Christine Lagarde, managing director of the International Monetary Fund, warned Sunday that the U.S. fiscal is troubling the whole world.
“It’s very concerning,” Lagarde said on NBC's "Meet the Press." “The world was doing better. There was recovery in the U.S., in Europe at last. Japan was turning the corner. The emerging markets were still growing fast and the low-income countries were really showing strong growth.”
But the concern then turned to the impact of U.S. monetary policy; 300 finance ministers, she said, "found out that the debt ceiling was the issue. They found out that the government had shut down and that there was no remedy in sight. So it really completely transformed the meeting in the last few days,” Lagarde said.
David Gregory, moderator of “Meet the Press,” brought up some U.S. politicians think the effect of default is overstated and that the Treasury could work around it.
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“Creative accounting is not the solution, and markets know that. The counterparts to the United States know that,” replied Lagarde, a former finance minister of France.
Lagarde explained that the U.S. economy is looked at somewhat paradoxically, “We say hurry up, but slow down. Hurry up because measures have to be taken now to deal with entitlements, as you suggested. Because there is a lot of entitlement coming up and big liabilities as well in terms of interest payment. But we say slow down because the point is not to contract the economy by slashing spending brutally now as recovery is picking up.”
Watch the full interview of Christine Lagarde, the managing director of the International Monetary Fund, in the videos above.