16-02-2003 01:34									#91
	Enter the AD-FREE zone

quote: Originally posted by Zen Master Economics 101: deficits during crisis can actually be useful to revitalize the economy and lessen unemployment.

Yes, deficit spending can help during a resession. The problem is when you have already morgaged everything you own and your debts are still so massive that you can't continue to pay for them. That is when no one will loan you any more money and that is when people come looking for the IMF. The IMF is trying to help them change the patterns which lead them to destitution to begin with; what you're asking is for the IMF to throw good money after bad just so the debter can continue his profilgate ways.

That's like giving money to crack addict. They have proven their financial incompetetence and now if they want someone to bail them out so they are going to have to follow certain rules which insure the IMF gets its money back. Don't like it? Tough.

	16-02-2003 05:37									#92
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yep: Economics 101 tends to oversimplyfy everything. Yes, deficits during crisis can revitilize the economy and lessen unemployement. But, it increases inflation, increases interest rates, which in turn makes appreciates the value of the currency, which means that the terms of trade for said third world country deteriorate even more. Then they cant get the hard currency to invest or even service their debt.

	16-02-2003 07:03									#93
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quote: I have yet to meed someone in Latin America who talks wonders of the IMF and the Washington Consensus

And yet they speak so well of their governments that got them into trouble in the first place.

	16-02-2003 07:58									#94
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the IMF can get countries in trouble too.

	16-02-2003 08:08									#95
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Out of curiousity in which manner are you refering?

	17-02-2003 01:27									#96
	Avatar Enlargement: We've got the solution

The IMF demands that the markets be opened immediatly, no matter what the short term problems are. In Senegal for example, the Senegalese government had price controls on food. The IMF stepped in and said that tomorrow there would be no price controls. The effect of this was out of control inflation for one year. None of the traders knew what the equilibrium price was, so they all set it as high as possible. It took a while for competition to set in and lower the prices. In subsequent years, inflation was lower then during the price controls

Instead of shocking the market with immediate dropping of price controls. the IMF could have increased the maximum price slowly every couple of months until the maxiumum price is above the equilibrium. In this way, Senegal could have avoided the inflation and still have market liberalisation.

	17-02-2003 03:19									#97
	Support Apolyton, buy Civilization 2

quote: Originally posted by Berzerker And yet they speak so well of their governments that got them into trouble in the first place.

Actually, most don't. Talk to some and you'll see for yourself.

	17-02-2003 03:28									#98
	Inflate your Upload Space

quote: Originally posted by Oerdin Yes, deficit spending can help during a resession. The problem is when you have already morgaged everything you own and your debts are still so massive that you can't continue to pay for them. That is when no one will loan you any more money and that is when people come looking for the IMF. The IMF is trying to help them change the patterns which lead them to destitution to begin with; what you're asking is for the IMF to throw good money after bad just so the debter can continue his profilgate ways. That's like giving money to crack addict. They have proven their financial incompetetence and now if they want someone to bail them out so they are going to have to follow certain rules which insure the IMF gets its money back. Don't like it? Tough.

Economics is a trade-off. You can usually solve problems one way yet invite others because of that measure. Such is the case of deficit spending which can cure some evils as well as cause some too. The problem is that to know if it is usefull or not depends on each country's condition. What bugs me about the IMF is that they "satanize" certain things like deficit spending, tariffs, inflation, etc. which may or may not be as bad as most people think. Their one-sided arguments that "deficit spending is bad" may not, therefore, necesarily apply.

As I said before, I do not support giving loans to 3rd world countries precisely for the same reasons you mention. Plus, no "rules" of the IMF ensures them they will get paid. Just look at how many countries have billion-dollar debts since the 70's and 80's. No "rule" the IMF has imposed has been to enable these countries to stay out debt or repay it.

The "rule" is to benefit western companies and government's access and control of 3rd world economies. That's the deep dark secret behind all of this, if it sounds like a conspiracy theory then so be it. Nobody does things because they are nice.