The Macro Downgrade Cycle Begins...

Part of the reason stems from, what I can tell, is a misunderstanding over the word “stimulus.” John Maynard Keynes would be appalled.


Growth in the United States, buoyed by a procyclical fiscal package, continues at a robust pace and is driving US interest rates higher. But US growth will decline once parts of its fiscal stimulus go into reverse.


How can it be “procyclical” if after it ends the cycle downgrades? That’s not stimulus, it’s mere interference. True stimulus would, as Keynes claimed, “pump prime” meaning it would set off a virtuous circle whereby the removal of said stimulus would be rendered immaterial to the cycle that followed. The economy doesn’t go up and come back down, it goes up and then keeps going.

I don’t really think the IMF has misstated Keynes at all, rather they have to say something about global plateaus and the reemergence of those damn clouds. They are, at present, presented overseas in Asia.


The negative revisions for emerging market and developing economies are more severe, at -0.2 and -0.4 percentage point, respectively, for this year and next year.


These are all, the IMF assures us, still very good numbers and projections. They’ve merely adjusted from something like perfect to a little less than perfect.

And they sound exactly like every bond rating downgrade going from AAA to AA. What are the chances this one, unlike the last three, stops there?

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