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China considers shifting yuan''s link from dollar to group of currencies
11:41a ET Saturday, June 11, 2005
Dear Friend of GATA and Gold:
As you'll see from the Associated Press story appended
here, the Group of Eight industrialized nations agreed
today simply to cancel $40 billion in debt owed by poor
nations and to do it without reference to the gold held
(or supposedly held) by the International Monetary Fund,
which Britain long had been proposing to sell to
compensate the lenders for writing off their bad loans
to the poor nations.
But since the lenders were really only the industrialized
nations themselves, acting through international
organizations, the IMF's gold would have been sold -- if
it really hasn't long been sold off surreptitiously anyway
-- only to compensate its own owners, and so any such
transaction would have been, in effect, simply a wash.
As GATA and others long had observed, the industrialized
nations, if they wanted to, could just as well cancel the
debts of poor nations without any IMF gold sales or
compensating transaction at all. After all, it's all only fiat
-- infinite imaginary money created effortlessly by printing
press or computer entry, simply an instant tax claim on
the true wealth of the world, so much of which has been
flushed down the rat holes of poor nations only to turn
up in the numbered Swiss bank accounts of their dictators
and their bankers.
Thus the tedious years of talk of IMF gold sales turns
out to have had only one effect, which well may have been
its only purpose anyway: scaring the gold market to
depress the gold price, the inverse of the price of fiat
currency, so as to prop up fiat currency and maintain the
power of the central banks that issue it.
The G8's writing off the poor nations' debt presumably
will terminate the IMF gold sales threat, and this stands
to improve the gold market's morale. But of course the
central banks will look for something else to scare the
gold market with -- perhaps new alchemy, research in
physics that promises to turn lead into gold.
In any case, the G8's solution to the unpayable debt of
poor nations -- write it off and just crank up some new
money -- suggests that what the songwriter said about
the rock 'n' roll business just as well could have been
said about central banking:
.... Now look at them yo-yo's, that's the way you do it.
.... You play the guitar on the MTV.
.... That ain't workin', that's the way you do it.
.... Money for nothin' and chicks for free.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
G8 Agrees to Debt Relief for Poor Nations
By Ed Johnson
The Associated Press
Saturday, June 11, 2005
http://news.yahoo.com/news?
tmpl=story&u=/ap/20050611/ap_on_re_eu/britain_g8
LONDON -- Finance ministers from the Group of Eight industrialized
nations agreed Saturday to a historic deal canceling at least $40
billion worth of debt owed by the world's poorest nations.
Britain Treasury chief Gordon Brown said 18 countries, many in sub-
Saharan Africa, will benefit immediately from the deal to scrap 100
percent of the debt they owe to the World Bank, the International
Monetary Fund, and the African Development Bank.
As many as 20 other countries could be eligible if they meet strict
targets for good governance and tackling corruption, leading to a
total debt relief package of more than $55 billion.
"The G8 finance ministers have agreed to 100 percent debt
cancellation for Heavily Indebted Poor Countries," Brown told a news
conference in London.
Aid agencies welcomed the deal, saying it would save the 18
countries a total of $1.5 billion a year in debt repayments that
could now be used for health care, education and infrastructure
development.
Finance ministers from the United States, Britain, Japan, Canada,
Russia, Germany, Italy, and France agreed to the package during a
two-day summit in London.
"A real milestone has been reached," U.S. Treasury Secretary John
Snow said. "President Bush's commitment to lift the crushing debt
burden on the world's poorest countries has been achieved. This is
an achievement of historic proportions."
Nations in sub-Saharan Africa alone owe some $68 billion to
international bodies. Rich nations had long agreed the debt must be
relieved but the international community could not agree on a
formula for tackling the problem.
The package agreed to Saturday was put forward by the United States
and Britain following talks in Washington last week between Bush and
British Prime Minister Tony Blair.
Britain originally wanted rich countries to assume the repayments
for the poor countries but eventually agreed with the U.S. position
that the debts be scrapped outright.
Bush also made a significant concession, agreeing that rich nations
would provide extra money to the multilateral bodies to compensate
for those assets being written off and would ensure that future aid
packages would not be affected.
The agreement will initially cover 18 nations eligible for debt
relief under the HIPC initiative, including Benin, Bolivia, Burkina
Faso, Ethiopia, Ghana, Guyana, and Mali.
Another nine countries are close to completing the targets for good
governance set out under the initiative and would then qualify.
A total of 38 countries are participating in the HIPC program,
launched by the World Bank and IMF in 1996.
"This is a great deal for people in many of the very poorest
countries, it reflects well on (Britain's Treasury chief) Gordon
Brown and (U.S. Treasury Secretary) John Snow and is a tribute to
the growing global campaigns to beat poverty," said Jamie Drummond,
executive director of DATA, the organization founded by U2 singer
Bono.
"This bold step builds serious momentum for a historic breakthrough
on doubling effective aid and trade justice at the G8 summit next
month."
The Jubilee Debt Campaign called for further action and said at
least 62 countries needed 100 percent of their debts canceled to
meet the U.N. Millennium Development Goals of reducing poverty,
hunger and disease affecting billions of people by 2015.
Britain has made tackling poverty in Africa and the developing world
a priority for its G8 presidency.
Blair's approach is three-pronged: increasing aid; eliminating debt;
and removing export subsidies and other trade barriers that make it
difficult for developing nations to compete.
Aid agencies say the G8 leaders must now focus on meeting Britain's
target of boosting international development aid by $50 billion a
year.
Some question whether agreement on that will be reached at the July
6-8 G8 summit in Gleneagles, Scotland.
The United States and Japan both reject a British proposal to raise
that money by selling bonds on the world capital markets -- the
International Finance Initiative.
Like the United States, Japan prefers its own bilateral aid
programs, and France is pushing its own initiative -- an
international aviation tax.
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