Thank You for Your Comment – and for proving my point

I was happy to receive a thoughtful comment on my post “How to DOGE $7 Billion”.  It was anonymous but polite and thoughtful so it deserves a polite and thoughtful answer…in a post not in the Comment section where it will never be seen.

The first part of the comment was as follows:

This concerns a guarantee (with a 0,00001% chance that it will ever be called upon) not actual paid-in capital. As the risk is so low, the Treasury department doesn’t even hold assets against this risk. 

I could not verify the very precise figure of 0,00001% (the “,” shows this Commentor is not from Oklahoma) but will take the Commentor at his/her word.  Taking this figure as correct, there is clearly no need for the World Bank.  

At the end of the day, the World Bank simply syndicates loans from various countries and sells them off in the form of bonds floated in Luxembourg.  (Why they hide from U.S. regulation is a topic for another day.)  

If the true chance of a default is 0,00001%, there is no need for backing by U.S. or any other taxpayers.  JP Morgan or BlackRock would very happily take on this risk.  

There also is no need for the international development bureaucracy as the borrowing countries could simply submit their projects to the private lending syndicate which, at a 0,00001% default risk, would quickly absorb them.

So “Thank You” to the Commentor for making the argument for withdrawal from the multilateral development banks more clearly than I did.

The second part of the comment was:

Leaving the World Bank would therefore not get the US taxpayer the $70 billion (this is fictional, just an IOU)…

Here, the Commentor misread my post.  The $70 billion figure is not just for leaving the World Bank but for leaving ALL the multilateral development banks and their so-called “concessional” lending arms.  Leaving the World Bank would return approximately $3.7 billion.  

The average American family pays about $15,000 in federal income taxes each year.  I’m sure that 250,000 American families would be happy to be tax free for a year.

The final portion of the comment was:

…but it would weaken America’s leadership in the most important development organization in the world.

That is exactly the point.  We do not want or need “leadership” in these failed organizations.  The World Bank has been in place since 1944 and still not accomplished its ever changing “mission”.  It simply is not fixable.