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News Link • Corruption

The IMF: Please Don't Hold Our Heads Underwater

n a word, no. What should be done is to impose the corporate death penalty on those institutions that cannot cover their own debt loads. We should force the bad debt into the open and default it. We must return to a sustainable level of public and private debt, and in the United States that's about half of what's outstanding right now. Pretending that we can "grow" out of this is a lie. We cannot. To do so we would need to double GDP over the next decade, and yet do so without taking on one penny of additional debt anywhere in the system. That amounts to 7% growth each and every year for the next ten, with zero additional debt. That exceeds any long-run GDP growth the United States has experienced on a debt-adjusted basis at any point in the modern era and as such is simply not going to happen. The dreams of political fools must accede to mathematical and historical facts, and on this point the data is clear - we cannot grow out of this. We must instead consolidate out of it and accept the economic pain that will result.

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