The International Monetary Fund, a creature birthed at the Bretton Woods Conference in July 1944, turned 80 years old this week. Its bureaucrats are worried.
The title of the IMF’s recently published World Economic Outlook is titled, The Global Economy in a Sticky Spot. The source of the stickiness, per the WEO, is services inflation. Namely, nominal wage growth, especially in the U.S., is increasing above goods price inflation.
Working stiffs haven’t received a real, inflation adjusted, raise in four decades. Shouldn’t a slight increase in nominal wages above goods price inflation be a welcomed occurrence?
Not for the IMF and its banker buddies. From their perspective, services inflation is inhibiting the ability for central banks like the Federal Reserve to cut interest rates. They want lower interest rates to help soften the fallout of all the bad loans made during the coronavirus madness. The Treasury also wants lower interest rates so it can finance its massive pile of government debt. Continue reading