The IMF has now cut its current-year growth forecasts nine out of 12 times in the last three years as it consistently overestimated how quickly richer countries would be able to pull free from high debt and unemployment in the wake of the 2007-2009 global financial crisis.
It also lowered its expectations for longer-term potential growth, something its chief economist Olivier Blanchard called “the force from the future.”
“You have these forces from the past, the forces from the anticipated future … and I think that explains the sequence of revisions that we’ve had,” Blanchard said in an interview.
Well, of course, it is ‘the forces from the anticipated future’! That’s what’s holding back the economy. Now politicians only have to fight ‘the forces from the anticipated future’ and then we’re off to … Olivier Blanchard had better moments than this one. It all reeks of intellectual bankruptcy. There is only one institution that can be forced to spend when nobody else does, and that is the government. Like or not.
More government spending does not mean a bigger government, does not mean more public workers, does not mean redistribution from poor to rich. All of that is independent from the question how much the government spends, except size of the government. Also, tax cuts could also provide economic stimulus to the economies, leading to a widening government deficit just the same.