During the – 1997 Asian financial crisis – when the IMF intervened and imposed harsh structural adjustment packages on the impacted countries (cuts in spending and interest rate hikes), we learned that IMF officials would swan in from Washington to, for example, Seoul, for a weekend, hole up in expensive hotels and by the end of the weekend profess to know everything about the country and what was good for it. Austerity followed. This is the way the IMF work. They apply mainstream New Keynesian macro theory on a one-size fits all basis ignoring history, culture, institutional specificity and all the rest of the nuances and complications that should be taken into account when appraising a situation in some nation. So for them, spending a day or so in some expensive hotel was the perfect place for them to ‘know the country’ – good food, good wine, air conditioning – what more is required. The problem is that besides the specifics that always need to be considered, the overriding theory is not fit for purpose, which is why the application of the IMF-model with the SAPs has been a uniform disaster for nations. The IMF though continues to operate in this vein. I read a report yesterday about sub-Saharan Africa written by a series of IMF officials most of whom seem to be French citizens who have gone to the best universities, who advocate harsh fiscal policy shifts in the poorest nations. I am sure none of their jobs or wages are at stake.…
William Mitchell — Modern Monetary Theory
IMF paper on Africa exemplifies why the mainstream approach is problematic
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
3 comments:
The mainstream approach is not “problematic.” It works perfectly. The mission of the IMF, World Bank, and the central banks of most Western nations is to continually widen the gap between the rich and the rest. This is done via austerity, weaponized debt, and the weaponized use of interest rates.
The IMF uses various forms of camouflage for its evil -- e.g. it talks about “debt-to-GDP” figures which are silly and irrelevant to nations that have monetary sovereignty.
The IMF talks about economic “shocks” such as Covid, and Russia’s defensive invasion of Ukraine. These are not shocks at all. The damage is done by hysterical public responses to these items.
William Mitchell mentions the CFA franc, which Brussels and Frankfurt use to rule fourteen African nations. (Brussels and Frankfurt rule France, which is turn rules the economies of African states.) All the IMF chatter about “fiscal challenges” can be ignored while the CFA franc exists, since the CFA franc is itself a fiscal challenge.
(On 22 Dec 2019 it was announced that the CFA franc will be replaced by a new currency called Eco. The Eco scam will be almost an exact carbon copy of the CFA franc scam, run by the exact same banks. Meet the new boss; same as the old boss.)
Muammar Gaddafi wanted to launch a pan-African currency that would be independent of Europe. Therefore NATO brought him "democracy” – i.e. NATO lynched Gaddafi and destroyed Libya.
Where will the turd world nations get the USDs to purchase the critical US products they need ?
Medicine, machinery, etc…
If these institutions don’t lend USDs to them?
Daffy Kadaffy got what he got because he reneged on the Pan Am terrorist deal…
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