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IMF paper warns of 'savings tax', mass write-offs and a wave of haircuts as West's debt hits 200-year high, 02 Jan 2014

IMF paper warns of 'savings tax' and mass write-offs as West's debt hits 200-year high

Much of the Western world will require defaults, a savings tax and higher inflation to clear the way for recovery as debt levels reach a 200-year high, according to a new report by the International Monetary Fund.

The IMF working paper said debt burdens in developed nations have become extreme by any historical measure and will require a wave of haircuts, either negotiated 1930s-style write-offs or the standard mix of measures used by the IMF in its “toolkit” for emerging market blow-ups.

“The size of the problem suggests that restructurings will be needed, for example, in the periphery of Europe, far beyond anything discussed in public to this point,” said the paper, by Harvard professors Carmen Reinhart and Kenneth Rogoff.

The paper said policy elites in the West are still clinging to the illusion that rich countries are different from poorer regions and can therefore chip away at their debts with a blend of austerity cuts, growth, and tinkering (“forbearance”).

http://www.telegraph.co.uk/finance/financialcrisis/10548104/...

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what a joke. Savings tax?

what a joke. Savings tax? that equals bailins. I sure hope people are not sitting on dollars. Buy gold and silver and hold it in your own possession.

Engineered financial repression

Wasn't really aware of some of the historical examples they cite - anyone have a link
to the original paper?

"Financial repression can take many forms, including capital controls, interest rate caps or the force-feeding of government debt to captive pension funds and insurance companies. Some of these methods are already in use but not yet on the scale seen in the late 1940s and early 1950s as countries resorted to every trick to tackle their war debts.
The policy is essentially a confiscation of savings, partly achieved by pushing up inflation while rigging the system to stop markets taking evasive action."

All for our benefit, of course...

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