13 sats \ 14 replies \ @Undisciplined 8 Jul \ parent \ on: Argentina’s Recent Inflation Trends Are Proving Hazlitt Right - FEE econ
I literally don't understand how you all live that way.
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.
reply
If I king and was confronted with inflation, I would suspend government employee salaries
reply
If I were king, I'd do that whether or not there were inflation.
reply
I am a terrible monarch!
reply
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.
reply
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....
reply
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
reply
Fascinating, I didn't know! Do you remember what it was about?
reply
reply
Awesome, thank you!
reply
Milton Friedman said the worst inflation is unexpected, when consumers are blindsided
reply
Exactly Sr.
I'm developing a unified theory of inflation around all of this phenomenons, which are still presented in a rather scattered way.
reply
You may benefit from sharing those scattered pieces on Stacker News. I'm sure we'd also benefit from that.
reply
It's my objective Sr, will be sharing it as soon as I can :)
reply