Thursday, February 11, 2021

Will Biden Force Taxpayers to Fund Massive International Monetary Fund Bailout of China?; Congressional Democrats’ Plan to Bail Out China

Photo: Pang Xinglei/Xinhua/Getty Images
Will Biden Force Taxpayers to Fund Massive International Monetary Fund Bailout of China?:
Last year, The Heritage Foundation analyzed the risk to American taxpayers from a plan pushed by progressives and the international left to massively increase the quantity of the International Monetary Fund’s special drawing rights, or SDRs—a type of international reserve currency.
Under the Biden administration, those fears may soon be realized. And which country would be the chief beneficiary of U.S. taxpayers’ coerced trillion-dollar largesse? The People’s Republic of China.
The SDR expansion proposal has been circulating for years, lately under the pretext of aiding developing countries affected by the pandemic. In its current version, the proposal would increase the amount of SDRs at the IMF to as much as 2 trillion SDRs (about $2.8 trillion).
Promoted by left-leaning politicians and think tanks, the foreign aid community, George Soros, and the Chinese Communist Party, among others, SDR expansion was discussed at the IMF’s spring 2020 meeting.
If approved, the amount of SDRs available to countries would increase tenfold over the current level of SDR 204 billion (about $288 billion) in what would amount to money printing on a global scale.
U.S. allocations of SDRs (currently about $55 billion) would also rise exponentially, and the United States Treasury, as the IMF’s principal “designated participant,” could be forced to fund additional foreign exchange transactions of $1.5 trillion. --->READ MORE HERE
Photo: daniel slim/AFP/Getty Images
Congressional Democrats’ Plan to Bail Out China:
Sometimes an idea gets legs in Washington that is so objectively bad, you’re almost tempted to admire it simply for beating the odds. Such is the case with left-wing claims that the International Monetary Fund must shower money on developing economies to beat Covid-19. Congressional Democrats have pushed repeatedly for time-sensitive “must pass” legislation to require the IMF to issue at least two trillion special drawing rights, or SDRs, to its 190 member countries, which governments could then exchange for nearly $3 trillion in hard currency to defend against the pandemic.
This isn’t what SDRs are for, and it’s almost certainly not how they would be used if Democrats in Congress got their wish. Under the IMF’s longstanding rules, SDRs are supposed to meet a “long-term global need” in reserves; they aren’t meant to arm countries for short-term spending emergencies.
Nor would that be feasible: There are no strings attached to how a government uses SDRs, and they never have to be repaid. Donor countries may want recipient states to focus on acquiring personal protective equipment, vaccines and the like, but the IMF and World Bank already have programs directing money to areas where it’s needed most. A blank check would surrender accountability for how the money is used, inviting waste and corruption. --->READ MORE HERE

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