In a report released earlier summarizing the fund's findings from the irrelevant G-20 meeting over the weekend, "Global Economic Prospects and Policy Challenges", the IMF finally acknowledges what pretty much everyone has been warning about for over two years now. Namely: "From an external perspective, however, there is concern that quantitative easing in the United States could result in a flood of capital. In economies where recovery is already well established, policymakers will need to pay increasing attention to building inflationary pressure. Central banks should continue to stand ready to address liquidity problems in the banking sector, particularly in the euro area." Actually the liquidity area that should be addressed is that in the 3rd subbasement of the Marriner Eccles building where the printers work on full blast 24/7. Furthermore, the IMF points out another glaringly obvious factoid of today's global ponzi economy, namely the Chinese property bubble: "Residential real estate prices in some of China's larger cities have risen rapidly since the crisis, spurred initially by stimulative policies aimed at easing restrictions on real estate lending and subsequently by strong income growth, high savings, and limited alternate investment vehicles. While it is difficult to predict how significant the stress from potential property price correction would be, if these risks are realized, there could potentially be global ramifications." But arguably the most interesting observation in the report is that the ongoing tsunami of Fed-driven food price surges across the world, in most cases leading to outright revolution, will end up being invoiced to... you - dear US taxpayer.

"The recent food price increases come in the wake of the deepest crisis since the Great Depression, when countries are more vulnerable and have, in general, less fiscal space. In addition to the inflationary implications, the rapid increase in food prices may have adverse social implications, particularly in low income countries (LICs). The IMF also stands ready to boost its financial support to LICs and other member countries to help them stem the adverse effects of rapid food price increases."

Which means that soon the IMF will be subsidizing countries around the world, all of whom will adopt the Mutual Assured Destruction made so famous by our lunatic Treasury Secretary, and tell the IMF (whose number one sponsor happens to be the US), that either they get bailed out, or bloody revolutions will follow. And yes, America will foot the bill for that too.

Key highlights from the report:

On QE:

With inflationary expectations well anchored, accommodative monetary policy in major advanced economies remains appropriate for now. High unemployment and large output gaps are keeping wages and inflation expectations in the major advanced economies in check, notwithstanding large increases in food and energy prices. Continuing monetary policy accommodation is thus the right policy from a domestic perspective, considering also that the recovery is expected to remain sluggish going forward. From an external perspective, however, there is concern that quantitative easing in the United States could result in a flood of capital. In economies where recovery is already well established, policymakers will need to pay increasing attention to building inflationary pressure. Central banks should continue to stand ready to address liquidity problems in the banking sector, particularly in the euro area.

On Chinese property crash:

In addition to well-known downside risks associated with real estate in major advanced economies, an emerging risk to the global recovery stems from a potentially steep price correction in Chinese property markets. Residential real estate prices in some of China's larger cities have risen rapidly since the crisis, spurred initially by stimulative policies aimed at easing restrictions on real estate lending and subsequently by strong income growth, high savings, and limited alternate investment vehicles. Over the past year, the authorities have stepped up efforts to rein in property prices, recently announcing a range of measures, including raising the minimum down-payment for second-home buyers and enforced a 5½ percent business tax on properties sold within 5 years. Given the government guarantees in place, financial sector risks threaten the fiscal outlook. While it is difficult to predict how significant the stress from potential property price correction would be, if these risks are realized, there could potentially be global ramifications.

And most curiously, on what could be the headlines of tomorrow: "how the IMF fed a hungry world":

Sharp food price increases pose a particular challenge for many emerging and developing economies. The recent food price increases come in the wake of the deepest crisis since the Great Depression, when countries are more vulnerable and have, in general, less fiscal space. In addition to the inflationary implications, the rapid increase in food prices may have adverse social implications, particularly in low income countries (LICs). To minimize the social and economic costs from rapid food price increases, policymakers would need to: (i) avoid discretionary policies, such as export bans and taxes and price controls, that seek to insulate domestic markets, as such actions can increase world food price volatility; (ii) accommodate first-round effects, but be ready to tighten policies to avoid second-round effects that could result in persistent inflation; and (iii) ensure that the poor are protected, ideally through targeted and cost effective social safety net programs. The IMF also stands ready to boost its financial support to LICs and other member countries to help them stem the adverse effects of rapid food price increases.

How providing additional capital does not lead to increasing local inflation in said "LICs" we fail to comprehend. But we will leave that logic to someone with an economics Ph.D.

Full report: