Complaints from the IMF\/World Bank meetings in Peru.<\/p>\n
Nick Asheshov writes: \u00a0The IMF\/World Bank AGM meetings were\u00a0deeply confused. The muddle \u00a0came not from the third world, the usual suspects, much less from Peru, \u00a0but from the IMF itself together with the big shot central banks, led by the Fed in Washington, The European Central Bank in Frankfurt, the Bank of England and their equivalents in China and Japan.<\/p>\n
It quickly became clear\u00a0that the international financial system, which is run by the directors and staff of the Fund, is not only dangerously unstable but that there is worse to come. \u00a0The world economy, said Christine Lagarde, the Fund\u2019s managing director, is barely growing, at only 3.1% \u2014 Fundspeak for 2.3%.<\/p>\n
Mme. Lagarde could have added that economic growth is not actually her job. \u00a0Her job, the task of the International Monetary Fund, is to provide financial stability, which is, as we all understand it, the stepping stone for a successful economy. \u00a0 No stability, no growth.<\/p>\n
Instead Mme. Lagarde and others talked of the importance of increasing jobs and pay for women, for income equality, for more old age pensions and social inclusion, climate change and indigenous rights.<\/p>\n
There was no talk, or \u00a0hardly any, about exchange rates, nor even interest rates. \u00a0Mme Lagarde and her crew \u00a0are paid to control exchange rates. Dollars, euros, yen, renmunbi, pesos, reales, fluctuate today as dramatically as, and more unpredictably than, oil, gold and silver. \u00a0Indeed, it is often the volatile currencies that push and pull the prices of commodities and most other things besides. Tails wagging \u00a0the dogs. \u00a0 Carpet weavers in Kazakhstan and quinoa farmers on the Altiplano see their \u00a0fortunes zoom or doom if\u00a0 the Fed in D.C. increases, or not, $ interest rates by a quarter \u00a0point..<\/p>\n
This is exactly how it should not be. \u00a0The Fund was set up 70 years ago at the end of WWII to say Never Again to the disastrous competitive devaluations and desperate inflations and deflations that followed World War I. \u00a0It was these crashing swings and roundabouts that set the scene for \u00a0the Great Depression and World War II.<\/p>\n
The IMF\u2019s job was to keep European, and later the rest of the world, exchange rates fixed or at least stable.<\/p>\n
The Fund never really knew, and as we see still does not know, what to do about exchange rates. Or rather, they always have had a theory but the theory keeps changing.<\/p>\n
Fast forward to Lima 2015, with trillions of dollars and the others zooming beyond the control of the IMF, the Fed or anyone else. \u00a0Peru has chosen this past couple of years not to devalue the Sol\u00a0against the euro and the yen, and only slightly against the US dollar. \u00a0Meanwhile neighbors like Brazil, Chile and Colombia have strongly \u00a0devalued their pesos and reales.<\/p>\n
Peru has over the past two years burned $24bn of its reserves to stabilize, as the Central Bank puts it, its currency and, one is to suppose, the economy. \u00a0But the economy has slowed over the past 12 months to\u00a0a whisker over 2%. \u00a0Certainly the IMF and the other experts provided no ideas, much less clear guidance.<\/p>\n
Until\u00a0the United States, Europe and Japan put their houses in order, which is their constant advice to third world backsliders,\u00a0there is not much \u00a0the rest of us can do.<\/p>\n
Complaints from the IMF\/World Bank meetings in Peru. Nick Asheshov writes: \u00a0The IMF\/World Bank AGM meetings were\u00a0deeply confused. The muddle \u00a0came not from the third world, the usual suspects, much less from Peru, \u00a0but from the IMF itself together with … Continue reading ![\"Is](\"http:\/\/www.w-t-w.org\/en\/wp-content\/uploads\/2015\/10\/Is-the-House-in-Order-300x228.jpg\")
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