8 ms·

Odd how the author doesn't even touch on the causes of Argentina's persistent inflation. Rather, it's presented as though it came from nowhere, and the only rea

Odd how the author doesn't even touch on the causes of Argentina's persistent inflation. Rather, it's presented as though it came from nowhere, and the only real story is how people deal with it.

harpiaharpyja 5y ago
It's pretty bizarre.
steelstraw 5y ago
That is curious. What are the causes?
- pmcollins 5y ago
  gov’t insiders printing money
- ajot 5y ago
  IANAE, but I'll say it's mostly seigniorage to fill up for the fiscal deficit. And if you try to cut the money printer (without taking some.huge debt), you have to squash the deficit, which is mostly subsidies to electricity, gas and public transport, and non-contributive retirements. You can't, politically speaking (and maybe legally too), cut the retirements, so you have to cut the subsidies, which will increase the measured inflation, at least for a few months.
  - Izikiel43 5y ago
    > You can't, politically speaking (and maybe legally too), cut the retirements Funny enough, that's what the current government did. They removed a law from the previous government which ensured that pensioners would be paid inflation + x% so that their real income won't decrease, and now the government decides on a whim what the pension raise would be (the pensions have been increased by very little very sparsely), effectively cutting retirements, as inflation eats through them. They can't cut subsidies because most of their voters are poor, and if they touch that, shit hits the fan, whereas they don't give a shit about old people, since they lose them money and don't vote for them. I'm so happy to have moved to the us and have a 401k and ira accounts the government can't touch.
    - ajot 5y ago
      Well, I meant cut them in a "LOL, no more pensions for you, starve to death or something". But you're right, the use-the-LELIQs-to-increase-retirements plan is marching as intended.
      - Izikiel43 5y ago
        > "LOL, no more pensions for you, starve to death or something". Yeah, they won't say they are doing that, but they are doing that.
  - ephbit 5y ago
    > ... if you try to cut the money printer (without taking some.huge debt), you have to squash the deficit ... Right. Governments would have to do sound budgeting. But people who advocate for a balanced budget typically get laughed out of the room. The way I see it, the real reason why governments most often need ever increasing debt-based budgets is: a growing proportion of the circulating money gets continuously redirected into (and by) the financial sector which puts most of the money in the hands of say the richest 10 %. Because these rich people know best how to avoid/minimize taxation this leads to a lack of tax revenue for the government. Which in turn compels governments to seek other ways to remain capable of acting (deciding how much money for what is one of the key ways of acting out political decisions for every government). So in order to still be able to act, there's only two possibilities left: A) taking on more debt. B) raising taxes. The latter is spectacularly unpopular with most voters (even though additional taxation ought to hit the most wealthy anyway) so it's hardly surprising that most governments prefer taking on more debt. Usually it works "well" because with today's mainstream opinion it's seen as almost natural to take on more debt, whenever big expenses need to be taken care of. Hardly anyone questions the principle, except for Austrian economics proponents, who aren't really taken seriously.
- mgh2 5y ago
  They have a history of defaults, but mainly gov. corruption Crypto fans like to compare to the US, but there is a key diff: the work ethic. Money printing + no production = stealing + inflation + defaults The US has the production and work ethic to compensate so far
- victorcharlie 5y ago
  It's a combination of factors but, basically: Populism and its mania with expending more money than what it generates in stupid ways. An obsession from a big part of the society to sustain obsolete and uncompetitive industries with state money just to avoid "losing jobs". Draconian taxation for productive and competitive industries (Ag mostly, IT affected too). Slow, confusing and corrupt bureaucracy requiered for starting a new bussines. A hecktonne of social assistance that barely keeps the persons from starving but don't provide real social ascension. Obscene subsidies to electricity and natural gas (think about rich people warming their pools during winter). Sorry that I don't provide raw numbers, I'm in my lunch break and really don't want to sour it.
- hogrider 5y ago
  We print money like there's no tomorrow lol.
  - betwixthewires 5y ago
    Examining your statement literally is also very illuminating. They literally treat the money like tomorrow does not exist.
- missedthecue 5y ago
  They are printing so much money that they had to outsource to foreign printing presses -- their domestic facilities are already running 24/7 at full capacity. http://mriguide.com/argentina-plans-to-outsource-currency-printing-to-foreign-printers/ http://mriguide.com/argentina-plans-to-outsource-currency-pr...
  - oneoff786 5y ago
    Why wouldn’t you just print larger denominations
    - notch656a 5y ago
      Because that would be admitting there is a problem. Do you want to be the politician that authorizes change in denomination while simultaneously explaining why you haven't addressed why that is required. I'm guessing the politicians don't want to touch inflation with a 10 foot pole, because solving inflation is painful in the beginning so it tends to be very bad for anyone elected on any timespan less than a decade. Milton Friedman called inflation like alcoholism, great at the start but quitting is long and painful and most of the rewards of stopping are delayed with only pain up front.
