Resolution

LUF:s resolution, passed at the IFLRY GA.

Resolution on the Financial Crisis

Deeply concerned about the current financial crisis that has caused recessions and market breakdowns in the economies of both developed and developing nations;
Deeply worried that the financial crisis will transform into a social dilemma, adversely affecting the world?s entire population regardless of class and social status;
Understanding that the responsibility of the governments and international organizations should be focused on avoiding that this financial crisis will become a humanitarian crisis.
Troubled by the prospect that the financial crisis will lead governments to react by imposing severe market regulations, trade restrictions, protectionism, the abolishment of market and financial freedom, and competition among liberal and democratic states;
At the same time being reminiscent that the core of liberal democratic nation-states is a commitment to free market principles, the rule of law, respect for private property, free trade, and adequately regulated financial systems;
Observing in the light of the above that state interventions as a reaction to the financial crisis, especially the bailout of banks, but also the bailout of other companies or whole industries, have not only produced an undesired effect but have produced unjustifiable costs and might ultimately prolong the recession.
Believing that although the causes for the current financial crisis are almost innumerable, it is the practice of the artificial creation of money and credit by governments and central banks, who have set interests rates rather arbitrarily and artificially low and have increased the supply of fiat money, that have made inflation and damagingly cheap credit possible. Inflation and cheap credit is ultimately a duty, similar to a tax, that affects young people and low-income-earners the worst;
Noting that the Group of 20 (G-20) convened to craft a strategic plan and program of actions which aims to solve the flaws of the current world?s financial systems which includes the establishment of a sound and just financial regulatory system, macroeconomic cooperation, rebound of the Bretton Woods financial institutions, and the stabilization of global economy,

The International Federation of Liberal Youth hereby,

1. Calls upon liberal democratic nations to uphold, protect and carry on to the fundamental principles of the free market, private property and the rule of law, which are the bedrock of democracy and freedom and which are essential for economic growth;
2. Supports the G-20 Summits on Financial Markets and the World Economy, its program of actions and purposes therein given that the aforementioned principles are being upheld; especially supporting the decision taken by the G-20 summit of rejecting protectionism as main strategy to overcome the crisis.
3. Calls upon the G-20 Summits, the European Union and national governments to evaluate the possibility of an implementation of full-reserve banking as a possible way to create confidence in the financial system through a stable money supply.
4. Urges central banks to take asset price inflation, not just consumer price inflation, into account when setting interest rates, so that excessively cheap credit as one factor creating asset price bubbles will be largely eliminated.
5. Emphasizes to always be reminiscent of the fact that personal and economic freedom are inseparable and that freedom will therefore only be realized in the presence of free, competitive financial markets. Discourages the notion that the current financial crisis signals the downfall of capitalism. In contrary, the principles of the free market have never been fully realized in the now failing financial system which is why now is a better time than ever to make the case for liberalism.