STAFF NEWS & ANALYSIS
Madame Lagarde Prolongs the Pain
By Staff News & Analysis - July 03, 2012

IMF warns on U.S. economy … Christine Lagarde, managing director of the International Monetary Fund, is encouraging U.S. lawmakers to focus on boosting the economy now, and worry about cutting deficits later … Boost the U.S. economy now and worry about cutting deficits later, the International Monetary Fund recommended Tuesday. The U.S. recovery remains "tepid" and according to the IMF, is expected to grow only 2% this year. Meanwhile, the fiscal cliff looms in 2013, threatening to reduce the economy's growth to only 1% next year. – CNN

Dominant Social Theme: The US government needs to do more to create a recovery.

Free-Market Analysis: Funny, you would think that private enterprise makes money, but not according to the International Monetary Fund and Christine Lagarde. Lagarde wants the US government to do more.

This is an evident and obvious dominant social theme of the power elite for whom Lagarde works. The idea is always to celebrate government, even when it makes no sense. And in this case it makes no sense.

Government cannot produce anything and cannot create anything either in terms of competitive goods and services. What government can do is tax and spend – redistribute wealth in other words.

When the redistribution gets too onerous, societies begin to collapse. Everything government does, unfortunately, is a form of price fixing and price fixing doesn't work, certainly not over the long term.

The power elite likes to celebrate government because it hides behind bureaucracies and pulls the levers of power via elaborate regulatory rituals. The process in aggregate is known as mercantilism. The idea is to pass laws that benefit you and dismay and even ruin your competitors.

At the very top, the elites wish to declare world government and a host of globalist facilities like the IMF are busily at work preparing the way. The fear-based memes are always the same.

In the case of the IMF, the idea is to proclaim loudly and at length that even worse times are ahead if government does not act. If government CAN act. Here's some more from the article excerpted above:

Amid that weakness and threats from slower growth abroad, the IMF recommended U.S. policymakers spend more on infrastructure, worker training programs, extended unemployment benefits and fixes for the housing market.

"Continued policy action is needed to boost the recovery," IMF Managing Director Christine Lagarde said at a news conference. "We believe the U.S. authorities do not have a lot of space available to act, but they should use it to support the recovery in the near term."

The fiscal cliff and other spending cutbacks would not only stunt U.S. growth but also have "significant spillover effects" on the global economy, Lagarde said. The IMF also urged lawmakers to raise the debt ceiling as soon as possible.

Isn't that incredible? Since government doesn't actually provide any goods or services, it likely isn't very competent when it comes to worker training programs.

Nor does government do an especially good job with infrastructure. Government contractors build but government rarely has the funds to maintain, certainly not over a long period of time. Public works tend to run down and then sit in useless disrepair or are scrapped.

When it comes to extending unemployment benefits and raising the debt ceiling, government is in a no-win situation. It is spending money it doesn't have to support massive public works programs that likely can only grow costlier.

Citizens in depressed economies need to "fish" – not be fed their fish. Independence is key. But Lagarde is offering Keynesian nostrums as a cure for a deflationary depression.

Lagarde does seem to realize the dangers of chronic US overspending. She did not indicate satisfaction with President Barack Obama's $3.8 trillion budget that projected reducing the US deficit from 8.5% to 5.5% of gross domestic.

That reduction is too rapid, the IMF said, "given the weak economy and downside risks." Instead, the IMF recommended cutting the deficit by only 1% of GDP in fiscal 2013. The U.S. should still work on addressing its debt over the medium term, Lagarde said. "It has to be sensible and certainly not excessive."

Finally, Lagarde had kind words for the Federal Reserve and hyper-stimulative chairman Ben Bernanke. These days Bernanke never saw a helicopter he didn't want to fill with cash and with two bouts of quantitative easing out of the way, he is aid to be gearing up for a third.

The IMF and Madame Lagarde have it backwards. They need to let the economy subside in the West and around the world. They don't need to keep pumping it up because that only prolongs the agony.

Businesses and individuals have to know who is credible and who is not, who is involved in belt-tightening and who is going broke.

The only way to purge the economy is to clean it out and let those who are going to fail do so, even the biggest among them. But perhaps this is the point after all. The elites that want world government are possibly prolonging the pain.

After Thoughts

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