IMF Urges Post-Pandemic Stimulus to Avoid Depression Mistake — Rich Miller

The International Monetary Fund wants policy makers to avoid repeating the Depression-era mistake of ratcheting back budget deficits. Instead, it’s urging them to ramp up fiscal stimulus when the coronavirus contagion starts to abate.…

 This doesn’t sound all that different from the prescription of Modern Monetary Theory proponents -– a heterodox economic school that contends countries such as the U.S. can run bigger budget shortfalls without worrying about going broke because they print their own money....

Yahoo Finance
IMF Urges Post-Pandemic Stimulus to Avoid Depression Mistake
Rich Miller, Bloomberg

DW — Coronavirus latest: World has 'clearly' entered recession — IMF head

15:51 "It is clear that we have entered recession," said IMF head Kristalina Georgieva. Due to the pandemic, the global economy experienced a "sudden stop" and the fund is now looking for a practical approach to prevent indebted countries from "falling off the cliff."

15:23 The ongoing pandemic will have a deep economic impact and recovery could be only expected in 2021, said IMF chief Georgieva. This target can only be reached if the virus is contained and liquidity problems are not allowed to turn into issues with solvency, which is the ability to pay debts.

15:17 The world has entered a recession which is as bad or worse than the global financial crisis of 2008, the head of the International Monetary Fund (IMF) Kristalina Georgieva has said. 

The next leg down in the failure of neolibetralism.

Deutsche Welle
Coronavirus latest: World has 'clearly' entered recession — IMF head

IMF boss says raise taxes on the rich to tackle inequality— Larry Elliott

Kristalina Georgieva, the IMF’s managing director, said higher marginal tax rates for the better off were needed as part of a policy rethink to tackle inequality.

In a sign of how the IMF has moved away from the tax-cutting approach that once formed a central part of its policy advice, Georgieva said there needed to be a different approach to tackling what had become “one of the most complex and vexing challenges in the global economy”.

The IMF chief, writing in a blog, said: “Inequality of opportunity. Inequality across generations. Inequality between women and men. And, of course, inequality of income and wealth. They are all present in our societies and – unfortunately – in many countries they are growing.”

The Guardian (UK)
IMF boss says raise taxes on the rich to tackle inequality

Larry Elliott, economics editor

Kristalina Ivanova Georgieva-Kinova is a Bulgarian economist, who is the managing director of the International Monetary Fund. She worked as chief executive of the World Bank from January 2017 to 1 October 2019. She served as Acting President of the World Bank Group from 1 February 2019 to 8 April 2019. Wikipedia

Bill Mitchell— Free flows of capital do not increase output but do increase inequality

There was an IMF paper released in April 2018 – The Aggregate and Distributional Effects of Financial Globalization: Evidence from Macro and Sectoral Data – that had a long title but a fairly succinct message. It indicates that the IMF is still in a sort of schizoid process where the evidential base has built up so against the political voice and practice that the IMF has indulged itself as a front-line neoliberal attack dog that elements in its research division are breaking ranks and revealing interesting information. In part, the Brexit debate in Britain has been characterised by economists supporting the Remain argument claiming that free capital flows within Europe (and Britain) are the vehicle for strong output growth and better living standards. They claim that when Britain leaves the EU global capital flows will be more restricted in and out of Britain and that will be damaging. It is really just a rehearsal of the standard mainstream economic claims found in monetary, trade and macroeconomics textbooks. What the IMF paper does is provide what they call a “fresh look at the at the aggregate and distributional effects of policies to liberalize international capital flows” and the researchers find that, “financial globalization … have led on average to limited output gains while contributing to significant increases in inequality”. That is, the pie hasn’t really grown much as a result of all these free trade moves but a growing share is being taken by an increasingly wealthier few. And workers are the losers....

