Congressman Ron Paul, MD
a hypothetical bank run by a group of international executives operating
behind closed doors, making decisions of enormous international
importance. Imagine the bank consistently made high-risk loans to
shaky governments with weak economies and currencies. Imagine it
made those loans at substantially below-market interest rates, even
though the risks involved warranted high interest rates. Imagine
it knew that certain corporate interests would benefit directly
from contracts awarded by the borrowing nations. Finally, imagine
the bank schemed with governments around the world to have taxpayers
foot the bill for the predictable losses stemming from bad loans.
Surely no reasonable person would invest his money in such an institution,
it or not, such an institution exists, and it's called the International
Monetary Fund. The IMF is an international organization comprised
of member states, much like the UN, that takes your tax dollars
and sends them overseas. It's expensive, too, just like the UN.
It receives approximately $37 billion from American taxpayers each
year, and it wants to increase that amount to $50 billion beginning
on earth would Congress fund such a lousy scheme? IMF supporters
claim the organization exists to fight poverty in developing countries,
but the evidence shows otherwise. At best IMF borrowers are governments
of countries with little economic productivity; at worst the money
ends up in the hands of corrupt dictators. Either way, most recipient
nations end up with huge debts that they cannot service, which only
adds to their poverty and instability. IMF money ultimately corrupts
those countries it purports to help, by keeping afloat reckless
political institutions that destroy their own economies.
truth, Congress funds the IMF because of the corporate interests
it subsidizes. The huge multinational banks and corporations love
the IMF. Big banks used IMF funds taxpayer funds to
bail themselves out from billions in losses after the Asian financial
crisis. Big corporations obtain lucrative contracts for a wide variety
of construction projects funded with IMF loans. It's a familiar
game in Washington, with corporate welfare disguised as compassion
for the poor.
recent financial collapse in Argentina provides a perfect example
of the folly of IMF "assistance." Although the Argentine
economy has been in serious trouble for several years, IMF loans
with an incredibly low interest rate of 2.6% kept pouring into the
country. According to Congressman Jim Saxton, Chairman of the Joint
Economic Committee, this "continued lending over many years
sustained and subsidized a bankrupt Argentine economic policy, whose
collapse is now all the more serious. The IMF's generous subsidized
bailouts lead to moral hazard problems, and enable shaky governments
to pressure the IMF for even more funding or risk disaster."
Yet unless Congress acts this year, U.S. taxpayers will be forced
to pay for even more bad loans to equally unstable countries.
IMF was a bad idea from the very beginning economically,
constitutionally, and morally. There is no justification for taxing
working Americans so the federal government can bail out foreign
leaders and Wall Street. Participation in the IMF costs us billions
every year, billions that should be returned to taxpayers. Hopefully
the Argentine debacle will cause Congress to rethink our foolish
participation in the IMF.
Ron Paul is a Republican member of Congress from Texas.
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