welsch (12/02/82)
Question: Are banks allowed to freely lend to international bodies? Reply: The banking industry is regulated both domestic and international. "Freely" must be within the bounds of the regulations. Statement: It seems that with money being the scarcest resource, then allowing free (unrestricted) international credit markets, we lose the money that America actually has. Rebuttal: It is my understanding that at the time, mid 70's, the loans were made the banks making the loans had a surplus of "oil" money from the mideast. The surplus was caused by the inflationary price increases in oil at this time. If the banks did not loan the money at "high" interest rates to developing countries then it is probable that the investors would take their money elsewhere. Statement: For example, if banks were not able to lend internationally, then more money would be available for domestic loans, and paying of federal deficits. Rebuttal: If American banks were not allowed to lend internationally then they would lose international investors and the international banking industry, ie. jobs particularaly in the New York city area. Question: Does this situation exist as described, or am I over simplifying the problem? Reply: Yes you are over simplifying the problem Question: And, what remedies are possible for controlling international money flow? Reply: I don't think the "flow" is the real problem. Accountability of countries is a problem. We have a similar problem on a smaller scale with cities, states and our own government. What would happen if the U.S. government defaulted on the national debt?