| Three quarters of the world (in economic terms) is pursuing a road to normalisation of fiscal and monetary policy, aiming to restore fiscal balance, positive real interest rates, moderate inflation and the discontinuation of emergency measures. Japan is, understandably, the exception to the last of these measures. The road back to steady and sustainable growth often passes through austerity, as epitomised by the economic programmes of the UK and the euro zone peripherals. Canada, from where this Weekly is written, may be the Western world’s exception in not having to make the austerity detour, and its government has been duly rewarded at the polls. |
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| One quarter of the world is following a road all of its own, a road that is only accessible because of the international role of its currency. The United States continues to spend more than it earns, a path which we have often described as an impasse, as there is no way out other than reversal. Many American commentators are well aware of this, yet the political leaders are deaf, or choose to be deaf, to their warnings. The two political parties make noises about cutting the budget deficit, but pull in different directions so that no viable plan emerges. |