Redmond Weissenberger, Contributor
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.
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.