      - edko 5y ago
        I would add to your excellent answer an anecdote about the tricks of a previous government (with mostly the same people as the current one) to hide inflation: the Secretary of Interior Commerce (a complete thug) forced McDonalds to freeze the price of the BigMac, so that Argentina would look good on the BigMac Index. The prices of all other burgers were more or less free to increase.
        notch656a 5y ago
        So can you actually go in and buy the BigMac? Wouldn't price controls cause inventory of BigMac to disappear? Or does McDonalds happily sell them at a loss?
- edko 5y ago
  Fiscal deficit. The public sector grows and grows by hiring friends, family, and party members. In addition to that, every government contract is overpriced for kickbacks, and the government meddles in everything seeking opportunities for corrupt personal profit. All of this spending and corruption is financed by very high taxes that oppress the private sector, and by debt. When you cannot increase taxes anymore (in some cases, Argentina taxes are over 100%) and when nobody lends you money anymore, the only solution is to print money. But everybody knows that money is not worth anything, thus creating very high inflation.
- sleepingadmin 5y ago
  I don't know the answer, I never invest in south america so I haven't really checked. So let's look together. Inflation seems to have been a problem since around 2002. From 2006 to 2015 it was kind of stable but bad. The currency then dropped out. GDP across that entire period seems collapsed. They constantly are dipping into recessions. Their manufacturing industry seems to be in decline since ~2012. Agriculture is suspiciously flat. Mining is in decline for that entire period. Seems to be whole economy collapse to me. Labour participation rate is steady around 45% suggesting not much tinkering with employment numbers. Which looks also steady about 42%. Unemployment is pretty steady from about 2006 to present around 6-8%. So their productivity is poor. They'll very likely always be a second world country. What a sad outlook. Central bank balance sheets are all the rave, they only go back to 2012. It looks as bad as any other country as of late. Money supply is sky high. They probably have ~300-600% inflation locked in here. Holy. Interest rates are in the 40-80% ranges? But real yields are negative for sure. You cant save a dime in this environment. Balance of trade is good since 2019 or so, but that probably lines up well with collapse of their economy. Probably means poverty on the rise bigtime? Otherwise has been bad for years and has been in decline in scope. Tourism died long before covid. Roughly in 2016 something happened to kill their tourism industry. Government credit rating is trash. Yet government debt is rising. Argentina's military spending had been bad since the 1990s. No surprise to see their economic competitiveness is nearly lowest ranked in the world. household debt to gdp? Argentina has no household debt? You cant get a mortgage at 40%+ interest rates. Therefore you cant have debt. Their people have no debt and they are sitll in collapse? Corporate tax rate is recently down from an outrageous 35% to a slightly less outrageous 25%. Personal tax is 35%, Sales tax at 21%. So a total tax burden of easily well over 80%. Argentinian people work for the government at least 80% of the year. Does the government provide 80% back in services and goods? I highly doubt that very much. Since the problem has been ongoing so long. Politically it can't be solved. I must admit I know nothing about their politicians but if I were to shoot from the hip, their current leadership is not ideologically aligned with fixing it. So easy prediction without crystal ball? They have at least 3 more years of absolute collapse. We're talking probably 20% of people will enter poverty before this ends. It's going to be very bad for the argentinian folks.
  - valcron1000 5y ago
- testfoobar 5y ago
  "Inflation is always and everywhere are monetary phenomenon."
uejfiweun 5y ago
The Washington Post is no longer concerned with giving readers interesting and useful information. Instead, the entire newspaper is devoted to fearmongering, spin, and propaganda. A quick Google search for "Argentina Inflation Cause" yields the following result: "the price increase in Argentina was fueled by rapid expansion of the money supply". The WaPo very explicitly wants to rapidly expand the money supply in order to redistribute wealth and achieve "equity" or whatever the buzzword is today. I'd guess that this is likely the reason why they don't touch on this in the article - they want to distract you from what's currently happening, and instead are conditioning you to accept the outcome.
- everybodyknows 5y ago
  > fearmongering, spin, and propaganda You're missing the biggest one, the first commandment of 21st century journalism: Thou shalt not criticize the culture of another people, howsomever much all evidence of a trouble's causes may point in that direction.
- kgin 5y ago
  That's a lot of big claims about a very specific agenda. What are you basing this on?
- gruez 5y ago
  >The WaPo very explicitly wants to rapidly expand the money supply in order to redistribute wealth and achieve "equity" or whatever the buzzword is today. Considering that they're owned by jeff bezos, why would bezos want this?
  - deleted 5y ago
    [deleted]
  - tomp 5y ago
    Because he has real wealth (Amazon stock) that isn't affected by inflation (stocks rise as money loses value).
    - 5y ago

