ABSTRACT
Senator Moynihan was asked to comment on what the political response by the U.S. would be, should a Latin American country, say Mexico, declare that it could no longer meet the required interest and/or principal payments on its foreign borrowing. Would the U.S. Senate support an imposition of some control and/or punishment for Mexico? The Senate, Moynihan replied, would not respond directly; the banks would be rushing down asking for help which they would probably get. Our obvious response would be to print more money and give it to the banks, just as we do to pay our own overseas trade debt. And the real question is how much more money we would print. This American problem would not be dissimilar to the Brazilian problem, the Argentine problem, or the Mexican debt problem. We would also need to look to the international institutions, the IMF and the World Bank, for handling the matter as it would affect them, even though both institutions have been American-directed for the most part.
