Who are they fooling?

One of ZANU’s tricks is to talk so long about their plans that we get bored before they eventually carry out the plan and it takes us by surprise.

Source: Who are they fooling? – The Zimbabwean 22.08.2016

Remember they still threaten us with bond notes in October. A lot of things that have been said about this scheme need challenging. First: “this is just like bond coins”. That is a lie. Bond coins work because nobody treats them as real money. They are useful tokens for kombi fares, but nobody wants to be left holding a sackful of them at the end of the day. Do you remember how bundles of – I think it was 20×Z$50million -notes served this purpose? Three of them were accepted as US50c while their real values halved daily. As long as you only had one set of three until the next passenger paid with a dollar and you got your Z$ wad as change, the system worked. Not if they become a big part of the system.

Bond notes are designed to be a big part of the system. I even heard an American “expert” at one of those discussion groups organised by their embassy say “after all they’re only going to print $200 million and the total money supply is $5 billion. That’s not significant”. If that wasn’t a lie, it displayed monumental ignorance. Bank notes were only a small part of what ZimStats used to call “money supply”; notes and coins in circulation were usually about 10% of the total, “short term deposits”, meaning your cash you could draw from the bank any time, made about 20% according to the latest (November 2015) ZimStats figures, and the rest of “broad money” was debits and credits in some bank’s computer. Since we officially started using US$, ZimStats have had no way of counting notes in circulation (I suppose they used to count what the Reserve Bank were printing) but we all know the number had dropped considerably since last November. The short term deposit figures have dropped, probably even more sharply, or we would be able to draw our money from the bank when we needed it. My guess is that the published figures are what the banks’ books say they have, ignoring the fact that most of the actual banknotes have been spirited away by financial trickery.
So, if we allow that notes in circulation are as much as 8% of the money supply, that is US$400 million. The bond notes issue would be half that. That is most definitely significant, if every second note that comes your way will be the “bond” variety. But it’s worse than that. They are only printing denominations of $50 or less, so bond notes will be more than half, maybe a lot more than half, of the notes in circulation of the $1 to $20 denominations; that is, most of what we use every day. And we know the smart people on the street are already quoting them at a 20% discount, meaning they will only give you 80c of real money for every bond dollar. By the time they actually appear, that could be down to10c if you’re lucky. If you’re not, you might as well use bond notes to wipe your nose.
Another warning came in a less than true statement from the RBZ governor, Dr Mangudya. “If you are getting a $400 salary, you will still get $400 in United States dollars, bond notes, rand or euros. If you don’t want them then you use plastic money. We are not forcing anybody to use bond notes,” he said this week.
Assume I get my $400 in a mixture of those currencies. There aren’t enough rand or euros around to make much difference, so I’ll get a mix of US$ and bond notes. As I showed above, bond notes are likely to outnumber US$ in my pay packet. Can I return them and ask for real money? Let’s have a clear answer to that question. I can guess what the truth will be, and so can you.
Of course, I could use plastic money, leaving my salary in the bank and buying everything I need with a debit or credit card or Ecocash. Like a pocket of potatoes or oranges at Mbare Musika, a couple of bottles of Chibuku Super, a newspaper from a vendor on the street, and so on. Even our local OK had a sign saying “We accept Ecocash” but if you tried to pay that way, they’d tell you “go to that desk over there and they’ll give you cash. Come back here and pay with that.” But real cash is so scarce you’ll get mostly bond notes, or nothing at all, and how many bond dollars will you have to pay for a loaf of bread? The good doctor is being disingenuous.
Then there have been other assurances that are not worth the effort somebody took to make them. The simple fact is that in the modern world, the value of money is a matter of trust. You can use US$ to buy your groceries and they will be accepted because we trust that somewhere, maybe in the US Federal Reserve Bank, there is enough real wealth to back this note in your hand. We know our guys are bankrupt and, even if we didn’t know that, we do know just how much their promises are worth. I wouldn’t trust them to run a tuckshop. If they tried by the methods they use to run the country, they’d be out of business in a week.
My only suggestion on what to do with any bond notes you can’t refuse is that you use them to pay your electricity bill, school fees and any taxes you can by depositing cash (bond notes) in the relevant bank account, but don’t expect to get away with that a second time.
That only leaves us with one option. Refuse to touch them. That will make life difficult for a while, but it will put a spanner in the works to force us on to a different track.