Some economists see the International Monetary Fund (IMF) as a vital bulwark against financial crises in countries around the globe. Forbes magazine publisher Steve Forbes sees otherwise. “To be blunt, the world does not need the IMF,” he writes. “It does more harm than good. The world would be better off without it.”
Given that most of the IMF’s $375 billion in assets come from American taxpayers, this is no trivial issue, Forbes notes.
“Once upon a time the IMF had a useful purpose,” he acknowledges. “It was created in the waning days of World War II to undergird the new postwar international monetary system.”
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But once the fixed exchange rate system was dropped in the 1970s, the IMF lost its usefulness, Forbes says.
“Did the IMF close shop when its purpose was rendered moot?” he asks rhetorically. “Ronald Reagan correctly observed that a government program or agency is the closest thing we get to immortality on this Earth. The IMF reinvented itself as a global economic doctor.”
And not a good doctor. “Trouble is that the IMF's prescriptions almost always perpetuated poverty for its patients,” Forbes says.
The biggest mess occupying the IMF now is the Greek financial crisis. IMF funds slated for Greece next month are in danger as European nations can’t agree on how to bail out the country.
Debt restructuring “seems to be increasingly probable,” Raghuram Rajan, former chief IMF economist, says, according to Bloomberg.
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