Somalia Govt Has Accepted Western Banking



The government of Somalia has accepted the in-evitable, Modern Banking Laws have been passed 'quietly' in the nation as not to 'stir up' these throw-backs from the 7th century who will start crying 'haram' this and 'haram that'. All banks are ordered to display their effective interest rate at their branches and offices and from time to time deliver reporting on 'interest rates' so it can be monitored and managed by the Central bank of Somalia.

Interest rates are critical for investors depositing their capital so the bank has 'currency' to begin loaning the locals because due to inflation of the market, it is critical for an investor return above inflation rates and a profit margin or else it's pointless exercise for investors to create 'deposit' accounts which the bank can pull from.

Once the government gets a hold of the local currency and destroys all 'fake' notes and the market is secured with one 'tender', it will be required to know how much to 'print' to keep up with the pace of investors capital. For example if 500 million has been created in deposit accounts for a given year, the govt will know to 'print the equivalent value in Somali shilling' and hence reporting of investors and interest rates are critical to ensure the nation doesn't have over-supply or under-supply of local currency to keep up with investors.

Plus the govt will need to also 'print' enough currency to support the market 'trade' for each given year and work out the 'growth or decline' in trade which also needs to be monitored 'sector by sector' and their level of 'growth and losses' each year to keep Somali currency in-line with the level of business 'activity'. As u know over supplying a currency where the business activity is lower, leads to prices increasing or 'sicir' because there is more currency circulating then actual 'products'. There is no point printing 1 million dollars when the products in the market do not exceed '100k' in value. It will lead to business people to 'increase the price' to keep up with the money increases. So what may have been sold for $10 dollars in a normal market with a currency that matches the goods available, could be sold 10 times higher if you increase the currency by 10 times more then what is available.

That is why market is measured by the 'product' not necessarily the 'currency' unless it's foreign exchange and even then the 'currency' only is as strong as their 'products in their economy'. If Somalia market is 7 billion each year in terms of 'product' there is no point printing 100 billion dollars, it will cause everything to increase 10 times over to match 100 billion dollars. Did anything change in terms of growth? nope you just end up paying more for the same product nothing else.

We know what happens if a 'currency' under supplied, there will be 'more goods' then 'currency' available, they will end up selling it 'cheaper' in order to get some cash from the minimal amount in the market which isn't good either. That's why it should always be 'even' or at 1-3% increase or decrease each year in currency production but that needs 'data monitoring' and 'central bank' that is institutionally strong and equipped with 'market' data because the market determines what amount of currency is going to be printed.

I support this idea of conventional banking but we should also encourage other types of banking like 'shariah' also if it 'works' and have them compete and not have any type of bank have a monopoly. Without the banking, it's impossible to discuss market economy. Plus we need to start educating on 'mass scale' about loaning from the bank to buy properties or open up business and we need to 'restrict' hawalas in our country by FORCE so people have to fend for themselves rather then rely on never-ending charity which is the worst form of ribbah as it leads to eventual financial slavery not banking because thru banking it's not life-long like charity.
 
It's quite easy to spot inflation. Either they increase the 'denominations' like say it as 1, 5, 10, 50, 100. It will be like 10,000, 100,000, 500,000, 100,000,000 bank notes that is like zimbabwe type of inflation, so the prices of good will match those currencies and it doesn't mean more wealth, because the product quantity hasn't changed whatsoever, it's when product quantity changes when u develop wealth and the difference between quantity each year is 'growth' or 'decline' levels.

But Somalia inflation wasn't similar to zimbabwe, they didn't change the denominations meaning they had to 'print' more money of the same demonation hence it eventually reached a point of un-useability, where $100 dollrs meant millions of shillings requiring trucks, and that's just $100, you can't do business with that type of currency any longer, u won't have space to store all that currency. Imagine it was $1 thousand dollars, u would get like 10 trucks worth of shilling. Somalia chose the 'print more of but kept the same denomination'.

