Whats the scoop on the IMF and the likes?

[Dozyproductions]

And you think that that is *less* harmful?

Sure. It's not a guarantee that it will work if government tries to save it (by buying back reserves, increase interest rates, cut spending, lower/higher taxes, etc). You have to remember that a big part of the circular cycle of economics is confidence in the market. This is not an exact science and loss of confidence can often times be self fulfilling no matter how much the government pleads to the rest of the world of their efforts.

Plus letting a currency practically forces more fiscal responsibility in order to insure future trust in the money.

It really all depends on the different characteristics of each country and their actual to perceived economic strength. This differs from country to country in letting the currency slide. Example the Brits in 92' eventually let go of the pound and it only lost 15-20% of its value because people have faith in England and its ability to honor its debts so instead of mass panic people thought of it as a good time to invest again. In fact if they didn't do anything they would of made a profit off their devaluation by keeping their foreign currency reserves.

But what works for England doesn't work for places like Malaysia, Thailand and etc.

[nrubenstein]

Sure. It's not a guarantee that it will work if government tries to save it (by buying back reserves, increase interest rates, cut spending, lower/higher taxes, etc). You have to remember that a big part of the circular cycle of economics is confidence in the market. This is not an exact science and loss of confidence can often times be self fulfilling no matter how much the government pleads to the rest of the world of their efforts.

Plus letting a currency practically forces more fiscal responsibility in order to insure future trust in the money.

It really all depends on the different characteristics of each country and their actual to perceived economic strength. This differs from country to country in letting the currency slide. Example the Brits in 92' eventually let go of the pound and it only lost 15-20% of its value because people have faith in England and its ability to honor its debts so instead of mass panic people thought of it as a good time to invest again. In fact if they didn't do anything they would of made a profit off their devaluation by keeping their foreign currency reserves.

But what works for England doesn't work for places like Malaysia, Thailand and etc.

OK, two things:

1) If letting the currency fail is less harmful, why is it that countries prefer the IMF to default? Remember that use of the IMF's services is not in any way compulsory. They can always tell the IMF and the rest of the world to go fuck itself and just default.

2) Since we are on Korea, can you provide a realistic estimate of the harm that would have been done if the won had been allowed to fail?

Edit: Uh, and the 1992 pound crisis has almost no relevance to this discussion.

[Dozyproductions]

OK, two things:

1) If letting the currency fail is less harmful, why is it that countries prefer the IMF to default? Remember that use of the IMF's services is not in any way compulsory. They can always tell the IMF and the rest of the world to go fuck itself and just default.

2) Since we are on Korea, can you provide a realistic estimate of the harm that would have been done if the won had been allowed to fail?

Edit: Uh, and the 1992 pound crisis has almost no relevance to this discussion.

1. now you're putting words in my mouth. Letting currencies slide is a double bladed sword. There can be just as many cons to every pro. Countries will often use the IMF because of thos cons. But the IMF is a tough love big brother that you have to listen to. It can dictate beyond just economic policy in your country if they deem it to be related.

2. I can't do with what I know, what people who study this for their entire lives can't do either. Choose your words more carefully.

3. UK does have everything to do with the topic just like 'everything relates to everything' in economics.

Remember what I was saying about confidence? It's always part of the game but, it's just approached differently with varying results.

[nrubenstein]

1. now you're putting words in my mouth. Letting currencies slide is a double bladed sword. There can be just as many cons to every pro. Countries will often use the IMF because of thos cons. But the IMF is a tough love big brother that you have to listen to. It can dictate beyond just economic policy in your country if they deem it to be related.

2. I can't do with what I know, what people who study this for their entire lives can't do either. Choose your words more carefully.

3. UK does have everything to do with the topic just like 'everything relates to everything' in economics.

Remember what I was saying about confidence? It's always part of the game but, it's just approached differently with varying results.

Uh, you said that you'd be perfectly happy to just let currencies fail. That means that you think the outcome would be better if we did.

And, the difference between Black Wednesday and the Asian Financial Crisis is HUGE. In 1992, the Brits were forced to freely float their currency because it was fixed at an unsustainable level and it largely fixed everything. In 1997, the won crashed and they lacked the internal resources to restore confidence. The whole point of the IMF terms is that they trade the money necessary to prop up a currency in exchange for terms which force better governance.

