Inflated and weak currency central to Tunisian revolts

If you wanted further proof that a weak currency destroys and impoverishes nations, and ultimately leads to violent and fatal revolts, we link up what was said last week in the post “Weakening the Rand will result in violent outbreaks nationwide” with what’s going on in Tunisia:

“Politicians must be careful what they wish for.  Weakening the Rand to help exporters in the short-term will bring severe hardship to the vast majority of South Africans as their transport and food bills skyrocket.  If the Rand weakens 30%, expect the petrol price to catch up and be roughly 30% than it is today. The Rand is a numeraire, by weakening the Rand everything priced in Rand automatically rises.

In an environment of higher unemployment, a weaker Rand will result in violent outbreaks and public unrest nationwide as people on no, low or fixed incomes see their disposable income completely wiped out.  And as Gerald Celente likes to point out, “when people have nothing left to lose, they lose it.”  It is no coincidence that the Xenophobic outbreaks happened in May 2008 when CPI inflation was breaking above the 10% mark.”

Zoom over to Tunisia where the president of 23 years has just been ousted and forced to flee the country. Wiki says:

The 2010–2011 Tunisian protests are a continuing series of street demonstrations taking place throughout Tunisia from December 2010 onwards. The demonstrations and riots were reported to have started over unemployment, food inflation, corruption,[2] freedom of speech[3] and poor living conditions. The protests ultimately culminated in the ouster of PresidentZine El Abidine Ben Ali, who stepped down from the presidency and fled Tunisia on 14 January 2011 after 23 years in power.[4][5]

The protests began in December 2010 after Mohamed Bouazizi set himself on fire after police confiscated his produce cart.[6] The protests constituted the most dramatic wave of social and political unrest in Tunisia in three decades[7][8] and have resulted in scores of deaths and injuries. Following Ben Ali’s departure, a new election was called within 60 days. The protests have also been called the Jasmine Revolution in the western media in keeping with the geopolitical nomenclature of “colour revolutions”.

[HA emphasis in red]

Guess what, the Tunisian dinar has been chronically weak against the US dollar, falling by 11% in 2010 and 24% since late 2008.  This has pushed the continuous commodity index in dinar terms up 93% since the start of 2009, up 50% from the start of 2010, and 30% higher than the peak in prices reached in middle 2008.


Go for it, fellow Tunisians! That is huge inflation that no-one should be happy about!  But go and break down the central bank and drop the dinar, rather than damaging private property on the streets.

Someone should point this out to South African politicians when they debate the Rand at this week’s lekgotla.  Peace on the Jozi and township streets depend on it…  Literally!

PS1. Note the president and his wife fled the country with 1.5 tonnes of gold, NOT paper Tunisian dinars. Why would he, it is only as good as monopoly money outside the legal tender laws of Tunisia!

PS2. Is Egypt next? A quick glance of the currency, the Egyptian pound (EGP), confirms the risk is there. EGP is down 6% against the US dollar in 2010, and down 80% against the CCI since start of 2009 and down 40% against the CCI in 2010.

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