What is the International Monetary Fund? An IMF FAQ
By Greg Sabin
© IAN LANGSDON/epa/Corbis
The head of the International Monetary Fund was recently arrested for allegedly sexually assaulting a hotel housekeeper in New York City. Dominique Strauss-Kahn (DSK to his friends), head of the IMF since 2007, is a political rival to French president Nicolas Sarkozy, and a well-known seducer of women (seriously, his French nickname roughly translates to “The Great Seducer”). This whole sordid affair has led some to ask hard and penetrating questions about psychology, sexuality, legality, and conspiracy. But as we wait for the details of the case to emerge, let's look at the big picture; specifically, what is the IMF and what the heck does it do?
What is the International Monetary Fund?
Founded by a handful of countries at the tail end of World War II to help avoid the type of worldwide financial problems that led to the Great Depression, the IMF now has 187 member countries pooling funds that help stabilize financial markets.
The IMF helps to facilitate exchange of currencies, consults with national banks during times of difficulty, and, most importantly, lends money to troubled countries to help shore up their economies.
In other words, it’s a credit union for world governments.
But it’s also a great resource for economic data and research. Since one of the main directives of the IMF is to help support the global economy, it needs to know where all the bodies are buried. IMF data and research numbers, therefore, are some of the best around.
How much money does the IMF have?
Tough to say. The amount of money held by the IMF at any one time is pretty fluid, but $200-$300 billion would be a good running total.
What role has the IMF played in the latest financial crisis?
In the last few years, the IMF has loaned hundreds of billions to countries like Greece, Mexico, Poland, Costa Rica, and Pakistan to help shore up their economies after credit crunches and, in the case of Pakistan, natural disasters. The package for Greece is the largest IMF loan ever at over $100 billion.
Why does Ron Paul hate the IMF?
If you didn’t know already, Ron Paul thinks the IMF is a pile of garbage. He’s not shy about his opinion (and he's not alone). The Libertarian Congressman from Texas believes that free markets, property rights, and the rule of law can solve just about anything. So the IMF is really not his kind of thing.
According to Paul, the real purpose of the IMF is to channel taxpayer dollars to politically connected companies. From third-world construction projects to commodity extraction to bailouts, the beneficiaries of the IMF’s largess (in the form of risky, low-interest loans) are the multi-nationals.
Appearing yesterday on Fox News Sunday, Paul responded to the Strauss-Kahn news this way: "These are the kinds of people who are running the IMF. And we want to turn the world's finances and the control of the money supply to them?"
© REHAN KHAN/epa/Corbis
Despite the altruistic appearances of the IMF’s mission, some folks aren’t convinced. Much like the Federal Reserve, the meetings of the IMF are mostly private and not open to public scrutiny. This invariably leads to cries for more transparency. Sometimes these cries turn violent.
In almost every country where the IMF intervenes, there are charges of corruption, exploitation, and fraud. Those who are against the IMF (and by association the World Bank) cite the difficulty most impoverished nations have in paying off their loans (usually to the detriment of their citizens), the preference the bankers have for privatization of resources (versus public ownership), and the funding given to environmentally destructive projects (e.g. mining).
Calling on governments and citizens to change their ways, protesters congregate all over the world to air their grievances against the international money folks. These folks have legitimate gripes. As compared to…
What role does the IMF have in the New World Order?
Whenever a large international body convenes, the conspiracy theories follow closely behind. Along with the Federal Reserve and the World Bank, the IMF gets linked to all kind of conspiracy plots, most of which follow the standard template involving bankers/Asians/Zionists/Smurfs who use the good people of the world as their puppets. Some claim that the leadership of the IMF is secret (even though their names are on the IMF website). Others claim that the IMF is part of the financial Illuminati. Or it’s a tool of the Cylons.
Whatever the case, the IMF is without its leader today—American John Lipsky has assumed the role of acting managing director—yet the world economy remains stable. I’m sure there’s a conspiracy somewhere in that.