IMF: Entire World Needs To Stay High On American Monetary Heroin

File this under: we are ruled by morons.

Also under: we are ruled by morons who are trapped and don’t have any solutions.

From Associated Press:

The International Monetary Fund’s managing director warned Saturday of the risks posed to global economic recovery from the reduction of the U.S. Federal Reserve’s monetary stimulus and falling prices in the eurozone.

Despite growing evidence the global economy is faring better than it has for years, Christine Lagarde said policymakers around the world have to be alert to the potential repercussions from the Fed’s “tapering,” a policy change it decided to embark upon in December.

[…]

Over the past few years, the Fed’s stimulus, in its various guises has had a big impact on financial markets. As well as shoring up stock markets around the world, the new money created by the stimulus has flown to emerging economies as investors sought out better returns. Currencies, such as the Indian rupee and the Brazilian real, have been beneficiaries. The withdrawal could prompt a reverse in those flows and see their currencies come under pressure.

“This is a new risk on the horizon and really needs to be watched,” Lagarde said in a discussion about the global economic outlook at the World Economic Forum.

[…]

Lagarde also cautioned about the outlook for the 18-country eurozone. Though the eurozone has emerged from its longest-ever recession and many of the bailed-out countries appear headed for modest growth, inflation has fallen sharply. At last count, it was down at 0.8 percent in the year to December, way below the European Central Bank’s target to keep price rises just below 2 percent.

Many economists have worried that the eurozone may be about to suffer a debilitating bout of deflation, which Japan has experienced for the best part of two decades. Falling prices can hurt an economy as consumers postpone spending in the hope of getting cheaper deals in the future while businesses fail to innovate and invest.

The alleged problems ascribed to deflation are nonsense. What people are afraid of is going bankrupt and having to lose their place in the economy as the most wealthy and powerful. It is true that Japan’s economy stagnated, but that is because they fought deflation tooth and nail, just like the Federal Reserve is doing now. They insisted their banking system was too big to fail.

Inflation, on the other hand, robs from the majority in the economy and benefits the wealthy few.

This entire scheme is corrupt and bogus. Think about the sheer scale of the insanity. LaGarde is saying, as the authoritative head of an international financial institution, that the entire world depends on us printing money. How does printing money add to production? It doesn’t. It can’t. Her words reveal that she has no clue how economies really work.

All the Federal Reserve is doing is barely staving off the deflation that would allow the world to get rid of all the malinvestment that happened during the last boom and rebuild their economies on a sounder foundation.