Bill Mitchell – billy blog

Free flows of capital do not increase output but do increase inequality
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — Data suggests a unilateral Greek exit would have been much better than their colonial future under the Troika

Yesterday (November 26, 2019), the news came out from the Hellenic Minister of Finance that Greece had completed its latest repayment of 2.7 billion euros to the IMF early (Source). They owed around 9 billion euros to the IMF. Greece had to go ‘cap-in-hand’ to its “European creditors” to gain permission to make the payment early, which they claim saves them crippling interest rate payments. The loans were locked in at 4.9 per cent per annum – usury rates by any definition. Celebration seems to be the message from the neoliberals. But, from my reckoning, the disaster for Greece continues. On September 30, 2019, the IMF European Director Poul Thomsem gave an extraordinary (for its shameless arrogance) speech on Greece at the London School of Economics. Entitled – The IMF and the Greek Crisis: Myths and Realities– Thomson admitted that the IMF had revised its date at which they think Greece will finally get back (in GDP per capita terms) to the pre-crisis level. When they devised these usury loan packages, they claimed that “it would take Greece 8 years to return to pre-crisis level”. Now, they have revised that projection to 2034 – yes, you read that correctly – a generation of waste and foregone opportunities. When you look at their own scenarios for a unilateral exit in 2012, it becomes obvious (and I have said this all along) that exit could not have been worse than what the Greek people are enduring and will endure for an entire generation.

By way of background, recall that Thomsen was the IMF’s architect of Greece’s original bailout....

Bill Mitchell – billy blog
Data suggests a unilateral Greek exit would have been much better than their colonial future under the Troika
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Some brief thoughts on Argentina's ongoing crisis and the IMF's role in it — Matias Vernengo

Argentina's peso depreciated significantly after the primary elections last month, with the clear victory of the opposition. The crisis has come full circle now with the re-imposition of capital controls, and with the default on domestic bonds, the latter a puzzling and clearly unnecessary measure, since it was in domestic currency (Standard & Poor's says it's a selective default, whatever that means, and Fitch called it a restricted default). So here a few things that might be useful to understand what is going on....

Naked Keynesianism — Hemlock for economics students
Some brief thoughts on Argentina's ongoing crisis and the IMF's role in it
Matias Vernengo | Associate Professor of Economics, Bucknell University

The IMF Program in Ecuador: A New Report by Mark Weisbrot — Matias Vernengo

As they discuss the new candidate for the International Monetary Fund (IMF), and it seems that the lead candidate for Lagarde's position is the former Dutch finance minister Jeroen Dijsselbloem, a pro-austerity member of the Labor Party (which I guess is at least nominally on the left), it is worth reading the new CEPR report on the possible effects of IMF programs in Latin America, more specifically the one in Ecuador, now that the country has been brought back into the fold of well-behaved nations (after expelling Assange from their London embassy, in the post-Correa period)....

Naked Keynesianism — Hemlock for economics students
The IMF Program in Ecuador: A New Report by Mark Weisbrot
Matias Vernengo | Associate Professor of Economics, Bucknell University

Michael Hudson Discusses the IMF and World Bank: Partners In Backwardness — Bonnie Faulkner interviews Michael Hudson

Bonnie Faulkner of Guns and Butter interviews Michael Hudson. Transcript.

Naked Capitalism
Michael Hudson Discusses the IMF and World Bank: Partners In Backwardness
Yves Smith

