IMF and The Global Austerity Programs

IMF Global Austerity Programs


Austerity measures are typically taken if there is a perceived threat that government cannot honor its debt liabilities. In such situations, inter-governmental institutions such as the International Monetary Fund (IMF) come in and demand austerity measures that on average have not yet been proven to be productive. Opponents argue that austerity measures depress economic growth, which ultimately causes governments to lose more money in tax revenues. In countries with already anemic economic growth, austerity can engender deflation which inflates existing debt. This can also cause the country to fall into a liquidity trap, causing credit markets to freeze up and unemployment to increase. Opponents point to cases in Ireland and Spain in which austerity measures instituted in response to financial crises in 2009 proved ineffective in combating public debt, and placing those countries at risk of defaulting. Such measures are presently being set in motion in the united states of America states such as Indiana and New Jersey, California is a likely candidate and many more will follow as the economics woe's of the United States of America come to grip, forcing many states to accept such measures that will eventually lead to the break up of the United States, Canada, and Mexico creating a IMF imposed North American state nation.