Skip to content
Catholic Online Logo

By Catholic Online (NEWS CONSORTIUM)

1/5/2014 (2 years ago)

Catholic Online (www.catholic.org)

Fund warns that the west must weather higher inflation and look to defaults in order to remain afloat

The International Monetary Fund has issued a sobering report for the western world. In short, the analysis maintains that the world's wealthiest nations are deluded in thinking that austerity cuts will chip away at debt. The report is warning of massive write-offs and defaults in order for the world's economy to remain afloat.

Some of these methods are already in use, but not yet on the scale seen in the late 1940s and early 1950s as countries resorted to every trick to tackle their war debts.

Some of these methods are already in use, but not yet on the scale seen in the late 1940s and early 1950s as countries resorted to every trick to tackle their war debts.

Highlights

By Catholic Online (NEWS CONSORTIUM)

Catholic Online (www.catholic.org)

1/5/2014 (2 years ago)

Published in Business & Economics

Keywords: IMF< First World, debt, haircuts, war debt


LOS ANGELES, CA (Catholic Online) - According to the reports, the majority of the Western world will require defaults, a savings tax and higher inflation. Debt levels have reached their highest in more than 200 years.

Debt burdens in the First World have become extreme by any measuring stick. A wave of haircuts, either negotiated Depression Era-style write-offs or the standard mix of measures used by the IMF is required, the report argues.

"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," Harvard professors Carmen Reinhart and Kenneth Rogoff say.

Overall, developed nations are working under the delusion that they are different from poorer nations and can therefore chip away at their debts with a blend of austerity cuts, growth, and tinkering. "Forbearance" is just another form of debt.

Advanced economies, many assume, "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."

This line of thought, researchers say, rely on the "collective amnesia" of European and U.S. history. They are structured upon "overly optimistic" assumptions that risk doing far more damage to credibility in the end. This only drags on the crisis, blocking a lasting solution. "This denial has led to policies that in some cases risk exacerbating the final costs," it said.

Higher burdens are placed upon northern taxpayers with debt pooling in the eurozone. This could drag the EMU core states into a recession and aggravate their own debt and aging crises. Germany and the creditor core would do better to "bite the bullet" on big write-offs immediately rather than buying time with creeping debt mutualization, the paper argues.

Western debt burden is now so big that rich states will need same tonic of debt haircuts, higher inflation and financial repression, defined as an "opaque tax on savers" - as used in countless IMF rescues for emerging markets.

"The magnitude of the overall debt problem facing advanced economies today is difficult to overstate. The current central government debt in advanced economies is approaching a two-century high-water mark," they said.

Financial repression can take many forms, including capital controls, interest rate caps or the force-feeding of government debt to captive pension funds and insurance companies.

Some of these methods are already in use, but not yet on the scale seen in the late 1940s and early 1950s as countries resorted to every trick to tackle their war debts.



---


Pope Francis: end world hunger through 'Prayer and Action'


Copyright 2016 - Distributed by THE CALIFORNIA NETWORK

Pope Francis Prayer Intentions for May 2016
Universal:
Respect for Women: That in every country of the world, women may be honored and respected and that their essential contribution to society may be highly esteemed.
Evangelization: Holy Rosary: That families, communities, and groups may pray the Holy Rosary for evangelization and peace.



Comments


More Business & Economics

Obama brags in face of economic failure Watch

Image of The Obama administration claims the economy is thriving - but what is REALLY going on (TPNN)?

By Kenya Sinclair (CALIFORNIA NETWORK)

We all know "that guy." You know the one - the guy who is obsessed with conspiracy theories and who swears the government is out to get us. Well, according to newly released economic data, "that guy" might be (partially) right. LOS ANGELES, CA (Catholic Online) - U.S. ... continue reading


Yes, there's definitely something wrong with millennials, and here's what it is! Watch

Image of As far as millennials are concerned, the American dream is just that -- you have to be asleep to believe it.

By Marshall Connolly (CALIFORNIA NETWORK)

Across the country, the news is shocking. Over half of the millennials think socialism might be a good thing. Most of them believe the American dream is a myth, and public perception is that something is wrong with them. Why do they just want "free stuff?" LOS ANGELES, ... continue reading


Billionaire Soros warns China is near economic collapse Watch

Image of China's economy may be heading for trouble.

