Lisa Thomas
A Bleak picture from the IMF?
Thu Sep 26 01:54:00 2002
208.152.73.198

Sept. 25, 2002

A Bleak picture from the IMF? Even LOWER rates? O'Neill not
worried.


> from a friend in the process of leaving the country:
>
> Dollar Set to Plunge as Bush Scoffs IMF Warnings
>
> The IMF warned that the dollar is set
> for a dramatic and swift plunge in
> value if something does not happen
> in the coming weeks and months.
> In this article, the IMF asserts:
>
> "the United States is running a
> dangerously high current account
> deficit because its trade deficit
> with the rest of world is so high
> and it is so dependent upon inflows
> of capital from abroad to finance
> it. That increases U.S. vulnerability
> to a sharp dollar decline..."
>
> Nonetheless, Treasury Secretary O'Neill
> didn't seem to be concerned at all by
> the IMF warnings (maybe he has already
> sold all of his US dollars for Euros?)-
> you can read his comments in the attached
> article.
>
> Here is the article:
>
> http://www.reuters.com/news_article.jhtml?type=businessnews&StoryID=1494974 
>
> IMF Cuts U.S. Growth Estimate
>
> September 25, 2002 10:35 AM ET
>
>
> By Glenn Somerville
>
> WASHINGTON (Reuters) - The risk that skidding U.S.
> stock prices will pinch spending means Federal Reserve
> policymakers must be ready to cut interest rates if
> necessary, the International Monetary Fund said on
> Wednesday.
>
> In its latest World Economic Outlook, the
> Washington-based lender scaled back its previous
> estimates for U.S. economic growth in 2002 and 2003
> and said prospects depended heavily upon whether
> demand holds up.
>
> "In view of the heightened uncertainties surrounding
> the outlook, the Federal Reserve has room to wait to
> withdraw stimulus until the recovery is more clearly
> established, and if the incoming data were to weaken
> further, additional interest rate cuts would need to
> be considered," the IMF said.
>
> The U.S. central bank's policysetting Federal Open
> Market Committee met on Tuesday and, by a split vote
> of 10-2, decided to keep its trendsetting federal
> funds rate at a four-decade low 1.75 percent.
>
> Two dissenters argued unsuccessfully for lower rates
> -- a sign of unease within the Fed's policy group that
> a spotty U.S. recovery needs help to stay on track.
>
> The IMF predicted the U.S. economy would expand a
> relatively tepid 2.2 percent this year and 2.6 percent
> in 2003 -- down from estimates of 2.3 percent and 3.4
> percent the IMF made in April.
>
> Its bleaker prognosis for U.S. performance fits with
> the IMF's broader assessment that global growth was
> not recovering as well as anticipated and that odds
> were the situation would worsen rather than improve.
>
> But in the case of the United States, the IMF stressed
> the potential adverse impact from large, continuing
> losses in stock prices that have carried leading
> indices like the Dow Jones Industrial Average to four-
> year lows and subtracted trillions of dollars from
> investors' wealth.
>
> "Clearly, the recent sharp decline in equity markets
> will have a significant impact on demand looking
> forward, particularly in 2003, although this will be
> partly offset by the recent fall in long-run interest
> rates and the depreciation of the dollar," the IMF
> said.
>
> In addition, the IMF warns the U.S. is vulnerable
> because of "the possibility of an abrupt and
> disruptive adjustment in the U.S. dollar (that)
> remains a concern, for both the United States and the
> rest of the world."
>
> It repeats a long-standing IMF concern that the United
> States is running a dangerously high current account
> deficit because its trade deficit with the rest of
> world is so high and it is so dependent upon
> inflows of capital from abroad to finance it. That
> increases U.S. vulnerability to a sharp dollar decline
> if a global economic slowdown causes foreigners to
> invest less in the United States.
>
> "The question is not whether the U.S. deficit will be
> sustained at present levels forever -- it will not --
> but more when and how the eventual adjustment takes
> place," the IMF said.
>
> The Bush administration strongly rejects the IMF's
> contention that the current account deficit is
> troubling. On Tuesday, Treasury Secretary Paul O'Neill
> said it simply reflected the brisk level of business
> activity in the United States relative to other parts
> of the world.
>
> "I'm not too worried." O'Neill said in response to
> questions during a trip to Tennessee, acknowledging
> there was "lots of clamor" from some quarters about
> its potential risk.
>

"Lisa Thomas" wearingpurple@yahoo.com

======================

Congressman Ron Paul
U.S. House of Representatives
September 10, 2002

ABOLISH THE FEDERAL RESERVE

Mr. Speaker, I rise to introduce legislation to restore financial
stability to America's economy by abolishing the Federal Reserve. I
also ask unanimous consent to insert the attached article by Lew
Rockwell, president of the Ludwig Von Mises Institute, which explains
the benefits of abolishing the Fed and restoring the gold standard,
into the record.

Since the creation of the Federal Reserve, middle and working-class
Americans have been victimized by a boom-and-bust monetary policy. In
addition, most Americans have suffered a steadily eroding purchasing
power because of the Federal Reserve's inflationary policies. This
represents a real, if hidden, tax imposed on the American people.

>From the Great Depression, to the stagflation of the seventies, to
the burst of the dotcom bubble last year, every economic downturn
suffered by the country over the last 80 years can be traced to
Federal Reserve policy. The Fed has followed a consistent policy of
flooding the economy with easy money, leading to a misallocation of
resources and an artificial "boom" followed by a recession or
depression when the Fed-created bubble bursts.

With a stable currency, American exporters will no longer be held
hostage to an erratic monetary policy. Stabilizing the currency will
also give Americans new incentives to save as they will no longer
have to fear inflation eroding their savings. Those members concerned
about increasing America's exports or the low rate of savings should
be enthusiastic supporters of this legislation.

Though the Federal Reserve policy harms the average American, it
benefits those in a position to take advantage of the cycles in
monetary policy. The main beneficiaries are those who receive access
to artificially inflated money and/or credit before the inflationary
effects of the policy impact the entire economy. Federal Reserve
policies also benefit big spending politicians who use the inflated
currency created by the Fed to hide the true costs of the welfare-
warfare state. It is time for Congress to put the interests of the
American people ahead of the special interests and their own appetite
for big government.

Abolishing the Federal Reserve will allow Congress to reassert its
constitutional authority over monetary policy. The United States
Constitution grants to Congress the authority to coin money and
regulate the value of the currency. The Constitution does not give
Congress the authority to delegate control over monetary policy to a
central bank. Furthermore, the Constitution certainly does not
empower the federal government to erode the American standard of
living via an inflationary monetary policy.

In fact, Congress' constitutional mandate regarding monetary policy
should only permit currency backed by stable commodities such as
silver and gold to be used as legal tender. Therefore, abolishing the
Federal Reserve and returning to a constitutional system will enable
America to return to the type of monetary system envisioned by our
nation's founders: one where the value of money is consistent because
it is tied to a commodity such as gold. Such a monetary system is
the basis of a true free-market economy.

In conclusion, Mr. Speaker, I urge my colleagues to stand up for
working Americans by putting an end to the manipulation of the money
supply which erodes Americans' standard of living, enlarges big
government, and enriches well-connected elites, by cosponsoring my
legislation to abolish the Federal Reserve.