An American-Based Liberian Financial Expert Condemns Printing of New Bank Notes
MONROVIA – A Liberian Financial expert based in the United States of America Mr. Jeffery B. Tomah has frowned on the request by the government of Liberia to print new bank notes in the mix of the current hardship faced by the masses in post conflict Liberia.
“The government of Liberia needs to understand that our imports are more than our exports—- meaning that we do not have enough high value currency (US dollars) to back the local currency, so printing new bank notes will create more inflation (Hyperinflation). Our country Liberia needs to learn from Zimbabwe that kept printing money in different denominations and did not solve their economic woe”
According to the Liberian Financial expert, the problem Liberians are having in the country surrounding the shortage of money all come down to the lack of credibility within the banking institutions.
Mr. Tomah noted that due to the difficulties Liberians presently faced when trying to get money from the bank, they will no longer trust the banking institutions and as such they preferred keeping their money in their various homes to avoid the many difficulties.
Speaking further, the Liberian Financial expert said Money Printing usually debases Currency, causes Inflation, and reduces a country Wealth. Adding that basic economics clearly shows that the increase of any money supply causes inflation and reduces purchasing power. The reason for this is a spike in demand exceeds supply thus causing the prices for everything to jump higher.
Mr. Tomah disclosed that unless there is an increase in economic activity to commensurate with the amount of money that is created, printing money to pay off the debt would make inflation worse. This would be, as the saying goes, “too much money chasing too few goods.”
According to him printing more money is bad for the economy because it will create problem than solving it, which will lead to high level of inflation in the country. “Historically, when countries have simply printed money it leads to periods of rising prices — there’s too many money chasing too few goods. Often, this means every day goods become unaffordable for the ordinary citizens as the wages they earn quickly become worthless”.
At the same time Mr. Tomah said for a country to get richer, it has to make and sell more things – whether goods or services. This makes it safe to print more money, so that the common people can buy those extra things. If a country print more money without making more things, then prices just go up he lamented.
In conclusion, the Liberian Financial expert noted that if the government wants to print money to replace mutilated money, then that is fine. But on the other hand, if the government wants to just print money to pay for debts, then that would be a wrong idea and it is a recipe for economic disaster. Printing money does not increase economic output.
“Also, if for any reasons, the government should go ahead with the printing of the additional or excess bank notes, she needs to be very careful with the supply of such money on the market. The more money is supplied on the market, the more the money value becomes worthless”.
Mr. Tomah wants the government to make the financial/banking institutions credible and trustworthy, by allowing all banks to have required reserve with the central bank. Noting, that way, when banks go bankrupt, such reserve would be used to meet depositors’ withdrawal demands, he concluded.
Mr. Tomah is an American trained financial expert with MBA Degree in Business Administration in Financial Management from the Keller Graduate School of management in the United States of America.