Repeal, Don’t Reform the
IMF!
By Ron Paul
March 31, 2015 "ICH"
- A responsible financial institution would
not extend a new loan of between 17 and 40
billion dollars to a borrower already
struggling to pay back an existing
multi-billion dollar loan. Yet that is just
what the International Monetary Fund (IMF)
did last month when it extended a new loan
to the government of Ukraine. This new loan
may not make much economic sense, but
propping up the existing Ukrainian
government serves the foreign policy agenda
of the US government.
Since the IMF receives most of its funding
from the United States, it is hardly
surprising that it would tailor its actions
to advance the US government’s foreign
policy goals. The IMF also has a history of
using the funds provided to it by the
American taxpayer to prop up dictatorial
regimes and support unsound economic
policies.
Some may claim the IMF does promote free
markets by requiring that countries
receiving IMF loans implement some positive
economic reforms, such as reducing
government spending. However, other
conditions imposed by the IMF, such as that
the country receiving the loan deflate its
currency and implement an industrial policy
promoting exports, do not seem designed to
promote a true free market, much less
improve the people’s living standards by
giving them greater economic opportunities.
The problem with the IMF cannot be fixed by
changing the conditions attached to IMF
loans. The fundamental problem with the IMF
is that it is funded by resources taken
forcibly from the private sector. By taking
resources out of private hands and giving
them to IMF bureaucrats, government distorts
the marketplace, harming both American
taxpayers and the citizens of the countries
receiving the IMF loans. The idea that the
IMF is somehow better able to allocate
capital than are private investors is just
as flawed as every other form of central
planning. The IMF must be repealed, not
reformed.
The IMF is not the only US institution that
manipulates the global economy. Over the
past several years, a mysterious buyer,
identified only as “Belgium,” so named
because the buyer acts through a
Belgian-domiciled account, has become the
third-largest holder of Treasury securities.
Belgium's large purchases always occur at
opportune times for the US government, such
as when a foreign country sells a large
amount of Treasuries. “Belgium” also made
large purchases in the months just after the
Fed launched the quantitative easing
program. While there is no evidence this
buyer is working directly with the US
government, the timing of these purchases
does raise suspicions.
It is not out of the realm of possibility
that the Federal Reserve is involved in
these purchases. The limited audit of the
Federal Reserve’s actions during the
financial crisis that was authorized by the
Dodd-Frank Act revealed that the Fed
actively intervenes in global markets.
What other deals with foreign governments is
the Fed making? Is the Fed, like the IMF,
working to bail out Greece and other EU
countries? Is the Fed working secretly to
aid US foreign policy as it did in the early
1980s, when it financed loans to then-US
ally Saddam Hussein? The lack of
transparency about the Fed’s dealings with
overseas central banks and foreign
governments is one more reason why Congress
needs to pass the audit the fed bill.
By taking money from American taxpayers to
support economically weak and oftentimes
corrupt governments, the IMF distorts the
market, enriches corrupt governments, and
harms both the American taxpayer and the
residents of the counties receiving IMF
"aid." It is past time to end the IMF along
with all instruments of American
interventionist foreign policy.
Copyright © 2015 by RonPaul Institute.
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