The IMF is forecasting negative economic growth on a global scale for 2009. For a debt growth dependent global economy, this is a growing disaster [see Treatise]. Stimulants have been given, but there are no signs of revival. Now there are even discussions of nationalizing banks. In the short run, the appearance of growth can be forced by massive influxes of money with the end result being inflation. Prices go up and loans get repaid with cheaper money, and loan defaults, a worse sin, are avoided. This is a classic stall tactic until the economy actually does start to grow again. Grow to what? Doesn’t matter, just grow.
The downside scenario is that economic growth, on the massive scale required, does not materialize. Will more and more money get pumped into the economy, potentially risking hyper-inflation? Zimbabwe is a recent example. Or perhaps a war to jolt the economy back into a growth mode while thinning the bewildered herd? Again, wouldn’t be the first time. Perhaps removing the monetary virus that forces growth to unsustainable extremes? Doubtful.
World economy 'to shrink in 2009'
http://news.bbc.co.uk/2/hi/business/7952377.stm
19 March 2009
The world economy is set to shrink by between 0.5% and 1.0% in 2009, the first global contraction in 60 years.
Fed pumps $1.2tn into
http://news.bbc.co.uk/2/hi/business/7951493.stm
18 March 2009
The US Federal Reserve says it will buy almost $1.2 trillion (£843bn) worth of debt to help boost lending and promote economic recovery. It said it would start buying long-term government debt and expand purchases of mortgage-related debt.
Dollar slides after US Fed plan
http://news.bbc.co.uk/2/hi/business/7952319.stm
19 March 2009
The dollar has fallen against all major currencies after the US Federal Reserve announced a plan to buy $1.2tn (£843bn) of debt to boost its economy. The dollar fell by 3.8% against the euro and by 3.6% against the pound.