I don't know why you guys are so opposed to this anyway. The IMF likes to demand fiscal austerity, cuts to entitlements, and better oversight. Isn't that pretty much your platform?

[Dozyproductions]

Uh, you said that you'd be perfectly happy to just let currencies fail. That means that you think the outcome would be better if we did.

And, the difference between Black Wednesday and the Asian Financial Crisis is HUGE. In 1992, the Brits were forced to freely float their currency because it was fixed at an unsustainable level and it largely fixed everything. In 1997, the won crashed and they lacked the internal resources to restore confidence. The whole point of the IMF terms is that they trade the money necessary to prop up a currency in exchange for terms which force better governance.

I don't know why you guys are so opposed to this anyway. The IMF likes to demand fiscal austerity, cuts to entitlements, and better oversight. Isn't that pretty much your platform?

letting currencies fail is nothing new and is actually one of the methods to restructure weak or over speculated currencies.

Never said happy or anything you said. That was you... so yes, you're putting words in other people's mouths.

Of course the differences are huge but then again you aren't able to see the similarities. (speculators played/hedge funds played a big role and etc.)I don't like the IMF because for the very reason I like this quote "Those Who Sacrifice Liberty For Security Deserve Neither."

What the IMF asks for back isn't purely based economic science yet the solutions are approached as such. Yeah like in Asia, they helped continue the recessions by making the countries raise taxes, lower spending and upping interest rates. Great

And try looking into intentions vs. reality. The IMF is headed by humans so automatically they are just as fallible except, they have entire countries at beck and call. Awesome.

[nrubenstein]

Never said happy or anything you said. That was you... so yes, you're putting words in other people's mouths.

Of course the differences are huge but then again you aren't able to see the similarities. (speculators played/hedge funds played a big role and etc.)I don't like the IMF because for the very reason I like this quote "Those Who Sacrifice Liberty For Security Deserve Neither."

What the IMF asks for back isn't purely based economic science yet the solutions are approached as such. Yeah like in Asia, they helped continue the recessions by making the countries raise taxes, lower spending and upping interest rates. Great

And try looking into intentions vs. reality. The IMF is headed by humans so automatically they are just as fallible except, they have entire countries at beck and call. Awesome.

OK, you said that it's nothing new and one of the approaches. "Happy" may not be an exact interpretation of your statement, but you have essentially stated that it is acceptable to let a currency fail and you have implied that you prefer it to IMF intervention.

And, uh, you are not necessarily trading liberty for security. There is nothing inherently permanent about the reforms that the IMF requires as a condition for providing loans. Usually, the conditions that bring about a crisis requiring IMF intervention are fraught with corruption, poor governance and a lack of transparency. There is nothing of liberty in that. Furthermore, one can make a rather compelling argument that conditions of economic collapse do rather little to improve or maintain liberty.

[nrubenstein]

All that said, again, I ask this: If the conditions that the IMF imposes are so horrible, why is it that it's rare for a country to opt out. They have every right to do so.

Furthermore, when you get a mortgage or a car loan, do you believe that you are trading liberty for security? Was that an unacceptable trade?

[Dozyproductions]

And okay, obviously we aren't going to interpret the "advantages" of the IMF in the same way. But I will say that, that quote should be listened to on any scale for how ever long of a time. O well, these problems are inherent of the system.


edit: Loans do not provide security, only the illusion of it. As a computer chair economist, I can fully stand behind that statement.

[nrubenstein]

And okay, obviously we aren't going to interpret the "advantages" of the IMF in the same way. But I will say that, that quote should be listened to on any scale for how ever long of a time. O well, these problems are inherent of the system.


edit: Loans do not provide security, only the illusion of it. As a computer chair economist, I can fully stand behind that statement.

So, does that mean that you believe that all forms of debt are bad?

[Dozyproductions]

yes but then again I know drinking is bad yet I do it.

[nrubenstein]

yes but then again I know drinking is bad yet I do it.

So, what it really comes down to is that it's not an argument about whether or not the IMF is bad. It's about debt as a concept, which is a rather different thing.

[Dozyproductions]

no because in this case, the debt comes with more unanticipated strings that you have no power over.

[nrubenstein]

no because in this case, the debt comes with more unanticipated strings that you have no power over.

That's where we fundamentally disagree. The strings are fairly predictable, and you absolutely can say no.

[Dozyproductions]

cheers :)