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Sunday July 25th, 2021
Economy

Sri Lanka lifts coconut price controls as monetary nuts loosened

ECONOMYNEXT – Sri Lanka has lifted price control on coconuts ordered by circumference as coconut prices went up after a ban on palm oil imports and the Federal Reserve fired a global commodity bubble with ‘stimulus’ and the domestic currency also came under pressure from liquidity injections.

“Acting under the powers vested in it by Section 20(5) of the Consumer Affairs Authority Act, No. 09 of 2003, the Consumer Affairs Authority hereby rescind Order No. 69 (Maximum Retail Price for Coconut) published in Gazette Extraordinary No. 2194/73 dated 25th September, 2020,” retired Major General Shantha Dissanayake said in a gazette notice.

In September 2020, the Consumer Affairs Authority which has emerged as the main price control agency that disrupts market price signals to curtail supply and also create black markets set three price controls by circumference.

A nut with a circumference of over 13 inches was given a ordered price control of 70 rupees, between 12 and 13 inches 65 rupees and below 12 inches 60 rupees.

According to official statistics collected from key markets the wholesale price of a coconut was 80 rupees this week and retail prices were around 92 rupees.

Sri Lanka has banned palm oil saying it was to improve the health of the people.

Later blending of coconut oil was also banned and existing oil palm was ordered to be uprooted.

After ordering palm oil to be uprooted, the state published an order to stop coconut trees being cut.

When the original price control was placed in September the rupee was at 185 to the US dollar. It has since fallen to 200 to the US dollar amid money printing to pay state workers and also keep interest rates down.

The US Fed has also been printing money firing a global commodity bubble. Earlier in the year classical economists have called Federal Reserve Chairman Jerome Powell ‘delusional’ for some of his comments over money supply growth and inflation.

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US inflation will overshoot target, Powell delusional: Hanke

Inflation has since overtaken the Fed target.

Powers last week indicated that the Fed monetary policy committee had “talking about talking about” ending monetary liquidity injections.

“You can think of this meeting that we had as the ‘talking about talking about’ meeting, if you’d like,” he said. “I now suggest that we retire that term, which has served its purpose.

Among major central banks the Federal Reserve had done the most damage to the world, critics say. After stumbling onto open market operations accidentally in the 1920s it created the Great Depression by firing what came to be called the ‘roaring 20s’ bubble.

Under pressure from President Richard Nixon the Fed printed money firing an ‘oil shock’ in the 1971 and ended a centuries old gold standard, torpedoing the Bretton Woods system of soft-pegs and dooming the world into a floating fiat money regime.

The Bretton Woods system was supposed to have been pegged to gold at 35 dollars an ounce and the rupee at 2.88 grains of gold under the same system.

In 2008 it triggered the ‘Great Recession’ after firing a massive commodity and housing bubble. (Colombo/June21/2021)

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