Bill Mitchell — IMF changes tune on industry policy – shamelessly – Part 2

In Part 1, I introduced the discussion about the use of industry policies in the Keynesian period after World War 2. Most nations adopted a mixed planning-market based system for allocating productive resources and the state was always central in setting out planning parameters, direct ownership and employment, and regulation. It was a system that researchers described as being “highly successful”. Two approaches to industrialisation were taken: (a) export-oriented (for example, South Korea); and (b) import-substitution (for example, India), although in most cases, nations used both strategies. As neoliberalism emerged and the fixed exchange rate system broke down in the early 1970s, the IMF, whose purpose was intrinsically tied to providing foreign reserves to nations under the fixed exchange rate system, no longer had a purpose. They reinvented themselves as the neoliberal attack dog for corporations and global capital. They also provided cover for governments who were embracing the Monetarist ideas of Milton Friedman and intent on imposing fiscal austerity. These governments had become captured by corporate interests and by appealing to external demands from bodies such as the IMF, these governments could depoliticise harsh policy shifts away from Keynesian full employment. I used Britain as an example. Tony Benn, a Left Labour member in the British Parliament and Secretary for Industry, proposed an alternative industrial plan to revitalise British industry in 1975. It was rejected at the time by Harold Wilson and Denis Healey, who were intent on imposing fiscal austerity and deregulating. They used the scare that the IMF would have to bailout Britain as a ruse to force their Monetarist ideology onto the British Labour Party. It was no surprise that in an era where governments started abandoning fiscal support to maintain full employment, deregulated labour and financial markets, and abandoned domestic protections for their industries, many industries would go to the wall. The IMF claimed that this shows industry policy focused on import-substitution can never work. But the culprit was not flawed industry policy. Rather, it was the withdrawal of all the accompanying support structures that made it work, but which ran counter to the neoliberal ideology of ‘free markets’. Now the IMF is having a rethink based on the devastation that neoliberalism has caused. On March 26, 2019, the IMF published a new working paper (19/74) – The Return of the Policy That Shall Not Be Named: Principles of Industrial Policy. Now, we are reading that the IMF has conceded that industry policy interventions that were the basis of economic planning in the Keynesian era were highly successful and only stopped being so, in some cases, when fiscal austerity was imposed and trade controls were abandoned in the 1970s. This is Part 2 of the two-part series on this topic.…

Bill Mitchell – billy blog
IMF changes tune on industry policy – shamelessly – Part 2
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — IMF changes tune on industry policy – shamelessly – Part 1

In 1975, Tony Benn, a Left Labour member in the British Parliament and Secretary for Industry. At the time, the Prime Minister and Chancellor were becoming attracted to Monetarism and started framing and implementing the austerity-type fiscal strategies that are common today. Benn opposed this approach, and, instead proposed a far-reaching alternative economic strategy that involved increased industrial planning to revitalise British industry. The growing ‘free market’ orthodoxy at the time, spearheaded by the IMF and the World Bank, which had transformed into neoliberal enforcement agencies, were vehemently opposed to any form of industry policies or state intervention. As a result, Benn was basically shut out of the debate and this helped transform social democratic politics into the mess it is today. Ironically, now the IMF is changing its tune. It has recently rediscovered how effective industry policies of the type Benn was proposed actually can be if supported by coherent policy structures. Irony two is that these supportive policy structures are the opposite to those typically proposed by the IMF. At the time, there were economists (such as yours truly) who knew that the descent into neoliberalism would be a disaster and hamper growth and more equal distributions of wealth and income. But that view was also shut out. Now, without shame, the IMF are basically admitting the decades of insufferable neoliberal policies that they forced onto nations may have been wrong. Industry policy is back in focus. Imagine if they never had seduced the world with their snake oil. British politics, for one, would have been quite different. Brexit could very well happened in 1975 under a Labour government. And more. This is Part 1 of a two-part series which will finish tomorrow....

The good news is that the IMF seems to be in recovery.

Bill Mitchell – billy blog
IMF changes tune on industry policy – shamelessly – Part 1
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — Inclusive growth means poverty reduction and declining income inequality

I am doing some work on the way technology can be chosen to maximise employment in the pursuit of advancing general well-being. This is in the context of some work I am doing on advancing what is known as ‘relative pro-poor growth’ strategies in Africa via employment creation programs and draws on my earlier work in South Africa on the Expanded Public Works Program. In the current work, I have been assessing ways in which the Labour Intensive Public Works program in Ghana has been deployed to serve this purpose. The problem one confronts when working as a development economist in less well-off nations is that the institutional bias promoted by the IMF and the World Bank is towards advancing, at best, what we term ‘absolute pro-poor growth’. But that sort of agenda typically fails to strengthen other aspects of a strong civil society because it is almost always accompanied by rising inequality which continues to concentrate power and influence at the top and leads to resources being disproportionately expropriated by the wealthy (and usually foreign) classes. Institutions such as democracy, justice, law and order and causes such as environmental sustainability are then compromised....

