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January 2011 -Food for thought about Literacy and Numeracy in South Africa
Devaluing the South African graduate
When the First World War finally came to an end in 1918, Germany was left virtually bankrupt and yet facing two daunting responsibilities:
(1) paying war reparations to the victorious Allies, set at about $12bn after long and rancorous negotiations; and
(2) making provision for the sustenance of millions of its impoverished and war-fatigued people.
Let us call this "the German Conundrum". Not surprisingly, many post-war governments fell on the German Conundrum;
some governments in that country did not last a week. Miraculously, one man outlasted the expectations of both inside and outside observers:
Rudolf von Havenstein. As president of the Reichsbank - the central bank responsible, inter alia, for monetary management - Von Havenstein decided that the German Conundrum
could be solved simply by printing more paper money. And he did. In his magisterial book, Lords of Finance, Liaquat Ahamed captures the dramatic consequences of Von Havenstein’s folly:
By August 1923, a [US] dollar was worth 620 000 [German] marks and by early November 1923, 630 billion. Basic necessities were now priced in the billions - a kilo of butter cost 250 billion;
a kilo of bacon 180 billion; a simple ride on a Berlin street car, which had cost 1 mark before the war, was now set at 15 billion. …
The country was awash with currency notes, carried around in bags, in wheelbarrows, in laundry baskets and hampers, even in baby carriages.
(2010: 121) What is the basic money principle that escaped Von Havenstein’s plainly stupid mind?
He did not know that national bankruptcy cannot be made up for merely by printing more paper money; there must at all times be a connection between the state of the economy and the money in circulation.
If the only thing that works is the printing machine, distributing the notes it produces freely to a horde of unproductive people can only make a mockery of the concept of money.
