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May 16, 2007
Away with Monetary Nationalism
Don Boudreaux
Benn Steil offers many interesting and important points in his contribution to the current issue of Foreign Affairs. For example,
When currency crises hit, countries need dollars to pay off creditors. That is when their governments turn to the IMF, the most demonized institutional face of globalization. The IMF has been attacked by Stiglitz and others for violating "sovereign rights" in imposing conditions in return for loans. Yet the sort of compromises on policy autonomy that sovereign borrowers strike today with the IMF were in the past struck directly with foreign governments. And in the nineteenth century, these compromises cut far more deeply into national autonomy.
I'm no fan of the IMF. But my dislike of this institution has nothing to do with the fact that it puts conditions on receipt of its loans or that those conditions diminish each recipient-government's sovereignty. Indeed, nationalism and institutions that claim monopoly power to rule defined territories are curses.
One of the important points emphasized in this essay by Steil is that monetary nationalism is as stupid and as dangerous an idea as is economic nationalism.
(HT to Leonard Liggio.)
Posted by Don Boudreaux in Trade | Permalink
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Comments
Of what use is soverignty or autonomy if you cannot trade it in return for something else?
Imagine somebody complaining that people trade their autonomy by working for somebody else in return for money!
Posted by: Ashish Hanwadikar | May 16, 2007 10:54:06 AM
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