Bill Mitchell – billy blog
Inclusive growth means poverty reduction and declining income inequality
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

See also

Could this possibly be the result of natural spontaneous order resulting from market competition and personal initiative so that everyone receives their just deserts based on their productivity? Or is the result of asymmetry and bias? If the later how does that arise. Is it solely the result of government as some claim, or it is owing to the asymmetrical power that increasing wealth as ownership of real and financial assets conveys?

Michael Roberts Blog
The top 1% own 48% of all global personal wealth; 10% own 85%
Michael Roberts

Bill Mitchell — IMF Euro hitman in denial of the reality that the monetary union has become

The IMF hitman in Europe, one Poul Thomsem recently published a European Money and Finance Forum (SUERF) Policy Note (October 2018) – A Financial Union for the Euro Area – where he basically told us that any changes that the IMF will allow to occur in the Eurozone architecture will be minimal and will not stop Member States “from being forced to undertake large pro-cyclical fiscal adjustments when the next shock or major downturn hits”. The term “large pro-cyclical fiscal adjustments” means harsh fiscal austerity at the same time as the non-government sector spending in those Member States is collapsing. Fiscal policy thus reinforces the non-government spending withdrawal and worsens the outcome for employment, growth, income generation etc. Why? Because “all member countries” must “respect the Stability and Growth Pact”. End of story. Welcome to the Eurozone dystopia – the world where governments must follow rules set by technocrats which are incapable of delivering sustained prosperity for all but clearly suit the top-end-of-town. He then waxed lyrical about a whole set of neoliberal financial market reforms that the IMF is proposing which will further diminish the capacity of the Member States. But, at that point, he just starts to dream. The Member States are already deeply suspicious of the financial reforms that have been introduced to date, ineffective as they are. They are not about to cede more power to Brussels and Frankfurt any time soon....

Stabilize the EZ financially by destabilizing it socially, politically, and economically. How is that working out for you one wonders, with people taking to the barricades and the old order collapsing as nationalism and populism rise? See below.

Bill Mitchell – billy blog
IMF Euro hitman in denial of the reality that the monetary union has become
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

See also

French authorities have predictably blamed the right-wing for the protests - with interior minister Christophe Castaner denouncing National Rally (*formerly National Front) leader Marine Le Pen of encouraging the violence.

"Marine Le Pen urged people to come to the Champs Elysees, and there are members of the ultra-right putting up barriers," said Castaner, adding "They have responded to Marine Le Pen's call and want to take the institutions of state. We want people to be responsible."
The real cause, however, may be quite a bit more nuanced and a long time coming. As political commentator Kark Sharro suggests in a seven-part tweetstorm, the Yellow Vest movement is "about marginalsation and the impotence felt by ordinary people."

Zero Hedge

Explaining France's Grassroots "Yellow Vest" Movement - And Why It's Spreading Across Europe

Tyler Durden

See also

 As I see it, what was happening ... in the streets, explains the different responses to the two crashes. It was the Left—in the form of political parties (Socialist, Communist, and the left-wing of the Democratic Party), but also labor unions, councils of the unemployed, academics, and so on—that pushed the administration of Franklin Delano Roosevelt and Congress to adopt policies that moved beyond restoring economic growth to fundamentally restructure the U.S. economy (which, of course, continued during and after the war years).*** Nothing similar happened in the United States after 2008. As a result, the policies that were discussed and eventually adopted only meant a recovery for large corporations and wealthy households. Everyone else has been left to battle over the scraps—attempting to get by on low-paying jobs retirement incomes based on volatile stock markets, with underwater mortgages and rising student debt, and facing out-of-control healthcare costs....

