It's around almost 9am. I literally just ate this vanilla Cornetto ice cream on this balcony that has a lovely view of Alabang, a wonderful place somewhat south of Metro Manila where I've lived almost all my life.
Ever since I ate in Sambokojin (buffet of Japanese and Korean cuisines) a few days ago for my mother's birthday, I've been having this craving for vanilla ice cream on the back of my head from time to time. Being that I just woke up and I've been quite a morning person lately, I decided to go to South supermarket (it opens at 8:30 am and is walking distance from where I am currently located) and buy vanilla ice cream. And hey, it worked. The view, the ice cream, lots of water — bam! my hangover is somewhat gone.
The twist on all of this is that I literally only had 20 pesos with me. I dragged myself to the supermarket with faith and hope in humanity that advertising isn't really all about deceit. True enough, the Cornetto ice cream is only 20 pesos. Not only have their TVCs been entertaining and effective, it also provides some form of truth to it (could be more expensive in other places).
But that's me, a young "middle class" person blessed with a hardworking mother, an education, and many opportunities and aspiring career choices. It is even quite possible that I am their main target market. The young and broke and frugal (so much for being wild and free).
For many of the individuals in our population, spending 20 pesos on vanilla ice cream is already a luxury. They could already use it for commuting to work. They could add it to their savings. They could buy half a kilo of decent rice. They can buy galunggong (I once bought 30 pesos worth back in college and got so many of this dried fish delicacy) that can feed their family.
Instantly, this makes me ask myself: what gives value to paper money we use as currency? What gave value to the 20 pesos piece of paper I used a while ago to trade for the vanilla ice cream?
Many assume that it is backed by some sort of asset or commodity, that our government has reserves of gold, perhaps, that gives that 20 peso paper bill I had while ago some value. The fact is though that this hasn't been true since 1971 when the Bretton Woods system was abolished. For some libertarian scholars, it hasn't even been backed by anything far longer than that.
You see, from my understanding and research, their are three perspectives on this issue. Economics is a soft science after all. The market is so complex and organic that treating it like hard science is a pretense of knowledge (a phrase popularized by F.A. Hayek). Anyway, there's the Keynesian, the Monetarist, and the Austrian perspective on money and inflation. The system we have now, from what I know (I may be wrong), is some sort of Keynesian type where a central bank gets to arbitrarily dictate the money supply, the value of money, and interest rates. This is in spite of the fact that we have already established that the market is just too complex and organic.
Basically, your government has a monopolistic power to debase your currency in accordance with their theories and at their own discretion which to me is pure and blatant theft. They steal value from money you earned and worked hard for. And of course, I find it silly that many actually think this kind of monetary policy has nothing to do with rising prices.
Aside from arbitrary control over our money supply, they also get to randomly pull out a number from thin air and dictate interest rates which is perhaps the greatest indicator in a market of how we must organically spend or save. They lower interest rates with the noble intention of boosting the economy because people get to borrow, spend, and develop. But you see, this false sense of low interest rates only create malinvestment. It sends the wrong signals to market players and consumers. This "economic boom" of the Philippines, this "good economy" we are made to believe we are experiencing — it's all artificial.
Yes, in the short term, it makes people trade and spend, it creates buildings and condos, and in turn of course creates jobs. This is their supposed noble intention. The scariest part though is that this boom will eventually bust. The market will eventually have to self-correct and dictate the real values of interest rates and prices. This is when the bubble, this growing economy, will eventually burst.
Sure, it's such a pessimistic perspective on our economy and goes against many pundits, journalists, economists, and experts, that write about how our economy is so great. I just want people to realize that one day wala ng mabibili ang 20 pesos mo (your 20 pesos will not be able to buy anything anymore).
In my opinion, you don't have to be a rocket scientist to see even a tad bit of immorality in this form of system. I remember people in the US laughing at Peter Schiff, libertarian and Austrian economist, when he was predicting the housing bubble long before it happened. We must learn from the mistakes of the west. Just take a look at the Euro as the biggest example of what kind of policies we must avoid.
As educated and open-minded individuals, there is nothing wrong in rethinking monetary policy and in studying alternative perspectives.
For now, I'm gonna go make myself a cup of coffee. Being worried about our economy is not helping with my hang over at all. For now, why not just think about it: “Hanggang saan aabot ang 20 pesos mo?"