"If a group or organisation had used it's hard earned money to help these developing nations, then we might sympathise that there should be a real effort to repay these loans. But the money used was created from fractional reserve banking. The money loaned to the Third World came from the 90% the banks allow themselves to loan on the 10% they actually held. It didn't exist, it was created from nothing, and now people are suffering and dying in an effort to pay it back. "
This is bunk, IMO. Although the US has a fiat currency, there is still value to that currency, albeit "perceived" value. Fractional reserve banking is well known, as is the printing press mentality of the Fed. On the other hand there is an international currency market where the US dollar still has a value (however that is decided and calculated). Again, IMO, they took the money, knew the interest rate, spent the money irregardless of how the money was created. They owe it back, with interest.
Also, the condemnation of fractional reserve banking doesn't make any sense to me in the author's context. A better problem he could have addressed is the money multiplier, but that also wouldn't fit. Basically, if he is bitching about fractional reserve banking AND the money multiplier, he is saying that countries like Brazil bankrupted themselves by lending out internally and having a large amount of internal defaults, thereby not receiving any rate of return or a return of the original loan amount creating the inability of them to pay off their own loans back to their primary lender.
Screw Bono, SA owes the money. |
