Tuesday, 28 January 2014

Lessons from U.S. Reserve Bank

Lessons from U.S. Reserve Bank


THE United States Federal Reserve Bank clocked a century in December 2013. In the designated bank building called Federal Building, the outgoing chairman, Ben Bernanke performed a solemn ceremony marking the occasion of the founding of the banking system in 1913. Bernanke was flanked by his illustrious predecessors Paul Volker, Alan Greenspan and Janet Yellen the person billed to succeed Bernanke in February 2014.

  During the occasion, Bernanke praised his predecessors for their courage to withstand pressures and make tough decisions necessary for the survival of the union. The history of the Federal Reserve Bank is very important to Nigeria. This is because our federalism is modeled after the United States. Therefore, we should imitate it, particularly because the Federal Reserve Bank (FRB) is the biggest and most influential central banking system in the world. The FRB operations affect the whole world.

  Moreover, the FRB monitors the dollar, the world’s reserve currency. Besides, the dollar is very vital to our sustenance because it governs the global petroleum transactions, which is our basic life line. In order to manage the economy of the United States more effectively, Senator Nelson Aldrich in 1910 conceived a plan to create a central bank for the states. The ensuing Aldrich Plan recommended a federal institution to be run by bankers. Because bankers are reputed to be very corrupt, the U.S. Congress jettisoned the bill.

  But the courageous President Woodrow Wilson in power at the time persuaded the Congress to revisit the project. Wilson, being a retired university president understood the importance of the bank. Within a month of his election as president, Wilson caused the Aldrich bill to be passed into law.

  As currently constituted, the FRB is an independent financial institution, with a board of governors having executive powers. It has about six other regional banks with some measure of independence from the centre. The primary role of FRB is to supervise every banking activity in the United States. It lays down monetary policy, controls prices ensuring growth and full employment.

  The Federal Open Market Committee of FRB manages the monetary policies of banks. Indeed, the Federal Reserve Act of 1977 emphasized the dual mandate of FRB. It was charged with creating financial stability in the nation and ensuring full employment within the framework of financial stability and growth. In large measure FRB has achieved its mandate in the last hundred years. To wit, it has succeeded in making the dollar the world’s strongest store of value, thereby succeeding to Great Britain’s imperial Pound Sterling.

  Thus, FRB has become America’s indeed, he world’s think tank on monetary and economic policy. But it has made mistakes causing the world economy to wither between 1928 and 1940. Then, stock prices reached a high plateau, with a prolonged euphoria in Wall Street where the Dow Jones Industrial Index increased six fold in eight years. In a twinkling of an eye, the bull metamorphosed into a grizzly bear, culminating in the economic crash of October 1929. Within a week, millionaires became paupers. Unemployment soared to unbelievable proportions, reaching forty per cent plunging the whole world into recession.

  Besides, by 1971, the gold standard had collapsed in the Republican administration of Richard Nixon just like the 1929 depression in the Republican administration of Herbert Hoover. The collapse of the gold standard was occasioned by a severe balance of payments crisis, forcing President Nixon to devalue and abolish Bretton Woods fixed exchange rate regime.

  Another Federal Reserve gaffe was the housing bubble of the 1980s which ran the world economy into a crisis from where we are just recovering. This latest crisis uncovered large scale corruption in the banking sector. A 2010 Bloomberg poll found as many as 40 per cent of people believing FRB needed to be more accountable. It is believed that the operations of the Federal Open Market Committee are corrupt and should be overhauled.

  Moreover, FRB imposes groupthink on economists, making it professionally dangerous for anyone to depart from the received wisdom of the Bank. That was why the Nobel laureate, Paul Krugman accused the bank of incompetence for failing to read the writing on the wall with regard to the housing crisis until the bubble burst. Indeed research by notable economists showed that the subprime crisis of 2008 and the great recession were evidence that we have not been as smart as we thought we were. Which was why bankers engaged in fraudulent practices amounting to billions of dollars under the indulgent watch of the FRB.

  Thankfully, today we have a better understanding of the working of central banks. We now know that institutions such as the IMF, the G20 nations, the Bank for International Settlements (BIS) and the World Bank have roles to play in servicing the economy and safeguarding global financial stability. But at the moment, creative monetary policies and fiscal forbearance are needed to ensure long term sustainable development.

  In the case of Nigeria where there are no laws to govern financial transactions, the Central Bank of Nigeria (CBN) must be imaginative in running the economy for the good of the people. Price stability cannot be the sole objective of a central bank. Growth, full employment and social security should be the purview of the CBN.

