“The House has just voted to pay to help China and Russia
improve their global monetary positions. This is a disgusting
use of American taxpayers' money. And it had no place in
a war supplemental appropriation. This was an egregious
insult to America's fighting men and women."—ALG President Bill Wilson.
ALG Condemns House for Expanding IMF by $108 Billion
June 16th, 2009, Fairfax, VA—Americans for Limited Government President Bill Wilson today strongly condemned the House of Representatives for approving $108 billion in assistance to the International Monetary Fund (IMF) as "a critical loss for American taxpayers, the dollar, and the economy."
"The House just voted to destroy the dollar's status as the world's reserve currency by expanding the IMF by $108 billion on the same day China, Russia, India, and Brazil were meeting to bolster the IMF's Special Drawing Rights as an alternative to the dollar," said Wilson.
The legislation, HR 2346, contained a $100 billion line of credit to the IMF and the $8 billion increase the nation's Special Drawing Rights (SDR) holdings.
"The American people are tired of handing out welfare. And now they are on the hook for another $100 billion credit line overseas to the IMF thanks to Barack Obama and his cronies," said Wilson. "This is a global bailout at a time when the American people are having a hard time making ends meet, making their payments on time, and keeping their jobs."
The $100 billion line of credit itself would be the SDR equivalent of $100 billion on the date of the agreement. Currently the U.S. has a $10 billion line of credit to the IMF worth SDR 6.6 billion. The proposal would also increase the U.S. share in the IMF by SDR 4.97 billion at a cost of $8 billion, bringing the total cost to taxpayers to $108 billion, greater than the war supplemental itself.
"While the U.S. financial system is sinking, the national debt is weighing down the American people at $11.3 trillion and the deficit is at $1.84 trillion, and the Obama Administration has absolutely no plan to get the nation out from under $104 trillion of unfunded liabilities, the House under Nancy Pelosi thinks it's a good time to send $100 billion overseas to a failed international institution to dispense welfare checks to failed states," Wilson said.
At the G-20 summit in April, Barack Obama pledged a $100 billion line of credit to the International Monetary Fund (IMF) as part of a $550 billion global effort to bolster the international bank. The G-20 then approved a new $250 billion general allocation of Special Drawing Rights (SDR)—the bank's reserve asset.
"This welfare will go to Third World dictatorships, help China, Russia and other nations to transition away from the dollar, and only damage the nation's economic standing in the world," Wilson said.
"Russia, China, India, and Brazil are currently buying interest-bearing IMF bonds denominated in the IMF's Special Drawing Rights, and now the House has voted to pay for it with a $100 billion line of credit extension and $8 billion expansion to the IMF," Wilson added.
Currently, Russia, India, China, and Brazil are already prepared to purchase their first round of IMF bonds—denominated in SDR. So far, China is purchasing $50 billion, Russia $10 billion, and Brazil $10 billion worth, with India expected to soon announce their own purchase.
Combined, Russia ($2.261 trillion), Brazil ($1.981 trillion), India ($3.288 trillion), China ($7.916 trillion) have GDP (PPP) of $15.446 trillion compared to the U.S GDP (PPP) of $14.264trillion.
"The IMF through its sale of interest-bearing bonds is becoming a de facto central bank—and the dollar will be damaged as a direct result as it is replaced over time as the world's reserve currency," said Wilson.
"The House had a golden opportunity to save the dollar from being replaced as the world's reserve currency, and they knowingly blew it," Wilson said.
Overall, the legislation has passed the House with at a cost of $96.7 billion and the Senate at $91.3 billion. The final version of the bill presented from conference totaled $106 billion, with the IMF credit line only being listed as $5 billion.
The IMF provisions were not originally included in the bill as passed in the House. Americans for Limited Government released a backgrounder on the issue outlining the implications of the IMF credit line, the SDR reserve currency, and China's transitioning away from dollar assets.
"The House has just voted to pay to help China and Russia improve their global monetary positions. This is a disgusting use of American taxpayers' money," Wilson said, adding, "And it had no place in a war supplemental appropriation. This was an egregious insult to America's fighting men and women."
"We don't even have $108 billion to spend," Wilson added. "We'll have to borrow from overseas or print the money when the credit line is invoked."
Wilson promised to remind constituents how each member of Congress votes on the supplemental.
"The American people have a right to know which of their representatives just voted to destroy the dollar today, and Americans for Limited Government pledges to remind them often," Wilson concluded.
"Dollar in Danger: $100 Billion Line of Credit to IMF Backgrounder," Americans for Limited Government, June 2009.