The face value, sometimes called nominal value, is basically the value of a paper money, coin or stamp as printed on the coin, stamp or bill itself by the issuing authority(Allen L, 2009). This is where developing countries lose alot of money and is a source of debt itself(Conant E.A, 1905).
To mint money is indebtedness of a country, the minters of notes and coin will do a simple thing. That is print a paper which you have to pay the printing cost with either minerals or money itself [Dollars]. Why can’t we pay them with the paper they are printing?. How do you print paper and you expect me to pay you with gold, diamond, oil etcetera.
Take; If you have a 10,000 note, the face value is assumed 10,000 but the cost input in printing the money is 2,000. If 10,000 comes in to the country, its already indepted by 8,000. That money is not charged interms of the recipient country paying the money immediately, its charged interms of interest.
That is what determines the central bank lending rate. They will say this is the amount of money to pay the minters, all the commercial banks will come to us. We specify the interest we are lending to them in order to cover for the cost input used by the minters. Actually if it were not for that, the central bank lending rate would have been just at 1% this making commercial banks lend at say 4%. But the western world would never allow that to happen in the name of neo colonialism.
Thus the more money you are holding even if it’s not borrowed is actually the more indebtedness you owe to the central bank. The more money a country has in circulation is the more dept accrued on the central bank to pay back to the minters and printers.
That is why money is guarded when it comes in to the country till it reaches the central bank such that we are all indebted to that as a country. Minting and printing money is independence of a country itself. That is why we write legal tender on them, but this is far from the truth.
HOW MUCH MONEY HAVE WE PRINTED?
How much foreign notes and coins are floating in to our market? How much Ugandan notes and coins are floating in congo, and south Sudan? At what time do they leave and come back? And if they do at what ratio? What are the inflationary tendency in regards to the imbalances when they leave or come back?Why is the foreign exchange rate highly affected?All this must be answered before we mint more money. But does the central bank do this?
Take 1 dollar is 1.5 Ghanaian cedars. How did Ghana achieve this notch, reason they practice Development economics through out there policies of trade and investments” As there god father believed from inception of the country that “Independence is only the prelude to a new and more involved struggle for the right to conduct our own economic and social affairs”.
Thus before you mint more money, you must convince this country that you have enough agricultural productivity and production sector, manufacturing sector to cope with the amount you are going to print.
These are the greatest source of indebtedness for developing countries. The day any developing country decides to print it’s own money is the day western capitalist will topple the government, it’s a redline because it’s their biggest source of revenue from developing countries.
Col. Muammar Gaddafi wanted to start the gold value and oil transaction and we all saw what happened to him.
It is so painful after all the hustles, we see our government taxing citizens income directly. Say OTT and the new one they have proposed on bank transactions. Countries that know the value of Development actually don’t have income taxes. Like in Dubai there is no income tax, that is why they have had a leap in development and just 45 years ago, Kampala was better than Dubai. We need to duel on how income taxes has affected our development in the next write up.
It’s a shame!
By Eng. Jakech Boris Rwothomio