User:Sandmanether/sandbox

Economic Growth and Fiscal Policy

Large parts of Africa, Zimbabwe in particular have been plagued with difficult economic growth. The difficulties stem largely from mismanaged fiscal policies. Fiscal frameworks help with administering proper economic policy that allow for the growth of an economy; the ability to finance public services, collecting revenue, the ability to audit financial records, as well as the ability to provide borrowing and debt services. When financial frameworks are not properly managed many of these services become difficult to manage and implement at scale. This causes much stress and can prevent a country from developing economically. Zimbabwe currently owns large amount of debt which amounts to US$10 billion (Budget Statement, 2012). During the 2000's Zimbabwe faced a large economic collapse which caused mass inflation within their local currency. At its historical peak the national currency reached rates of inflation of 231 million percent (Central Statistical Office, 2009) . Peak inflation occurred during 2008 as the entire globe started to struggle economically. Zimbabwe just happened to be one of the worst hit by the global recession. As inflation hit, Zimbabwe was put into a difficult situation where their national currency became worthless and eventually Zimbabwe was forced to abandon their national currency and replace it with a separate system. February 2009 was when the currency was officially replaced by a multi currency system where the US dollar was used as its main form of currency. According to a report by the IMF all bank accounts denominated in Zimbabwe dollars were frozen as the use for the local Zimbabwe dollar became discontinued in 2012.

To prevent the country from completely collapsing the government had to resort to drastic measures and many fiscal provisions were made to the constitution. Fiscal policies help a countries government run smoothly and allows for tax dollars to be spent on programs directed towards its national citizens. There are systems known as autonomous revenue authorities that have been established in Africa and its many countries including Zimbabwe. These institutions are set up to help in collecting taxes. Some of Zimbabwe's economic problems stem from the difficulties in revenue collections. This has led to several other issues in the ability to issue debt such as financing and borrowing for his citizens. This then leads to difficulties in expenditure issues such as providing funding for local welfare programs for its citizens.

Fiscal and Monetary Policies Post 2008

There have been legislative frameworks put in place post 2008 which are constitutional provisions that are drafted in a legal manner that have been passed to help with the economic problems of Zimbabwe. Such frameworks such as the Public Finance Act, Management Act, The Audit Act, The Appropriation Act, and several more provisions that were enacted and helped replace previous policies such as the Audit and Exchequer Act and the State Loans and Guarantees Act. According to an article published by the University of Zimbabwe, fiscal policy and fiscal management go hand in hand. The proper implementation of fiscal policies allow for a foundation to be laid that creates a central framework from where the government has the ability to utilize resources in an efficient manner that allow for economic growth. An example of this can be seen in the ability to tax and regulate spending. Without the proper policies that allow for revenue generation and taxation there is a gap that prevents social programs from being implemented. This causes gridlock and prevents governments from regulating economic activity that allow for infrastructure such as public roads, schools, welfare programs, and many other facets of society from functioning.

The strong transition from the national Zimbabwe dollar to a multi currency system has proven beneficial to Zimbabwe's economy. GDP data taken from World Bank shows that from 2000 to 2008 Zimbabwe had an average GDP of 5.81 billion dollars with 2008 being the lowest with a GDP of 4.42 billion dollars. Post 2008 the GDP rose drastically in 2009 with a GDP of 8.62 billion and an average growth rate of 5.9 percent. In year 2010 through 2012 the average growth rate in GDP was 11.3 percent. The massive spike in GDP post 2008 is a good indicator that the transition from Zimbabwe denominated currency to a multi currency system proved to be beneficial.

Reasons for why the transition to a multi currency system has proven so beneficial can be attributed to the ability for the country to restructure its internal finances which allows for greater transparency in accounting. The transition forced more discipline in fiscal management and stabilized the economy from being further affected by inflation.

However beneficial the transition was to the Zimbabwe economy, there are still challenges that the country faces due to the change in currency exchange. For one, the prices and wages within the country were denominated in Zimbabwe dollars and post transition the agreed upon exchanges have been altered. Since the prices and wages are now quoted in U.S. Dollars the competitiveness globally and possible international investment opportunities become limited. Zimbabwe's main trading partner is South Africa so a large portion of their currency exchange is in the South African Rand. Therefore, when Zimbabwe has an influx of revenue in Rand the exchange rate between the U.S. Dollar and Rand become a difficult obstacle. Another issue that Zimbabwe faces is the smaller circulation of small denominated U.S. currency. Without a large circulation of small banknotes and coins retailers have a difficult time receiving payment for goods and services from average citizens. According to the IMF the multi currency system is a temporary system until 2012 when a new system can be implemented or continue with the current system. The obstacles that Zimbabwe faces when transitioning is creating new agreements and provisions that continue in the transparency of accounting and also does not prove too destabilizing to the economy.

