Ron Paul Statement on IMF Hearing
April 21, 1999
(J. Bradley Jansen was Ron Paul’s legislative staffer for these issues at this time)
Opening Statement from
Rep. Ron Paul
Hearing on International Financial Institutions Authorizations Request
Subcommittee on Domestic and International Monetary Policy
House Committee on Banking and Financial Services
April 21, 1999
Mr. Chairman, I applaud you for taking leadership to shine some light on this important subject. This hearing and the debt write-off proposal are an admission that the IMF emperor has no clothes. The fictional IMF world where there is no cost to taxpayers, where countries never default on loans and where it is a force for good in the world has been exposed as a fraud.
Even the major newspapers lampoon such nonsense. Today’s Wall Street Journal (“A Leadership Vacuum in International Economics”) reads, “The only operable results [of the new financial architecture], apart from massive new taxpayer dollars for the IMF, have been a devastating devaluation in Brazil, full capitulation on Russia and a directive that Pakistan stop making its eurobond payments. It adds that “under Indonesia’s IMF program, 150 million people, three-fourths of its population, are expected to live on $1 per day in 1999. . . [The Clinton administration] belatedly called the 1997-98 currency crisis the worst in 50 years.”
“Rather than an architectural uplift, the world needs a new financial foundation. Successful economies are built on stable currencies, low tax rates, slow growth in government and reliance on contracts, entrepreneurship and small businesses rather than international institutions,” it explained correctly.
There is no amount of invisible thread available to cover the naked truth that a renewed IMF would further distort the market pricing of credit and aid the transfer of wealth from taxpayers to a few select groups: officials of inept, and often corrupt and brutal, governments; already over-paid international bureaucrats who don’t pay taxes themselves; and Wall Street fat cats. Rep. Jim Saxton rightly criticized the proposed IMF gold sales saying it would “accommodate more IMF loans, subsidies, and moral hazard problems.”
Ever-increasing debt burdens on the people of a country for the benefit of privileged groups is not only unsustainable but offensive. These policies only exacerbate human suffering around the world as citizens of poor countries suffer the burden of a higher cost of government, higher cost of capital and reduced economic growth. Just yesterday, Standard and Poor’s credit rating agency warned that excessive credit growth and falling asset prices are weakening the world’s financial systems.
The gold sales proposal is a prime example of harming nations with the very mechanism which purports to help. For example, Ghana derives 40% of total export revenue from gold mining and would be devastated by a fall in the price of gold. Needless to say, producers of gold in the United States will be similarly hard hit.
It should not be forgotten that the money the U.S. used to pay our initial contribution to the IMF came from the ‘paper profit’ of President Franklin Roosevelt’s forced confiscation of gold from the American people. The gold that the U.S. government transferred to the IMF should be returned to the American people, from whom it was forcibly taken.
Any debt relief proposals should be considered in the context of an admission of failure of the current policies and under the process of dismantling the IMF and distributing the gold to the original gold donor countries. It is ironic that proponents of U.S. membership in the IMF argue we have a claim to an asset. However, by selling off the IMF’s only real “assets,” any possible value to the US evaporates.