Saturday, March 14, 2009

The Drawbacks of a World Stimulus

I read an interesting article on a counterpoint to world scale economic stimulus- pretty interesting...

It goes like this: Many people are calling for an increase in the World Monetary Fund, through contributions from wealthy nations intended to help the rest of the world. Some now believe that the positives of massive stimulus could be outweighed by government borrowing on international capital flows. That is, excessive spending in places like the US and other developed nations will slow down capital flows to emerging markets and other nearly broke countries. An increased WMF would help nations that cannot borrow easily, but it may not be enough. Something to consider if one is planning to put money to work overseas and at the same time believes that more large-scale stimulus may be coming.