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IMF Warns of Civil Wars

Blog Feb 16, 2011

The International Monetary Fund (IMF) has warned that global inequities have emerged that could threaten to derail the global recovery as well as ignite civil wars in countries that are the most unequal.

Dominique Strauss-Kahn, the IMF’s chief, said that the global economic recovery is built on an “unstable foundation” with the wealthier nations troubled by unemployment and the BRIC (Brazil, Russia, India and China) nations at the brink of overheating.  He further stated that “It is not the recovery we wanted. It is a recovery beset by tensions and strain, which could even sow the seeds of the next crisis.”

With growing global unemployment, widening income gaps and 400 million youths joining the work force in the next 10 years he states “We could see rising social and political instability within nations – even war.”  The tensions in North Africa could be an insight into what the future may hold.

Mr. Strauss-Kahn says that countries need to curb large external surpluses, exchange rate adjustment should not be resisted and capital controls should not be imposed to control the inflow of funds.  He also warns that China needs to slow its growth before inflation becomes out of control.

Rising food prices are a major threat to further protests and civil unrest worldwide.  As the US continues to print money those dollars need to find a home.  Much of these dollars find their home in emerging economies like the BRIC nations and in commodities such as oil and food.  As a result food prices are rising rapidly around the world.  Citizens in countries like Egypt spend around 40% of their incomes on food.  This puts extreme budgetary pressures on their citizens in addition to other mounting issues, causing unrest.

We live in a time fraught with uncertainty.  This is why we at ITM Trading feel that it is so important to protect the assets that we have spent years building and we urge our clients to own precious metals.  Gold and silver have proven many times throughout history to be an excellent hedge in times just like these.  One of gold’s major functions is to keep up with inflation and during bull markets even outpace inflation.  Gold has risen over 450% in the last ten years and looks as though it is poised to go much higher from here.

Thumbnail Photo We believe that everyone deserves a properly developed strategy for financial safety.

Lynette Zang

Chief Market Analyst, ITM Trading

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