IMF details errors in calling for austerity

by Michael Smith (Veshengro)

They finally have realized that they haven’t got a clue, it would seem...

The International Monetary Fund is revising its metrics on how fast governments should cut their budgets, with the IMF’s top economist making the case that Europe’s fiscal diets were too severe.

In a new paper published Thursday, IMF Economic Counsellor Olivier Blanchard and research-department economist Daniel Leigh show the IMF recommended slashing budgets too fast early in the Euro crisis, starving many economies of much-needed growth.

In “Growth Forecast Errors and Fiscal Multipliers,” Messrs. Blanchard and Leigh calculate IMF and European economists underestimated the Euro-for-Euro effect of cutting government budgets. While economists expected that cutting a Euro from the budget would cost around 50 cents in lost growth, the actual impact was more like 1.50 per Euro.

However, the truth is that governments cannot go on spending money like there is no tomorrow and then wonder why the countries are in debt. One of the founding fathers of the United States said that the country should never be indebted to any one, especially not the banks and there is a great truth in this.

What this American Founding Father really was saying, even though it is politically incorrect today, was that being indebted to the banks would mean being indebted to a particular “ethnic” group and that is the reason why the USA today is so pro a certain entity in an occupied land in the Middle East and no bad word may be spoken against it. In fact, it would appear that people who do may find themselves in legal trouble even.

A country that is financially dependent on banks such as those controlled by the Rothschilds and others no longer has control of it own affairs and this does make a point for getting rid off government debt.

How to do that is, however, a different question but, despite the fact what the IMF (another strange bird that controls countries) may say, it now says that the advice for austerity may have been wrong, the fact is that countries have to reduce their debts and thus reducing spending is the only way to deal with it. But there are ways and ways.

The UK certainly is taking the wrong approach by cutting essential services to the people while at the same time ring-fencing “overseas aid” and military spending.

Charity begins at home and overseas aid is NOT essential and military spending definitely is not anything that is essential. The brief of the British forces is the defence of the realm and the realm, last time I checked, does NOT include Iraq, Afghanistan, Libya, Syria or anywhere else. The realm is the British Isles and British Dependencies and nothing more; period!

So, cut military spending, get rid off the overseas aid (for the moment at least and I am sure many if not all services to the people will not have to be touched. It is not rocket science.

© 2013