  Like the Nigerian Mortgage and Finance Company, which CBN jointly established to provide affordable housing for our people, CBN should also establish an Ebele Facility whereby small scale industrialists can access interest free loans for full employment in Nigeria. In the Nigerian Mortgage Finance Company, government and CBN sponsored loans for housing in the Federation. The scheme is also backed by a World Bank zero interest credit of $250 million with 40 years tenor, and 10 years of grace, a very attractive facility. The mortgage firm will further float an additional N50 billion bond as soon as operations begin. These bonds can thereafter attract institutional investors for subscription.

  In the same vein, the proposed Ebele Facility can be tendered for state subscription and adoption. As the American experience illustrates, successful central banking in the 21st century will have to be knowledge driven. In our case, the new CBN governor must be very knowledgeable. He or she must be both an experienced banking official and a rigorous and up to date economist. He needs in-house research analysts who will feed him with effective policy options.

  Like the FRB of the United States, the CBN needs to take full account of regional economic realities and learn how to calibrate monetary policies to reflect our diversity while it expands the frontiers of social welfare in the Nigerian federation. To be effective, the CBN must be run by self confident governors able to manage politicians whose instincts never transcend the calculus of immediate gain.

  The CBN must be led by men and women of integrity, courage and creativity, and who can manage knowledge while earning respect and trust. A good Central Bank is never subservient to the politicians, they are resolutely committed to accountability. They eschew secret, parochial agenda, while working for the common good.

  In this turbulent world, mistakes are bound to happen, when they do, a responsible central bank official quickly owns up, setting out to make amends. When there are no clear cut powers, the responsible banker does what is proper and fair, creating a convention that could be legalized later. As Janet Yellen takes over as chairman of the U.S. Federal Reserve Bank in the new year, it is expected that she will consolidate on the achievements of Ben Bernanke, her predecessor. She needs creativity to meet the challenges of a world in which the U.S. dollar may no longer dominate owing to the emergence of China as a world power. United States greatness had been rooted in its great institutions, its commitment to the rule of law, freedom of expression and the creative ingenuity of his people. With Yellen in the saddle, we look forward to a great 21st century with her entrepreneurial mindset and intellectual firepower. I urge her to lead the financial world with detachment communicating clearly, without allowing herself to be mesmerized by bureaucracy.

• Ogunmupe is a columnist with The Guardian Newspaper in Lagos, Nigeria

How To Regain Your Glory, Doing the will of God

On The Path Of Winners

By Bayo Ogunmupe

How To Regain Your Glory

WHATEVER life has taken from you, God can restore to you more abundantly. He may not give you exactly what you want, but He will give you what is best. Even when you fall under His corrective hand through disobedience, if you repent, Jehovah will reinstate you to a place of glory. You say, ‘But what about the time I have wasted, the opportunities squandered?’ ‘Behold the Lord’s hands is not shortened, that it cannot save, nor His ear heavy, that it cannot hear!’ Isaiah 59:1.

  After wasting all that he had inherited, the Prodigal Son returned home, penniless and embarrassed. All he wanted was three square meals and a job in the servants’ quarters. But the moment he said forgive me, his father called for the best robe, the fattest cow, the newest shoes, and a ring of son-ship restoring him to his rightful place as a member of the family. Even under the crushing weight of the Draconian laws of the Old Testament, God said,; if a man steals an ox or sheep he shall restore five oxen for an ox and four sheep for a sheep, Exodus 22:1. Now if God would do that for those on the wrong side of the law, how much more will He do for those He has redeemed? So you can go to Jehovah with confidence, knowing He is a God of restoration. One day the Amalekites burned down King David’s hometown, taking its families captive. In that scene of devastation, David and his men wept their eyes out. But said to David, ‘Pursue, for you shall surely overtake them and without fail recover all,’ 1 Samuel 30:8. That was how David got back all they had lost. Thus Yahweh is not only a God of restoration, He is also a God of abundance. God who created time can give you more of it.

  When God blesses you, it will not come from a rationed supply. Ever since Adam and Eve blew it in the Garden of Eden, God’s desire has been to restore to Homo Sapiens, all that we lost. So go to God today and let the restoration to glory again. Being justified gives you the right to stand before Allah and claim his best. So, believe for more gain that expected, because our God is a God of retorationĂ¥. ‘Your God will come with recompense,’ Isaiah 35:4.

