All the Jamaican government is doing is redistributing wealth created outside of Jamaica by hard-working Jamaicans overseas. Hence, devaluation as the only policy instrument to create growth in the Jamaica economy has failed miserably as the International Money Fund signals the alarm.
Truth is devaluation as a tool to meet inflation targets invariable increases the price of manufactured goods, creates shareholder values which increase stock market values and allows for investors to earn huge returns by moving investment capital between the Stock Exchange and Foreign Exchange Markets.
According to Dr. Nigel Clarke, “There‘s no better place in the world to invest right now than Jamaica. According to Bloomberg Markets, Jamaica’s stock market has been the best performing in the world over the past five years.” What he did not say is during that time period, the Gross Domestic Product was 0.85 percent.
It would appear then that market intervention to force liquidity at a new level of depreciation in the domestic currency outside normal market resets only serves to counteract the appreciating effects of Direct Remittance Investments (DRI) and increase shareholder’s value at the expense of the working class and poor who will have to bear the burden of high taxation to service the debt and budget deficits for generations to come.