The Next Recession’s Cure Might Be Worse Than the Disease

Let’s say you’re sick and your doctor tells you you need two kinds of medicine — and you can totally afford both medicines, lucky you — but instead of doing what the doctor says, you say, “I don’t think so, Fancy Doctor Lady,” and take only one of the medicines because you have some kind of goofy superstition about the other one. And you just keep getting sicker and sicker, but you keep not taking that medicine because you think you know better than Fancy Doctor Lady.

That would be pretty dumb, right? But that is what our august world leaders are doing to the global economy, basically. Some Fancy Economist Ladies and Gentlemen are gathered in Washington this week for meetings of the International Monetary Fund and World Bank, at a time when the global economy is teetering on the edge of a serious downturn. These economic brainiacs will spend the confab talking about how fiscal policy needs to start pulling its weight after nearly a decade of central banks doing all the work, writes Mohamed El-Erian. Unfortunately, political resistance means that probably won’t happen until things get much, much worse.