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To: waldo who wrote (22708)	11/7/1998 3:12:00 AM
From: Alex	Respond to of 116764

Some great stuff waldo. Thanks for the links.................... Should the International Monetary Fund sink or swim? By John Skorburg Congress has allocated almost $18 billion to help prop up the International Monetary Fund and has attached several strings to make sure that this agency is utilizing its charter effectively. There are several facts to keep in mind as the ongoing debate over the mission and actions of the IMF unfolds in the months ahead. A brief history The International Monetary Fund was formed at the Bretton Woods Conference held in the United States in 1944—to perform a well-defined purpose in aiding the world economy. After World War II there was a need for an entity to enforce the rules in a system of "fixed exchange rates" around the world and to alter a country's exchange rate when "fundamental adjustment" was needed. In short, the IMF made it possible for countries to exchange currencies around the world and to make sure that trade ensued in an orderly fashion. In 1971, the Bretton Woods system collapsed because major countries, like the United States, failed to maintain economic policies consistent with exchange rate stability. The switch to "floating exchange rates" led to the IMF trying to reinvent itself by providing advice and information to its 180 national members. By 1995, the IMF decided to become the lender of last resort and dictator of economic policies to countries in crisis by bailing out the Mexican economy in exchange for a massive devaluation of Mexico's currency. Mexico recovered from this crisis, but paid a price of both recession and inflation. This same scenario is now being played out in Asia. In exchange for U.S. dollars, the IMF is giving advice that has led to the devaluation of many currencies in that part of the world. This also has led to the loss of many export markets for U.S. goods. Two sides to the same coin The pro-IMF view: Massachusetts Institute of Technology professor Paul Krugman sees the IMF as an international lender of last resort, perhaps flawed, but "all that we have, and it is a lot better than nothing at all." The con-side of the IMF: Anna Schwartz of the National Bureau of Economic Research believes that it's time to terminate the IMF. In a recent foreign policy briefing, Schwartz states, "The IMF is an undemocratic institution unaccountable for its actions. Its current function has little to do with its original mission. Its foreign exchange interventions have always been wasteful and ineffective at controlling the relative price of the U.S. dollar. Defenders of the IMF as an international lender of last resort are misinformed since the IMF does not and cannot serve that purpose." Many economists generally agree that massive currency devaluations not only hurt individual economies but the world economy as well. Farm Bureau recommends that the charter for the IMF be reviewed to ensure that it is operating according to its original Bretton Woods purpose of ensuring international liquidity and exchange convertibility to facilitate world trade and capital flows. The next region to watch is Latin America. If Brazil is forced to devalue its currency, expect currency problems to spread to this region of the world. If the IMF helps Brazil to defend its currency, the "real, rather than drive it down as the IMF did in Asia, the currency problems can be contained and better export markets for U.S. agricultural products will follow. In short, the IMF must learn to do good without doing harm. John Skorburg is an AFBF senior economist. fb.com