Debt Pushers at the IMF Say Debt-Addict Countries Should Try Cutting Down a Little
Although they are the ultimate debt-pushers, the hypocrites at the IMF are telling "advanced" economies that they should cut down a tad on the debt as it may be a bit, uh, troublesome moving forward.
The word "entitlement" is funny at this point, right?
The International Monetary Fund on Sunday urged countries, particularly those with advanced economies, to pare their fiscal deficits and debt to prudent levels by carrying out pension and health entitlement reforms.
IMF First Deputy Managing Director John Lipsky said in remarks delivered in Beijing that high public debt and fiscal deficits have already raised the risk premium for several countries, and could lead to higher interest rates and slower economic growth in the medium term.
"We have estimated that maintaining public debt at its postcrisis levels could reduce potential growth in advanced economies by as much as 0.5 percentage point annually compared with precrisis performance," he said. "For most advanced economies, including several of the largest, maintaining fiscal stimulus in 2010 remains appropriate, but fiscal consolidation should begin in 2011, if the recovery occurs at the projected pace," he said.
Mr. Lipsky said that unwinding stimulus programs introduced during the financial crisis won't be enough. "Such measures have accounted for only about one-tenth of the projected debt increase," he said. "Merely winding down the stimulus won't come close to bringing deficits and debt ratios back to prudent levels, considering the projected increases in health care and other entitlement spending." He urged governments to strengthen fiscal institutions and carry out entitlement reforms, such as increases in the retirement age, to help bring down both their debt and their deficits.
Perhaps - and this is just a hunch - the IMF has preyed on the last of its victims and now realizes it can no longer fund the wealth transfer. So it's trying to make sure you guys chill out on the funny money before the supply runs out and the dealer is getting attacked by dope fiends.