By Jimmy Song — Originally published in The Christian Post
A few years ago, a missionary decided to do a small and seemingly inconsequential experiment in El Zonte, a beach town in El Salvador. The plan was to get the community to adopt Bitcoin so that they wouldn’t have to rely so much on the cash economy. What he started would change the country in a remarkably short amount of time.
Until recently, El Salvador was known for two things: murder and fleeing immigrants. Known to many as the murder capital of the world, the endemic gang violence meant that it became the most dangerous country in the world that was not at war. Fortunately, despite the travel warnings from the US state department, the good waves in El Salvador were able to attract growing numbers of foreign surfers
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Like many developing countries, El Salvador was dependent on foreign aid. Specifically, the International Monetary Fund, or the IMF. The IMF is an organization that gives loans to countries as they need them. This is usually in dollars, and like all fiat currency, is created for the sake of the borrower.
IMF loans do not have any opportunity cost. That is, they’re not loans made from someone’s savings, but loans created into existence. The organization that can do this for the dollar is the Federal Reserve, the central bank of the United States. The money gets funneled into the IMF and loans subsequently given to developing countries.
To many people, this doesn’t sound bad — in fact, it may sound very positive since poor countries are getting foreign aid. After all, isn’t having access to more money going to be good for their development? Yet if you study history, IMF loans are terrible for these countries. The reason is that these loans don’t come in as pure loans, they come with strings attached.
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The IMF dictates how countries spend the loaned money. Only a certain percentage of the budget can be spent on infrastructure, for instance. But the money is irresistible and the governments agree to let the IMF dictate policies. Unfortunately, this often means brutal austerity measures that impact the poor and the vulnerable.
What happens next is that much of the loaned money goes into the pockets of the leaders, as they abuse their position to take advantage of IMF loans. For example, in El Salvador, 3 of the 4 previous presidents to Bukele have been imprisoned on charges of embezzlement. Historically, many countries have not been able to repay their loans, and they end up selling state-owned property from the country to make up the difference. The buyers tend to be multinational corporations. In sum, IMF loans generally result in property going from the developing country to rich people and corporations in the first world. What starts as money printing in the US ends with US companies owning a good chunk of the country.
The Salvadoran government started adopting Bitcoin in earnest, but there was something coming to a head. IMF loans were due and they needed to figure out whether this was something worth continuing. IMF policies had been hampering them for so long, but could Bitcoin be an alternative? The government decided against IMF loans and instead went with Bitcoin financing. They decided to issue the Volcano Bond, which allowed them to use the upside of Bitcoin to attract more buyers. They would have the ability to raise financing for infrastructure projects to improve the country. The bond is still ongoing, but is projected to be significantly oversubscribed.
The people on the ground in El Salvador have noticed a huge change in how the government deals with them. Any country taking IMF loans ends up serving the IMF masters rather than their own people. The IMF bears a large part of the responsibility for the corruption that’s rampant in developing countries. Taking away the IMF and its many tentacles was an emancipation, a huge noxious cloud over the country that lifted. The government served the people, not the IMF paymasters. As a result, many missionaries have noted how the government treats them very differently. For many years, whenever they wanted to do something for the community, they would get tangled in red tape. Only after many months of bureaucratic box checking would they be allowed to do something beneficial for the community.
Now, government officials are asking the missionaries and non-profit organizations how they can help! This is a startling turnaround and cause for great optimism.
Monetary oppression has a profoundly spiritual aspect. The self-image of Salvadorans for a long time was that of being second-class world citizens, as people who were ashamed of coming from there, being at the bottom of the totem pole, of which the US is at the top. The drain of talent and resources to first-world countries has been devastating. What’s changing now is that there’s optimism again in the country. People who have been gone for 20 years are trying to find their way back. People from other Central and Latin American countries are coming to El Salvador to learn how they can also get out from under the shackles of the IMF. This can be felt on the ground when you visit. Infrastructure is being built, people are starting businesses, tourism is thriving. The country is changing.
When the Bible speaks of the rulers, the powers, the world forces of this darkness and the spiritual forces of wickedness (Eph 6:12), we tend to think of them as demonic forces that are abstract. What if the spiritual forces of wickedness are the monetary organizations like the IMF? What if these forces have been oppressing a significant portion of the world and we were just too blind to see it?
Jimmy Song is a Bitcoin developer, educator and entrepreneur. He’s a programmer with over 20 years experience, an open source contributor to many different Bitcoin projects and the author of Programming Bitcoin from O’Reilly, The Little Bitcoin Book, Thank God for Bitcoin and BItcoin and the American Dream.
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