Many people tend to believe that a crime is an immoral act and vice versa. This is not true. An immoral act is only apparent to a person with a sound conscience. A corrupt person cannot distinguish between right and wrong. A crime is an act, described by the law as wrong, although it might be moral. In other words, a legal act can be immoral and an immoral act can be perfectly legal. I will give an example: a man left the country with his savings. He was arrested for infringing foreign exchange regulations. From a moral point of view, one’s money is one’s property and should not be subject to any restriction. Keeping one’s money safe from crooks is a laudable act. This is an example of how a moral act can be a crime. An example where an immoral act is not a crime: a man has homosexual relations with another. According to US law, if both parties are consenting, it is no wrong act. Everyone knows that homosexuality is unnatural, therefore immoral, yet it is perfectly legal in many countries.

Another example where an immoral act can be legal. Pickpocketing means dipping your hand into somebody’s pocket to deprive him of his property or money. It is illegal. However, one can disguise the same crime and make it perfectly legal. Devaluation is just that. It is a legal immoral act as it deprives the owner of the intrinsic value of his goods stored in money form, i.e. the owner will never get back the same amount of goods he originally possessed with the same amount of money after devaluation. In the past, the State announced whenever it proposed to devalue the currency but nowadays it is done discreetly i.e. “mordé soufflé” as we say in Kreol.

What is money?

To understand the nature of the fraud, we must first know what money is. Money is a store of value that is portable and transferable. A man can chooose to keep his valuables in goods or money. Monetary value is the unit to measure the worth of human efforts to produce anything, i.e. the selling price of goods represents the contribution of all the parties who have transformed the goods to the point of sale. Call it by whatever term you want – wages, profits, interest – the value of goods includes these elements.

However, if somebody converts his efforts into money, he entrusts his goods to the State against a promissory note, called “money”. Hence the terms “I promise to pay the bearer the sum of” on all banknotes. However, in some countries, this expression has been changed to “this note is legal tender for”. Why would somebody convert his goods into money if not because it is easily transferable, portable and negotiable. Another alternative would be to exchange goods against goods - the barter system. To operate this system, there should be coincidence of wants. Both parties should desire the goods offered and money fulfils this need.

Suppose someone lends you a hundred 8 mm iron bars. When he comes to claim his 100 iron bars, instead of giving him back 8 mm ones, you give a hundred 6 mm bars. According to the law, you have cheated him. Another example: you sign a work contract against 1,000 gm of silver per month. At the end of the month, he pays you only 900 gm of silver. He has cheated you of 100 gm. This is exactly what the State does when it devalues currency.

This practice is not new. It has been done in the past by unscrupulous kings. The King used to borrow money from the public when he was short of money in his treasury. Money was in gold coins and only the Royal mint could mint coins. The King, when he had to reimburse his creditors, used to mint coins in a slightly smaller size and repay them with the reduced coins. No one had the guts to grumble as the King had absolute power. This practice was called “debasement of coinage”. In fact, it was a disguised theft. Today, it is called devaluation. Nobody has ever questioned this immoral practice because it is legal. You may ask why such an immoral act is legal. It is simple. Laws are enacted by Parliament by majority vote. If the majority has no conscience, it will vote immoral laws, which suit its whims and caprices. Just as in the United States, homosexuality considered immoral and abnormal before, is today considered acceptable and has been legalised. In other words, if the majority derives pleasure from an act, hitherto immoral, the law will be amended. Since democracy is the will of the majority, if the latter become perverts, then you get perverted and immoral laws.

Effects of devaluation

To add insult to injury, here’s another point. A man starts a business. He has 1 kg of gold representing his savings. He converts it into money for Rs300,000, which he invests in his business. At the end of the year, his total assets amount to Rs360,000. According to the income tax department, he has made a profit of Rs 60,000. He is thus taxed at the rate of 25% on the profit of Rs 60,000 and pays Rs15,000 in tax. According to the law the man is richer by Rs45,000.

During the year, however, there has been a currency devaluation of 25%. To get back his initial 1,000 gm of gold, he now has to find Rs 400,000. He is now left with only Rs. 345, 000. He can now get only 862.5 gm of gold with that sum. He does not understand where his 137.5 gm of gold have vanished. Yet the Law says he has made a profit of Rs 60,000. In fact, the man’s pockets have been picked twice. Firstly, the money has been devalued and, secondly, he has been taxed on fictitious profit, while he has incurred a loss after tax of 137.5 gm of gold. The State is benefiting twofold. just like we say in Kreol:“manz banan dan de bout”. If the investor had not carried any business and kept his money in gold he would not have paid any tax and, in monetary terms, he would have been richer by Rs100,000. In fact, this system seems to reward the idle man and penalise the entrepreneur.

Let us now look at the effect of devaluation from a wage earner’s point of view. He earns Rs6,000 per month. During the year, he gets a 10% increase. But the effect of the 25% devaluation in spite of the increase can be seen below:

In fact, the worker was made to believe that he had a 10% pay rise while, in fact, it was a strategy of “donn enn dizef, pran enn bef”. In addition, if his increased salary falls within the income tax bracket because of the fictitious increase, it will be taxed.

Thus, in any devaluation, the State benefits in three ways: firstly, by appropriating part of the wealth in its custody through devaluation; secondly, by charging income tax on fictitious profits arising from devaluation; and, thirdly, by charging customs duty and value added tax on the new rate of exchange thereby increasing its revenue while both the wealth and income of the public have been reduced considerably.

It is the moral responsibility of any government with a conscience to ensure that money retains its intrinsic value. Money is a promissory note issued to the public for assets deposited with the State by them. The State acts as a trustee for the assets deposited with it and these should be returned intact on demand. Today, we see that the State acts as if the funds deposited with it were its property. Just like kings in bygone days used to reduce the size of the gold coins when they could not pay back their creditors in full, today the State devalues the currency to make up for its deficits. If any Government with any sense of morality acts in this manner, it is reneging on its promise “to pay the bearer on demand” and its action can be likened to that of a banker, who mismanages depositors’ or shareholders’ funds and asks them to bear the costs of any deficit. In the latter case, the general manager may be accused of money laundering but the former, although its case is morally worse, will be praised for keeping the balance of payments in equilibrium.

The State, being the trustee, has the moral duty to safeguard the public’s assets. The State after devaluing the currency makes the public believe that by keeping the monetary value intact the intrinsic value of the currency has been preserved. This is untrue and tantamount to confiscation of property. The public’s situation is similar to the NPF’s when it realized that Rs 800 millions had been siphoned off its account in the bank. The bank is obviously responsible for not ensuring proper internal control procedures to prevent such a fraud. Here, there is negligence but, in the case of the State, where we are talking of billions and not millions, it is deliberate embezzlement and confiscation of the public’s property. Billions of rupees belonging to the public have been wiped out of the State’s books overnight. The State has assumed the right to steal. How can the State protect the public against corruption when it does not itself practise what it preaches?

In the past, the King or the State did not have the sole monopoly of issuing coins or money. Anyone could fabricate his own gold coins. This gave unscrupulous people the opportunity to mint coins whose contents were diluted with other metals and thereby cheat people with coins not representing the true value, hence the decision of the King or the State to control the issue of money. However, the role has now been reversed. The State, instead of being the watchdog to ensure that the real value of money is not tampered with, is actually tampering with the intrinsic value of money just like money counterfeiters of the early days.