Peso posts sharpest weekly fall since Milei took office

[Jimbob]

When? In October?

The following inflation.

 

[Ries]

Inflation is caused by printing money. Period. Point blank. End of sentence.
It has nothing to do with the relative value of that currency vs other currencies.
So long as the government continues to rein in the money supply, inflation will be controlled.

this is a classic case of a simple answer to a complicated problem that is wrong.
during and after Covid, inflation rose in most places due to supply chain issues, even and especially in countries that did not print money.
Historically, many other things have caused inflation, in many countries, including Argentina.
The "Printing Money" crowd completey discounts human beings and their psychlogy, tariffs, duties, taxes, global economies, the price of oil, wars, famines, climate change, and a hundred other agents.
But its an easy answer.
However, Milei has not "controlled" inflation. He has caused enormous amounts of it, and continues to.

 

[AdrianB]

during and after Covid, inflation rose in most places due to supply chain issues, even and especially in countries that did not print money.

Which countries didn't print money? Big inflation started all around the world around mid of 2022 largely due to a bunch of free money that was given to people/businesses during lockdowns.

 

[LuckyLuke]

Inflation is caused by printing money. Period. Point blank. End of sentence.
It has nothing to do with the relative value of that currency vs other currencies.
So long as the government continues to rein in the money supply, inflation will be controlled.

To echo what Ries posted.

IMO, this is far too simplified an answer. Inflation can happen across many different sectors independently for many different reasons such as taxes, regulations, supply constraints, shifting consumer trends, regional banking crisis, changing weather patterns and all sorts of fun surprises.

That "M2 velocity = inflation" has been debunked thoroughly as a "Modern Monetary Theory" cliché.

Milei has already successfully reined in money supply and is actively shrinking it (much the detriment of national industries) without quelling inflation.

 

[LuckyLuke]

So what is the realistic value of the peso / dollar exchange? 2,000 to the dollar?

I think the most pertinent question is what is your "real" inflation? Meaning what is the cost per unit of the items you regularly consume in the currency you earn in?

Not too long ago, a member posted an Excel sheet of their regular consumption priced in dollars that was very helpful in analyzing real inflation for most expats outside of the peso/dollar rate.

I imagine your personal inflation will, on the whole, go down only if the dollar rising exceeds your local markets ability to absorb peso price increases. In other words, almost all producers are actively trying to dollarize their margins. That the dollar rises does not unequivocally mean your costs go down.

 

[daveholman]

this is a classic case of a simple answer to a complicated problem that is wrong.
during and after Covid, inflation rose in most places due to supply chain issues, even and especially in countries that did not print money.
Historically, many other things have caused inflation, in many countries, including Argentina.
The "Printing Money" crowd completey discounts human beings and their psychlogy, tariffs, duties, taxes, global economies, the price of oil, wars, famines, climate change, and a hundred other agents.
But its an easy answer.
However, Milei has not "controlled" inflation. He has caused enormous amounts of it, and continues to.

You're just wrong in every detail. To drop inflation from over 200% to 20% in a year and a half is quite a feat. There is still to much money in the economy. To lower it faster would have required actually destroying currency in circulation.

 

[RichardAlem]

Inflation is caused by printing money. Period. Point blank. End of sentence.
It has nothing to do with the relative value of that currency vs other currencies.
So long as the government continues to rein in the money supply, inflation will be controlled.

Correct. That is the textbook definition of inflation.

Profligate money printing will eventually catch up to the USA as well. Sovereign central banks know this and continue buying gold despite its record high prices.

 

[Ries]

we will have to just agree to disagree.
I am not a believer in the Austrians.
I have observed the Argentine economy since 2007, when I first bought an apartment here, and have seen times when the government was actually incapable of printing money- paper issues, political infighting, etc, and there actually were so few bills larger than the equivalent of $5 USD that you would pay for a bottle of fernet with a giant wad of bills worth almost nothing.
I have been here when it was quite expensive in dollars, and then, when it became cheaper, in dollars, and then, when it got expensive again.
And yet, inflation came and went as it pleased, sometimes tracking money supply, sometimes not, sometimes tracking exchange rates, sometimes not, always, like all things Argentine, refusing to respond to textbook ideas about anything.
I have seen prices rise, here, globally, and in the USA, consistently since the 60s when I first began purchasing things like 45 records and comic books. Nowhere has it followed the rules of Austrians or the Chicago school, much less libertarians.

 

[FrankPintor]

A glance at Wikipedia is all that's needed to debunk the would-be experts: "In economics, inflation is an increase in the average price of goods and services in terms of money". That's it, no mention of printing money. Things get more expensive, we see inflation.

If you read a bit deeper, classical economics identifies "three separate factors that cause a rise or fall in the price of goods: a change in the value or production costs of the good, a change in the price of money which then was usually a fluctuation in the commodity price of the metallic content in the currency, and currency depreciation resulting from an increased supply of currency relative to the quantity of redeemable metal backing the currency". The second factor is presumably no longer relevant, only the third factor implies printing money. The first factor is very relevant, particularly if you consider the US Dollar as a base against which to compare local production costs.

And no, going from 200% annualized inflation to 35% (not 20%) does not count as "quite a feat" when Milei was responsible for a large part of the 200% by devaluing the Peso by 54% in December 2023.

More understanding and less didacticism would be useful, perhaps?

 

[Caribbean Cool]

Inflation is caused by printing money. Period. Point blank. End of sentence.
It has nothing to do with the relative value of that currency vs other currencies.
So long as the government continues to rein in the money supply, inflation will be controlled.

A glance at Wikipedia is all that's needed to debunk the would-be experts: "In economics, inflation is an increase in the average price of goods and services in terms of money". That's it, no mention of printing money. Things get more expensive, we see inflation.

If you read a bit deeper, classical economics identifies "three separate factors that cause a rise or fall in the price of goods: a change in the value or production costs of the good, a change in the price of money which then was usually a fluctuation in the commodity price of the metallic content in the currency, and currency depreciation resulting from an increased supply of currency relative to the quantity of redeemable metal backing the currency". The second factor is presumably no longer relevant, only the third factor implies printing money. The first factor is very relevant, particularly if you consider the US Dollar as a base against which to compare local production costs.

And no, going from 200% annualized inflation to 35% (not 20%) does not count as "quite a feat" when Milei was responsible for a large part of the 200% by devaluing the Peso by 54% in December 2023.

More understanding and less didacticism would be useful, perhaps?

Where is Milton Friedman when we need him?