vehicle emissions.

        The experiences with the US that you mentioned are precisely what I want to see avoided. How do you do that? You must be proactive and bring in the types of industry that is best for Jamaica. By partnering with Americans, not the US Federal Government, you can establish a firewall of support that will avoid the circumstances of which you speak. There is a lot of conscienceless American money seeking opportunities to exploit, that is the money that Jamaica wants to avoid, yet that is the money that has been exploiting Jamaica for decades. UC Rusal is owned by a Russian named Oleg Deripaska. UC Rusal owns Bauxite plants in Jamaica. UC Rusal required funding from Wall Street to continue operations around the world, during the height of the financial crisis. Deripaska had to get the highest level help to be able to visit the US to get business done, because of alleged associations with the Russian mafia. The world financial system is extremely complicated.

        My figures relative to Canada are real. I have digital copies of Federal Reserve documents of every one of the 407 borrowers from the Fed’s loan program from August 2007 to April 2010. It’s an eye opener.

  7. Delano Seiveright

    Your knowledge is impressive Noel. Absolutely impressive. What do you do for a living?

    • Brian

      And the U.S was built by African slaves and the unjust taking of Native people’s land, so I don’t see what you argument proves. The U.S dollar being the world’s reserve currency was deliberate and diabolically done behind the close doors. Some Countries like some of the oil producing Countries in the East, agreed to buy U.S debt in return the U.S said they would buy their oil. But its not if they did not agree to that that they would not be able to sell their oil. If nature was allowed to take its course it would not be that way. And like any Country/Nation/Empire, its day of decline coming, and just as the world survived the decline of the Roman Empire or the other Empires before it… too will the world survive the fall of the America and the dollar.

      • Noel Richards

        I’m only truly interested in seeing Jamaica thrive Brian, not in thrashing out the bad deeds of the United States, however, it will help to properly research Standard Oil and Aramco.

    • Noel Richards

      Thanks Delano, I do appreciate what you said, I also appreciate that you are willing to listen. I won’t say precisely what I do now (politics/writing), but I will say that I am acquainted with Wall Street, lived in the DC area for four years and Europe for seven, and was a Professional Cyclist. Born Kingston, Jamaica, October, 1962 at the height of the Cuban Missile Crisis.

      • Brian

        I’m familiar with those two companies, but I will have to refresh my memory…..but I’m also aware all these oil men don’t care about the dollar….as far as they are concern oil is the currency of the world, and the world needs their oil……they (these oil men) determine the price of oil.

        But I guarantee you that Jamaica will never thrive and can never thrive if its dependant on another Country……especially the U.S……doing so is a prescription for disaster. For a Nation to do well it must be able to control what it needs to thrive……the leaders/politician/government in that Country need to motivate and inspire its people, that they are born with everything they need to do well…..that they don’t have to latch on to another Country to thrive.

        Jamaica has a lot of resources that it needs to do well, but instead they drain the Country by importing too many things that could be produced in the Country…….this would create jobs if they did. But there are too many in the Country that are benefiting from the way things are now. The people are too corrupt; from the least of them to those at the top. That is the main reason why Jamaica is doing so poorly…….everything is tied to that. If you can’t fix that, then everything else is a waste of time.

      • Noel Richards

        Brian, Jamaica is already far too dependent on the US. What I am talking about is how to make that dependence work for Jamaica, not against it. Until Jamaicans own or co own some of the intellectual property and methods of production that drive the world economy, it won’t slip the chains of subservience.

  8. Brian

    I don’t see how becoming more dependent on the U.S would be in the best interest for Jamaica… least in the long term. A Nation should always seek to be as self-sufficient as possible. So that in any event whatever happened around them there would be minimal effect on that Country. Jamaica has been taking steps backwards instead of forward; somewhat like a child that has grown up and moved out of his parents’ house, only to move into someone else’s house to become dependent on that person.