Odd how the author doesn't even touch on the causes of Argentina's persistent inflation. Rather, it's presented as though it came from nowhere, and the only real story is how people deal with it.

harpiaharpyja 5y ago

It's pretty bizarre.

steelstraw 5y ago

That is curious. What are the causes?

pmcollins 5y ago
gov’t insiders printing money
ajot 5y ago
IANAE, but I'll say it's mostly seigniorage to fill up for the fiscal deficit. And if you try to cut the money printer (without taking some.huge debt), you have to squash the deficit, which is mostly subsidies to electricity, gas and public transport, and non-contributive retirements. You can't, politically speaking (and maybe legally too), cut the retirements, so you have to cut the subsidies, which will increase the measured inflation, at least for a few months.
- Izikiel43 5y ago
  > You can't, politically speaking (and maybe legally too), cut the retirements Funny enough, that's what the current government did. They removed a law from the previous government which ensured that pensioners would be paid inflation + x% so that their real income won't decrease, and now the government decides on a whim what the pension raise would be (the pensions have been increased by very little very sparsely), effectively cutting retirements, as inflation eats through them. They can't cut subsidies because most of their voters are poor, and if they touch that, shit hits the fan, whereas they don't give a shit about old people, since they lose them money and don't vote for them. I'm so happy to have moved to the us and have a 401k and ira accounts the government can't touch.
  - ajot 5y ago
    Well, I meant cut them in a "LOL, no more pensions for you, starve to death or something". But you're right, the use-the-LELIQs-to-increase-retirements plan is marching as intended.
    - Izikiel43 5y ago
      > "LOL, no more pensions for you, starve to death or something". Yeah, they won't say they are doing that, but they are doing that.
- ephbit 5y ago
  > ... if you try to cut the money printer (without taking some.huge debt), you have to squash the deficit ... Right. Governments would have to do sound budgeting. But people who advocate for a balanced budget typically get laughed out of the room. The way I see it, the real reason why governments most often need ever increasing debt-based budgets is: a growing proportion of the circulating money gets continuously redirected into (and by) the financial sector which puts most of the money in the hands of say the richest 10 %. Because these rich people know best how to avoid/minimize taxation this leads to a lack of tax revenue for the government. Which in turn compels governments to seek other ways to remain capable of acting (deciding how much money for what is one of the key ways of acting out political decisions for every government). So in order to still be able to act, there's only two possibilities left: A) taking on more debt. B) raising taxes. The latter is spectacularly unpopular with most voters (even though additional taxation ought to hit the most wealthy anyway) so it's hardly surprising that most governments prefer taking on more debt. Usually it works "well" because with today's mainstream opinion it's seen as almost natural to take on more debt, whenever big expenses need to be taken care of. Hardly anyone questions the principle, except for Austrian economics proponents, who aren't really taken seriously.
mgh2 5y ago
They have a history of defaults, but mainly gov. corruption Crypto fans like to compare to the US, but there is a key diff: the work ethic. Money printing + no production = stealing + inflation + defaults The US has the production and work ethic to compensate so far
victorcharlie 5y ago
It's a combination of factors but, basically: Populism and its mania with expending more money than what it generates in stupid ways. An obsession from a big part of the society to sustain obsolete and uncompetitive industries with state money just to avoid "losing jobs". Draconian taxation for productive and competitive industries (Ag mostly, IT affected too). Slow, confusing and corrupt bureaucracy requiered for starting a new bussines. A hecktonne of social assistance that barely keeps the persons from starving but don't provide real social ascension. Obscene subsidies to electricity and natural gas (think about rich people warming their pools during winter). Sorry that I don't provide raw numbers, I'm in my lunch break and really don't want to sour it.
hogrider 5y ago
We print money like there's no tomorrow lol.
- betwixthewires 5y ago
  Examining your statement literally is also very illuminating. They literally treat the money like tomorrow does not exist.
missedthecue 5y ago
They are printing so much money that they had to outsource to foreign printing presses -- their domestic facilities are already running 24/7 at full capacity. http://mriguide.com/argentina-plans-to-outsource-currency-printing-to-foreign-printers/ http://mriguide.com/argentina-plans-to-outsource-currency-pr...
- oneoff786 5y ago
  Why wouldn’t you just print larger denominations
  - notch656a 5y ago
    Because that would be admitting there is a problem. Do you want to be the politician that authorizes change in denomination while simultaneously explaining why you haven't addressed why that is required. I'm guessing the politicians don't want to touch inflation with a 10 foot pole, because solving inflation is painful in the beginning so it tends to be very bad for anyone elected on any timespan less than a decade. Milton Friedman called inflation like alcoholism, great at the start but quitting is long and painful and most of the rewards of stopping are delayed with only pain up front.
    - edko 5y ago
      I would add to your excellent answer an anecdote about the tricks of a previous government (with mostly the same people as the current one) to hide inflation: the Secretary of Interior Commerce (a complete thug) forced McDonalds to freeze the price of the BigMac, so that Argentina would look good on the BigMac Index. The prices of all other burgers were more or less free to increase.
      - notch656a 5y ago
        So can you actually go in and buy the BigMac? Wouldn't price controls cause inventory of BigMac to disappear? Or does McDonalds happily sell them at a loss?
edko 5y ago
Fiscal deficit. The public sector grows and grows by hiring friends, family, and party members. In addition to that, every government contract is overpriced for kickbacks, and the government meddles in everything seeking opportunities for corrupt personal profit. All of this spending and corruption is financed by very high taxes that oppress the private sector, and by debt. When you cannot increase taxes anymore (in some cases, Argentina taxes are over 100%) and when nobody lends you money anymore, the only solution is to print money. But everybody knows that money is not worth anything, thus creating very high inflation.
sleepingadmin 5y ago
I don't know the answer, I never invest in south america so I haven't really checked. So let's look together. Inflation seems to have been a problem since around 2002. From 2006 to 2015 it was kind of stable but bad. The currency then dropped out. GDP across that entire period seems collapsed. They constantly are dipping into recessions. Their manufacturing industry seems to be in decline since ~2012. Agriculture is suspiciously flat. Mining is in decline for that entire period. Seems to be whole economy collapse to me. Labour participation rate is steady around 45% suggesting not much tinkering with employment numbers. Which looks also steady about 42%. Unemployment is pretty steady from about 2006 to present around 6-8%. So their productivity is poor. They'll very likely always be a second world country. What a sad outlook. Central bank balance sheets are all the rave, they only go back to 2012. It looks as bad as any other country as of late. Money supply is sky high. They probably have ~300-600% inflation locked in here. Holy. Interest rates are in the 40-80% ranges? But real yields are negative for sure. You cant save a dime in this environment. Balance of trade is good since 2019 or so, but that probably lines up well with collapse of their economy. Probably means poverty on the rise bigtime? Otherwise has been bad for years and has been in decline in scope. Tourism died long before covid. Roughly in 2016 something happened to kill their tourism industry. Government credit rating is trash. Yet government debt is rising. Argentina's military spending had been bad since the 1990s. No surprise to see their economic competitiveness is nearly lowest ranked in the world. household debt to gdp? Argentina has no household debt? You cant get a mortgage at 40%+ interest rates. Therefore you cant have debt. Their people have no debt and they are sitll in collapse? Corporate tax rate is recently down from an outrageous 35% to a slightly less outrageous 25%. Personal tax is 35%, Sales tax at 21%. So a total tax burden of easily well over 80%. Argentinian people work for the government at least 80% of the year. Does the government provide 80% back in services and goods? I highly doubt that very much. Since the problem has been ongoing so long. Politically it can't be solved. I must admit I know nothing about their politicians but if I were to shoot from the hip, their current leadership is not ideologically aligned with fixing it. So easy prediction without crystal ball? They have at least 3 more years of absolute collapse. We're talking probably 20% of people will enter poverty before this ends. It's going to be very bad for the argentinian folks.
- valcron1000 5y ago
testfoobar 5y ago
"Inflation is always and everywhere are monetary phenomenon."

