monetary aid to poor countries damages that countries economy.

Economics Economics Questions
1

So you have a poor country.

Say the world bank loans/gives that country some money.

in isolated terms what does this do to the said countries monetary inflation?

does it do anything to the countries currancy value relative to other currancies?

does it make a difference if its in dollars or the countries currency?

I suppose it makes a vast diffence what the money is spent on…and how long it stays in the economy.

whats the difference from the world bank loaning the money and the country printing the money itself?

2

The problem with issuing loans to poor countries is the Compound Interest Paradox.

Suppose you lend $1M to a poor country at 10% interest for a year. A year later, $1.1M must be repaid. That poor country must come up with $100k of exports to repay its debt.

Also, the leaders of the poor country typically spend the $1M on pork projects, rather than constructively investing it.

As the poor country must raise money to repay its debt burden, its own currency starts suffering from inflation.

It would be superior for the poor country to print its own money to finance local development projects. The world bank and IMF don’t allow this to happen.

Loans to poor countries set them on the path to debt enslavement. It’s economic imperialism. Instead of manufacturing things for local consumption, the poor country must produce exports so it can repay its debt.

As condition for world bank and IMF membership, poor countries are BARRED from using sound money (gold or silver). The political leaders like the IMF loan/bribe, so they go along with selling out their people into debt slavery.

3

If the currency you send them has a stable universal trading value, such as gold or silver, this would allow them to import capital, which would be a good first step for their economy.

If the currency has a nearly universal consumer use, such as gold or silver, this would help set a stable value to the currency in the given economy, as the value of the currency cannot fall below its consumption demand. If too much gold appeared relative to the goods in that local economy, you’d see gold taken out of circulation to be made into jewelry. Thus, money supply/inflation is regulated by the market.

But mailing them paper is a fool’s game.