Its flexible credit line, reserved for countries that pre- qualify based on sound fundamentals, will be extended for up to two years and have no set limits.
Strauss-Kahn has sought to enhance the institution’s role as a buttress against financial crises, convincing member countries to pledge $500 billion in emergency funds in 2009. Today’s decision is part of a push before the Group of 20 summit in November to attract more countries to its contingency financing program.
Talks are ongoing with member countries to raise the IMF lending capacity to $1 trillion as part of G-20 discussions.
Guess which member country pledges the largest capital funding to the IMF? The US does, which also happens to be the most indebted country. In essence, the US taxpayer will bail out other sovereign countries at risk of default. Meanwhile, the US itself is in danger of defaulting on its own financial obligations.
The theater of the absurd has reached the hallowed halls of the IMF, the ECB, and the Fed. They are following the Zimbabwe version of Moore's Law in doubling their deficits every 18 months in lieu of increasing the number of transistors on a semiconductor chip.