In situations such as Zimbabwe's where their national currency becomes defunct, a replacement known as a hard peg must takes its place to stabilize the economy. There must be some stable form of value that the country can value its goods and services from. There are benefits to society as well as trade offs that come with hard pegs. Benefits include low inflation, quicker response time to implementing policy changes that prevent destabilization, and the possibility of better economic growth. The ability for key fiscal institutions to deliver proper and sane fiscal and monetary policies through hard pegs create for a more desired stable economy. With any benefit comes some sort of trade off, in the case of hard pegs, several trade offs are made such as losing the ability for autonomous monetary and fiscal policies and the possibility for exchange rate movements to be unfavorable towards Zimbabwe. Another issue that Zimbabwe may face is the inability to have a sovereign central bank separate from outside influence which creates a scenario where Zimbabwe is no longer able to issue debt such as loans on its own terms. This creates a situation where there is a lack of emergency liquidity available to businesses and citizens. However difficult the trade offs may seem, Zimbabwe is currently better off with the current transition to a multi currency system.

Wiki Draft: Zimbabwe: Decent Work and Economic Growth

• Large parts of Africa, Zimbabwe in particular have been plagued with difficult economic growth. The difficulties stem largely from mismanaged fiscal policies. Fiscal frameworks help with administering proper economic policy that allow for the growth of an economy; the ability to finance public services, collecting revenue, the ability to audit financial records, as well as the ability to provide borrowing and debt services. When financial frameworks are not properly managed many of these services become difficult to manage and implement at scale. This causes much stress and can prevent a country from developing economically.[1] Zimbabwe currently owns large amount of debt which amounts to US$10 billion (Budget Statement, 2012). During the 2000's Zimbabwe faced a large economic collapse which caused mass inflation within their local currency. At its historical peak the national currency reached rates of inflation of 231 million percent (Central Statistical Office, 2009) [2]. One main focus is on revenue collection. Revenue collection remains a basic means of keeping a countries government running smoothly and allows for tax dollars to be spent on programs directed towards its national citizens. There are systems known as autonomous revenue authorities that have been established in Africa and its many countries including Zimbabwe. These institutions are set up to help in collecting taxes. Some of Zimbabwe's economic problems stem from the difficulties in revenue collections. [3] This has led to several other issues in the ability to issue debt such as financing and borrowing for his citizens. This then leads to difficulties in expenditure issues such as providing funding for local welfare programs for its citizens.

There have been legislative frameworks put in place which are constitutional provisions that are drafted in a legal manner that have been passed to help with the economic problems of Zimbabwe. Such frameworks such as the Public Finance, Management Act, The Audit Act, The Appropriation Act, and several more provisions that were enacted and replaced other provisions such as the Audit and Exchequer Act and the State Loans and Guarantees Act. [4]

Article Evaluation

• Is everything in the article relevant to the article topic? Is there anything that distracted you?
  • As far as I can tell, the history of Bitcoin, the reason beyond its inception, the explanation of decentralized currency compared to centralized, the concept of Austrian Economics, the ideals behind anarcho capitalism and libertarian ideals, the idea of privacy, fungibility, and even the criticisms seem to all be well identified. There from my point of view, someone who has followed Bitcoin very closely, almost at its inception, I find that the article is quite thorough and unbiased.
  • One thing that I might add is the concept of the halvening and what the means to the price, supply, demand, and mining conception of Bitcoin
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  • Like I mentioned earlier, the one thing that could be added is the concept of the halvening and what the means into terms of bitcoin.
    • The halvening is a very important concept in terms of Bitcoin and effects how Bitcoin operates at the protocol level. This means that since the inception of Bitcoin there has been two points in time where the block reward when miners solve a particular algorithm has been cut in half.
    • At the inception of Bitcoin which was 1/3/2009 every block of bitcoin mined rewarded the miners with 50 BTC which was created every 10 minutes. From the inception to 2012 which was the first halving 10,500,000 BTC were mined.
    • On 11/28/2012 every block of bitcoin mined now only produced 25 BTC and on 7/9/2016 the second halving was initiated which reduced the reward to only 12.5.
    • The halving follows a strict set of code which is similar to Moore's Law which states that "number of transistors in a dense integrated circuit doubles about every two years."
    • This means as computing power increases every two years the capacity for miners to improve the ability to mine will improve, but so will the number of miners entering the market which creates competition among each other. As competition increases so does the mining difficulty which will push back each halving further and further until the expected year which is some time in 2100 where the last block of bitcoin will be mined.
    • If the trajectory of mining follows its current pattern, sometime in the next century is when the last block of bitcoin will be mined
• What else could be improved?
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  • No the article seems to be quite neutral and only states the history and the events which have taken place. There are certain topics such as the legality, the use case, certain ideas such as anarcho capitalism and libertarian theories, but they all play a vital role in shaping the idea of bitcoin, the reasoning behind its creation, as well as further discourse on the history and future of Bitcoin
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  • There are some viewpoints such as the ideology of bitcoin that could be described more thoroughly
    • For example the idea of Austrian Economics and the theory of decentralized money could be better discussed.
    • The idea of Fungibility can be further described and identified as the reason behind its importance.
    • The concept of cold storage and hot wallets, as well as hardware wallets are important and seem to be underrepresented as well
  • I do not see any viewpoints that are overrepresented. I feel as though most viewpoints can be further defined.
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  • Yes, the inks that I clicked seem to have a page associated with more detail about the specific topics.
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