I don’t know if one of the editorials from The Korea Herald should be an occasion for rejoicing. While reading Stephen Richter’s “The silent revolution underway inside the IMF”, my emotion is mixed. The writer is talking about reform and revolution. I assume Austrian economists would question even the very existence of the IMF and would go for its abolition.
The writer himself is negative towards the IMF for he describes it as an institution “whose machinations have proven to have effects similar to nuclear radiation.” However, the irony here is that a destructive institution such as the IMF is now criticizing another destructive financial institution, the Federal Reserve.
New voices within the IMF are now exposing the negative impact of the Fed’s financial stimulus on emerging markets. Quantitative easing is said to have failed in boosting the real economy and “has mainly boosted the stock market.” And now, even the effect of the stimulus package on the stock market is “wearing off”.
The writer identified these new voices. They are Tharman Shanmugaratnam of Singapore and Guido Mantega of Brazil. Richter even praised Brazil and South Korea for their “counter-cyclical capital account regulations” (I do not know exactly the meaning of these regulations).
In concluding the editorial, Richter is happy. He invites the world to rejoice with him:
“The world at large has reason to rejoice in the fact that the IMF is taking off its self-imposed ideological blinders. If the current trend of change continues, and all indications are that it will, it would represent a big step forward for better global governance.”