Hoppe briefly mentioned in ‘Marxian and Austrian class analysis’ that the dominant state tyrannizes other states through war and what he calls monetary imperialism in that the Federal Reserve prints dollars and then that causes inflation around the world. Robert Murphy also explained that World Bank and IMF have a role in the inflationary redistribution of wealth.What are the roles of the Fed, WB and IMF and how can printing dollars cause inflation in other countries? Wouldn’t it be advantageous for other countries to have a strong currency against the dollar?
Mercantilist regimes pathologically wish to be net exporters. Thus they devalue their currencies to remain competitive in a grandiose race to the bottom.
But that’s an independent decision of the state. What I’m asking is the role of the Fed, WB, and IMF
Are they not creatures and colluders of the state apparatus? They control the money and credit supply…
The dollar has an extremely privileged status as the “vehicle currency” (world reserve currency). This means that America basically gets to print as many dollars as it wants, without facing an immediate currency crises (props up demand for dollars and American debt), and then uses those dollars to purchase foreign goods. This stimulates the demand for consumer goods world-wide, which flows towards America, in return for dollars (which foreign nations use for investment in the United States–security markets, FDI, real-estate, ect). America, then, runs enormous current account deficits while nations like Germany and China (especially China) get to have inflated current account surpluses (exports>imports) which makes their GDP growth look impressive. Basically we produce and export paper monies. This also bids up the prices of consumer goods, and forces the poor people of the world to save (it’s basically forced saving–they save so we don’t have to). Thus the FED is really the world central bank, and it exerts a dramatic influence over the various exchange and interest rates (capital flows). All while every other nation tries to inflate like mad in order to boost exports and finance their welfare states.
The U.S. finances the IMF, and it’s used to basically buy up weaker and lesser developed nations.
Do you have a link?
He starts talking about it 29 minutes into the interview. He was very brief about it though so I didn’t understand
But the money has to go through the sytem right? I mean the government itself doesn’t purchase the consumer goods but those companies that borrow from the banks (at low interest rates) who get money from the Fed. The government itself does not buy up these goods. Is that correct?
“Investment bankers do much of their business underwriting government bonds, in the United States and abroad. Therefore, they have a vested interest in promoting deficits and in forcing taxpayers to redeem government debt. Both sets of bankers [i.e., commercial and investment], then, tend to be tied in with government policy, and try to influence and control government action in domestic and foreign affairs”~Rothbard
I recommend reading Wall Street Banks and American Foreign Policy, but in A History of Money and Banking in the United States, he describes the desire of the U.S. to force money on other folks. Also here is a nice lecture on the Spanish-American War.
Well you have it here. The imperialism Hoppe mentions is distinct from imperialism perpetrated through the IMF. IMF hasn’t to do with inflation as you said.
That has me wondering if it’s better for say a third world country to have trade deficits with the United States instead of a trade surplus since a trade deficit would mean real stuff rather than useless paper?
I do not quite follow why the countries where the US purchase goods from have to inflate their currencies?
They don’t have to inflate. They choose to do so because it makes their goods cheaper on the international market. This boosts their GDP’s, and grants them significant current account surpluses (trade surplus).
I don’t know what you mean. Governments inflate their currencies to get the money to exchange for US Dollar to buy US debt with. This is what is known as ‘exporting inflation’, because it means that even as the US prints more paper the value of its paper is propped up by the now even greater amount of foreign paper chasing its papers, while the foreign paper causes the full effects of inflation at home because there is no corresponding magical increase in demand to suck up the new paper.
@ the OP
Hoppe also goes into more detail in his essay, here. My understanding is that international banking is analogous to domestic banking. The Fed is a cartelizing device which coordinates monetary expansion domestically. It ensures that private banks inflate at roughly the same rate to prevent the market’s natural check of some banks simply not inflating so they can push their competitors into insolvency through bank runs. There is more on this in Human Action and The Mystery of Banking. The IMF and WB are just catelizing institutions which perform the same function w.r.t. central banks internationally. The U.S., being the sole superpower, enforces the cartel. At least that’s how I understand it.
Ok, now I’m lost. What I learned so far from the posts on this thread is that the Fed prints money to buy goods from the rest of the world. This is bad for the rest of the world because they get increasingly worthless paper while the US gets stuff. Exporting stuff is liked by the politicians in the exporting countries because of the fallacious belief that exports mean the population gets richer. So they inflate the currency to export more stuff while further impoverishing the citizens. I don’t know how US debt fits into this picture. I would guess it’s still the same scheme. Foreign currency ‘buying’ US dollars mean more imports for the US at present, ‘buying’ US debt mean exports BY the US in the future. Is that correct?
Debt fits into the picture because it represents another thing that you can buy with US Dollars. If the US just printed money without issuing debt you would have inflation as there would be more paper chasing the same amount of things to buy. But since as the quantity of paper is increased - also increased is the number of stuff you can buy with that paper it seemingly works. Of course it only works for as long as this debt is snapped up by buyers right away - which until now has mostly been the case.