THE International Monetary Fund (IMF) yesterday warned that the massive surge in US inflation driving the Central Federal Reserve Bank (Fed) to push up interest rates and cut off money printing will lead to a worldwide economic crash.
The IMF states: ‘Broad based US wage inflation or sustained supply bottlenecks could boost prices more than anticipated and fuel expectations for more rapid inflation.
‘Faster Fed rate increases in response could rattle financial markets and tighten financial conditions globally. These developments could come with a slowing of US demand and trade and may lead to capital outflows and currency depreciation in emerging markets.’
With the core US inflation reaching a decade old high of nearly 6% and rising, the Fed is desperate to try to reign it in by ending its asset-purchase programme in March and increasing interest rates three times in 2022.
Asset purchasing is the name given to Quantitative Easing – the process by which the Fed and other central banks print worthless money used to flood the economy and keep capitalism from drowning and plunging into bankruptcy.
Near zero interest rates made all this debt just about affordable, but it has fuelled inflation across the capitalist world.
In the past, the central banks dismissed inflation as a threat, confident that they could bail out the banks, bosses and entire governments simply by a never-ending process of printing money.
The chickens have now come home to roost. There is a manic scramble to try to cut back on money printing to try to stop the inflationary spiral getting out of control. The IMF is clearly very worried about the knock-on effects of this. In particular, they warn of the disaster it will wreak on the so-called vulnerable, emerging economies of the world.
The IMF blog states: ‘In recent months, emerging markets with high public and private debt, foreign exchange exposures, and lower current-account balances saw already larger movements of their currencies relative to the US dollar.’
The IMF is worried this will lead to a banking collapse saying: ‘For countries where corporate debt and bad loans were high even before the pandemic, some weaker banks and nonbank lenders may face solvency concerns if financing becomes difficult,’ and advising countries: ‘Resolution regimes should be readied’.
Although these dire warnings from the IMF appear to be aimed solely at the dangers facing ‘vulnerable, emerging markets’ with massive debt, in fact, the biggest indebted nations are the ‘advanced’ capitalist economies.
The US national debt stands at over $29.3 trillion while the private debt for American households reached a massive $15.24 trillion in November.
In Britain, the national debt is over £2.3 trillion while the average total debt per household was £62,965 in October 2021 – with the total unsecured debt per UK adult standing at £3,713.
Huge public and private debt alongside an economy composed of companies that exist entirely through cheap debt, are not confined to emerging economies – every capitalist nation faces bankruptcy.
The measures now being taken by the Fed and the Bank of England to try to hold back the tide of inflation will inevitably lead to the collapse of indebted companies, the collapse of banks, and workers being faced with impossible demands for repayments on the debts they incurred just to survive the capitalist crisis and austerity attacks on their wages and benefits.
The unspoken fear expressed by the IMF is that, with no way out of its crisis, capitalism internationally is being confronted by workers, young people and the masses of the world who are not prepared to accept poverty and starvation to keep the bosses and bankers from collapse.
Across the globe they are rising up, with trade unions in the US, UK and Europe taking mass strike action demanding wage increases that is putting them in direct confrontation with the bosses and a capitalist system determined to inflict its crisis on their backs.
The only answer to the world crisis of capitalism is the world socialist revolution to put an end to bankrupt capitalism once and for all.
This requires the building of revolutionary parties of the Fourth International in every country to lead the fast developing world socialist revolution to victory.THE International Monetary Fund (IMF) yesterday warned that the massive surge in US inflation driving the Central Federal Reserve Bank (Fed) to push up interest rates and cut off money printing will lead to a worldwide economic crash.
The IMF states: ‘Broad based US wage inflation or sustained supply bottlenecks could boost prices more than anticipated and fuel expectations for more rapid inflation.
‘Faster Fed rate increases in response could rattle financial markets and tighten financial conditions globally. These developments could come with a slowing of US demand and trade and may lead to capital outflows and currency depreciation in emerging markets.’
With the core US inflation reaching a decade old high of nearly 6% and rising, the Fed is desperate to try to reign it in by ending its asset-purchase programme in March and increasing interest rates three times in 2022.
Asset purchasing is the name given to Quantitative Easing – the process by which the Fed and other central banks print worthless money used to flood the economy and keep capitalism from drowning and plunging into bankruptcy.
Near zero interest rates made all this debt just about affordable, but it has fuelled inflation across the capitalist world.
In the past, the central banks dismissed inflation as a threat, confident that they could bail out the banks, bosses and entire governments simply by a never-ending process of printing money.
The chickens have now come home to roost. There is a manic scramble to try to cut back on money printing to try to stop the inflationary spiral getting out of control. The IMF is clearly very worried about the knock-on effects of this. In particular, they warn of the disaster it will wreak on the so-called vulnerable, emerging economies of the world.
The IMF blog states: ‘In recent months, emerging markets with high public and private debt, foreign exchange exposures, and lower current-account balances saw already larger movements of their currencies relative to the US dollar.’
The IMF is worried this will lead to a banking collapse saying: ‘For countries where corporate debt and bad loans were high even before the pandemic, some weaker banks and nonbank lenders may face solvency concerns if financing becomes difficult,’ and advising countries: ‘Resolution regimes should be readied’.
Although these dire warnings from the IMF appear to be aimed solely at the dangers facing ‘vulnerable, emerging markets’ with massive debt, in fact, the biggest indebted nations are the ‘advanced’ capitalist economies.
The US national debt stands at over $29.3 trillion while the private debt for American households reached a massive $15.24 trillion in November.
In Britain, the national debt is over £2.3 trillion while the average total debt per household was £62,965 in October 2021 – with the total unsecured debt per UK adult standing at £3,713.
Huge public and private debt alongside an economy composed of companies that exist entirely through cheap debt, are not confined to emerging economies – every capitalist nation faces bankruptcy.
The measures now being taken by the Fed and the Bank of England to try to hold back the tide of inflation will inevitably lead to the collapse of indebted companies, the collapse banks, and workers being faced with impossible demands for repayments on the debts they incurred just to survive the capitalist crisis and austerity attacks on their wages and benefits.
The unspoken fear expressed by the IMF is that, with no way out of its crisis, capitalism internationally is being confronted by workers, young people and the masses of the world who are not prepared to accept poverty and starvation to keep the bosses and bankers from collapse.
Across the globe they are rising up, with trade unions in the US, UK and Europe taking mass strike action demanding wage increases that is putting them in direct confrontation with the bosses and a capitalist system determined to inflict its crisis on their backs.
The only answer to the world crisis of capitalism is the world socialist revolution to put an end to bankrupt capitalism once and for all.
This requires the building of revolutionary parties of the Fourth International in every country to lead the fast developing world socialist revolution to victory.
