ZURICH (Reuters) - The financial crisis that has engulfed many top banks is spiraling into a broader economic crisis that has yet to peak, International Monetary Fund's top economist Olivier Blanchard told a Swiss newspaper on Saturday.
Reuters - The financial crisis that has engulfed many top banks is spiraling into a broader economic crisis that has yet to peak, International Monetary Fund's top economist Olivier Blanchard told a Swiss newspaper on Saturday.
Yves here. Even when Blanchard takes pains to characterize his remarks as personal, they can at least be assumed to have a solid following at the IMF. His effort to summarize findings from a recent IMF conference, the one that garnered a great deal of attention due to Larry Summer’s remarks on secular stagnation, can also be seen as a statement of what I call leading edge conventional wisdom among mainstream economists.
The International Monetary Fund's top economist said Monday there was little risk of a sharp rise in inflation in the United States and Europe, despite spikes in food and energy prices.In the US and Europe, "oil prices and food prices don't seem to have large inflationary effects," Olivier Blanchard, the IMF's chief economist, said at a conference in Washington.Blanchard said that risks were muted thanks to Western central banks' seriousness in ensuring price stability.
The IMF's woeful forecasting record, chronicled extensively before, has just taken yet another hit, following the latest flip flop on emerging markets. Try to spot the common theme of these assessments by the IMF. IMF Chief economist Olivier Blanchard, April 11, 2011 (source):
I interpret this as IMF chief economist Olivier Blanchard saying, as clearly and straightforwardly as his office allows him to, that in his judgment the 2% per year inflation target is past its sell-by date and rotted, and that the North Atlantic economies need to move to a 4% per year inflation target in order to reduce the risk of another 1932, or another 2010.
What do you think?
Monetary Policy Will Never Be the Same