  What you give up in order to serve God is nothing compared to what you will get back, God can give you a hundred fold what  you have sacrificed in order to serve Him. ‘Be strong, do not fear! Behold your God will come with vengeance, with restoration. He will come and save you,’ Isaiah 35: 3-4. God can give you back any losses in overflowing measure: And the ransomed of the Lord shall return and go to Zion with singing, with everlasting joy on your heads. You shall obtain joy and gladness and sorrow shall flee away. Stand on His promise: ‘And the desert shall rejoice and blossom as the rose, it shall blossom abundantly,’ Isaiah 35: 1-2. Rejoice, the Almighty is a God of restoration, so your best days are ahead of you.

  Dr. Alexander Maclaren, the great Scottish preacher, attributed everything he knew to one habit: spending an hour each day alone with God. Sometimes he allowed others into his study, but they were never allowed to speak. God gave you your talent, but it is your job to develop it. And it isn’t that complicated because your gift usually relates to something that excites you. Think about it. God made you. He put that desire into your heart. Knowing that helps you understand why the things you find rewarding involve your innate talents and abilities. It is natural for a dog to hunt. Coop him and it will lie around without enthusiasm. But it is going hunting, he comes alive. That is because God designed dogs that way. They have that passion inside them.

  And for humans, when we are doing what we know we are called to do, enthusiasm and excitement erupt in us. On the other hand, when you are doing something not natural, it is always a struggle. If you try, train, practice and push, you still cannot master the skill. Then you should recognize that it may not be your forte. Though we must persevere by learning hard things, but life should not be a constant struggle. When you are fulfilling your purpose, the most noticeable result is how rewarding it feels to stir up the gift of God in you by utilizing your natural talents.

  As they wrestled together, the angel of Jehovah asked Jacob, ‘What’s your name?’ Jacob answered, ‘Jacob.’ Then the angel said, ‘your name will no longer be Jacob, which means deceiver, but Israel, which means’ a prince with God,’ because you have struggled  and overcome,’ Genesis 32:27. God forced Jacob to look at his true identity. He wrestled him into a revelation of who he was -  not what others said he was. You are not who others say you are. You should determine who you are before God. You are more than your past and education, you are more than your circumstances. You are an overcomer. So dry your tears, square your shoulders and begin walking in your God-given identity, as the champion of Nigerian prosperity.

  Our champion this week is David Sarnoff, the American pioneer in the development of both radio and television broadcasting. Sarnoff was born in February 1891 at Minsk, Russia, as a boy he spent several years preparing for a career as a scholar of the Jewish Talmud. He emigrated with his family to the United States in 1900. He settled first in Albany, then in New York City. While at school, he supported his family by vending newspapers and singing liturgy in a synagogue.

  In 1906, he left school to become a messenger in a telegraph company and with his first salary bought a telegraph instrument. He soon became proficient in Morse operations, thereby finding work as a radio operator for the Marconi Wireless Telegraph Company. After service at sea for several years Sarnoff became operator of the most powerful radio station in the world, created by John Wanamaker atop his Manhattan department store. There in April 1912, Sarnoff picked up the distress call from the sinking Titanic, he remained at his post for 72 hours receiving and passing on the news.

  Rewarded by the Marconi Company with rapid promotion, he became a director of the company and in 1916 first proposed a radio music box or commercially marketed radio receiver. This proposal took several years in gaining acceptance. But as the manager of Radio Corporation of America in 1921, he demonstrated the profitability of broadcasting during the boxing match of Jack Dempsey and Georges Carpentier (July 2, 1921), the broadcast created a sensation. Within three years the corporation sold more than eighty million dollar worth of radio sets. In 1926, Sarnoff formed the National Broadcasting Company (NBC).