    Jamaicans need to start thinking big and stop limiting themselves…….their way of thinking is the cause of their predicament. Jamaica as a Nation don’t think they can achieve on their own what they see other Nations have achieved. I’m reminded of what Jesus said, when He said, all things are possible to those who believe. So if you don’t believe you can, then that will be your reality. But if you believe you can, and then take steps to accomplish your goal, then you will achieve what you have set out to do…….the choice is the Jamaican people on what path do they want to be on. If Americans, British or even Canadians thought the way many Jamaicans think, then what would happen to Jamaica? Who would Jamaica seek to depend on?

    • Noel Richards

      Let’s look at the reality of Jamaica right now, it’s on its butt. You want to see Jamaica running before it can even walk. There is nothing that Jamaica makes nor is there any service that Jamaica provides that the world needs on a daily basis. The POTENTIAL is there, but nothing that has so far been done has realized that potential, in reality, the idea that Government should be at the center of the lives of Jamaicans has retarded the potential of most. A much closer look at the history of the United States will show that although dominated by people from Europe, it is a conglomeration of many different people, and a Can-Do, Will-Do, Did It, mentality. Americans don’t simply conceptualize ideas, they pursue them, and if at all possible, accomplish them. That is why cooperation with American citizens, not their Government, is the path that will best see that take set in Jamaica. The biggest reason you cannot see that is because you are taking way too many of the things you use on an everyday basis for granted, you don’t realize how much work went into creating them, the decades of R&D and then the implementation, the manufacture, the distribution, the marketing. When you jump on the Internet it’s just there, but Americans created the Internet (the Web is not the Internet) and the US Government controls the Internet through the 13 Root Name Servers that run the Internet. Look at a cell phone, a television, a radio, a car, a plane, a bicycle, a camera, most of the processes for construction of buildings you reside in, what has been Jamaica’s input in the creation of any of those? It is good to dream of being independent, but please live in the real world if you want to make the lives of Jamaicans better, don’t lie to yourself.

      A good example of not lying to oneself is the issue of GPS and the mapping of Jamaica. The Mona GeoInformatics Institute has done some very good work in mapping Jamaica. Where the media has gone wrong is that public praise has gone from praising the act of getting the mapping of Jamaica done, to praising the technology as though it was created by Jamaicans. The reality is that the GPS system is American and was offered free to the world by Ronald Reagan after the downing of Korean Airlines flight 007 by the Soviet Union in 1983. He did that to avoid any further such incidents of commercial airlines flying off course. GPS was created by the US Government with Lockheed Martin Space Systems in Denver Colorado, for military purposes. Garmin is American. All those maps you see on Google Earth etc and which the GOJ sells to Jamaican farmers and developers are created by Digital Globe satellites. DG, headed by former US military Generals, is based in Longmont Colorado, about 7 miles from where I live.
      The point is that Jamaica can never be entirely independent for a multitude of reasons. Wishing for a higher level of independence is a nice sentiment, however, making it a reality is priceless.

  9. Brian

    You must be joking……nothing that Jamaica makes or produce that the world wants? It is producing a lot of things that the world is buying. For example, chocolate. It is one of the most popular by product of Cocoa, and the last time I heard they weren’t producing enough to satisfy the demand. And just like Cocoa, they are not producing enough of the other things it exports.

    Jamaica should have long past the stage where it is walking on its hands and knees. But its because as I said before the people are corrupt……they are suffering as a result of their own doing. They think they can succeed by being dishonest. And the more dishonest they become is the worse off they become, and the worse off they become the more dishonest they become, and the cycle repeats itself.

    You see like so many Jamaicans are selling yourselves short by thinking that unless you tie yourself to the U.S. they could never achieve greatness. And you are fooling yourself that a people can achieve greatness, by latching on to another, while being corrupt….. I guarantee you it will only get worse. Jamaica has been trying to latch on to pretty much everything from the U.S, and instead of things getting better the opposite is the result.

    Take a look at Puerto Rico for example, what has been the result? In all my years living in the U.S I know of no Puerto Ricans that lives in Miami or New York that wants to move back. The main issue is crime and unemployment, the same things Jamaicans talk about in Jamaica and those abroad. Why is the crime rate and unemployment so high, despite having the U.S dollar as their currency?