uejfiweun 5y ago

The Washington Post is no longer concerned with giving readers interesting and useful information. Instead, the entire newspaper is devoted to fearmongering, spin, and propaganda. A quick Google search for "Argentina Inflation Cause" yields the following result: "the price increase in Argentina was fueled by rapid expansion of the money supply". The WaPo very explicitly wants to rapidly expand the money supply in order to redistribute wealth and achieve "equity" or whatever the buzzword is today. I'd guess that this is likely the reason why they don't touch on this in the article - they want to distract you from what's currently happening, and instead are conditioning you to accept the outcome.

everybodyknows 5y ago
> fearmongering, spin, and propaganda You're missing the biggest one, the first commandment of 21st century journalism: Thou shalt not criticize the culture of another people, howsomever much all evidence of a trouble's causes may point in that direction.
kgin 5y ago
That's a lot of big claims about a very specific agenda. What are you basing this on?
gruez 5y ago
>The WaPo very explicitly wants to rapidly expand the money supply in order to redistribute wealth and achieve "equity" or whatever the buzzword is today. Considering that they're owned by jeff bezos, why would bezos want this?
- deleted 5y ago
  [deleted]
- tomp 5y ago
  Because he has real wealth (Amazon stock) that isn't affected by inflation (stocks rise as money loses value).
  - 5y ago