The World Bank on Jan. 10 followed the IMF in forecasting a dramatic slowdown in the world economy in 2016, and a former U.S. Treasury Secretary wrote in the Washington Post, “Why the Fed Needs To Prepare For the Worst Right Now.” Although these warnings underlined the fraudulent character of Barack Obama’s planned “economic recovery” speech Tuesday night, they blindly ignore the actual issue of the worsening financial collapse, and the solution to it.

Last week the IMF acknowledged that total world trade had actually shrunk from the last half of 2014 to that of 2015. In this report, the World Bank said that the world economy could be hit by a “perfect storm” in 2016, and a severe recession, if a slowdown in the biggest emerging markets were “heightened by severe market stress,” as when the Federal Reserve set off “taper tantrum” by prematurely announced the end of quantitative easing in 2013.

By pointing to this relatively minor Fed episode — a brief day in the park compared to the market crashes hitting now — the World Bank was indicating its fear that the Fed, having started to raise interest rates, will have to lower them again, causing panic throughout financial markets.

But more importantly, it was denying reality: “market stresses” in the U.S. and European financial systems are not a possible “heightening factor” in a developing sector slowdown; these now-plunging trans-Atlantic debt markets have been the cause of slowing down growth in the BRICS countries in particlar.

Former U.S. Treasury Secretary Lawrence Summers’ column in the Post is a plain warning that the market gyrations since Jan. 1 are the signal of a coming economic plunge, and that the Fed must be ready to take action “against the worst.” Summers here doesn’t say what action; but he obviously means going back down to zero or even negative interest rates, and resuming QE money-printing for the banks.

That is complete folly. If Alexander Hamilton were alive tofsy, he would consider a U.S. central banker who proposed to print money and give it to bankrupt bank speculators, to be a dangerous idiot. The problem is bad debts, worthless bank assets, which have no means of repayment coming to them. The solution is to shut down the Wall Street institutions loaded with those worthless assets, and then replace the economy’s “lost money” with Federal credit directed to productivity and new productive employment.