Argentina’s Recent Inflation Trends Are Proving Hazlitt Right

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Argentina’s Recent Inflation Trends Are Proving Hazlitt Right - FEE fee.org/articles/argentinas-recent-inflation-trends-are-proving-hazlitt-right/

1387 sats \ 30 comments \ @398ja 8 Jul econ

Argentina’s inflation rate has recently dropped to its lowest point since January 2022, registering a monthly increase of 4.2 percent in May according to the National Institute of Statistics and Census (INDEC). Although annual inflation has slowed for the first time since mid-2023, it still stands at 276.4 percent, one of the highest rates globally.

https://m.stacker.news/38758

Javier Milei, an avid reader of Henry Hazlitt, appears to have effectively applied these principles in his economic strategy. Hazlitt anticipated that radical decisions to solve inflation would be disagreeable, and indeed, many Argentinians have expressed discontent with the measures implemented in the last few months. But despite the controversy, Milei’s approach is a compelling example of how free-market principles and a limited government can address economic challenges.

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13 sats \ 20 replies \ @Undisciplined 8 Jul

4% monthly inflation is still pretty god awful, though.

34 sats \ 15 replies \ @didiplaywell 8 Jul

Untold levels of stability in comparison to recent years, you can imagine...

13 sats \ 14 replies \ @Undisciplined 8 Jul

I literally don't understand how you all live that way.

82 sats \ 13 replies \ @didiplaywell 8 Jul

You would too. This shocks you because you see the big number all of a sudden in stark comparison to your current, relatively lower levels of inflation. But more than 15 years ago, 1 USD was at 10 Pesos and I still remember when "1 USD = 100" Pesos was used as a superlative extreme of ridiculousness conceivable solely in a humorous way. Today 1 USD = 1400 Pesos, saying that more than 15 years ago was such a forced exaggeration that wasn't even funny, it made you sound dumb. And here we are. It all happens slowly, and progressively, and you just get used to it. You expect it. First you get used to the increments, then you get used to the speed. The brain makes all of the adjustments for you. The only thing that helped to break the spell was being able to compare us with other nations and understand that that's not how an economy works. They tried to convince us that inflation was good. At a point, they tried to convince us that taxing a given industry was the way to help it to develop. It never happens all of a sudden, they go little by little. It's the boiling frog syndrome, not more not less.

21 sats \ 2 replies \ @Bell_curve 9 Jul

If I king and was confronted with inflation, I would suspend government employee salaries

13 sats \ 1 reply \ @Undisciplined 9 Jul

If I were king, I'd do that whether or not there were inflation.

21 sats \ 0 replies \ @Bell_curve 9 Jul

I am a terrible monarch!

33 sats \ 9 replies \ @Undisciplined 8 Jul

That makes some sense to me.

Inflation is low enough here that we get used to prices and think of them as being fixed. When they rise, we're caught off guard. If we expected prices to be higher every time we went shopping, it would be a completely different mentality.

82 sats \ 4 replies \ @didiplaywell 8 Jul

Prices being higher every single day happen only in a context of hyperinflation. Remarking is time-consuming, and makes everything more complicated for everyone. It affects people capacity to buy and sell, and even complicates the calculations involved. So even if prices could rose by a cent everyday they wont until the debt can't be contained any more and you see the sudden step up. That staggered augmentation happens in shorter periods the more you are close to hyperinflation. First things augment from a year to another, then each 6 months, then 4, then 3, then monthly, then weekly, then daily, then by the hour, and believe it or not, by the minute. We faced hyperinflation here at the end of the perverse socialist government of Alfonsín, and at the eight of the disaster people in the market had to get stuff literally running because the price augmented as you walked. It gets that insane. The problem is that the way it starts is difficult to sense. Specially if you can not see the tendency clearly at first, which is made more difficult if prices increase a single time all of a sudden: because it's only one time and it's fast, it hurts but it can be overcome and people tend to dismiss it. Same happens with sudden new taxes "of only 0.2%, only this time". And so it goes on and on....

20 sats \ 3 replies \ @Bell_curve 9 Jul

Thanks for sharing

Wences Cesares is considered bitcoin patient zero in Silicon Valley

I listened to him in a podcast with Russ Roberts in 2013? I can't remember the year

13 sats \ 2 replies \ @didiplaywell 9 Jul

Fascinating, I didn't know! Do you remember what it was about?

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41 sats \ 3 replies \ @Bell_curve 9 Jul

Milton Friedman said the worst inflation is unexpected, when consumers are blindsided

34 sats \ 2 replies \ @didiplaywell 9 Jul

Exactly Sr. I'm developing a unified theory of inflation around all of this phenomenons, which are still presented in a rather scattered way.

23 sats \ 1 reply \ @Undisciplined 9 Jul

You may benefit from sharing those scattered pieces on Stacker News. I'm sure we'd also benefit from that.

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34 sats \ 3 replies \ @398ja OP 8 Jul

Oh Yes!

An inflation rate of 4% per month results in an annual inflation rate of approximately 60.1% when compounded. It would take approximately 17.67 months for the value of money to halve at a 4% monthly inflation rate.

But the graph suggests they are on the right track...

54 sats \ 2 replies \ @Undisciplined 8 Jul

It does and I don't want to under appreciate that. It's just wild how big of a hole the previous regimes dug the country into.

54 sats \ 1 reply \ @398ja OP 8 Jul

We're all rooting for Milei because we recognise how significant his success would be for the rest of the fiat world...

0 sats \ 0 replies \ @krispy_donkey 8 Jul

I have not been following since he was elected. What would be the significance of his success to fiat?

13 sats \ 3 replies \ @wispy 8 Jul

He didn't stop emission, just delayed payments. See you again in two months

13 sats \ 2 replies \ @didiplaywell 8 Jul

What payments? Delaying payments do not stops inflation, because it do not stops deficit. Stopping deficit does stops inflation, and that's what he did, and that's the very first thing Hazlitt mentions in his section on how to cure inflation: "It is next to impossible to avoid inflation with a continuing heavy deficit. That deficit is almost certain to be financed by inflationary means—i.e., by directly or indirectly printing more money." That's exactly how they are proceeding. First end the deficit, then you can end the emission.

20 sats \ 1 reply \ @Bell_curve 9 Jul

and you can only end the deficit by cutting spending which means cutting government programs and departments and head count

13 sats \ 0 replies \ @didiplaywell 9 Jul

Exactly

0 sats \ 0 replies \ @Satosora 9 Jul

the inflation is still at 276.4%. That is still way too high.

0 sats \ 0 replies \ @Coinsreporter 9 Jul

What I see that in recent months Argentina's inflation has dropped in a big way so here and there if it increases 4% here and there, it won't surprise me!