The International Monetary Fund (IMF) – a.k.a. the “United Nations” of monetary policy- says that America’s failure to control its rampant deficit spending could be the undoing of the global economic recovery.
According to the IMF’s most recent World Economic Outlook, the federal government not only lacks a “credible strategy” for dealing with its skyrocketing debt, but that it is continuing to expand deficit spending at a time when it should be contracting.
That disturbing trend – which Washington politicians seem hopelessly incapable of reversing – is increasingly likely to result in the bond market losing confidence in America’s ability to ever get its fiscal house in order.
That loss of confidence will mean higher interest rates – which of course will have disastrous consequences on the global economy.
“As activity continues to pick up, large sovereign funding requirements will put upward pressure on interest rates, slowing the recovery of the private sector and lowering potential output,” the IMF report states. “This could cause abrupt increases in interest rates in the United States (from especially low levels) that could destabilize global bond markets, with particularly deleterious effects on emerging market economies.”
For those of you educated in South Carolina public schools, “deleterious” means bad … real bad.
Over the last three-and-a-half years alone, the federal government has added $5.1 trillion to the national debt – with another $1.5 trillion in deficit spending projected for the coming fiscal year.
“A credible strategy to stabilize public debt in the medium term, and a down payment on fiscal consolidation in 2011, are urgently needed,” an IMF economist said this week in releasing the outlook.
The problem?
Washington, D.C. is sorely lacking in “credible strategies …”
IMF WORLD ECONOMIC OUTLOOK (APRIL 2011)
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By lol...funny April 14, 2011 at 9:42 am
” “deleterious” means bad … real bad “- It’s gems like this that keep me coming back.
Anyway, we are literally already the walking dead…anyone with an ounce of brain matter knows the crushing debt is never getting “paid back”…the US is going to have to run to the IMF and either establish it’s own new currency or if the world doesn’t jump on board push for a global currency using IMF SDR’s or something…
All the bailouts of 2008 did is give the high end financeers(rats) time to jump off the titantic before it goes down…the pols are merely rearranging the deck chairs as it sinks.
Good riddance as far as I’m concerned, bankers will take their rightful place as scorned members of society-maybe even behind lawyers.
Hopefully they aren’t able to pass off another fiat currency for a while….but then again there are lots of stupid people out there so we’ll just have to see.
By political hack April 14, 2011 at 10:54 am
The inflationary dollar bubble we have been in since Nixon’s folly in ’71 is near it’s bursting point. Next step, some exotic form of currency on a global scale, such as SDR’s, and a new world financial/government paradigm. Oh and let’s not forget the suffering that always comes with inflation: our wealth and purchasing power slowly being robbed from you every second.
Sadly, and this is a problem, most people don’t believe that anything bad is going to happen with all this continued money printing. It is if the average voter, who has a less than average education in financial affairs, has faith in the State to engineer it’s way out of the corner without sacrificing the dollar. Although we have done many great things in our short time as a nation, the markets always win. History doesn’t lie either. All great empire’s have bit the dust not from foreign conquerors, but from internal strife via inflation (see Rome, Great Britain, and dozens of others). Fractional reserve banking and socialized credit centralize power with the state and by their very nature result in inflation. Without a currency backed by anything, there can be no curb to bad policy and government waste.
By Proud to be an Amer'cun April 14, 2011 at 1:35 pm
How many SDR’s does it take to buy a cheesburger? I could be down with this.
By Party is Over April 14, 2011 at 2:18 pm
The party is over. There is no way the US government can reduce the entitlements being paid out. The voters will vote in someone else that promises them a “free give away”. The US is done. We will never be able to pay back the soon to be $15 Trillion debt, that is an entire years worth USA GDP. Will never happen. When you add in the unfunded mandates for Medicare, Medicaid and Social Security, we will owe almost $75 Trillion by 2025, give or take four years. This number comes straight from the government. It could be as high as $120 Trillion depending on how the economy goes. That is the problem, no economic growth equals much worse, but even with growth, it is bad. We will never be able to pay this back, therein lies the Fed Reserve’s inflation strategy, pay back the US Bond purchasers with “less valued dollars”. We will default, go bankrupt, and then the USA will be up for grabs. I predict a military takeover in the wake of a massive revolution when the default and resulting massive economic earthquake cause the death of millions from starvation, homelessness and joblessness. There is no way we can get out of this mess, we don’t have the economic growth to do it. The politicians are like Dr.’s lieing to a terminal patient about their health.
By SDR to Cheeseburger conversion April 14, 2011 at 3:02 pm
Currently 1 SDR is equal to $1.59, so figure 2 SDR’s get you your cheeseburger depending on who you patronage.
That could be a problem though if you’re getting paid in dollars and everyone wants SDR’s for example.
:)
If the leaders in SC actually pulled their heads out of their asses for a brief moment they’d have noticed that Utah passed gold/silver legal tender laws to protect what assets are left in their state from the Feds money printing/devaluation machine. At least they have leaders with brains.
I doubt there is any one in any position of power in SC with the actual will to breathe fresh air or look out for our citizens however…aside from the implications towards our overlords in DC whose ass SC’s leaders like to kiss.
“Crouch down and lick the hand that feeds you. May your chains set lightly upon you; and may posterity forget that ye were our countrymen.” – Samuel Adams
By Caution April 14, 2011 at 10:43 pm
The problem is not entitlements, Medicare, Medicaid, Social Security,etc. The problem is that most of you have been duped! You continuously fight for lower taxes, but you are fighting the battle for big business. Please enlighten yourselves… http://www.alternet.org/economy/150509/how_big_business_gets_a_free_ride_by_lobbying_to_raise_your_taxes_/
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By Lorne Marr July 3, 2011 at 8:37 am
Sounds to me like a group of people that just want the debt ceiling raised so the banks could make money on the interest payments. I don’t believe IMF would genuinely be worried about the well being of the American people.