Free Market Economics: A Basic Reader by Bettina Bien Greaves

Author:Bettina Bien Greaves
Language: eng
Format: epub, pdf
ISBN: 9780910614566
Publisher: Ludwig von Mises Institute

International Monetary Fund Promotes Inflation

The system has not worked well. There is no evidence that it has “shortened the duration and lessened the degree of disequilibrium in the international balances of payments of members,” which was one of its six principal declared purposes. It has not maintained a stable value and purchasing power of the currencies of individual members. This vital need was not even a declared purpose.

In fact, under it inflation and depreciation of currencies have been rampant. Of the 48 or so national members of the Fund in 1949, practically all except the United States devalued their currencies (i.e., reduced their value) that year following devaluation of the British pound from $4.03 to $2.80. Of the 102 present members of the Fund, the great majority have either formally devalued since they joined, or allowed their currencies to fall in value since then as compared with the dollar.

The dollar itself, since 1945, has lost 43 per cent of its purchasing power. In the last ten years alone the German mark has lost 19 per cent of its purchasing power, the British pound 26 per cent, the Italian lira 27 per cent, the French franc 36 per cent, and leading South American currencies from 92 to 95 per cent.

In addition, the two “key” currencies, the currencies that can be used as reserves by other countries—the British pound sterling and the U.S. dollar—have been plagued by special problems. In the last twelve months the pound has had to be repeatedly rescued by huge loans, totaling more than $4 billion, from the Fund and from a group of other countries.

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