Ron Paul Dear Colleague Letter Opposing Foreign Ops Approps with IMF Funding
November 3, 1997
(J. Bradley Jansen was Ron Paul’s legislative staffer at this time on these issues)
FOREIGN OPS APPROPRIATIONS
November 3, 1997
The Foreign Operations Appropriations bill passed by the House wisely omitted any funding for the International 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 monetary system” (bailing out countries which have spent and inflated more than others and seek their salvation at U.S. taxpayer expense).
The most facetious argument made is that there is “no cost” for the “transfer of assets” even though it requires an appropriation: we give the IMF $3.5 billion and it gives us a financial instrument entitling us to the $3.5 billion, plus interest. The fallacy, of course, is that this money is taken out of the economy, removed from available sources of credit and is no longer available to the average American citizen. Bankers and investors on Wall Street would have purple pockets tomorrow if we put purple dye on the money we sent to corrupt foreign governments today.
Even Bill Simon and George Schulz, both former secretaries of the Treasury, advocate abolishing the IMF because it has a poor track record of preventing financial crises. The postwar Bretton Woods Agreement established the IMF to maintain the pseudo fixed-exchange rate system. After it collapsed in the early 1970’s, the IMF recreated itself. Its new development mission merely duplicates more able 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 weak currencies bail out the even weaker ones. Fluctuating fiat (unbacked) currencies eventually lead to financial bubbles and inflations corrected by recessions or depressions. Worldwide currency and financial conditions today are 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 to corporations 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 responsibility truly lies with the U.S. Congress which abdicates its responsibility over monetary policy and appropriates funds to the IMF.
There is no U.S. benefit to continued participation in the IMF. Financial conditions around the world are 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 sound currency based on real value. Unfortunately, economic and financial chaos around the world will only serve as an excuse for the believers in strong international government to further intervene and pursue their goals. We need less government, less inflation and less international management of our currencies and our economy and more emphasis on a sound currency, free markets, and individual liberty.
Ron Paul, M.C.