You are here

International institutional promotion of a globalization Ponzi scheme?


Global Economy of Truth as a Ponzi Scheme (Part #4)


[Parts: First | Prev | Next | Last | All] [Links: To-K | From-K | From-Kx | Refs ]


The concern here is that there does not appear to be any formal distinction between globalization and a global Ponzi or pyramid selling scheme, especially as they merge into multi-level marketing schemes. Those promoting globalization, especially those subscribing to a neoliberal world view, seemingly have no need to clarify these distinctions in relation to the international institutions which endeavour to frame globalization as inevitable and of unquestionable benefit.

In this sense how are the strategies of the World Bank, the IMF, the United Nations Development Programme, or of regional central banks, to be distinguished from those promoting pyramid selling schemes? In the case of the European region for example, the case has variously been made (Mario Blejer, Europe is running a giant Ponzi scheme, Financial Times, 5 May 2011; Gregory White, Former IMF Official Calls Europe's Bailout Program A Pyramid Scheme, Business Insider, 6 May 2011).

The main document of authoritative relevance would appear to be from the Office of the Chief Economist of the World Bank Group (Kaushik Basu, Ponzis: The Science and Mystique of a Class of Financial Frauds, July 2014, WPS6967). The abstract reads:

Ponzis are among the most ubiquitous and least understood phenomena of economic life. They acquired a certain salience with the global financial crisis of 2008 and the crash of Bernie Madoff's celebrated Ponzi scheme. This paper explains the struc ture of Ponzi schemes and argues that what makes this such a troubling phenomenon is its ability to be camouflaged amid legitimate practices. It is shown, for instance, that the common practice of giving stock options to employees could be a potential Ponzi that allows corporations to flourish for a while by borrowing from its own future. The paper discusses the need for intelligent regulation to incise harmful Ponzis (not all Ponzis are harmful) while taking care not to damage the legitimate activities that surround them.

Of particular interest is the total lack of reference to the globalization process. As with UNDP, Ponzi schemes and pyramid selling are problematic processes held to be occurring "elsewhere" -- and in which such institutions are themselves neither implicated nor totally complicit. In systemic terms, they are curiously, if not suspiciously, "above that". This is evident in the IMF studies of their incidence and the guidance it offers to those vulnerable to them (IMF Survey: IMF Advice Helps Fight Financial Fraud as Schemes Multiply, IMF, 12 February 2009).

As queried by Paul Amery with respect to the IMF's boosting of the size of its New Arrangements to Borrow from US$50 billion to US$550 billion:

Can you see any difference between Charles Ponzi's "postal reply coupon" scheme, Ivar Kreuger's match empire, the Lloyd's insurance market's 1980s reinsurance spiral - to give three of many examples - and the IMF's new arrangement? All are essentially pyramid schemes, dependent on new money to prop up an increasingly unwieldy structure and maintain belief in the ability to pay out. In the case of the IMF's enlarged NAB facility, we have insolvent national governments joining together to promise to lend money they don't have back to themselves. (The Ultimate Ponzi Scheme, ETF, 16 April 2010)

In its introduction to the nature of an IMF proposal, Global Research News indicated in 2015:

As first reported by Forbes, the International Monetary Fund (IMF) dropped a bomb in its October Fiscal Monitor Report. The report paints a dire picture for high-debt nations that fail to aggressively "mobilize domestic revenue," which is code for "aggressively tax its citizens." It goes on to build a case for drastic measures and recommends a series of escalating income and consumption tax increases - culminating in the direct confiscation of assets.

Why is the IMF proposing this? Because global governments and central banks pumped trillions of dollars of YOUR money into the banks and stock market over the last several years, catapulting public debts to tens of TRILLIONS of dollars. But now,governments and central banks can no longer sustain these debt levels, and global wealth confiscation is their only way to maintain the Ponzi scheme. So it's more apparent than ever, if you want to keep your savings & retirement out of the hands of desperate governments, there's only one thing you can do. (The IMF Proposes "Global Wealth Confiscation": the appropriation of household savings, Global Research, 3 April 2015)

The text quotes a particular comment from Forbes:

If politicians should fail to engage in this kind of wholesale robbery, the only alternative scenario the IMF posits is government bankruptcy and hyperinflation. The IMF makes no proposes to reign in the Ponzi-scheme entitlement programs that are bankrupting us (The International Monetary Fund Lays The Groundwork For Global Wealth Confiscation, 15 October 2013).

In an earlier study, Allan H. Meltzer argues with respect to the IMF:

... the IMF quota increase and the policy on which it rests is a type of international Ponzi scheme. The creditor banks have assets that are valued above their market value. If they were bonds, their value would be much lower on the books of the banks. Because they are loans, the banks continue to carry the assets at their face value. The bank examiners encourage this practice despite their obligation to protect safety and soundness (Five Reasons for Opposing the IMF Quota Increase, In: Constructive Approaches to the Foreign Debt Dilemma, Taxpayers Foundation, 1983).

At the time of writing Christine Lagarde has been found guilty of negligence in approving a massive payout of taxpayers' money to a controversial French businessman during her former position as a French finance minister. No punishment was imposed but there are concerns for the credibilty of the IMF of which she is currently managing director (Christine Lagarde avoids jail, keeps job after guilty verdict in negligence trial, The Guardian, 19 December 2016; IMF Head Lagarde Found Guilty of Criminal Negligence, Global Research, 20 December 2016; Jean-Pierre Lehmann, Lagarde's Failure to Do the Honorable Thing -- And Resign, The Globalist, 22 December 2016).

The conviction naturally raises the question as to whether there are other issues with regard to which the managing director of the IMF is expected to be "negligent", especially given its track record with regard to the appointment of a previous managing director (Pre-Judging an Institution's Implicit Strategy by the Director's Private Behaviour: remarkable parallels in the case of the IMF and Dominique Strauss-Kahn, 2011).

Given the seeming implication of the IMF, it is understandable that little authoritative clarification is available distinguishing such policies from their perception as Ponzi schemes, as articulated by critics. Bluntly stated, undertaking any such analysis would be a "bad career move" for an economist -- and unlikely to be recognized as meriting a Noble Prize.


[Parts: First | Prev | Next | Last | All] [Links: To-K | From-K | From-Kx | Refs ]