  By then, Sarnoff had perceived the potential of television. In 1928 he launched NBC television and demonstrated the new medium. Its development was delayed by World War Two where Sarnoff served as a Brigadier, on the staff of General Dwight Eisenhower, the supreme Commander of Allied Forces. He became president of Radio Corporation of America in 1930, chairman of the board in 1947, retiring in 1970. He died in New York in December 1971. He was pioneer of radio and television broadcasting in the world.
On the Path of Winners
By Bayo Ogunmupe
Doing the will of God
DOING the will of God in order to gain fulfillment is the forgotten secret of success. Jesus said, “my meat is to do the will of Him that sent me, and to finish His work,”Jn 4:34. Hardwork isn’t what determines how great you become. Neither does persistence bring automatic success. It takes your doing the will of Jehovah for you to succeed. Increase comes after planting and watering. The pursuit of your purpose and persistence in that pursuit is planting. What then does watering mean? The watering stage in the pursuit of happiness is where we often miss the point.
  But until you plant and water, it is then that God can give you the increase desired. “In everything give thanks: for this is the will of God concerning you,” Thessalonians 5:18, Doing the will of God through thanksgiving grants you access to success in life. You don’t gain greatness until you are grateful to God. You cannot gain outstanding success unless you penetrate the mystery of thanksgiving.
  Ingratitude stops the finger of God which brings success to you. “For ye have need of patience, that, after ye have done the will of God, ye might receive the promise,” Hebrew 10:36. Here, we are told we can only receive the promise after we have done the will of the Almighty. And what is the will of God? It is in everything you must give thanks, until the will of God is done, you cannot obtain the promise.
  So, every pursuit in your life must culminate in thanksgiving, for it to end up in success. If there was no sale yesterday, thank God there was no robbery attack also. For today, thank Jehovah for being divested of fraudsters or that there was no fire outbreak in home and shop. Thus, if you want to receive the hand of God, then lift up your hands in thanksgiving to Him. You may be valiant in the pursuit of your purpose, you may even be very persistent in that pursuit, but nothing will work until you are genuinely thankful to Allah. Divine presence is the ultimate in your clarion for recognition.
  God’s presence is your guarantee for the accomplishment of your goals. His presence renders your enemies helpless, paving way for the establishment of your goal.
  There are many workaholics who died in penury, because of the missing God’s presence. Thus, it isn’t enough to have a goal and the persistence to pursue it. The answer is that you strive to carry God’s presence and praises creates a conducive atmosphere for His presence.
  Until you Praise Allah, you are not worthy to carry His presence. Until you register in the school of thanksgiving, you will never be successful. No one ever gets anywhere with complaints. Never complain to God, ask Him what you want; “For no good thing would He withhold from them that walk uprightly.”
  Great success is the heritage of the thankful. The ones full of praise for Jehovah and the joyful are those that can provoke the hand of God to produce results. You reign by working. You cannot substitute work with prayer. Life does not reward wishers, it rewards workers. Work strengthens you while laziness wears you out. Hardwork is the secret of success. It provokes God to help you. You cannot succeed alone. Stay connected to God, rely on Him. Envy no one.
  Know what you want and be ready to give it whatever it takes. Work hard and work smart. The use of your senses is what enhances your results. Always get persuaded by available facts. Then get to work on your field of interest where you wish to excel. Believe in facts and information. Do everything to acquire them, for they will give quality to your reasoning and planning. When facts are applied in your decision making, you come out with excellent results.
Work is a commandment from heaven. Prayers are spiritual wishes, and if wishes were horses, beggars would ride. You reign by working, Jesus said, “I must work the works of Him that sent me, while it is day, the night cometh, when no man can work, John 9:4. “Seest thou a man diligent in his business? He shall stand before Kings, he shall not stand before mean men, Proverbs 22:29. Diligent in his business, not diligent in prayers. Jehovah God works. Work authenticates faith (James 2:18). Life doesn’t answer wishers, it only rewards workers. The harder you work the more profit you gain. Moreover, hardwork keeps you healthy.
 Our champion for today is Frantz Omar Fanon, the Martinique-born Algerian and French Psychiatrist, philosopher and revolutionary. He was a writer whose works are influential in post-colonial studies, critical theory and Marxism. As an intellectual Fanon was a radical and humanist concerning colonialism and the cultural consequences of decolonization.
  In the course of his work as a physician and psychiatrist, Fanon supported the Algerian war of independence from France. He was a member of the Algerian National Liberation Front and for four decades, the life and works of Fanon have inspired anti-colonial liberation movements in Palestine, Sri, Lanka and the United State States.
  Frantz Omar Fanon was born on the Caribbean Island of Martinique, then a French Colony but now a French county. His father was of African descent, his mother was of Indian and European descent, whose White ancestors came from Strasbourg in Alsace, France. Fanon was born in July 1925 and died in December 1961. After France fell to Germany in1940, at the age of 18, Fanon fled Martinique to the British Dominica to join the Free French Army. He enlisted in the French army and joined an Allied convoy that was stationed in Casablanca, Morocco.
  When the Nazis was defeated by the Allied forces, Fanon was among the Allied forces that crossed the Rhine into Germany. Then he returned to Martinique in 1945 but didn’t stay long. He then left for France where he studied medicine and psychiatry. In 1952, Fanon wrote Black Skin, White Masks, reflecting his service in the Army. Later he published. The Wretched of The Earth and Toward the African Revolution. There, Fanon revealed himself as a war strategist. Still later, A Dying Colonialism he published before dying as Algerian ambassador to Ghana in 1961.