I think the circular route is going to work out something like this:
a) the IMF puts up whatever funds are eventually deployed to Brazil
b) it turns to its members, including the US for their respective share of contributions. In the old days, they could also issue supranational money of their own, by way of SDRs, I'm not sure if they still can, if so of course, everyone gets away scot-free, effectively the 'piper' doesn't have to be paid.
c) as for the US contributions which need to be funded, the Treasury immediately issues more bonds during its weekly auctions, and the happy Chinese, Japanese, Taiwanese, Korean and Arab governments, pension funds, private investors and for good measure, hedge funds everywhere subscribe for them.
It seems, this cycle has been either going on for a long time, or will go on forever from here on, since the bailout will not stop with Brazil....can someone clarify why this thing could be a 'freebie' for the US of A.
Selva |
