The hoof beats are growing louder and louder… I’ve been warning my Facebook friends about it since well before it was being talked about publicly, and now… one of the most well-known economics journalists in the world has blown the trumpet.
From the Telegraph, Ambrose Evans-Pritchard: “IMF paper warns of ‘savings tax’ and mass write-offs as West’s debt hits 200-year high.”
Much of the Western world will require defaults, a savings tax and higher inflation to clear the way for recovery as debt levels reach a 200-year high, according to a new report by the International Monetary Fund.
The IMF working paper said debt burdens in developed nations have become extreme by any historical measure and will require a wave of haircuts, either negotiated 1930s-style write-offs or the standard mix of measures used by the IMF in its “toolkit” for emerging market blow-ups.
“The size of the problem suggests that restructurings will be needed, for example, in the periphery of Europe, far beyond anything discussed in public to this point,” said the paper, by Harvard professors Carmen Reinhart and Kenneth Rogoff.
The paper said policy elites in the West are still clinging to the illusion that rich countries are different from poorer regions and can therefore chip away at their debts with a blend of austerity cuts, growth, and tinkering (“forbearance”).
The presumption is that advanced economies “do not resort to such gimmicks” such as debt restructuring and repression, which would “give up hard-earned credibility” and throw the economy into a “vicious circle”.
Ladies and gentlemen, predatory governments and banks who have mismanaged everything are eyeing your savings—your retirement assets… everything you have in the system is at-risk.
Have you prepared yourself? There is no guarantee on how much longer before they pounce… all it will take is some dramatic event—and possibly you won’t even get that kind of last-second warning. Brace for impact, Piggy.