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Has any Indebted Country ever Gave Up their Gold Voluntarily?
261 sats \ 10 comments \ @spiderman 30 Aug econ
It seems countries borrow like no-tomorrow and demand bailouts with impunity. After examples like Greece, Argentina, Pakistan, Sri-Lanka, now we are hearing France may need IMF bailout. Sometimes the bailouts come from China, sometimes from IMF or ECB (which was the case for Greece).
But I am wondering, as most countries hold gold as a reserve asset, when they seek bailout, do the countries have to give up any gold as part of the negotiation? Or does IMF just lets them keep all the gold so as to not alienate them too much? Or do they usually seek bailout after the gold has already been liquidated, so there is not much to give anymore anyway? Is there any data or reliable report on countries giving up their gold (not entirely voluntarily, but pushed by the circumstances)?
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137 sats \ 1 reply \ @Tony 30 Aug
Since the Second Amendment to the IMF’s Articles of Agreement in 1978, the IMF cannot require gold as collateral for loans.
Under the Second Amendment to the Articles of Agreement, passed in April 1978, the IMF has no authority to buy gold or engage in gold transactions such as loans, leases, swaps, or use gold as collateral.1
So today, IMF lending is based on a country’s quota (its shareholding in the IMF), policy commitments, and repayment capacity — not on pledging gold.
However up until 1971, when dollar was depegged from gold by the U.S., IMF indeed used to acquire gold from the member countries and creditors:
  1. At the IMF’s founding in 1944, member countries paid 25 percent of their initial quotas in gold. They did the same with quota increases over the next three decades. These payments represent the largest source of the IMF's gold.
  2. Members normally paid all interest owed on IMF credit in gold.
  3. Members also could use gold to repay credit extended by the IMF.
  4. Members seeking to acquire another member’s currency could do so by selling gold to the IMF, as South Africa did in 1970–71.
That said, governments sometimes sell their gold in order to cover some losses caused by the unravelling crisis, but these sales are never directly presented as a "payback". Such sales are often announced as a "sovereign decision" or a "bilateral agreement", not the fulfillment of the IMF demand.
I strongly recommend Alex Gladsteins's "Structural Adjustment". It doesn't touch on the gold repayments topic, but is a great eye opener for those who really want to understand how IMF works.

Footnotes

  1. https://www.imf.org/en/About/Factsheets/Sheets/2022/Gold-in-the-IMF ↩
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0 sats \ 0 replies \ @spiderman OP 31 Aug
I read the article from Alex, and while I understand what he means (I am myself no fan of IMF, or technocrats doing central planning), seems like a lot of his agendas/angers are misplaced, and points to him having his own agendas.

Friend of Dictators?

While the basic assertion is valid, that IMF regularly engages with dictatorial regimes, I fail to see what's IMFs fault here. Was the IMF meant to be like the CIA, in charge of regime change and coupe whenever it deems appropriate? IMF, purely as a financial institution, deals with the regognised state representative of each nation. Whether those representatives enjoy or were elected via democratic support, is simply outside the IMF mandate. IMF's job is not primarily to meddle in the internal politics of a nation to satisfy layers and layers of sub-national governmental entities or individual families. Internal political reform is still firmly the responsibility of the individual nations and their people (to the extend they care or have any awareness).
Then, the rest of the demands of IMF? They come into play only when a country is seeking bail out from the IMF. A creditor does have full right to audit, and, to some extent, control the debtor's decision as the creditor is exposed to the risk of debtor's actions. If a country is financially self-sufficient enough (by which I do not mean isolated, but one that does not need aid or loan from the IMF), then it is fully sovereign to implement its domestic agendas as it pleases. What exactly is surprising or unexpected in it?
I am not defending the IMF, but trying to be objective here as much as possible. In general, I have no love lost for IMF if more countries just decide they can conduct their own trade settlement and balance the budget just fine without IMF, hence choosing to totally opt out. That will significantly reduce IMF influence as a lender of last resort and that is also where Bitcoin will have a chance to flourish as a final global trade settlement layer.
But, if a country X goes hat in hand to another entity Y (which may be IMF, or the CCP or ECB or whatever) asking for money, then X has to be ready to sacrifice part of its sovereignty and decision making. There is no two way around it. You cannot be a debtor seeking a bailout and favour, while acting strong and mighty as if you are in charge of your destiny.
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10 sats \ 5 replies \ @hasherstacker 30 Aug
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0 sats \ 4 replies \ @Solomonsatoshi 30 Aug
Try managing without one and see how it goes for you. You will be screeching desperately for government before long. Governments and their provision of property rights and law enforcement form the basis of wealth creation. Without them there has never been a prosperous sustained economy. Why? Because without rule of law you have anarchy and it is extremely difficult to do much let alone invest in complex infrastructure and productive capacity required for a prosperous economy.
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0 sats \ 1 reply \ @Tony 30 Aug
Couldn’t agree more. The best example of a government provision of property rights would be North Korea. But there are many runner ups. Let the plebs do their homework and realize for themselves how thoughtful and caring governments have been towards their citizens.
On a serious note:
Governments as we know them did not emerge until 16th-18th century. Their emergence was the result of the Church losing power over plebs as it failed to continue to feed people its version of “truth”. Kudos to Gutenberg, who invented the printing press, allowing the masses to efficiently create and spread (alternative) information.
Without them there has never been a prosperous sustained economy.
History shows numerous examples of prosperous communities of different scale:
  • Haudenosaunee Confederacy (pre-contact North America)
  • Çatalhöyük (~7500–5700 BCE)
  • Nuer People (pre-colonial Sudan)
  • Medieval Iceland (930–1262)
  • Chumash of California
These societies had complexity, trade, and stability without a coercive state.
Instead of a central authority, these communities relied on:
  • Kinship & clan systems
  • Customary law
  • Distributed leadership
  • Economic interdependence
  • Cultural norms & shared values
Governments are reverse Robinhoods. The sooner everyone realizes this, the sooner we can build a prosperous and just societies again.
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0 sats \ 0 replies \ @Solomonsatoshi 31 Aug
All those systems are governments! Often less centralised and more distributed than a modern nation state but governments none the less.
They all rely as you yourself acknowledge upon common and agreed rules and means of resolution.
The Theocracy of the Catholic Church in Europe was government...you appear to assert it wasn't- delusional sophistry! The theocracy in Iran is government. Islamic State / ISIS are forms of theocratic governments!
Smaller more primitive economies and society can happily operate under more primitive forms of government but you have not and cannot show any example of where there was no government...even if you cannot see that governments can take and do take many different forms to the one of the modern nation state.
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0 sats \ 1 reply \ @hasherstacker 30 Aug
Impressive! And kudos to the state.
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0 sats \ 0 replies \ @Solomonsatoshi 31 Aug
Mostly Jewish shadow bankers have been behind the western governments who have dominated global hegemony over the last 500 years..
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0 sats \ 0 replies \ @optimism 30 Aug
Archived link
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0 sats \ 0 replies \ @Solomonsatoshi 30 Aug
Good question. Does anyone know the answer? Surely France and Britain must have significant gold reserves?
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