The International Monetary Fund

The IMF is best known to the public as the agency that sent billions of dollars into the financial system during the debt crisis of the 80s and for the huge amounts given to Mexico and Russia during the 90s. During 1983 and 1984 the IMF lent $28 billion to countries having difficulty meeting their financial obligations. In 1995, it loaned to Mexico over $18 billion. From 1992 through 1996 the IMF provided $20 billion to the Russians. The most significant segment of these maneuvers is where the money went. That’s what the lawyers teach us, follow the money. If you do this you will find that following a brief stay in the target countries, the lion’s share of it wound up in the accounts of Goldman-Sachs, J.P Morgan, and other New York banks. How could this happen? The scenario is well played. First these banks go where no sane banker would, and in exercises of statecraft, they make loans to whichever dictator is in power at the time or whichever one they want in power. The IMF says it has no say over how the money is spent. This is not the case. The recent change from the par value to the present open exchange system may suggest a loss of influence by the IMF. But the fact is that the present approach requires the IMF to be even more deeply involved with members’ economic policies that influence their money’s exchange value. Under the present system, the members told the IMF to look beyond currency value to examine parts of an economy that influence the exchange value and to evaluate performance. The present system demands greater ‘transparency’ and permits more reasons for the IMF to monitor national policy. The IMF calls this activity ‘surveillance,’ over members’ exchange policies. It is based on the conviction that strong and consistent domestic economic policies will lead to stable exchange rates and a growing world economy. But the reality is that this information is used by all manner of speculator to enrich themselves at the expense of the country providing the data. Each year, a team of IMF staff members travels to the country’s capital and spends two weeks holding discussions with officials. The first phase of the consultation is devoted to collecting data on employment, interest rates, money supply, exports and imports, wages, taxes, expenditures, and other aspects of economic life in that country.

The second phase consists of discussions with officials to find out how effective these policies have been during the year and what might be anticipated. It also seeks to evaluate restrictions the country has placed on the exchange of its currency. When these meetings are over, the team returns, to prepare, in Washington, a staff report for the Executive Board. Now, at this point every aspect of a country’s economic information is known.The Director representing the country takes part in this discussion, supplying further information about his country’s economy. A report of the discussion containing suggestions about how to address economic weakness is sent to the member’s government. You can see the value of this report especially to currency raiders and other IMF induced predators. Besides these discussions, the IMF holds consultations with the countries whose policies have an influence on the world economy. These meetings review the economic situation. The IMF publishes these reviews twice a year in its World Economic Outlook. This publication allows countries to coordinate their own economic policies with other countries because if all members inflate and deflate their currencies together the effects can be more easily hidden from the masses. Although the IMF was founded primarily to oversee the monetary system, it occasionally injects huge sums of money through loans to its members. Its financial function are a significant activity. In fact, these manipulations known as a ‘dirty float’ are exactly what is required to influence currency values. And where does it get this money?? The membership fees constitute the biggest source of money to the IMF annually. Member countries pay 3/4 of their dues in their own currency from taxes collected from its people. This serves two functions, one to reduce the amount of currency available in the target nation, thereby reducing inflation and two to provide the currency necessary to conduct its manipulations. Only 20 currencies are borrowed from the IMF in the course of a year, and most people want the major currencies: the dollar, yen, mark, pound, and the franc. About half of the money on the IMF’s balance sheets cannot be used. To deal with this, the IMF has a line of credit of $24 billion, with a number of governments and banks throughout the world. This line of credit, called the General Arrangements to Borrow, is renewed every five years. The IMF also borrows money from member governments or their monetary authorities for specific programs of benefit to its members. This type of social engineering is exactly the type of activity the IMF claims it is not involved in. Over the past decade the IMF has borrowed to provide members with more money for longer periods and under better terms than they could obtain on their own. The influence on the free market has been astounding, increasing their control with every loan.

If you examine the track record of countries involved with the IMF you will find that most are worse off economically than before accepting the IMF’s ‘help’. Borrowing large amounts has changed the nature of the IMF, making it more like a bank,an unregulated bank free to influence (Continued from page 1) world direction without the people’s voice. Countries are induced to spend more than they take in, making up the difference by borrowing until their credit is exhausted. That is when the IMF steps in supplying it with foreign exchange to allow it to extend its economic life, in direct opposition to what the free market demands. A member country with such a payments problem finds itself at the mercy of the IMF. The member country must demonstrate how it intends to correct its economic problems. The IMF restricts growth or forces increased taxes as a provision to the loans. Since the IMF wants to preserve its financial control, it lends only on condition that the member use the borrowed money to repay the private loans made to the original bankers thereby eliminating the risk of the private money-brokers who really control the system. The restrictions placed on the IMF at its founding highlighted the role of gold in the international monetary system. The Second Amendment to its charter contained a number of provisions that were intended to achieve a gradual reduction of the role of gold in the international monetary system and allow its accumulation in the IMF. Although the conventional wisdom is that gold is a barbarous relic it is still a critical asset in the holdings of the IMF. In fact with a $31 billion value the IMF has one of the largest official holdings of gold in the world. The IMF holds 3,217,341 kilograms of gold (103.4 million fine ounces) at designated depositories. What does the IMF have to say about all of this? “These holdings represent the balance of the IMF’s stock of gold …. While gold is reflected as an asset in the IMF’s balance sheet, it is not used in the Fund’s operations and transactions.” In this way they can pile up gold while constantly asking for more money. According to Article V, Section 12 (b) of the IMF’s Articles of Agreement, any transactions in gold by the IMF require an 85 percent majority of the total voting power of the IMF. The IMF may sell gold outright on the basis of prevailing market prices; it may accept gold in the discharge of a member’s obligations to the IMF. The IMF does not have the authority to engage in any other gold transactions, e.g., loans, leases, swaps, or use of gold as collateral, and the IMF does not have the authority to buy gold. The Amendment also abolished the official price of gold and abrogated the obligatory uses of gold in transactions between the IMF and its members. The Second Amendment required the Fund, in its dealings in gold, to avoid a fixed price of gold. Under the Amendment, members undertook to collaborate with the IMF and other members with respect to reserve assets to promote better international surveillance of international liquidity. In 1995 the IMF’s Executive Board reviewed the role of gold in the IMF and concluded that its policy on gold should be governed by the following principles: “As an undervalued asset held by the IMF, gold provides strength to its balance sheet. Any mobilization of the IMF’s gold should avoid weakening its overall position.” I guess Americans should take the same view. Buy gold now.