Thanks for the points, Brad, but I think in December we went over these and agreed to disagree. Then my main point was that once capital controls are established, the need for an IMF as lender-of-last-resort "when international capital markets panic" falls away, as the international speculators will stay away.
As for "development" without the IMF/WB (a la Cuba), I think the key thing is getting a trade finance system established that can be maintained when the BWIs and commercial bankers start pulling the plug on a country that has a radical change of leadership and maybe a debt default. Failure to finance trade was, I recall, behind Brazil's reversal on its 1987 debt repayment moratorium.
> But acquiring the resources from domestic savings alone is such a
> hard slog.
But a tightly-organised Keynesian multiplier strategy through printing money makes the slog easier, right? Sure, the tradeoff is inflationary pressure, but depending on the mix (up to 40% inflation, according even to Fischer), this is probably favourable compared to rejigging the economy to export more to repay foreign loans whose effective interest rates are skyhigh because of currency decline, in circumstances in which most of the people-centred "development" our mythical radical bureaucrats want to pursue is funded in local currency anyhow...
> ...
> I cannot help but believe that in the absence of an IMF, those crisis
> loans that would be made--as were made back before the IMF by, say,
> the Morgan-Belmont syndicate in the 1890s--would be smaller in
> magnitude and carry higher interest rates and more in the way of
> conditionality than the IMF demands.
Brad, think of the 1970s as a better, more recent precedent. Loan terms were MUCH easier thanks in part to interbank competition (and of course different macro conditions), with negative real interest rates and no "conditionality" by commercial banks, except that corrupt borrowers (mainly dictators) should place a fair share of the stolen funds into the lending banks' VIP accounts in the Cayman Islands.
Ok, forget I said that. Let's just get out Keynes from the Yale Review again, where he says "above all, let finance be national." I just read Herman Daly's 1996 book Beyond Growth, and he relies a great deal on this sentiment (as well as in relation to trade where like Keynes he critiques comp.advantage theory)...