> real reason for the risk of default is that El Salvador was counting on a loan from the IMF and the IMF refused to make a loan to El Salvador while Bitcoin is legal currency

El Salvador's dollar bonds started crashing right after the Bitcoin announcement, before the IMF bailed; Bukele had already snubbed the IMF six months before when he "fired five top judges and the attorney general" [1].

> Bukele is wildly popular in El Salvador

This is correct [2]. I'm not certain how this makes me feel about supporting them when this inevitably fails.

[1] https://www.bloomberg.com/news/articles/2021-11-22/bitcoin-b...

[2] https://www.reuters.com/markets/currencies/majority-salvador...

This is inaccurate. The IMF and other entities do not give aid or loans to dictatorships, because anything given to a dictatorship goes straight to the cronies at the top.

El Salvador started having this problem as Bukele eliminated other branches of government. That's why he pushed Bitcoin adoption in the first place - to work around the problems caused by his desired form of government.

LOL they lend to democracies in third world countries like mine where the money goes straight to the cronies at the top (Panama; I know the term is outdated but us third-worlders call our countries third-world).

My wife worked for a Ministry here and saw how the world bank shoved loans on non-functioning institutions and charged my country interest ON THE AVAILABLE FUNDS (like a credit line but it doesn't matter if you use it or not) despite them being executed or not.

I dont know wtf these people are doing, but benevolent they are not.

Yes, the IMF exemplifies the folly of global institutions. How long have they propped up kleptocracies like Argentina? "Democracy" is just a nice coat of paint over unbelievably corrupt countries where citizens will never see a dime of those loans yet will have to bear the burden of paying them back.

They are predators, they are usually eyeing the conversion of these loans into assets (which will be bought cheaply) once the country defaults.

> and charged my country interest ON THE AVAILABLE FUNDS

That's actually fair. The problem is that many countries lack the capacity to satisfy the conditions and requirements for unlocking such funds. My understanding (and you can correct me if you have more accurate fact), is that the WB pass this interest to the relevant country rather than charge it for profit. Since the money was allocated by the institutions, they expect yield whether it is deployed or not. Obviously, the WB is not going to bear that cost.

From my perspective it's a pretty complicated question. Like loans can be very beneficial if they are used to make sensible investments. So that's a good reason to give them out. But as you mention if it just goes straight into the private pockets of bad people that's not good. But realistically it's never so black and white. Some money will be used for sensible investments, some will be used to build a giant statue of the leader, a third part to cousins, and a fourth to buy votes. So it's a question, is a sufficent proportion used for good? And also is the leader legitimate? If a leader is very impopular then we may say the he cannot take loans on his people's behalf, that the people are not bound by any agreements he makes.

But anyway I'm curious about your thoughts, what is the alternative? How would a better system look like?

IMO a bureaucrat shouldn't be able to put an institution in debt.

This sounds strict, but think about it: every single company I've seen (correct me if this is biased in the wrong direction) doesn't allow just any employee to take out a loan. Heck, even the CEO can't just go to the bank and take out a loan if the collateral are assets/equity in the company - the board needs to approve that.

Why would we allow someone who's tenure is basically guaranteed to be <5 years to take out loans?

I know this sounds like a non-answer but maybe it's that simple: a specific institution/bureaucrat can't take leverage. The central govt can take out loans and increase budget to hand out.

So why did your country take the loan if it was so terrible?

My comment comes from a rude awakening I had: I thought these institutions and their bureaucrats we're well-meaning people. Naively, I thought 'hey if you work at a place like that what other motive do you have but to help?'.

Some of the employees in those institutions are actually connected politically locally and they favor insiders from their party. Others want the press-release and don't give a fuck if the project actually gets completed or if it impacts people. They're just as involved in politics as the locals: I'll give you this loan so you have cash to do whatever and you help me with this project I'm pushing throughout the region.

Sounds like a regular day at the office I guess but dunno I thought people who worked in these institutions wanted to do good. I guess I ate up some propaganda and never questioned it until I saw it first-hand through my wife's experience.

I think the point is that the cronies at the top took the loan on behalf of the country. They don't care that the terms of the loan are bad because they will personally get rich either way and paying back the loan is somebody else's problem.

Bingo.

Because 'my country' isn't a conscious entity. The people inside the institutions are cronies of current senators.

