Christine Lagarde, Managing Director of the International Monetary Fund indicated today that the IMF has lowered the global growth outlook, warming “the global economy is in a dangerous new phase.”
Lagarde has urged global leaders to take “collective, bold action” to prevent major economies from stalling. The IMF released the latest edition of its World Economic Outlook today in preparation for its fall meeting in Washington D.C. this weekend.
As reported yesterday’s article in the Examiner, “The fall of the almighty dollar” what may loom ahead for the world economy if it continues to remain flat or falls into another global recession is the possibility of the U.S. to lose its spot as the world’s reserve currency.
In fact the process is underway as stated yesterday. For example, according to the ‘International Business Times’, China and Russian will no longer use the U.S. dollar for trades between the two countries. Even in our own country in the Mid-West the use of ‘alternative currencies” has become common much like Berkshires that are used in western Massachusetts in place of the dollar. In fact, in some communities businesses may actually prefer foreign currencies rather than U.S. dollars.
If the dollar is knocked off by either a new trading unit that is being planned by the IMF or developed countries decide to use the Japanese Yen, for example, or another currency in place of the dollar, crazy things will happen in this country.
Because the demand for U.S. dollars would decline significantly, interest rates would soar, stock prices would crash leading to a new road to tread with an even more brutal downturn in the economy that would make the 2008 financial crash look like a walk in the park. Finally, the biggest blow to the U.S. would be widespread inflation at levels not seen before in this country, ever.
The IMF downgraded the growth rate for the world’s economy by expecting only an increase of only 4% in 2011 and 2012. This is a full 1.1% lower than the forecast for 2010 and even lower than the initial forecast for this year. The IMF sharply reduced the forecast for economic growth in the U.S. from 2.5% to 1.5%.
The IMF report implored world leaders to take realistic measures to deal with their respective economies. The IMF suggested that the U.S. should not try to solve the economic chaos in this country by massive public spending cuts; that would be non-productive and cause more harm than good to the unstable U.S. economy.
President Obama announced his plan for a $3 trillion cut in public spending for the next decade; last week he announced his $447 billion America’s Jobs Plan and he also described the way his spending incentives would be paid for over the years.
You can count on the Republicans to try to squash his plans before they gather any political momentum. That’s the American Way. The politics of today…a do nothing, solve nothing, contentious political process in Washington, D.C. that got us to this point of fiscal catastrophe.
Young people are demonstrating on Wall Street today; the European debt crisis continues to drive a negative stake in the hearts of the stock markets of the world; jobs for Americans have been kissed away with nothing in sight, not even after the Jobs Plans, to hearten anyone currently unemployed with any hope of working again anytime soon; and, the housing crisis continues as homeowners around the country still face foreclosure, albeit at somewhat lower rates than last year.
Think about it, bread at $7.50 a loaf, meat at $50.00 a pound, gasoline at $12.00 a gallon, and a utility bill that averages $450.00 a month for the average household. That’s what is on the horizon, no matter what our crack representatives in Congress do or what the media tells you. Keep on watching the new TV season…until you can’t afford to keep the lights on. Enjoy your day!
“Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.” Ronald Reagan, (1911-2004) American President, Governor of Californiaand B Actor
