EIR LEAD EDITORIAL FOR TUESDAY, AUGUST 31 , 2021
An Outrageous Crime by the International Monetary Fund
Aug. 30, 2021 (EIRNS)—Quietly, the International Monetary Fund last week allocated $650 billion in what are called IMF Special Drawing Rights (SDRs) to 215 member countries. The purpose is proven both by the structure of the SDRs and by the timing of this allocation. The IMF is trying hard to head off a “debt bomb,” a collapse of underdeveloped countries’ unpayable debts after 18 months of pandemic collapse. This is just like Federal Reserve and other big central banks hyperinflationary money-printing in huge “quantitative easing” programs, to prevent the “everything bubble” of corporate and household debts in Europe and the United States from blowing up in a new global financial crash.
The Special Drawing Rights sound like a big sum, but they are just rights of countries to borrow back their own IMF quotas for an indefinite period in order to pay foreign debts, which the underdeveloped nations will otherwise default on imminently. What will the IMF do next? Soon enough it will ask the major nations for new quotas to replenish its coffers, just as it demanded $500 billion from a G20 meeting in February 2009, right after the 2008 global crash.
This SDR move is not just the IMF signaling an underdeveloped nations “debt bomb” about to blow up. It is an outrageous move by the IMF to claim the authorization—never given to it in FDR’s Bretton Woods system which created it—to be the lender of last resort to super-indebted countries, providing them the income to pay debts to giant banks and other multilateral financial firms. This pure waste defines the difference between dumb money, which it is, and credit—which it is not.
Credit, productive lending from major sovereign nations to equally sovereign developing nations, for economic development and future industrialization, is the crucial element needed immediately now, to shift the 21st-century paradigm from endless wars to peace through development.
The IMF in effect is stealing that credit from major developed economies and passing it out as dumb money—new debt—to roll over unpayable debts. This was prohibited under the Bretton Woods agreements, which gave us a healthy, functioning international monetary system from 1945-70.
The last time the IMF pulled out this particular scheme, in 1982, Lyndon LaRouche was well known and trusted by developing countries’ leaders, despite Henry Kissinger’s threats against him. LaRouche told those leaders the IMF could not solve the 1980s “Third World debt bomb”; that debt had to be reorganized, as Hamilton did for the young American Republic, and made the basis for new credit for development. LaRouche was proven right; the IMF only exploded that debt bomb.
By the 1990s, even from prison, LaRouche designed the worldwide corridors of development—the “World Land-Bridge”—and with it, the New Bretton Woods necessary to provide the nation-to-nation credits to make it possible for underdeveloped regions to progress and industrialize. During the 1990s the Schiller Institute held hundreds of large and small conferences on these plans, and they were noticed, in particular in China.
Then for 20 years, after a 9/11 attack on the United States which no one but LaRouche understood at the time, the United States and NATO countries sent their young men and women to wars against developing sector countries, while our non-military industries steadily closed down when they could have been producing capital goods for export to development projects funded by credit. Constant, distant and meaningless warfighting battered and divided our societies.
As of this month, with the 20th anniversary of that 9/11 attack that triggered our trans-Atlantic Iliad, the geopolitical war policy has failed for all to see. Underneath it, so-called neo-liberal economics, has failed, the IMF with it. Afghanistan is the center of a tremendous opportunity to change the whole character of relations among nations to the one LaRouche laid out in the World Land-Bridge corridors of development and the New Bretton Woods credit system. Its descendant, the Belt and Road Initiative being carried on by China and many collaborators, is the vehicle into which credit for development should go.