Wednesday, April 17, 2013
From the Washington Post:
The International Monetary Fund has a reputation, hard earned over the decades, of being the annoying friend who is always telling you to be more responsible. Eat more vegetables! Put in more hours at the office! Do you really need that second glass of wine?
Similarly, it has historically been the IMF’s role to tell countries to behave themselves economically: Cut those deficits! Let’s see some tighter monetary policy! Do you really need such a generous public welfare system?
But something strange has changed in the world economy, which is evident in the Fund’s latest edition of the World Economic Outlook. The IMF is now among the strongest voices against excessive fiscal austerity and tight money.
The Fund is most direct in its prescriptions for Britain, which has had a stagnant economy for the past three years as deficit-reduction has gone into effect. Sure, the language is that ofinternational bureaucratese (“In the United Kingdom, where recovery is weak owing to lackluster demand, consideration should be given to greater near-term flexibility in the fiscal adjustment.”). But there is no mistaking the message: Hey, David Cameron! Slow down with the deficit reduction!
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