http://www.imf.org/external/pubs/ft/weo/2003/02/index.htm
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This sounds rather serious, to put it mildly.
I found this bit very interesting:
"Arguing that the world's big economies were already too dependent on the willingness of American consumers to live beyond their means, the IMF said the US could not continue to run a current account deficit of 5% of GDP."
It's often said that the US is the 'engine of the world's economy.' I've always interpreted the phrase to mean that if Matsushita of Japan and Samsung of S. Korea, to name two prominent examples, needed to revive their growth curves the easiest way was by depending upon the Americans to buy till it hurts - and perhaps beyond.
The IMF seems to be saying that this is a bad foundation for global capitalism given the long-lasting structural weaknesses of the US economy and the fact that American overextension cannot be supported forever.
American economists' counter-arguments, though very technical and beyond my scope, appear to depend upon the size and diversity of the US economy - plus the traditional dependence of the world upon the dollar as a common instrument.
The IMF's warning seems to say, 'you're size isn't that important anymore relative to other complex economies and dollar dependence is a house of cards given the aforementioned problems. The world needs to diversify its sources of growth and the Americans need to get their accounts in order.'
I'm curious as to how professional economists, mainstream and off the beaten track, are responding to this IMF statement.
DRM
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