Their both inflation though but a little bit different while they both have the same negative effect on the market. It's a general rule in economics, don't print more then the goods n services and products you have any given year. If you do print more make sure it's not a 'large' effect like 1-3% more as 'extra or less'. Say Somalia is predicted to have 7 billion economy this year. Don't print more then 7 billion plus 1-3% on top for just in-case unpredictability.

If it's predicted to decline how-ever, then u print 1-3% less then 7 billion, always being within a small margin of error on negative or positive growth. Any government without an 'economist' monitoring the market week by week, month by month and quarter by quarter and year by year is 'paramount' importance. Without this you could screw up your market place 'cost of living and prices'
 
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Where is Teeri Alpha, he is the Somalispot economist. Somalia economy is pretty one-sided anyways. Right now there is no real bank activity so he doesn't have to really print currency to match the investment flows in dollars. There isn't much production either. It's mostly imports where they will need to collect statistic for 'each week, month, quarter, year' and work out 'seasons' involved. So port reports are critical to determine amounts of goods and products each week, month, quarter, year.

This will inform them quite confidently of how much product and goods are entering and print the equivalent of currency to match it with 1-3% increase or decrease depending on market climate.

Then u will need to check out all the 'service' sector or where labour is involved for cash and predict 'activity' levels weekly, monthly, quartlerly, yearly. Same deal print equivalent currency with 1-3% extra or deducation. U may need to work out the 'construction' sector 'separately' since it's a 'product and a service' kind of mixed together so it properly deserves it's own 'assessment' each week, month, quarter, and year. That's it guys once u have the data in, pass that shit to the central bank and then begin 'record keeping' so they can look back over the years where they got it right and wrong and what the factors were for 'lessons learned'.
 
The goal of an economist should be to 'increase goods, products, services, and construction' those are the 4 pillars of all economies, some do more in one area then another but most prefer a 'mixed' market so you don't become reliant or develop a single market economy but a mixed market economy is better.

But the level of 'goods' either produced or imported need to increase and this can only happen thru 'consumption' and consumption is directly linked to 'jobs' and unfortunately u may hate to hear this, jobs are linked to 'investors' and investors are linked to 'banks' as they store their capital there to do loaning. It's all interconnected like a 'chain of organism' are interconnected, it's like a chain that is not autonomous of each other but dependent on each other also.
 
This is a good example of inflation and why it's terrible for an economy. It's not just the price rise that is the problem because the price rise will be supplemented by the currency production so the 'local won't feel it' as long the currency is being printed. In-fact 'businesses' do not even begin pricing without knowing 'currency' involved and it's value. It's easy then to work out how much u 'price' your goods basing it off the 'dollar'.

For example let's take a car? Say I am selling a car in Somalia. If I know the value is 20k in dollars. All I then need to know is what equivalent of 20k in Shilling and that is the price u will sell at. That is why 'currency' trader are critical to establish what the 'currency is worth' against other currencies or else u will not know how to 'price' your goods or products in Somalia or anywhere in the world.

But imagine this scenario. Say I am selling a car I imported from Dubai for 20k in Somalia. Imagine the govt begins producing more currency to the point it has increased ten times over the supply or the denomination change.

I will still sell it at all times based on what the 'currency is worth' that day, that's why they make sure currencies are up to date daily in the market, if it didn't do this, u could be robbed and selling your vehicle at lesser price then what it's worth in their currency.

Imagine the govt increased the supply of 'money' to the point where the local market responds by upping prices to match the currency increase, I will come in and do the same with my Car. Did the economy benefit? nope, it's still 1 car, it's not 2 cars right? hence product quanity is measured in GDP, that's wealth, where-as the currency in somalia no matter if they give me 1 hectare of land worth shilling or one bank note worth 20k, it won't change the fact they are purchasing a single vehicle only, there has been no growth because growth means they should be purchasing 100 cars from me not increasing their 'currency' cause it just leads to me increasing my price on my vehicle hence u don't win and I don't win because Im not producing more vehicles and u r not winning cause you are still getting the same product just 1 car.

Where Is Teeri we would have a real great chat about this, his the economist though
 

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