Creature From Jekyll Island by G. Edward полностью

The chickens will come home to roost. But, when they do, it will not be because of the trade deficit. It will be because we were able to finance the trade deficit with fiat money created by the Federal Reserve. If it were not for that, the trade deficit could not have happened.

Back to the main topic, which is the five methods by which a trade deficit can be paid. Through the process of elimination, the fourth option of borrowing is where the action is today for most of the world, and that is where the IMF positioned itself in 1970. Its new mission was to provide loans so countries can continue to spend more than they earn, but to do so in the name of "overcom-ing trade deficits."

IMF LOANS: DOOMED BUT SWEET

These loans do not go into private enterprises where they have a chance of being turned for a profit. They go into state-owned and state-operated industries which are constipated by bureaucracy and poisoned by corruption. Doomed to economic failure from the start, they consume the loans with no possibility of repayment.

Even the interest quickly becomes too much to handle. Which means the IMF must fall back to the "reserves," back to the

"assets," back to the "credits," and eventually back to the taxpayers to bail them out.

NEARER TO THE HEART'S DESIRE

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Whereas the International Monetary Fund is evolving into aworld central bank which eventually will issue a world currencybased on nothing, its sister organization, the World Bank, has b e c o m e its lending agency. Acting as Savior of the World, it seeks to aid the underdeveloped nations, to feed the hungry, and to bring a better life to all mankind. In pursuit of these humanitarian goals, it provides loans to governments at favorable terms, usually at rates below market, for terms as long as fifty years, and often with no payments due until after ten years.

Funding for these loans comes from member states in the formof a small amount of cash, plus promises to deliver about ten-times more if the Bank gets into trouble. The promises, described as

" c a l l a b l e capital," constitute a kind of FDIC insurance program but with no pretense at maintaining a reserve fund. (In that sense it is more honest than the real FDIC which does maintain the pretense but, in reality, is based on nothing more than a similar promise.) Based upon the small amount of seed money plus the far greater amount of "credits" and "promises" from governments of the industrialized countries, the World Bank is able to go into the commercial loan markets and borrow larger sums at extremely low interest rates. After all, the loans are backed by the most powerful governments in the world which have promised to force their taxpayers to make the payments if the Bank should get into trouble.

It then takes these funds and relends them to the underdevelopedcountries at slightly higher rates, making a profit on the arbitrage.