Saturday, 29 June 2013

End the IMF

By Henry Hazlitt (first published November 1963)

Representatives of the governments of the ten most powerful industrial nations (outside the Communist bloc) have begun a study of the world's monetary systems. Such a study is long overdue. Yet the prospects that it will result in a real improvement are not bright. On the contrary, the most influential governments are pushing for an increase in world "reserves" and international "liquidity." In plain English, they are pushing for more world inflation.

The real problem is how to bring this inflation to a halt. The real solution is to dismantle the International Monetary Fund system. This system has proved, in practice, a gigantic machine for world inflation. In the nearly 20 years of its existence, more and greater devaluations have occurred in national currencies than in any comparable period.

In Newsweek of Oct. 21, I called attention to this record, beginning with the scores of devaluations in 1949, touched off by the overnight devaluation of the British pound from $4.03 to $2.80. In the decade from the end of 1952 to the end of 1962, 43 leading currencies depreciated. The US dollar showed a loss in internal purchasing power of 12 percent, the British pound of 25 percent, the French franc of 30 percent. The currencies of Argentina, Brazil, Chile, and Bolivia lost, respectively, 89, 91, 94, and 99 percent of their purchasing power.

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