Feature

Even the IMF says markets need minders

So it is that the IMF has given its blessing to central-bank interventions and capital controls and put “employment and equity” at the heart of its policy agenda, said Joseph Stiglitz in Slate.com.

Joseph StiglitzSlate.com

The International Monetary Fund finally understands what the U.S. fails to grasp, said Joseph Stiglitz: that “free and unfettered markets are neither efficient nor stable.” That wasn’t obvious in 1997, when the IMF embraced the free-market ideology that had supposedly fueled the U.S. economic boom. Back then, market deregulation and minimal controls on cross-border capital flows looked like the keys to eternal prosperity.

The 2008 global crisis, for which U.S. financial deregulation was “a prime cause,” proved otherwise, and since then, government intervention has become the way of the world, and even those “who are ideologically opposed to intervening believe they have no choice but to do so.” The Federal Reserve’s unabashedly interventionist policy of quantitative easing finally “made the demise of the ideology of unfettered markets inevitable.”

So it is that the IMF has given its blessing to central-bank interventions and capital controls and put “employment and equity” at the heart of its policy agenda. It’s high time Washington did the same.

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