Thursday, May 19, 2005

IMF DELICATELY WARNS USA ABOUT DEBTS

opium den
Thanks to economic contractions further wracking the poor third world and reduction in use of oil by the first world, the price of oil has declined somewhat reviving hopes that there is no geological limits to oil pumping. The IMF sighs with relief and signals thatall is well, this crisis will pass and everyone can resume gorging.
The International Monetary Fund's forecast of global economic growth this year is unchanged at 4.3 percent although the U.S. current account deficit is still weighing on the world economy, IMF managing director Rodrigo Rato said on Thursday.

Oil prices have not accelerated further, but the U.S. current account deficit has not been corrected, Rato said, adding that the European Central Bank should not rule out an interest rate cut if economic growth weakens.
Are we losing our minds here? According to ancient laws of commerce, interest rates were set according to level of risk or to attract funds to lend. Over and over again, we see our rulers demanding that we "save" yet they provide no incentive to save. Earlier, Culture of Life News ran the story about elderly being tricked into signing up for long range "investments" only to find they can't access the money, all this for a reasonable return of 7% which is what the banks should be offering for ordinary deposits!

Instead, even the IMF, those former hard nosed lenders of last resort, pretend that interest rates are set only for one purpose: to keep recessions at bay. This monetarism view of money is what fuels the coming currency/wealth crisis: lending money world wide at a price that is cheaper than money itself. Namely, this is one huge gift to ourselves. The first world grants this over and over again, this open ended "loan" that seems to grow and grow and be less and less effective as it grows. Instead of printing mere dollars, we create it out of thin air via number crunching by computers. No mere printing press has to make this money visible. This is why the funds in DC for our retirement don't exist. It is a dossier in a folder in a safe that merely notes the fact that this money is owed to us in some future event.
`Oil prices are around where we put them, but there has not been an acceleration from there. Neither has there been any increase in inflation,'' Rato said. ``Monetary policy has been quite effective.'' A sharp rise in oil prices in the past year has raised concerns that inflation would rise and economic growth slow sharply around the globe.

But Rato said crude prices around $50 per barrel did not look that high any more, although the U.S. current account deficit had not been corrected.
In other words, our masters have decided the price of oil is OK. They managed to create money out of thin air to surround this oil hike and thus make inflation dissappear. Of course, the mechanism they used was to simply lie. They pretended that the real 6% inflation rate in America isn't there because it doesn't cover computers or cars. This lie is going to destroy us.

Interesting, isn't it, how this "economist" hails this whole mess as "monetary policy has been quite effective"? It did "work", of course, in the sense that it allowed them to contiue stealing from savers and transfering this wealth to the rich. The rich invest, not save. They buy stuff, not park it in bank accounts.
He also said the European Central Bank should not rule out a cut in rates if growth weakened.

``Under the scenario of greater weakness in the European economy it should not be ruled out,'' he said.

``We think that no type of measure should be ruled out if the weakness becomes much more pronounced. That is our position and we believe that it is difficult to argue against it because a central bank has its options open by definition.''

The ECB has signaled it is in no hurry to raise the main euro zone rate from an historic low of 2 percent, where it has remained for almost two years. But ECB policymakers, worried that inflation pressures may build up, have said a cut is not on the agenda.
Now the cautious Europeans are imitating the rash USA. They are viewing the vast slush of international funds to be something they can raid at will no matter how low the interest rates. These same monsters will make a straight face and tell the second and third world nations that they have to balance their budgets and pay realistic interest rates or else.

China is now taking over Europe's industrial base. To do this, they are offering tons of money in return at below the rate of inflation, the exact same deal they gave us. The Europeans are now taking the bait. It is probably too late to change course. Once addicted to monetarism and free loans they can't resist this. Even though in the end, they are digging their own graves.

This has happened not once but repeatedly in history. Rome lost the trade game with China. Britain was losing it in 1800 when they used their rising military power, thanks to the struggle with Napoleon, to turn on China in the early 1800s and attack successfully. Maybe we all think we can repeat the Opium wars again.
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