In the past, Belize money has been tied to the Pound Sterling of the UK. Due to shifting import patterns, that became a wierd deal with exporters getting lousy prices for agricultural products, so the GOB switched to the US dollar as the backing of the Belize dollar exchange rate. This has worked well as our imports mostly come from the USA and our exports go to Europe. Still, the net result is that whatever happens to the US dollar and economy also happens to the Belize economy.
I'm thinking it is probably time to change the backing for the Belize Dollar again, to GOLD! Now it doesn't have to be gold as in the precious metal. We could peg it to the GOLD INDEX. The world value of gold fluctuates and our Belize dollar would fluctuate with that, in turn with the economies and currencies of different other countries in the world.
What brings this excercise of mental masturbation on, is the fact that we are now entering a depression for the USA, which currency backs our currency for an exchange rate. If you couple that with shifting trading import patterns, from Mexico, Guatemala and China, our reliance on US goods is declining. Not so noticably right now, but most seriously by next year.
The rise or fall of the US dollar will effect our ability economically with the rest of the world; which understandably are going to go into a depression shock also. Each country to different degree.
Smart money is betting on gold. While that might not be a total panacea, the idea has merit from the economic currency exchange rate for Belize. Austerity is going to be forced upon Belize, whether it likes it or not. The US dollar is in trouble and likely, very likely to get into very BIG trouble, the economists say! Mainly because during the Clinton years, they printed a lot of money. US money has no backing other than the capability of the USA to produce new technological products which sweep the world markets earning them big bucks. Unfortunately, the big printing of money spree the USA had, has enabled them to go to big debt, much like Belize. Printing more money to pay off the debt is inflationary. Making the US dollar worthless. Meaning it will decline in purchasing power, versus more stable conservative government managing systems. The USA has Trillions upon Trillions of foreign owned debt, which is solely paper money, backed by nothing more than imagination and faith that the USA will produce some new technological marvels for the world marketplace. As depression deepens and takes root, a lot of foreign owned US debt is going to be cashed in. That means more printing of money ( inflationary ) and a spiral downward in value of that money.
Since the Belize dollar is tied to the US dollar at present, for an exchange rate; that means the purchasing power of the Belize currency is going to spiral downward also.
What would it mean, if Belize changed to the GOLD INDEX as the exchange rate for Belize currency? Well if the US dollar goes down, our EU exports money would probably buy more consumer goods from the USA. If the EU money value goes down, then we gain or lose nothing. But if our Belize currency is backed by the more stable GOLD INDEX value of the world markets, that is likely to rise in value as other currencies go down. With a more expensive Belize dollar, we get more foreign exchange, when we sell our products abroad. We are probably going to lose some tourists, but those that come, will reinforce our currency earnings. Will we lose more tourists to a world wide depression, or to a higher valued gold backed Belize dollar? Mixed choices here!
I think imports is the secret? Where are we going to get our most imports? The USA? If our import patterns change to China and they should if our merchants have any sense, then cutting back on rising costs of US imports is arguably a good thing. We import too much from the US anyway. If our GOB sees the reduction of US imports as a good thing, whether or not these imports are replaced by cheaper Chinese equivalents, then shifting the backing of the Belize Currency to the GOLD INDEX for this coming depression, makes sense. Keep our earnings high in values, and also finding cheaper sources for those imports we need.
It is probably time, to hold some Chinese merchant seminars and talk-a-thons. Our three China Belize citizen, unused hole cards, the Taiwanese, Hong Kong and mainland China Belizean immigrants could be the saving grace for Belize in the next ten years. They have the knowledge and language skills to benefit the Belize economy. Getting them fast 24 hour internet connections is paramount economically speaking for the GOB. Fast communications would be the key.
Is it time to change to the GOLD INDEX standard?