Chapter 8 - The IMF.

IMF

The IMF claims to do this:

“The IMF’s main goal is to ensure the stability of the international monetary and financial system. It helps resolve crises, and works with its member countries to promote growth and alleviate poverty.” [IMF website] [1]

And this:

“The International Monetary Fund (IMF) is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.” [IMF website] [3]

And this:

“The IMF’s primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other. The Fund’s mandate was updated in 2012 to include all macroeconomic and financial sector issues that bear on global stability.” [IMF website] [2]

It has a membership of 189 countries and is conveniently headquartered in Washington, D.C.

The IMF has been remarkably ineffective at its major tasks. The world economy is still prone to collapse. Poverty has not abated.

What the IMF actually does is this:

“The IMF lends money to member countries faced with balance of payments problems, ie when a country fails to earn sufficient foreign currency—through exports or provision of services—to pay for its imports. In return for financial assistance from the IMF, borrower countries must implement a set of economic reforms aimed at overcoming their balance of payments problems. Loans are disbursed in instalments and payment is tied to the countries’ compliance with the structural adjustment policies.” [IMF website] [2]

Those last words are not the words of a conspiracy nut, they are the words on the IMF website. The IMF gave ‘surveillance consultations’. There were 130 consultations in 2013, 132 in 2014, and 124 in 2015. [2]

The IMF uses its lending to influence and direct the internal policies of democratic nations. The IMF instructions are worded as ‘practical help’. [3] Even without loans, the IMF has influence:

“... the IMF is charged with (i) overseeing the international monetary system to ensure its effective operation, and (ii) monitoring each member’s compliance with its policy obligations.” [IMF website] [2]

All the above quotes were from the IMF website. The IMF has created a type of ‘global governance’. If the IMF lends money to nations, the conditions are particularly stringent. These nations then operate under a debt induced control. This is why you see protesters with banners such as:

IMF.

World’s predatory lender.

IMF.

Trapping countries in debt.

End structural adjustment.

IMF + World Bank = Hundreds rich. Billions poor.

IMF and World Bank.

Economic Terrorists.

IMF World Bank out.

Here are some more quotes from the IMF website to show the depth that the IMF reaches into your nation:

“IMF offers technical assistance and training to help member countries strengthen their capacity to design and implement effective policies. Technical assistance is offered in several areas, including fiscal policy, monetary and exchange rate policies, banking and financial system supervision and regulation, and statistics.” [IMF website] [4]

“The IMF promotes economic stability and global growth by encouraging countries to adopt sound economic and financial policies.” [IMF website] [4]

“The IMF provides technical assistance and training mainly in four areas:

[IMF website] [4]

The IMF is strengthening the legal framework for its surveillance. This quote is from a European Central Bank annual report:

“Nonetheless, there is still margin for further enhancing IMF surveillance of the EU and the euro area.” [European Central Bank website] [5]

and

“...which enables the IMF to survey all policies that are relevant both for a member’s external and domestic stability.” [ECB website] [5]

The IMF enforces policies with the dubious claim that the policies will promote stability. Stability is very difficult to argue against. If an official says that a policy is needed for stability, it is difficult to argue that the policy is not needed for stability.

Criticisms of the IMF

Critics of the IMF’s policies comprise a wide range of people. This includes: activists, journalists, social scientists, government officials, academics, politicians, and heads of governments. The list of criticisms about the IMF is long:

Unfortunately, most of these policies are the policies that one would choose if one was trying to follow Moses in Deuteronomy:

Moses  “For the Lord thy God blesseth thee, as he promised thee: and thou shalt lend unto many nations, but thou shalt not borrow; and thou shalt reign over many nations, but they shall not reign over thee.” [Deuteronomy 15:6]

and

Moses  “When the LORD your God hands these nations over to you and you conquer them, you must completely destroy them. Make no treaties with them and show them no mercy.” [Deuteronomy 7:2]

St. Ambrose suggested that the lending of money under usury in Hebrew times was used as an instrument of vengeance against enemies. He words it this way: "Take usury from him whom you may lawfully kill: whenever, therefore, you have a right to wage war, you have a right to take usury." [25]zzz Sir Edward Coke described it as a 'method to exterminate or depauperate enemies'. [26]zzz

As Christians, we must abandon the old testament. Jesus rejected the Old Testament concept of an Eye for an Eye.

Some relevant quotes about the IMF:

Kari Polanyi Levitt 1983: “It is important to note that IMF programmes are not designed to increase the welfare of the population. They are designed to bring the external payments account into balance.... The IMF is the ultimate guardian of the interests of capitalists and bankers doing international business” [6]

Jeffrey Sachs, the head of the Harvard Institute for International Development in 1997 said: “In Korea the IMF insisted that all presidential candidates immediately ‘endorse’ an agreement which they had no part in drafting or negotiating, and no time to understand. The situation is out of hand...It defies logic to believe the small group of 1,000 economists on 19th Street in Washington should dictate the economic conditions of life to 75 developing countries with around 1.4 billion people.”

Jakaya Kikwete: “There were times when there were riots in Africa, demonstrations against the IMF because of the policy advice they were giving, the conditionalities they were imposing, and the difficulties that arose out of the implementation of those conditionalities.”