  10. Noel Richards

    I said nothing that the world NEEDS, not wants. You are using cocoa as a comparison to technology? Jamaica isn’t even in the top 10 of world cocoa producers. While Jamaica has the best coffee, in my opinion, it still does not dominate the market, and in any case, I am not speaking of agricultural products.
    Puerto Rico is a very poor choice for your example, since Puerto Rico has not taken advantage of its position as a US protectorate since the Spanish-American War in the 1890’s. There has been no true cooperation between Puerto Ricans and Americans, just dependence. Don’t confuse opportunity with execution.

    • Noel Richards

      Oh, and in case you aren’t aware, the US Government is THE most corrupt organization in the world, it’s just not as overtly corrupt, nor crassly corrupt as you may observe in other places, it’s a more sophisticated form of corruption. Focusing too much on corruption will not fix the issue, finding the means to expand opportunities that people can make the best of for themselves, independent of Government, while strengthening necessary public institutions, is the best way to deal with corruption. At the very least it will alleviate the problem as people find less need to subsist on Government handouts.

      • Brian

        Yes, I know that it is but at least the common man is a little less so than the government. In Jamaica the average man is just as corrupt as the government. And their corruption is basically geared towards what is in the best interest of the U.S…..that is what their foreign policy is about.

    • Brian

      Coco is just one example of a product that Jamaica exports…..I could have used bauxite, which the world needs, including the U.S. Jamaica also exports various crops, but as I said they are not maximizing all that it is exporting.

      And what makes you think that Jamaica would do any better than Puerto Rico? I could have used St Croix as another example……they were so dependent on the U.S to feed them, that one of my friends from St Croix told me many years ago that the minister of agriculture is minister over grass, because that is the only thing they planted…..they were basically completely dependent on the U.S for their basic food need. Jamaica is more dependent on the U.S for their food than it did back in the 1970s, and your proposal would just be another step backwards in that direction.

      Dollarization has done nothing to help the poor in El Salvador……most likely people like you would benefit from Jamaica following in El Salvador’s footsteps, and most likely the reason why you are proposing it.

  11. Noel Richards

    I have enjoyed this discussion Brian, but we have to conclude at some point, so I will try to make one thing very clear, I am not encouraging Jamaica to strengthen its association with the US Government, I am encouraging a much stronger association with private American citizens.
    Dollarization is not about helping the poor, neither is it about helping the wealthy. Dollarization by itself will not help El Salvador or any other country, as Wayne Chen said, “it may be a part of the answer”, while I say it IS a part of the answer. The other parts are a non fairytale understanding of the world Jamaica exists in, the world where dogma should not trump pragmatism (those with money are not deterred by communism, socialism or any other ism as long as they make money), a better understanding of how those who run the financial system use it (I am not speaking of Bernanke of the Fed or Geithner now Lew of Treasury, I am speaking of a core group of super rich Americans and Europeans who stay out of the public eye, splitting and hiding their money from perusal, Carlos Slim’s US$73 Billion is small compared to how much old and new money some of these families have divided and hidden). A proactive approach is necessary to attract the types of investment that will set Jamaica on the path to realizing its true potential, after it recognizes the investors it really should attract.
    Your assumption that I am one of those who will benefit from Dollarization is absolutely correct, but only if it is coupled with a reconstruct of the way business is done in Jamaica. The only thing is, I am not driven by money. The way I will benefit is in seeing Jamaica flourish, so that I can return to live there, at least for part of the year. I have never been interested in living well while watching too many Jamaicans suffer. I could ignore what is taking place there and just live comfortably where I choose, however, Jamaica is at a crossroads where it will be too easy to fall back into bad old habits when there is a false perception that the crisis has passed.

    I think you should read the following that was released by Reuters “Brazilian leftist Rousseff distances herself from Chavez”

    As I said before, there is much, much more to Brazil’s rise than most realize. There is the movement of American money and also a US Government strategy to push Brazil as the moderate anchor for the region. The US Government’s involvement spell’s future trouble for Brazil, but it has been a great enabler. Any country that realizes that the best way to trump US Government interference is by strengthening relations with US citizens and individual States will have a great long term, not short term future, barring unseen issues. Watch Cuba when the Castro’s are gone.

  12. Brian

    I was thinking the same thing…..take care.

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