Monthly inflation in Argentina slowed more than expected in March, cooling for the third straight print as President Javier Milei’s austerity hurts consumer spending.
Argentina keeps dropping the inflation numbers, good news for the country!
Economic stagnation is not preferable to inflation. It’ll take a while to see how CoL responds to this but my fear is that these changes will drive down effective purchasing power.
In a normal economy, balancing growth versus inflation is certainly an important issue. But when an economy is undergoing hyperinflation, getting that under control has to be priority number one.
Keynes, for example, wrote eloquently about this a century ago. Some of his passages apply quite eerily to the case of Argentina:
The preservation of a spurious value for the currency, by the force of law expressed in the regulation of prices, contains in itself, however, the seeds of final economic decay, and soon dries up the sources of ultimate supply. If a man is compelled to exchange the fruits of his labors for paper which, as experience soon teaches him, he cannot use to purchase what he requires at a price comparable to that which he has received for his own products, he will keep his produce for himself, dispose of it to his friends and neighbors as a favor, or relax his efforts in producing it…
The effect on foreign trade of price-regulation and profiteer-hunting as cures for inflation is even worse. Whatever may be the case at home, the currency must soon reach its real level abroad, with the result that prices inside and outside the country lose their normal adjustment. The price of imported commodities, when converted at the current rate of exchange, is far in excess of the local price, so that many essential goods will not be imported at all by private agency, and must be provided by the government, which, in re-selling the goods below cost price, plunges thereby a little further into insolvency.
The central bank will absolutely put the country into a recession to stop inflation. That’s usually why central banks aren’t controlled by the government in power, because the government in power can impact things to improve their situation at the expense of the country.
Too much inflation is bad. Inflation that Argentina has, that’s a whole other level, that’s a potential country killer.
Economic stagnation is not preferable to inflation. It’ll take a while to see how CoL responds to this but my fear is that these changes will drive down effective purchasing power.
In a normal economy, balancing growth versus inflation is certainly an important issue. But when an economy is undergoing hyperinflation, getting that under control has to be priority number one.
Keynes, for example, wrote eloquently about this a century ago. Some of his passages apply quite eerily to the case of Argentina:
Um it kinda is.
The central bank will absolutely put the country into a recession to stop inflation. That’s usually why central banks aren’t controlled by the government in power, because the government in power can impact things to improve their situation at the expense of the country.
Too much inflation is bad. Inflation that Argentina has, that’s a whole other level, that’s a potential country killer.