Saturday, June 15, 2013

The IMF Urges US To Reverse Its Fiscal Policy Disaster

The US is the world's largest economy and the global economy is extraordinarily impacted by what happens in the US.  The IMF has reduced its forecast of global economic growth because the forecast anticipated that the US would reverse the fiscal contraction agreement that was made in order to get the GOP to raise the debt ceiling limit.  It urges the US to reverse this policy and it also supports the monetary policies of the Fed which have been offsetting the negative impact of US fiscal policy. 

The IMF has finally come to its senses and it has admitted its errors in supporting the push for austerity in Europe.  We are headed in a very bad direction in the US and many other countries.  Unemployment continues to be a problem and it could get worse unless something is done to shift our politics.  The IMF also recognizes the potential harm that might come from the aggressive monetary policy that is being employed by the Fed.  There is a trade off between the potential harm and the real harm to the economy from misplaced fiscal policy.

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