IMF Calls For Demise of Dollar

The International Monetary Fund on Wednesday stepped up the pressure for far-reaching shifts in exchange rates, declaring that the dollar will have to depreciate “significantly” over the medium term if global economic imbalances are to be resolved in an orderly fashion

In other words, they want the dollar to take a nose dive - and I'm sure Bernanke will oblige.

But, while this will decrease the value of our debts and "correct" trade imbalances, it will decimate American purchasing power in a consumer economy awash in imports.

In its clearest statement to date on this highly-charged subject, the IMF said it was essential that currencies in Asia and of oil exporters were allowed to appreciate as part of the required “realignment of exchange rates”. But it shied away from giving any specific figures as to the extent of appreciation required.

The statement came in the IMF’s twice-yearly World Economic Outlook, published on Wednesday, which highlighted global imbalances as the biggest threat to what was otherwise an “unusually favourable” economic environment.

Unusually favorable for industrialists and bankers - NOT workers.

It cautioned that a flattening out in US house prices could have a bigger effect on consumption than some studies show.

Now, that's an understatement!

The IMF said this year could prove a “watershed year” in which countries either capitalised on benign circumstances to address global imbalances, or spurned the opportunity. Exchange rate shifts would have to be accompanied by rebalancing of demand across the world, with steps to increase savings in the US, raise consumption in China, investment in the rest of Asia and boost productivity growth in the non-tradeable goods sectors in Europe and Japan.

Make no mistake, this is a threat.

If we don't quietly go with the program, they're going to conduct a hostile takeover.

They intend to serve as the global equalizers - and by that I mean minimum wages for all.

The World Economic Outlook also cautioned against becoming complacent about high oil prices. It said consumers may still be treating current increases as temporary, rather than permanent losses.

In other words, get used to it.