Occasional Links & Commentary
Tale of two depressions
David F. Ruccio | Professor of Economics, University of Notre Dame

Bill Mitchell — IMF continues to tread the ridiculous path

I am back in Australia now and I don’t have to stand on my head to write (a reference to the hassles of trying to maintain some order while travelling to different destinations on an almost daily basis). Last week, the IMF released its so-called – Fiscal Monitor October 2018 – and the mainstream financial press had a ‘picnic’ claiming all sorts of disaster scenarios would follow from the sort of financial situations revealed in the publication. At the time of the publication I was in London and the British press went crazy after the IMF publication – predicting that taxes would have to rise and fiscal surpluses would have to be maintained and increased to bring the government’s balance sheet back into balance. Yes, apparently the British government, which issues its own currency, has ‘shareholders’ who care about its Profit and Loss statement and the flow implications of the latter for the Balance Sheet of the Government. Anyone who knows anything quickly realises this is a ruse. There is no meaningful application of the ‘finances’ pertaining to a private corporation to the ‘finances’ of a currency-issuing government. A currency-issuing government’s ‘balance sheet’ provides no help in our understanding of what spending capacities such a government has.…

Bill Mitchell – billy blog
IMF continues to tread the ridiculous path
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Sputnik — Turkey 'Closed Chapter of IMF Credits', Never to Borrow Again - Erdogan

"We have closed the chapter of the IMF credits in order not to open it anymore," Turkish President Recep Tayyip Erdogan said on Sunday addressing the activists of Turkey's ruling Justice and Development Party in the town of Kizilcahamam.

Turning East.

Sputnik International
Turkey 'Closed Chapter of IMF Credits', Never to Borrow Again - Erdogan

Michael Roberts — Greece: on parole

Backgrounder on Greece (and the IMF and Eurocrats). A sad tale of elite rule and rent extraction off the back of ordinary workers with no power or influence — unless they rise up angry and are willing to pursue it.

Michael Roberts Blog
Greece: on parole
Michael Roberts

Michael Hudson — Argentina back on the debt train

Must-read. Michael Hudson gives the background on Argentina's fall in terms of neoliberal capitalism.

Michael Hudson: What really is at issue is whether all debts should be paid, or not? I think that there should be an international rule that no country should be obliged to pay its debts to the wealthy One Percent, especially to a creditor class that prefers to hold its domestic wealth offshore in foreign currencies. No country should be obliged to pay its bondholders if the price of paying means austerity, unemployment, shrinking population, emigration, rising suicide rates, abolition of public health standards, and selloffs of the public domain to monopolists. To make matters even worse, the privatizations demanded by the IMF and World Bank, for instance, will sharply raise the prices for what had been public services, transportation, water and sewer, communications, and telephones.

There should be principle that the domestic people should come before foreigners. But the guiding principle of the IMF, World Bank, and the United States the opposite: namely, that no nation should put its own interests first. Instead, every nation is told to put the interests of international creditors first, even when the cost is impoverishment, dependency, mass poverty and deindustrialization. This is what globalization really means today. It’s an international imposition of class war by the creditor One Percent against labor and the indebted 99 Percent and their governments.

The madness of this was spelled out over 2000 years ago. In Book I of Plato’s Republic you have Socrates arguing against the idea that all debts should be paid. He asks, what if you borrow a weapon from a crazy person, and he asks for it back. Should you give him a weapon if he’s likely to hurt people?

This applies to creditors in general: Should you pay off debts if the creditors are going to use their money to impoverish society and reduce people to debt dependency? That’s what the Republic is all about. We’re still dealing today twenty four hundred years later with the same issue.

The issue is: what should come first: the people’s welfare, or that of creditors?

