The Crisis Of The Bailout ( S ) - 1475 Words

The Greek Bailout(s) submitted on Sunday, 26 June 2016, 10:51 AMmodified on Sunday, 26 June 2016, 3:48 PM The International Monetary Fund’s â€Å"main goal is to ensure the stability of the international monetary and financial system. It helps resolve crises, and works with its member countries to promote growth and alleviate poverty† (Imforg, 2016). My research seems to point to the main failure of the IMF policies as pointing to the same issues faced by any bank – math vs. people. While its goals may be to help alleviate poverty, those same policies are what causes the patient to become sicker or possibly die from the cure. Economists attempt to apply the rigidity, demanding constraints, and unforgiving answers of mathematics to human†¦show more content†¦An example of this is when a country is caught in a death-spiral they are stuck in a taxes-spending-debt cycle. When a country spends more than it takes in (tax revenue) debt is incurred. Debt can be a healthy sign, like a company that wants to buy another truck to be able to meet its requests for more se rvices. However, when a country takes on too much debt, investors start to lose trust in that country’s ability to pay its debt, so in order to get more funds, the creditors raise the interest rate, thereby increasing its debt; and higher debt leads to lack of investor trust which leads to higher interest rates, increasing the debt. (Khanacademyorg, 2012) And the death-spiral begins. As with an individual, when they get a pay raise, they can afford the new debt. With a country, they must raise the taxes. If the citizens are not growing financially as a whole (Gross Domestic Product (GDP) - the broadest quantitative measure of a nation s total economic activity (Investinganswerscom, 2016)), then the ability of the country to raise taxes safely becomes problematic. Thus, the well-being of the individuals of a society help that country to grow. In other words, in 1776, Adam Smith called this being â€Å"led by an invisible hand† (Smith, Cannan, 1904). This invisible hand is the self-interest of the individuals of society to better their lives through their own hard work which leads to the betterment of the country. However, when a