OPPOSEFOREIGN OPS APPROPRIATIONSCONFERENCE REPORT
November 3, 1997Dear Colleague:The Foreign Operations Appropriations bill passed by the House wisely omitted any funding for theInternational Monetary Fund. We must oppose the Conference Report appropriating $3.5 billion for the IMF’s New Arrangements to Borrow (NAB), “justified” as “protecting the international monetarysystem” (bailing out countries which have spent and inflated more than others and seek their salvationat U.S. taxpayer expense).The most facetious argument made is that there is “no cost” for the “transfer of assets” even though itrequires an appropriation: we give the IMF $3.5 billion and it gives us a financial instrument entitlingus to the $3.5 billion, plus interest. The fallacy, of course, is that this money is taken out of theeconomy, r emoved from available sources of credit and is no longer available to the average Americancitizen. Bankers and investors on Wall Street would have purple pockets tomorrow if we put purpledye on the money we sent to corrupt foreign governments today.Even Bill Simon and George Schulz, both former secretaries of the Treasury, advocate abolishing theIMF because
it has a poor track record of preventing financial crises. The postwar Bretton WoodsAgreement established the IMF to maintain the pseudo fixed-exchange rate system. After it collapsedin the early 1970's, the IMF recreated itself.
Its new development mission merely duplicates moreable institutions. Both the Cato Institute and the Friends of the Earth want it out of the development business.The IMF is nothing more than an international “engine” for inflation “fueled” by the creation of credit.Its Special Drawing Rights are an international fiat currency whereby
currencies bail out the
ones. Fluctuating fiat (unbacked) currencies eventually lead to financial bubbles andinflations corrected by recessions or depressions. Worldwide currency and financial conditions todayare exactly opposite of what a market-determined, single hard currency would produce. Our inappropriate loan subsidies, such as those through OPIC and the Ex-Im Bank, socialize the cost tocorporations of risky ventures when these weaker economies predictably threaten to default.Although it’s tempting to divert blame from central bankers (e.g. the Fed and IMF), the responsibilitytruly lies with the U.S. Congress which abdicates its responsibility over monetary policy andappropriates funds to the IMF.There is no U.S. benefit to continued participation in the IMF. Financial conditions around the worldare as precarious now as they have ever been with a financial bubble built on inflationary fiat money,including IMF mischief. It warrants immediate and serious discussion regarding the need for a soundcurrency based on real value.Unfortunately, economic and financial chaos around the world will onlyserve as an excuse for the believers in strong international government to further intervene and pursuetheir goals. We need less government, less inflation and less international management of our