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Letters by a modern St. Ferdinand III about cults

Gab@StFerdinandIII - Plenty of cults exist - every cult has its 'religious dogma', its idols, its 'prophets', its 'science', its 'proof' and its intolerant liturgy of demands.  Cults everywhere:  Islam, the State, the cult of Gay and Queer, Marxism, Darwin and Evolution, 'Science', Globaloneywarming, Changing Climate, Abortion....a nice variety for the human-hater, amoral, anti-rationalist to choose from.  It is so much fun mocking them isn't it ?

Tempus Fugit Memento Mori - Time Flies Remember Death 

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Thursday, May 19, 2011

The IMF needs to be shut down.

Socialist engineering and bailing out big investors.

by StFerdIII

The IMF is a relic of the Bretton Woods post-war era. It needs to be shut down. The IMF was intended to help with the world's post war economy, especially that of Europe. The main theme to help stabilize capital flows, aid with capital formation, and ensure that debilitating crises did not impair re-development post 1945 had some sense. But the purpose of the IMF has long been overtaken by events and by European-Globalist politics. For some time the IMF has been a politicized tool, part of the UN group which pushes various strands of Marxist-Globalism. The IMF is no longer a manager of capital or reserves, but merely a lender of tax-payer money to various states which are bankrupted. This was never the IMF's role.

The main purpose of the IMF during the post World War II period was to administer the international monetary system based on fixed but adjustable exchange rates. This system had to provide monetary reserves in sufficient amounts to enable member governments to maintain the exchange rates for their currencies at assessed values. Monetary policies of the member countries....were tied to the US dollar, which in turn until the early 1970s was tied to gold.”[Read, America vs. Europe, p. 269]

None of the above has been relevant for 20 years. Exchange rates are no longer fixed. The Euro came into existence in 2000 as a competitor to the US dollar greatly enhancing the European ability to manage their own reserves. The US does buy gold, but the level is paltry when compared to the amount of printed US dollars in circulation or the public debt owed by the US [the Americans have 10.000 tonnes of gold, a fraction of what they should have]. The international economic order today has little resemblance to that of 1945, 1975, or even 1995. Times have changed.

The IMF has also changed but for the worse. As part of the UN system, the IMF along with the World Bank is a political forum, not an economic one. When the IMF bails out Greece in 2011 or 2012, it will simply be transferring tax-money, or some form of debt instrument to be paid by member states, to Greece. It will admonish the heirs of Pericles to cut their budget spend, rationalize their tax system, stabilize the banking sector, stop corruption etc. All great ideas. But there is no reason why an international institution needs to be involved in a Greek bankruptcy. These reforms are as obvious as Greek bankruptcy is inevitable. Let the Greeks and Europeans sort it out. The only cure is to go bankrupt and be forced into the many fiscal, monetary and political reforms. Creating an IMF-led welfare state will do little except prolong the agony, and destroy more wealth.

The IMF is famous for misdiagnosing problems as well. The East Asian crisis of 1997, and Timothy Geithner who led the IMF in bailing out Indonesia a few years later are examples. The Argentinian and Russian loans also were failures doing little to either help the countries, or just prolonging the fiscal and monetary madness. Interestingly less-developed countries view the IMF as part of the 'Washington Consensus' of institutions which express American and Western imperialism and through the control of capital try to control less-developed states. This is due in part to the IMF's funding procedure which forces countries to withdraw money at below-market rates but based on 'concessions' [called the concessional rate]. If the concessions or demands by the IMF are not met, than the stand-by lending facility cannot be accessed. This view is also premised on the pro-market policies that the IMF will sometimes espouse. In any event there is no role in creating moral hazard and funding bankrupted states, either in the developed or less-developed world.

The fact of IMF lending is this: some $500 billion has been lent out in the past 20 years to various states. Taxpayers in Europe and North America are essentially 'saving' two main groups within failed nation states. The first are big banks and investment houses and investors, who are either illiquid or made bad investments. These rich financiers want a socialized guarantee on their investments including bond-holders of bad government debt. The second are politicians and their union friends in government, who will receive enough welfare to keep their high paying jobs and their perquisites and who will delay as long as possible any obviously needed reforms. That in essence is what is happening with the IMF. Why should a tax payer in Iowa bail out Greece, or why does someone in Amsterdam have to keep an Athenian union worker in his well-pensioned job? I have no idea, though clever people chatter about 'contagion', 'market corrections' and the like. So what. If a country is bankrupted the government, the bond-holders, and even the citizens have to pay the price. There is a price to having bad policies and worse politicians isn't there?

The IMF did have a purpose for about 20 years after 1945. but now it is simply another UN-centric social engineering tool, keen to keep the 'system stable', which in essence means rewarding failure and prolonging the failed policies and the careers of welfare-state politicians and union workers, which lead inevitably to bankruptcy. It needs to be shut down.

 


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