The loans are a way to circumvent budgeting. Not sure on specifics but it's easier for them to accept the loan vs getting cash handed to them by the country's comptroller (Contraloria is the entity in Spanish).

The loan is usually so terrible because the IMF is supposed to be the lender of last resort.

You go to the IMF when no one wants to loan you money.

> The IMF and other entities do not give aid or loans to dictatorships

This is wrong. The IMF, USA, and Europe deal with dictators on a regular basis.

> because anything given to a dictatorship goes straight to the cronies at the top.

That's funny because the opposite happened where I live.

> El Salvador started having this problem as Bukele eliminated other branches of government. That's why he pushed Bitcoin adoption in the first place - to work around the problems caused by his desired form of government.

El Salvador had an astronomical crime rate, and bad finances long before Bukele. It's unlikely that Bukele (or a single man) can eliminate anything in the government or a democratic system. What happens is these system collapses and Bukele is just the symptom of it.

> What happens is these system collapses and Bukele is just the symptom of it.

You mean the corrupt criminal network in El Salvador somehow collapsed because of inexplicable reasons? The collapse is not even to some degree the effect of intentional political changes?

I guess it depends on what is your criteria for "dictatorship", but afaik they _love_ to give loans specifically to dictators. Because they know that the dictators agree on much worse terms as they not the ones who would repay the dept.

Also many countries on the https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending-... don't look very democratic. But again, it depends on what is criteria here.

First, El Salvador is not a dictatorship. President Bukele and his party won in a free election and everyone expects he will win re-eelection in 2024.

Second, no branch of government has been eliminated. What happened is that his party impeached the justices on their supreme court, replacing them with justices from his party. In fact, "packing" the court, the same thing leftists are urging the Democrats to do in the USA.

Third, the claim that the IMF does not lend to dictators is obviously untrue.

If either party in the US somehow managed to impeach the entire Supreme Court and replace the judges with partisans, it sounds fair to say that a branch of government has been eliminated.

Didn’t Bukele also declare martial law? That’s another traditional tool on the way to a dictatorship.

And also forced retirement for experienced officials in many government instutions, including the Ministry of Education [1], Judges [2], and Police [3].

[1] https://www.laprensagrafica.com/elsalvador/Sindicato-de-doce...

[2] https://m.dw.com/es/el-salvador-m%C3%A1s-de-200-jueces-cesad...

[3] https://www.laprensagrafica.com/elsalvador/Cuestionan-retiro...

> President Bukele and his party won in a free election and everyone expects he will win re-eelection in 2024.

Does the Salvadoran constitution allow immediate reelection? Has that changed recently? If so, by whom?

This is correct. The Nuevas Ideas party led by Bukele simply demolished FMLN and ARENA and rightly so.

> Despite his misadventures with Bitcoin, President Bukele is wildly popular in El Salvador.

He seems to have successfully controlled crime in El Salvador. Usually, there is something behind these strong men if they are still popular. Homicide is down from 103 in 2015 to 17.6 last year. People will stick with such figure; it's not clear why previous rulers have failed. 103 is scary as shit number. Bitcoin will look like a blip in his mishaps from the citizenry point of view.

The IMF is anti cryptocurrency ?

Ofcourse. they muscled Argentina to prevent banks from dealing in it, despite popular support and the banks announcing it.

IMF, as well as World bank and co, are anti-anything that could help a country to be less dependent on Wall Street.

See https://en.wikipedia.org/wiki/Structural_adjustment#Criticis... and https://en.wikipedia.org/wiki/Enough_Is_Enough_(letter) for examples.

The IMF is anti-gambling-with-soverign/borrowed-funds.

From the papers they released, I don't think they are. But this is an institution that works with SDR [https://en.wikipedia.org/wiki/Special_drawing_rights]; so they are not going to "understand" Bitcoin. In a sense, they have their own Bitcoin.

And I put understand in quotes because the IMF does get Bitcoin, Crypto and finance better than most countries. They understand that crypto is mostly bad news for weak countries because they are already having trouble with capital outflow as is.

They are happy with their monopoly as it is.

Most definitely - it takes away from their power.

That would depend on whether they control the cryptocurrency I imagine.

Yes.

The IMF is anti-idiocy. So yes.