Che Guevara 1959: “If it is an element of liberation for Latin America, I believe that it should have demonstrated that. Until now, I have not been aware of any such demonstration. The IMF performs an entirely different function: precisely that of ensuring that capital based outside of Latin America controls all of Latin America.” [7]

Luis Ignacio Silva, Brazil 1985: “Without being radical or overly bold, I will tell you that the Third World War has already started - a silent war, not for that reason any the less sinister. This war is tearing down Brazil, Latin America and practically all the Third World. Instead of soldiers dying there are children, instead of millions of wounded there are millions of unemployed; instead of destruction of bridges there is the tearing down of factories, schools, hospitals, and entire economies . . . It is a war by the United States against the Latin American continent and the Third World. It is a war over the foreign debt, one which has as its main weapon interest, a weapon more deadly than the atom bomb, more shattering than a laser beam . .” [9]

Brandon Smith 2014: “The IMF, like all central banks, is dominated by the international corporate banking cartel. Central banks are merely front organizations for globalists, ...” [11]

Who Owns the IMF

I cannot give you a definitive answer on that. The IMF has contributions from member nations. Irrespective of who owns the IMF, it is the control of the IMF that is of concern. Like the car that I bought for my daughter to use, it is not the ownership that is of concern, but who controls its use. It is the same with central banks. It is not a matter of who owns the central bank. It is of concern who controls the central bank.

A debt crisis provides an opportunity to quickly impose conditions upon countries when they are desperately in need of credit. Conditions are called “Structural Adjustment Programs” which demand changes to a nation’s policies that open the nation to international takeover by multinational corporations working in tandem with private corporations masquerading as international banks. There is less questioning about Structural Adjustment Programs when a country is in need of a bailout.

The policies implemented during a Structural Adjustment Program tend to be devastating to a developing nation. When the debt crisis arrived, zzzItaly was starved of credit. Italy had little choice but to sell out their economy to foreign purchasers. Italy came under a form of financial colonialism neatly packaged as a neo-liberal economic theory.

John Perkins wrote an interesting book called the “Confessions of an Economic Hit Man”, in which he described his time as an economic planner in the 1970s. He wrote how Third World nations were enticed into debt by the IMF and World Bank. He would negotiate very large loans to Third World nations which the borrowers would have no hope of repaying. When default occurred the lenders would demand the natural resources and utilities and would gain control of its economy and political system. Enticements included cash, hookers, cocaine, and luxury. Any leader who would not cooperate would be overthrown in a CIA coup or even be assassinated. As is usual with bank lending, the money lent by the IMF and World Bank did not exist until it was lent. John Perkins was describing usury of a truly international level.

Edward S. Herman: “The World Bank, IMF, and private banks have consistently lavished huge sums on terror regimes, following their displacement of democratic governments, and a number of quantitative studies have shown a systematic positive relationship between U.S. and IMF/World Bank aid to countries and their violations of human rights.” [12]

IMF Riots

Joe Stiglitz: “Every country the IMF/World Bank got involved in ended up with a crashed economy, a destroyed government, and sometimes in flames with riots.”

IMF and Italian Tax

The IMF sent a 'technical assistance mission' to Rome to advise on the revenue administration system. The purpose was to examine organization, governance and operational performance of the tax administration (Agenzia delle Entrate). The aim was to improve the effectiveness of the tax collection. So we have a bank delving into the tax system. Banks make a profit from interest and taxation is the avenue to that profit, for, without taxation there can be no bank profit. The 'Technical Assistance Report' has a strong bias to compliance. Nowhere does the report suggest that increased tax on productive transactions is detrimental to the economy. Nowhere do they suggest that more money should be taken from stagnant money. One sample in the 'Executive Summary' reads:

Joe Stiglitz: “A significant strengthening of debt collection. The accumulation of tax debts is alarming; structural issues need to be addressed urgently. The lag in identifying VAT liabilities, due to a weak VAT return filing system, contributes to poor collection rates. The split and duplication of audit and investigations lead to uncollectable assessments. The overly generous installment schemes, limitations in power to recover tax debts, and the lack of effective write off arrangements continue to exacerbate the debt problem.”[https://www.imf.org/external/pubs/ft/scr/2016/cr16241.pdf]

There is no questioning why businesses should be struggling to pay these taxes. There is no discussion on the damage that these taxes do to an economy. VAT is a tax that specifically targets the real economy. It drains money that is doing something useful. Money moving in the financial transactions of the wealthy completely avoids this tax. This tax is a straight out punishment on business.

We have here an agency that pays no tax advising a government on how to extract more tax.

In 2014, tax collection rose to 43.3% of GDP. This amounts to €697 billion. [43.3% of €1611 billion=€697 billion for 2014] This is to be taken from a Circulating Money of €134 billion. On a monthly basis, €58 billion is taken from €134 billion of money that is circulating.

Taxation of the circulation for Italy by Andy Chalkley. Creative Commons Attribute. www.andychalkley.com.au
Taxation of the circulation for Italy by Andy Chalkley. Creative Commons Attribute. www.andychalkley.com.au

This is the legend for the above graph:

Taxation for Italy by Andy Chalkley. Creative Commons Attribute. www.andychalkley.com.au