Saturday, February 07, 2009

The IMF & The Bailout

Lately I've been thinking about whether the IMF ought to get involved in the stimulus of the US economy. The IMF's mission is to help countries that get into trouble, but it seems that the trouble the US is in is beyond the resources of the IMF. The IMF's currency is Special Drawing Rights, which is a combination of the four major world currencies, the US dollar, the Japanese yen, the British pound, and the euro. Currently, 1 SDR is about 1.5 $US. The total reserves of all of the member countries of the IMF is about 217 billion SDR, or $326 billion. The US government is likely to commit three times that (when the dust settles) to the bailout. Wow! I'll bet that when the folks at Bretton Woods started talking numbers, they never could have imagined one country could need more than three times the resources of the entire Fund...

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