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Luis Alberto Moreno (L), president of the Inter-American Development Bank, talks with Christine Lagarde, managing director of the International Monetary Fund (IMF), during the opening meeting of the Finance Ministers of the Americas and Caribbean at the Inter-American Development Bank in Washington October 9, 2013.
Luis Alberto Moreno (L), president of the Inter-American Development Bank, talks with Christine Lagarde, managing director of the International Monetary Fund (IMF), during the opening meeting of the Finance Ministers of the Americas and Caribbean at the Inter-American Development Bank in Washington October 9, 2013.
(Gary Cameron/Reuters)

The IMF waves goodbye to austerity

The International Monetary Fund issued a dark warning this week about heightened risks to world growth. It cited the political deadlock in Washington and faltering prospects in emerging economies, and cautioned the Federal Reserve against a quick exit from monetary easing, putting the potential global bond losses stemming from an abrupt change in Fed policy at a whopping $2.3-trillion (U.S.). This is but the latest example of the IMF’s departure from its old austerity-above-all-else dogma, which it had frequently used to bludgeon hapless borrowers.