Why Isn’t Anyone Talking About the IMF Bonds?

You probably missed it this weekend, but the International Monetary Fund is planning to sell bonds in order to “solve” its fiscal needs. Apparently, China and some other emerging markets countries didn’t like the idea of making IMF contributions (8%) in excess of their voting percentages (4%). How China came to the conclusion that buying IMF bonds in order to fund the IMF would be better is beyond me. I guess it’s back to “I’ll take a shit in a box and put a guarantee on it.”
This story struck me as especially bizarre, since, the IMF HAS NO REVENUES! Talk about a pyramid scheme: hey IMF – how are you going to repay the bonds when they come due? Wait – I know the answer: SELL MORE BONDS TO CHINA! In the words of an old Guinness ad: “Brilliant!” More possible explanations came from my father, who suggested “China will just pay itself back,” and my friend Ted, who explained sarcastically (I think!), “When the economy gets better, we can give the IMF more money,” to pay back China of course!
Hey, maybe we’re the suckers here, and China is freerolling on this. After all, I don’t think the US has any chance of recouping its IMF contributions – at least not directly. Obviously, the idea is to help other global markets, so they can get healthy, thrive, and buy our debt.
And Ponzi lives on…
KD

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