Snatching a compliment from the jaws of contempt

New SARB governor Gill Marcus

On Tuesday the South African Reserve Bank (SARB) kindly let us know that the rate at which us lowly subjects would be allowed to borrow funds remained unchanged until its next autonomous decree in 2 months time.  If central banking wasn’t shrouded in all the clever-sounding jargonese, protected by legislative fiat and justified by puppet ivy-league economists, you could be forgiven for thinking we lived in feudal Europe where the commoners grovel at the feet of their benevolent lord. 

South Africa’s free but fawning press corps doesn’t help matters, seemingly idolising our monetary gods because they’re either too ignorant to understand real monetary economics, too giddy in the presence of power to question it, or too cowardly in the face of power to challenge it.  I suspect a healthy dollop of all three.  “Is it possible that we, mere untouchables, could be so lucky as to be thrown a few crumbs of mercy from our good and most excellent governor and receive a rate cut?  O, ’tis a lofty request to be sure, but, if it is not too presumptuous to ask, could we please once more be undeservedly lavished by your favour?”

Pathetic.  This media’s and public’s understanding and discourse about the central bank and its modus operandi should make any lover of freedom cringe.  The SARB is as unnecessary as any central bank, and by and large is as opaque, arrogant and misguided.  Our constitution gives the SARB full fiat control over money, makes it illegal to use as tender any other form of money, and legalises monopolistic counterfeiting.  The central bank controls the monetary system absolutely, kills off free market banking, and effectively forces a nation into the slavery of debt by its inflationary theft.

Finding a ray of light in this smothering blackness is a challenge, and indeed there has been little to celebrate regarding the SARB or its policies over the years.  But there is some good news about.

The new SARB governor Gill Marcus is a breath of fresh air, particularly after a decade of Mr. Mboweni’s stultifying arrogance, incompetence, lack of knowledge, obstructionism and evasion.  At the monetary policy committee meeting on Tuesday Marcus was measured, forthright, non-evasive, engaging, humble, honest, and highly competent.  She includes her MPC team in the interviews so that we can all get a good look at the handful of people deciding our monetary future.  She is not scared to admit she doesn’t have all the answers.

Yes, she is the head of a profoundly ugly institution, but she cannot really take the blame for being part of an entity that is burned deep into our collective economic psyche.

That we have a central bank whose main policy mandate is to create inflation (ideally of the order of between 3-6%) remains a fundamental problem for Human Action.  But, in the context of an imperfect world, Marcus is a SARB leader who at least understands there are limitations to what a central bank can possibly achieve (she said this explicitly), understands that inflation control is important, and will not make rash monetary judgements.  For now anyway.

While we have a fundamentally flawed monetary system, long may Marcus’ tenure last, so that at least South African citizens can start to experience more honesty and transparency from its central bank and are not ushered along down the path of monetary ruin as quickly as the rest of the global horde seems to be heading there. 

For the coming years we can be thankful that in the current SARB governor we are making the best of a bad situation.  In the meantime, keep preparing for paper money to collapse someday.  It’s not too far off now.