The Organization For Economic Cooperation and Development (OECD) is urging the nations of the world to be prepared for and have a coordinated plan to simultaneously engage in major "fiscal stimulus" in the event of a downturn in the global economy.

"Fiscal stimulus" is how economists refer to a government substantially increasing spending, while holding taxes constant or even reducing them. By pouring more money into the economy, while not taking more money out (or taking even less money out), the theory is that the economy and employment will get a large and positive jolt, and that this jolt will hopefully create sustainable economic and employment growth rates that persist after the stimulus is gone.

In other words - the OECD is urging the aging and heavily indebted major economic powers of the world, to be prepared to act in concert to simultaneously and rapidly borrow more money to pay for the fiscal stimulus, and thereby rapidly increase their national debts (and ongoing budget burdens in paying for those debts thereafter).

This premise of this analysis is that what is "in play" with such recommendations is not just the abstractions of international economics, but properly understood, this is the sort of reality-based information that should potentially have a quite direct impact on individual decisions for long term investment strategies, as well as retirement planning.

This analysis is part of a series of related analyses, an overview of the rest of the series is linked here.

The Recommendation

As covered in a recent Wall Street Journal article titled "With Central Banks Out of Ammo, Governments Urged To Ready Stimulus for Next Downturn" (11/21/18, link here), the OECD is urging the governments of the world to prepare big and coordinated spending plans.

"Governments around the world must prepare spending plans they can roll out quickly and in concert should the global economy slow sharply, given that central banks have largely run out of ammunition to fight a slowdown, the Organization for Economic Cooperation and Development said."

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