Michael Hudson — On Finance, Real Estate And The Powers Of Neoliberalism

Argentina back on the debt train
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

Ramanan — The Burden Of Adjustment And Keynes’ Solution

Argentina had a balance-of-payments crisis recently and required help. The IMF has agreed for a stand-by arrangement of $50 billion on the condition in the IMF’s own words:

“At the core of the government’s economic plan is a rebalancing of the fiscal position. We fully support this priority and welcome the authorities’ intention to accelerate the pace at which they reduce the federal government’s deficit, restoring the primary balance by 2020. This measure will ultimately lessen the government financing needs, put public debt on a downward trajectory, and as President Macri has stated, relieve a burden from Argentina’s back.

So Argentina has to agree on policies with deflationary bias to its output. John Maynard Keynes made this observation, had a completely different attitude than the IMF and proposed to change it. From The Collected Writings Of John Maynard Keynes, Volume XXV: Shaping The Post-War World: The Clearing Union, Chapter 1, The Origins Of The Clearing Union, 1940-1942, pages 27-30:

The solution that Keynes proposed was in terms of the monetary system current then. That is no longer the case, but the principle remains the same.

Of course we are past the Bretton Woods system and have a system of a mix of fixed and floating exchange rates but it hasn’t provided the market mechanism required to resolve imbalances. The adjustment is still on output and employment. Hence the need for an official mechanism to resolve imbalances. Bancor isn’t relevant now, but official intervention is.

The Case for Concerted Action
The Burden Of Adjustment And Keynes’ Solution
V. Ramanan

Christine Lagarde — Shining a Bright Light into the Dark Corners of Weak Governance and Corruption

I am gratified that nine countries—the entire G7 plus Austria and the Czech Republic—have already volunteered for this assessment. This is a major vote of confidence in the new framework.

IMF gets a new club to beat the emerging world that is now challenging the West. What's the likelihood of the IMF dealing with corruption in the West. This looks to be just another tool in the box of neoliberalism.

Most countries are affected by corruption of one form or another. Corruption in so-called capitalism is endemic, starting with state capture, since capitalism is based on law and institutional arrangements.

Neoliberalism is a political theory based on state capture — special interests using government to favor capital as a factor of production because this "promotes growth and efficiency." The same with neocolonial wars to spread late-stage capitalism under the rubric of "spreading democracy and freedom." The IMF is just a tool in the neoliberal toolbox.

The IMF itself is corrupt. Look what it contributed to in the destruction and enslavement of Greece.

IMF Blog
Shining a Bright Light into the Dark Corners of Weak Governance and Corruption

Christine Lagarde | Managing Director

IMF Says 2018 Economic Outlook is Rosy, But Austerity is Still Needed Ben Norton interviews Mark Weisbrot

The IMF just released a positive World Economic Outlook report for 2018. Still, in order to make sure that the outlook remains good, the IMF makes recommendation that would lead to recession, says CEPR's Mark Weisbrot.…

GS: There seems to be a general perception that the IMF has changed its ways and adheres less to neoliberal economic orthodoxy than it used to.

MW: … I think the perception that they've changed is really based on mostly what comes out of the research department. There have been some significant changes there. But their policy has changed very little. And you can see that they're having their World Bank and IMF annual spring meetings here in Washington. And this is a big event where you get finance ministers from all over the world, and the press comes and reports on it generally. And so, and this is where you see their world economic outlook, which you mentioned, you know, gives their take on the world economy and what they think countries should do....

TRNN
IMF Says 2018 Economic Outlook is Rosy, But Austerity is Still Needed

Ben Norton interviews Mark Weisbrot, co-director of the Center for Economic and Policy Research

Tim Wallace — UK economy ‘must get more efficient’, says IMF

Britain must make sweeping reforms to pensions, the planning system, infrastructure, education and training, and research and development if it wants to boost economic growth in the years to come, the International Monetary Fund has warned.

Productivity and GDP growth have been relatively weak since the financial crisis, compared to historical levels and relative to other rich economies.

They will stay that way unless serious action is taken....

The Telegraph
UK economy ‘must get more efficient’, says IMF

Tim Wallace