By Marshall Connolly (CALIFORNIA NETWORK)

Billionaire George Soros is sounding the alarm, China is about to go down and the rest of the world could follow. According to Soros, there is a major resemblance between China now and the United States in 2007-2008 just before the U.S. economy entered the Great ... continue reading


IRS issues dire warning before Panama Papers crackdown begins Watch

Image of The Panama Papers detail the tax evasion schemes of thousands of wealthy people around the world.

By Marshall Connolly (CALIFORNIA NETWORK)

The IRS has issued a warning to the rich who have been hiding money offshore - come clean now, before we catch you ourselves. The warning follows the leak of over 11 million pages of documents that detail the private, often hidden financial moves of wealthy people ... continue reading


Obama's Saudi masters order him not to sign 9/11 bill Watch

Image of It's not about the victims, it's about the Saudis.

By David Drudge (CALIFORNIA NETWORK)

Saudi Arabia is about to escalate their economic war with the United States should Congress pass a law that will allow victims of the 9/11  terrorist attacks to sue foreign states. The Obama administration opposes the bill and is lobbying against it. LOS ANGELES, ... continue reading


You won't believe how California's rich spend their money! Watch

Image of Top 1 percent pays nearly half of all California taxes (istockphoto).

By Kenya Sinclair (CALIFORNIA NETWORK)

When you think of California, images of sandy beaches, sun-kissed skin and Hollywood stars flash through your mind - and you're not wrong! California's rich enjoy all the sunny state has to offer - but at what cost? LOS ANGELES, CA (Catholic Online) - According to ... continue reading


Tesla KILLS American car industry in just 3 days. GOOD! Watch

Image of The Tesla Model 3 will sell for an average price of $42,000. Subsequent competition and models will reduce future prices even further.

By Marshall Connolly (CALIFORNIA NETWORK)

Tesla has blown away all predictions, selling over 276,000 pre-orders of their affordable Model 3 electric car, within 72 hours of going live. The massive public interest reveals a major shift in public preferences and should send shockwaves through the auto industry. ... continue reading


You won't believe what JUST happened to Walmart! Watch

Image of What does Walmart's revenue drop mean (WalmartDid).

By Kenya Sinclair (CALIFORNIA NETWORK)

The discount giant has received its first dip in revenue since its inception in 1996. Can the drop signify the beginning of the end? LOS ANGELES, CA (Catholic Online) - The digital age has marked a permanent shift in the way humanity perceives the world.One smartphone ... continue reading


Why Democratic Socialism is coming to America, whether you like it or not, and what you can do about it (but won't) Watch

Image of Presidential hopeful Bernie Sanders is a self-described democratic socialist. His movement is popular with millennials who are coming of age.

By Marshall Connolly (CALIFORNIA NETWORK)

America is in more trouble than people realize and here's why. The middle class is becoming poor, and as the ranks of the poor grow, our national politics will change. LOS ANGELES, CA (California Network) - The United States is changing and many people are having a ... continue reading


You'll never believe what the U.S. government is doing with $917 billion Watch

Image of How much do YOU owe (Shutterstock)?

By Kenya Sinclair (CALIFORNIA NETWORK)

How often do you swipe your credit card without considering your credit limit? When you don't have funds in your checking account, do you turn to credit cards to cover groceries, outings or bills? Have you considered what that credit card debt can do on a larger scale? ... continue reading


All Business & Economics News

Newsletters

Newsletter Sign Up icon

Stay up to date with the latest news, information, and special offers

Subscribe to Catholic OnlineYouTube Channel

the FEED
by Catholic Online

  • Daily Readings for Tuesday, May 03, 2016
  • Daily Reading for Thursday, May 5th, 2016 HD Video
  • St. Matthew HD Video
  • You won't believe why this ICONIC WWII image is being investigated!
  • St. James the Lesser: Saint of the Day for Tuesday, May 03, 2016
  • WARNING GRAPHIC VIDEO - Terrorists behead Canadian hostage, release ...
  • Religious freedoms endangered around the world

Daily Readings

Reading 1, First Corinthians 15:1-8
1 I want to make quite clear to you, brothers, what the message of the ... Read More

Psalm, Psalms 19:2-3, 4-5
2 day discourses of it to day, night to night hands on the ... Read More

Gospel, John 14:6-14
6 Jesus said: I am the Way; I am Truth and Life. No one can come to the ... Read More

Saint of the Day

Saint of the Day for May 3rd, 2016 Image

St. James the Lesser
May 3: St. James the Less, the author of the first ... Read More