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Ecuadorians Trust the US Dollar, not Correa’s New-Fangled Currency

By: Leonard Quinde Allieri - Jun 23, 2016, 9:57 am
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Ecuador’s government is pushing electronic currency despite its negative effects on the economy (wikimedia).

EspañolPeople have always turned to trade to better their lives. At first it was using barter, but the unpractical system had to be replaced by another way of carrying out the process. We then started experimenting with different goods to act as a representation of value in goods and services. And throughout history, we have used many things to that end; in Ecuador, for example, Spondylus was once used.

We’re close to reaching two decades using the dollar as currency. In a way, it was the currency that has gained our confidence and respect the most, and the one that has allowed us to take power away from some governments that wanted to do what they wished with our currency’s worth. This most currently happened with Sucre; the corruption of politicians was one of the factors that lead us to the 1999 crisis.

In Ecuador, there’s a lot of debate around the new whim of the government of creating a new electronic currency, a system the government wants to monopolize through the Central Bank. We all know what happens when there’s a monopoly created through legislation — that without any competition, the entity becomes severely abused.

The government of Ecuador has created privileges for its electronic currency and has complicated the dollar so people migrate to the government currency. For example, if you pay with the electronic currency, you pay a few points less on the VAT. As a market rule, people would immediately seek to buy with the currency that makes things cheaper.  This is a rather a Machiavellian plan, especially considering that it isn’t being done with the country’s best interests at heart. If the same thing were done to the dollar, it would immediately jump start the economy after the devastating earthquake.

Ecuadorians and distrust

It’s natural that Ecuadorians don’t trust this currency.  It’s in the nature of government to believe money is infinite, even more so to the self-proclaimed government of the citizen revolution. This government has brought multiple tax raises. Even during the biggest boom in our country’s history it has felt it needs more and more money, leaving us more deeply in debt. Of course, that’s always with the fervent desire of devaluating the currency so no one is exempt from such a squeeze.

It would seem the government is saying something along the lines of: “it’s finally not my money.”  In fact, that money isn’t the government’s, and that’s why it doesn’t have any incentives to manage it correctly. The crisis the country suffers from was caused by the government’s lack of foresight, excessive public spending, the creation of unnecessary bureaucracy and ministries, paying overheads in nearly all public works and investing things nobody needs and never get finished.

Today, we face endless broken promises, including a rise in taxes that were promised never to happen. Additionally, thousands of solar panel houses the government promised are missing, among other things.

How can we trust a government like that?

There are so many issues with the aforementioned electronic currencies. There’s the monetary policies that some people need and others don’t. There’s also also talk about it being a way to break the ties with the dollar. The most important thing is that we don’t trust the government and its brand of populism enough to use a currency controlled by them.

This government can’t and won’t achieve their goal unless it’s forced to do so through a mechanism that would include, once more, an abuse from the government, and that’s an abuse we have to watch out for.

Leonard Quinde Allieri Leonard Quinde Allieri

Leonard Quinde Allieri is an industrial engineer currently pursuing a degree in agricultural engineering. He's a member of Students for Liberty Ecuador, CREO Youth, and Ecuador's Libertarian Movement. Follow him: @LeoQALib.