Most of us know what the International Monetary Fund prescription for saving any given economy is, right? Drastically cut spending. No really, cut it. Slash it to the bone. Even military spending. Cut cut cut cut cut! This approach has opened them to criticism both from true conservatives and progressives.
So then, you know it’s a big deal on those rare occasions that the IMF tells a country they need to spend more money.
Yesterday, the IMF urged the 20 largest economies to spend more on stimulus, to the tune of 2% of their entire Gross Domestic Product. In addition, some central banks may need to take “unprecedented” measures.
Meanwhile, the GOP is railing against the Obama Administration’s first budget as spending way too much money: “Republicans say the path to prosperity is not the excessive spending proposed by President Obama but limited spending that holds down the growth of government, taxes and debt.”
Clearly what is happening to the economy — not just here but in all developed nations — is unlike anything that has happened in recent decades. The measures that got us out of recessions since the 80s are probably not enough to restore our economy to health.
Cross-posted at The Moderate Voice.
Important Update: the former Chief Economist of the IMF on world crises, how they compare to what is going on in the United States, and what must be done now. Very sensible stuff, but be warned that a) he’s an economist b) it’s in the Atlantic, so it may be a little dry for some readers. Try to make it through to the end, because it’s good.