But in the short term there are perhaps more losers than winners and the result, as we are seeing, is political paralysis.In the US they ought to be dealing with the budget deficit, but that would mean tax rises or less money spent rebuilding New Orleans Neither outcome is possible. It also has a current account surplus of 5 per cent of GDP, which is absurd. It is in the long-term self-interest of the electorate to bring in economic reforms at a swifter pace. The only credible argument is self-interest and, since we are dealing with democracies, there is a short-term/long-term divergence. Take Germany, which now seems to have a natural rate of growth of little more than 1 per cent a year.

The question is how to go beyond the economic analysis and find ways of prodding countries into changing their policies.I’m not sure there is much that can be done. The IMF has done some illustrations of what might happen if there were disruptive change, and they are not good news. The worry was that, if they did so, they would disrupt trade and undermine global growth. So the IMF would lend them money to tide them over and support policies to bring things back into balance.The world has moved on. Exchange rates are no longer fixed, so the pressure to adjust is less immediate; global financial flows are much larger and the resources of the IMF much smaller in relative terms; and in the case of the US, the problem is not the ability to finance a deficit but arguably too much of an ability to do so.Nevertheless, the principle is the same. There is a grave threat to global economic stability and it is very much in the self-interest of all players that these adjustments take place in an orderly way.

There are two sides to every economic transaction, to every imbalance. The IMF does not quite put things in these terms but maybe it should.If you go back to the original purpose of the institution, it was to prevent countries having to cut back demand too swiftly if they ran into balance of payment difficulties. If the US starts to correct its budget deficit, then that helps too. And if the eurozone and Japan manage to achieve faster growth, that gives still further help.The underlying point is a very simple one: correcting global imbalances is not just the responsibility of the US. The IMF projections for growth this year are shown in the left-hand chart.There are two other aspects to the IMF’s work which seem to me to be particularly enlightening.