This is great! I love it. It’s so insane even I didn’t think of this. So apparently, all IMF countries have this account of IMF monopoly money, its own IMF currency, that is actually the IMF’s money that I guess can be exchanged for currency at an agreed exchange rate upon joining the loot ball.
The money can be used in emergencies as effectively an IMF loan, and must be replenished within 30 days (June 11) by the IMF rules. I would guess the funds are supposed to be used for emergency defense, or natural disasters or whatever. But Greece drew down €650M in IMF monopoly money to repay…
the IMF itself.
As Zerohedge puts it:
In sum: the IMF paid itself on behalf of Greece and will now be forced to pay itself back for paying itself later this month. Or, put differently, Greece has prepaid the IMF with IMF money it doesnt have.
This isn’t any more crazy, really, than the idea of the IMF bailing out Greece so Greece can pay the IMF.
Here’s a piece out this morning even more instructive of the Klein Bottle of finance that the Greek State just did:
Earlier today, we learned that, contrary to what Greek government officials had been implying for the better part of a week, Athens did not have enough money to make a €750 million payment to the IMF on Tuesday. Instead, Greece borrowed most of the money (€650 million according to unnamed officials) from its IMF SDR reserves. This money must be paid back within 30 days. This effectively means that the IMF paid itself and it sets up a hilariously absurd scenario wherein assuming Greece manages to convince creditors to disburse a €7.2 billion tranche of aid later this month, the IMF will send money to Greece, who will send it right back to the IMF to replenish an IMF fund, which was drawn down by the IMF to pay itself back for money it loaned to Greece a long time ago. Put simply: Greece has taken circular funding schemes to a whole new level.
But that’s it though. Greece has about €50M in cash left, and after that, it’s game over people. The IMF has said it is not going to participate in another Greek bailout just so it can pay itself for even longer. By the end of the month, the first domino, finally, falls, and the chain reaction begins.