IMF Recommends Global Depression

The headline warns of the risk. But the IMF draws the wrong conclusion.

ZH: IMF Sounds The Alarm On Global Debt, Warns "United States Stands Out"
So what should policymakers - having gotten used to flooding the world in debt - do? Why the opposite, of course: as the FT summarizes, with the global economy growing strongly, the IMF recommended countries stop using lower taxes or higher public spending to stimulate growth and instead try to reduce the burden of public sector debts so that countries have more leeway to act in the next recession.

Translation: no tax cuts, no increases to deficit spending, i.e. another dig at everything that Trump is doing.

In fact, the IMF singled out the Trump administration’s tax cuts for criticism, since they left the US with a deficit of 5% of national income into the medium term and a persistently rising level of debt in GDP. It also explains why the IMF forecasts the US is the only nation whose debt load will rise in the next 5 years.
The next recession is already coming.

FT: IMF sounds alarm on excessive global borrowing
Half of the $164tn was accounted for by three countries: the US, Japan and China. The latter’s borrowing surged from $1.7tn in 2001 to $25.5tn in 2016, accounting for three-quarters of the increase in private sector debt in the past decade.

The fund was concerned that “an abrupt deleveraging process” in the private sector could trigger another financial crisis as borrowers tightened their belts simultaneously.
Zero Hedge reads between the lines and reaches the correct conclusion:
Here, the Keynesian would probably go nuts, and say that such a policy promotes saving, and is tantamount to austerity, which for some reason, is equivalent to economic death in a world where total debt/GDP is either 225% or 316% depending on whose methodology one uses.

Actually, come to think of it, it all makes sense when one considers that it is the very policies that define modern finance and economics, that have led the world to this precipice. In fact, reading the IMF report between the lines, it is nothign more than advance scapegoating for the inevitable global debt crisis that is coming, and which not even the IMF is hiding any more. What is most comical - if completely expected - is that the IMF is now blaming it all on Trump: not on generations of economists who steered the world to the point where there is more than $3 of debt for every $1 of GDP, and not on central bankers who flooded the world with debt so that the richest 0.01% can be richer than their wildest dream. Nope: it's all Trump's fault.

Somehow we doubt this advance damage control will work after the next, and likely final, crash.
The era of central bankers and economists "managing" the economy is coming to an end.

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