Thursday, May 14, 2015

Duisenberg and the International Monetary Scandal

Wim F. Duisenberg (1935-2005) was the first president of the ECB (1998-2003)
copyright David van Dijk

"During the 1960s, Duisenberg was a staff member of the International Monetary Fund in Washington. During the 1970s in the Netherlands, he was a professor of economics and a scrupulous minister of finance. Before becoming president of the central bank in 1982, he was director of one of Holland’s commercial banks [Rabobank]. When asked to give his version of the origins of the debt crisis, Duisenberg began with the same old story of the Arabs dramatically increasing oil prices in 1973. But this was a standard explanation [in those days… and still?]. I was interested in other stories with which Mr. Duisenberg must surely be familiar. Was he prepared to tell them? Yes, he was.  (…)

The second story Mr. Duisenberg relates is about how the richest country in the world has repeatedly made the world pay for its selfish financial policies and yet has received more financial aid from abroad over the past few years than any other country in the world. He says the situation we are in now is completely absurd. A sound situation would be that the rich countries lend or give money to the poor countries. There should be an export of capital in the form of loans and grants from the rich to the poor countries. But, surprisingly, the richest country in the world, the United States, actually imports capital from all over the world. In this sense the United States is being financed by the rest of the world, including the developing countries. (…)

Finally, when he is asked to comment on the view that the sudden booming of the US budget deficit is, above all, caused by the enormous American arms build-up, Duisenberg loosens up and begins calling a spade a spade. Here is what he said: ‘What the American government has done is implement a programme of tax reduction, which means less income for the government, while at the same time raising its expenditures, particularly in the military sector. Military expenditure increased in real terms by 7-8% a year. That's how the United States has acquired these tremendous budgetary deficits.’"

[excerpts from "The International Monetary Crunch: Crisis or Scandal?", Alternatives, July 1987.]

PS: Rearranging stuff in my room I found three 'old' pictures of Duisenberg and selected the one above. I interviewed Duisenberg twice, if I remember well, in 1978 and 1984. 

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