Clark Hampton Limited Director Tony Mwiti has advised President William Ruto to print more currency and stop introducing new taxation measures.
In an interview with Spice FM, Mwiti who is also a member of the Modern Monetary Forum, dismissed the belief that taxation is the main source of government revenue.
“The lens nations have been wearing is that taxation is the source of their own currency which then leads us to have the wrong solutions because the model subscribes that the source to be taxation rather than the source to be the government with its exclusive mandate and power to create the currency,” Mwiti said.
The Economist explained that the government should not be looking for the Kenya shilling since it is the source of the currency.
He said the government is the legal holder of the Kenya shilling and should not borrow it from foreign countries.
“Why would the license holder of an inexhaustible asset get that asset from an area where it is exhausted? There cannot have been a Kenya shilling if there was no Kenyans government. The source of the Kenya shilling can only be the Kenyan government, we cannot go to America to borrow the shilling. We can borrow the dollar, convert it to shilling and use it,” he said.
Mwiti maintained that the government is the currency issuer and should create more money if there is need.
“If you have a deficiency, the idea is you don’t have to go to the market and look for something that you already have, why not issue that money and put it on the table,” Mwiti said.
How Ruto Can Avoid Inflation
However, he warned that the government should be weary of causing inflation while printing more money.
According to Mwiti, the Ruto must have a well laid out plan and projects to invest in with the printed currency.
“In the area of money printing inflation is the relevant risk, so I am not saying let us print all that we can and issue all that we can give out,” Miwiti said.
“What I am saying is, the government is not broke. It is not a financial limitation; it is an inflation limitation. The limit is not money, the limit is what that money can do in the market either for good or for bad.”
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US 1932 Economic Depression Story
He revisited how former President Franklin D. Roosevelt applied the economic theory of John Maynard Keynes to tackle America’s depression in 1932.
Mwiti said President Roosevolt took over when the country had the great depression just like in the case of President Ruto.
America’s economy was at its knees with very few people employed, banks closed, and the value of the dollar depreciated.
Roosevolt approached Keynes who advised him to print more money and invest in development projects to spur economic growth.
“Keyne advised him to generate enough money to catalyze the economy, but mark enough projects to fund,” Mwiti said.
“They had a massive infrastructure project so that demand can be what the money satisfies. They went and employed Americans in large numbers, so they created the demand and fulfilled the supply. America went from the great depression and within five years they were back to superpower status.”
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Stop Depending on Taxes
Furthermore, the expert stated that the government should not depend on the citizens to fund its economic projects.
He opined that it is the citizens who need the government’s money which can be created in a structured manner that will not cause inflation.
Instead, he suggested that the government should print money just like the US and rebuild the economy.
“Every year since 1932 American government has openly printed about 10 percent of its annual budget,” he said.
“They are not doing it in secret, they just do not call it printing. They have an economic name for it.”
According to Mwiti, the government should not introduce new taxation measures if it has the capability of injecting more money into the economy.
“Don’t raise taxes generate more money from you own capacity to be able to create, print that money and utilize it to catalyze the economy,” he explained.
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