Continuum – Casey Research

On that general topic, this morning I came across the following gem from the International Monetary Fund, which is increasingly assuming a role as the “thought leader” for governmental schemes designed to keep the de facto sovereign bankrupts from becoming actual bankrupts.

Quoting from the Washington Post… (emphasis mine)

A new study by the International Monetary Fund raises a further warning flag for fiscal cliff negotiators in the U.S. In what it bills as the first-ever study of its kind, the fund analyzed decades of data on the world’s major industrialized countries to estimate how changes in government spending or revenue affect economic output.

The news isn’t good. Given current circumstances, with a U.S. economy that is growing but still trying to make up lost ground from the 2008 crisis, a one dollar change in government spending could knock as much as $1.80 in output from the economy – what fund researchers called a “statistically significant…and sizeable” outcome.

One brighter spot that could also influence negotiators: the growth impact of a tax hike is estimated to be negligible. The list of measures that automatically become law absent an agreement include both spending reductions and tax increases. While the spending cuts would comprise a heavy drag on growth, the fund paper suggests that a one percent rise in tax revenue would knock just 0.1 percent from gross domestic product.

(You can read the full article here.)

In other words, according to the ivory-tower intellectuals at the IMF (none of whom are rabid socialists, I am sure), cutting government spending even a little is verboten, but raising taxes is two thumbs up. Of course, both of those notions are entirely in sync with the continuum.

Those of you dear readers with a solid net worth no longer need to wonder who’s for dinner – it is you.

The IMF was of course part of the crew that utterly failed to foresee or prevent the events leading to our current smoking hole economy (or economies).  It takes real gumption for its folks to continue to pretend to understand how things work.  It would be funny if they weren’t such mischief makers.

via Continuum – Casey Research.

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