Thursday, February 14, 2013

Keynesian Economic Dream Playing Out in Argentina

Redmond Weissenberger, Contributor
Activist Post

If uber-Keynesian and New York Times columnist Paul Krugman wants to find paradise, he should journey down to Argentina. Immediately following the International Monetary Fund's censure over fudging its economic data, the government has frozen prices on every item in the nation's supermarkets. This just begs the question of why the Argentinean government needs to lie about its economic statistics. The answer is simple really. Like any state, it wants to paint itself in the best light by presenting a Potemkin village of happy citizens and a booming economy. In reality, the people in Argentina are suffering under a brutal bout of inflation. Private economists estimate the inflation rate has reached 30% - the very definition of hyperinflation.

Try as they might to deny it, this is the Keynesian wet dream playing out in living color. 

To finance government spending, the Central Bank of Argentina has been putting the pedal to the metal of his its printing press. Under Keynesian theory, the economy should be taking off like Bill Clinton alone with a White House intern. Instead, there is panic in supermarkets as people are trying to ditch the peso in favor of, well, just about anything.

This is not the first time Argentina has wrecked its economy. In fact, it's the fourth time in forty years. President Cristina Fernández de Kirchner has merely adopted the tried-and-true method of using increased government intervention to undo the mistakes of previous policy. Critics have called her administration corrupt, deceptive, and eager to assist big business with favorable regulations. In other words, she is pulling the reigns of government as any other president would. The only difference is that Kirchner has managed to destroy a national currency faster than the rest of the developed world.

But don't count the United States out of the global race toward monetary self-destruction just yet. With over a trillion dollars floating around the banking system and Federal Reserve Chairman Ben Bernanke intent on eroding even more of the greenback's value to boost the economy, there is no telling when the whole convoluted scheme will blow up in his face.

We are already in "uncharted territory" according to Julia Coronado, chief economist for North America at BNP Paribas. The day of reckoning for the US dollar could come any day now.

Americans should start looking at Argentina as a sign of what's to come rather than a possible vacation destination. And they should start looking at gold as a safe haven instead of their bank accounts.

Redmond Weissenberger is the Managing Editor of The Dollar Vigilante and the Founding Director of the Ludwig von Mises Institute of Canada, the centre for the study of the Austrian School of Economics within Canada.

Redmond founded the LvMIC in 2010 to address the lack of knowledge about the true cause of our booms and busts of the last 100 years and the need for sound money and sound economics to be applied to the Canadian and global economy


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Anonymous said...

What a simple minded article. Nothing about what the imf has done to them over the years. There are problems with keynes ,as with all economic theories, but to write about there current situation without some context is sloppy at best and dishonest at worst

Bill Haynes said...

Weissenberger is not the only one to notice Argentina's Keynesian economics. Paul Carter posted a similar observation only a few days ago.

Anonymous said...

The only difference between the US and South American banana republics is at least they have bananas.

Anonymous said...

Hmm, I wonder what group in modern history was aware of the dangers of usury and privately controlled finances and inflation?

"The sham state of today, oppressing the working classes and protecting the pirated gains of bankers and stock exchange speculators, is the area for reckless private enrichment and for the lowest political profiteering; it gives no thought to its people, and provides no high moral bond of union. The power of money, most ruthless of all powers, holds absolute control, and exercises corrupting, destroying influence on state, nation, society, morals, drama, literature and on all matters of morality, less easy to estimate."


"Wanton printing of bank notes, without creating new values, means inflation. We all lived through it. But the correct conclusion is that an issue of non-interest bearing bonds by the state cannot produce inflation if new values are at the same time created.

The fact that today great economic enterprises cannot be set on foot without recourse to loans is sheer lunacy. Here is where reasonable use of the state’s right to produce money which might produce most beneficial results."

Source - Gottfried Feder, The Program of the NSDAP, The National Socialist German Workers’ Party and its General Conceptions, translated by E.T.S. Dugdale, Fritz Eher Verlag, Munich, 1932


"The struggle against international finance capital and loan capital has become one of the most important points in the program on which the German nation has based its fight for economic freedom and independence."

~ Adolf Hitler, Mein Kampf, Hurst and Blackett, London, 1922, p. 124.

It's too bad the Freemason Dr. Hjalmar Schacht who was appointed President of the Reichsbank in March 1933 actively worked against these National Socialist policies until 1939(getting Feder canned in 1934), serving "international finance" in trying to destroy Germany economically from within (he began his career in 1903 by joining the Dresdner Bank).

Schacht was officially sacked on January 19, 1939 and a new policy more in line with National Socialist doctrine was implemented.

Then there was war.

Note: Montagu Norman, governor of the Bank of England, told the U.S. ambassador in London that Schacht was his constant informer over 16 years about Germany’s precarious financial position (U.S. Ambassador Joseph Kennedy reported this to Washington on February 27, 1939.)


Anonymous said...

I'm writing this from Argentina. In the '80s we suffered 400% of inflation, that's hiperinflation. I was just a child then, but I remember going into a supermarket with my family and watch the supermarket-guys changing the product prices while you were buying it! Those were pretty sad times. Now it's the opposite, Argentina broke the world record of public holiday (19, the 18 record belong to Argentina too), and all the resorts (snow, beaches, mountains, etc) in the country are totally full of people.

If you want to talk about data and lies, tell me, what do you think about that 2% of inflation in the United States?? That's a big bullshit. The IMF is angry with us because they won't put their feets again in this country, we don't need them anymore, we paid them and wave them bye bye. Neoliberalism is over here, that's for sure.

You need more information before you start talking about some things like this, and don't look just charts and data. As someone said before me, you need context.

Anonymous said...

The entire human race is fucked. Fucked. Fucked! And we have no one but ourselves to blame. The minority for fucking the majority and the majority for letting the minority fuck us. We get exactly what we deserve.

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