International Monetary Fund (IMF) and World Bank were created by a group of nations (USA, Canada, UK, France, Germany, Italy and Japan) before decolonization of nations in Asia, Africa and South America. The ostensible purpose was to help the third-world, especially, the newly liberated countries.
The ulterior strategy of creating the global financial bodies was to keep the third-world subjugated economically. This strategy has worked tremendously. The currency values of the third-world countries have been decimated in terms of dollar, euro and yen. This has forced the third-world to toil for pittance. This strategy has also made the European countries, USA and Japan very rich and powerful.
While a few bankers and hedge funds in dollar-euro-yen zone were short-selling third-world currencies in 1997 like the Indonesian rupiah, the IMF and World Bank were heaping praises on central bankers of those countries to keep the exchange values of their currencies as high as possible even by raising interest rates. This ploy was obviously designed to let a few dollar-euro-yen zone banks and hedge funds make bundles by short-selling currencies like rupiah even if it meant ruining third-world economies and triggering social chaos. The social chaos of the third-world perhaps gave birth to al Qaeda.
Indonesian rupiah, for instance, fell from 2500 rupiah per dollar in March 1997 to 20000 rupiah per dollar by the end of that year. Indonesian reserve bank lost $140 billion of its reserves within a few months. The Indonesian chaos led to riots that drove out the wealthy Chinese settlers who lost an estimated $60 billion at that time.
The game of ruining third-world economies for self-aggrandizement of a few bankers and hedge funds based in dollar-euro-yen zone with active connivance of the IMF has perhaps climaxed in 2000.
The vast majority of households in dollar-euro-yen zone benefited from cheaply production of global brands made in and imported from third-world countries. Prosperity in the dollar-euro-yen zone appeared endless. But alas! The same hedge funds and bankers turned their looting game on the vast majority of households in the dollar-euro-yen zone. Households in this zone have lost between $7 trillion to $9 trillion of their wealth due to the same game of the same global financial predators based in dollar-euro-yen zone.
The few global financial predators have proved to be Frenkenstein monstors devouring their own masters: the middle-class that can destroy the strategies of the monster by taking over power democratically and by making policy amendments as proposed in my book "Prosperity."
The November 2006 mid-term election in USA perhaps shows that the masters (middle-class voters) have recognized the game. They are perhaps simmering within about the loss of their hard-earned savings. They had some diversion due to 9-11 and Iraqi invasion touted tacitly as a strategy to garner cheap oil. But crude oil price tripled. USA spent an estimated $500 billion and many soldiers in Iraq war. The interest to taxpayers on this amount is $25 billion per year. The economic benefit of Iraq war has proved to be very negative for taxpayers.
Reams of data on economic growth are being beamed. But the middle class in USA did not seem to care for it and changed the balance of power in Congress in November 2006. But does the new Congress majority know what the problems are and how to correct them if they know the problems? This is a trillion dollar question!
Economic growth does not necessarily beget prosperity. Only an enhancement in economic net worth makes households feel prosperous. The net worth of the middle class is perhaps falling. But the truth about any growth in economic net worth of the middle class is unknown because the government does not measure individual household net worth to know the truth.
With zero savings and potential erosion of their wealth, middle class taxpayers in USA can only fume and look for better policies to enhance their welfare. One such policy that appears optimal is to close the IMF and World Bank. These global financial entities can only cause crises. They solve no problem of humanity, including the middle class living in the dollar-euro-yen zone. The strategic value of creation of these global financial bodies has diminished and turned very negative for the middle class voters in dollar-euro-yen zone nations.
It seems unseemly, if not insane, that the most "powerful" nation, USA, has to borrow from the third-world for survival. What is the use of IMF and World Bank to the vast majority of American voters? None. The mandarins of IMF perhaps tacitly colluded with a few hedge funds and bankers to precipitate a currency crises elsewhere. This resulted in disgruntlement everywhere in the third-world. The justification of such crises in the third-world–as given to American voters–was reaping cheaper American-European-Japanese brands made in the third-world. But the same game also undercut jobs because of artificially bloated value of dollar obtained by rigging the exchange rates of the third-world currencies. The few bankers, hedge funds and IMF have thus hoist a financial petard for the middle class household in USA.
The rigged-down values of third world currencies made the third-world more competitive. It turned USA as an economic Ponzi Scheme in which it printed more and more promises to buy merchandize and service from the rest of the world. The US is creating about $800 billion of such paper promises every year! But this is not sustainable, as warned in my letter to President Bush in January 2005. In fact, the new U.S. Treasury Secretary and Federal Reserve Chief have recently recognized the imbalance as not sustainable and are proceeding to China to induce the Chinese government to raise the value of yuan. The whole world has noticed the scheme. The problem is not the third-world. The same hedge funds are now short-selling dollar. They are also rigging up prices of commodities and energies to create double jeopardy for American households.
Eventually all Ponzi Schemes collapse as warned in my letter to President Bush in January 2005. Third world currencies have to be elevated. USA will perhaps be forced to hold foreign currency reserves of the third-world. China will perhaps become super power. But more benign alternative solutions have been proposed in my book “Prosperity.”
It is now very necessary for USA to shut down IMF and World Bank. The goals of Federal Reserve would also have to be redefined to serve the best interests of middle class of American Households, which forms the backbone of democratic power. We should welcome the U.S. Senate bill to regulate hedge funds. But any such regulaton must also restructure short-selling rules to establish trust, as proposed in my letter to the U.S. Congress. This is necessary to thwart recurrence of Global Depression.
Sankarshan Acharya
