Inflation

[mobri1130]

Good article in NYT that takes a look at inflation in ARG. Passage about hyperinflation reminds me of the story Bedside Manners by Luisa Valenzuela when a character tries to explain how quickly prices have been rising:

"It's incredible, hyperinflation they call it, we're world champions at that too. Do you know, the photographer in bungalow 7A was sent by a foreign magazine to photograph the prices here, and he simply couldn't, he said because they came out all blurred. Prices move too quickly for the camera here, you know."

http://www.nytimes.com/2011/02/06/world/americas/06argentina.html?src=twrhp

 

[citygirl]

Great and IMO, accurate article. 30% of the population live below the poverty line. 120% inflation in 4 years. That's some very scary stuff.

 

[jjsto]

Yep, that was a good article. The amazing thing to me is that none of the locals I talk to think the possibility of a looming crisis exists. It is as if since the stock market is up, the peso/dollar is more or less stable, and GDP growth is robust, there is nothing to really worry about. There is a belief that in an election year the government "won't let anything bad happen." Notwithstanding the history of inflation in South/Latin America people either think: 1) This time is different or 2) There will be a "soft" landing.

Given the long history of inflation in the region, it is strange how few people recognize that an inflationary policy is really a tax policy in disguise that effects the poor and elderly the most. And it is just absurd every time a finance minister gives an interview and mentions that "monetary policy" doesnt affect inflation. This has to be the only country on earth "debating" whether or not doubling the supply of money in less than 5 years has any affect on the price level. (Of course the US is probably the only country on earth whose presidential candidates debate if the earth is only 10000 years old)

Anyway, to end this rant, I have no idea how this will all end. Maybe CFK is really an economic genius and lying about inflation to reduce debt payments, maintain the illusion of stability until the election is over, and then raise interest rates/lower the money supply will facilitate a smooth transition. I, however, have my doubts....

 

[gouchobob]

I agree it was a good article. I don't think this will have a happy ending. I think things will blow-up sometime in the next year or two at the most. Hopefully the people that caused the problem will get the blame. About the only good reason for hoping Cristina gets re-elected is so when it hits the fan she is in office and has nobody else to blame.

 

[BROOKLYN]

I agree it was a good article. I don't think this will have a happy ending. I think things will blow-up sometime in the next year or two at the most. Hopefully the people that caused the problem will get the blame. About the only good reason for hoping Cristina gets re-elected is so when it hits the fan she is in office and has nobody else to blame.

well said!

 

[marksoc]

Nope, with the reserves we have there will be no crisis, sorry neocons, try it next time.

In some time there will be less exports,given the inflation, but 25 per cent anually is not at all strange in Argentina.

 

[ctru]

I think things will blow-up sometime in the next year or two at the most.

What will happen to the real estate prices when this happens?

 

[dr__dawggy]

Nope, with the reserves we have there will be no crisis, sorry neocons, try it next time.

In some time there will be less exports,given the inflation, but 25 per cent anually is not at all strange in Argentina.

Neither are economic crises. Argentina has been on a roller coaster of economic boom/bust cycles every 7 to 10 years for some time now.(2002 was the worst....but not the first).

 

[clooz]

Seems like its well written to explain the simplified picture of main street inflation and election cycles to first year high school students. Where's a discussion of relation to US policy to deflate the USD vs other currencies, i.e. cause inflation in other currencies vs the USD?

 

[BAwithkids]

Any thoughts on the implications of inflation for the tourist/temporary rental market? On the one hand, could drive prices up, but on the other hand, could push tourists away (thus leading to stable or even dropping prices in this very over-priced sector). What have you all seen?