G-20 to talk about ‘exit strategies’…
With the developed and developing economies printing money like it’s going out of style, the exit strategy – i.e., taking back the hundred percent increase in the monetary base (at least in the US) – is rumored to be the topic du jour at the G-20 summit later this month.
According to Reuters, the “G20 countries have agreed it is too soon to withdraw measures to end the global economic crisis and will discuss coordinating policy to wind up the trillions of dollars in support at talks in London this week.”
The article focuses on fiscal policy, but only a delinquent discussion of exit strategy leaves out the record monetary easing of late. However, I would most certainly agree that it is too soon.
The global labor market is plummeting.
And global sticky wages are consequently growing at snail-speed rates.
I’ve always been a big believer in the output-gap story. And until that unemployment rate starts to fall, I just don’t see how global inflation is going to be much of a problem.