Reply #29: Okay, but the citizens have the ability..

[Imajika]

..to remove people in power that accept IMF financing against their will. The IMF usually makes its financial offers when a nations back is already to the wall. Generally speaking, the government is going to have to impose painful cuts and tax increases by that time no matter what happens. Yes, I would argue a combination of defaulting and the cuts and tax increases that would inevitably follow are the better solution, but these governments are taking the money because the IMF austerity plan is usually not even as draconian (at first) as what said government would have had to do if it defaulted. You take Greece for example. Greece could default tomorrow and it would STILL have to go forward with either painful cuts, huge tax increases or some combination of both. I mean, they run something like an 8% deficit even with no debt payments. They just don't have the money to pay for what they have budgeted. Some people protested, but it would appear most Greeks are reluctantly willing to go along with the IMF package.

At the end of the day, the problem is that nations allow themselves to get into tremendous debt which leaves them open to these terrible terms the creditors can impose assuming the country in question accepts the financing. It really is not much different than an individual, family or business that gets heavily in debt and is hounded by creditors imposing higher fees, higher rates, less credit, odious fees, etc. Once in the hole, it is very difficult to get out.

The solution to this is to balance budgets. Period. Everybody can't have everything they want each budget year. That really is the problem. The left considers the social safety net, public employees, etc to be major priorities that can't be cut, and the right has all sorts of other priorities they don't believe can be cut. Same fight over taxes. The left believe in highly progressive taxation, the right thinks taxes are already too high. So we end up with something much less than a real progressive tax structure to pay for many/most of both sides priorities. This leads to high deficits which leads to high debt.

The IMF is like a vulture. The best bet is to produce budgets that are reasonably balanced to keep away the creditors.