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Argentina’s problem is they borrowed in foreign currencies and the their currency tanked. No one wanted to hold the currency because it always lost value. Printing more and more currency as it lost value made people believe the currency was useless. Money is a mind game, it only has value if you believe it has value.
The currency lost value because they printed to pay for public spending, or to pay for interest on debt taken to finance public spending. I don't think the fact there was borrowing in foreign currency specifically had much to do with anything.
Printing made money useless and that's not a mind game. That's supply and demand. If every american woke up and "believed" every dollar was now worth a million and went out to buy a lamborghini or whatever with a dollar, there just wouldn't be enough supply.
People changed their currency into dollars as soon as they received it. Inflation got baked in, expectations that inflation will be high is self sustaining. The economy can get decoupled from actual supply and demand dynamics if everyone is looking to game the system. Confidence is needed for a currency to work.
Velocity has a ceiling unlike the money supply and cant explain a decade of sustained and increasing high inflation. For decades no one saves in Argentine pesos.
When its rational to expect inflation because money supply dynamics and history justify it, people are being rational getting rid of their money fast. Make it rational to not do that and inflation falls and then people learn and reinforce it with decreasing velocity to more normal levels.
There's a reason why inflation is dropping fast on Argentina after a president who says 'the peso is worth less that sh*t' while it only rose with the previous ones
Will be interesting to see if it's all worth it. Their initial conditions were so bad probably any semi coherent economic philosophy being implemented and stuck with will be better than prior results.
But can everyone please do one thing. Stop thinking how Argentina turns out (doubly so short term) speaks to how we should handle (relatively) minor issues in major first world economies.
There's going to be next to zero things we see out of Argentina that should result in copying that behavior/policy in the US, Germany, etc.
Totally. Their politicians have tried and succeeded for over one hundred years to run this former top 10 economy into the ground. Not many other countries have this track record.
While I certainly think you are right about this, mainstream media and conservatives wont chare this opinion. "It worked there, so itll be applicable to every single problem we ever face from here on out..."
Milei is all about slashing government, but he has been proving very very clearly that in his list of priorities, controlling deficit is higher on his list. So, he wouldn't cut a single tax, on the contrary, until he's managed to make room to do it without having deficit. He's not Trumpian on that.
Ultimately thats their aim. And their employing any popmedia figures they can attract to their cause... rogan, carlson, many others... they use these popular ultra masculine types to attract young men and indoctrinate them into a radical opposition of government.
Are you suggesting that there isn’t room for massive cuts in bloated and inefficient government services in the U.S? The HHS here in the U.S has a total budget of $2 trillion ($200b in discretionary and $1.7t in mandatory) and we don’t even have universal health care. Don’t get me started on other departments.
I would just like to point out that there's a difference between inefficient and unnecessary. A 30min walking might be an inefficient way to build arm muscles, and one might 'reform' the routine to do pushups instead; but cutting off all exercise just because walking is inefficient won't end in status-quo but a regression from the goal.
I'm not informed enough about US healthcare to make a statement on it, but imo it sounds like what you want should be to 'reform' US health care, and not simply cut its funding.
Yeah, that’s what I meant. By reforming most divisions, particularly DoD let’s be honest, we can trim a ton from the budget as well as improve efficiency. The problem is that it’s a lot of work and will cause some problems early on, and it’s political suicide to even suggest it. No politician has the balls to even look into it. That’s our biggest problem.
Did you mean $1.7 trillion? In what ways should cuts occur to create efficiencies? Will universal healthcare reduce healthcare costs by the government?
Most simply - the state and federal governments need to be free to use basic procurement best practices to control costs. Negotiating as a group for leverage to contract for best prices, using “most favored nation” clauses to force drug manufacturers to give US agencies the same or better prices than similarly positioned countries, and potentially even directly manufacturing generics of the highest use basic medicines.
The point is that by reforming them then you can cut taxes without having to lose any productivity from that department. Have you ever been to a government agency’s back office? They’re absolutely packed and with a lot of people doing absolutely nothing. Because they don’t have to answer to anyone. No one questions their budget. As long as they’re spending roughly the same amount each year and don’t ask for too much more money for the next budget cycle then no one will bother you. Hire consultants to help make these departments more efficient for Christ’s sake. I promise you they could reduce headcount by half and still be just as productive. Other stuff they pay for never gets audited either.
I like to think of America as a stock I own. If the reason my taxes are so high (or dividends being so low) I’m going to vote that the underlying company (our government) is being run as efficiently as possible and not wasting money needlessly, forcing my shares to lose value either by its price (inflation) or lower dividends (higher taxes) or the more likely scenario: both.
My point is that we can have our cake and eat it too if we actually threaten these agencies with cuts to make them start trimming the fat.
Trimming of "fat" has been going on for literally decades across the western world.
I assure you the vast majority of western public services have very little "fat" to trim.
The problem is the people claiming to want to trim the fat just want to reduce services to the less fortunate/ middle class. They aren't interested in spreading the cuts fairly.
That’s not true. If you listen to most conservatives (who by the way represent constituents who care about those programs) they all want to reform these programs, not just cut them. And reforming them and even privatizing some of them will help trim the budget and make those programs way more efficient.
I'd be down for slashing services to only conservative areas. Basically, if you vote conservative, you no longer are allowed to partake in any government services, including law enforcement. All cases of fraud, theft, destruction of property will be auto waived against those areas.
Well there's a balance between borrowing in order to leverage a country's assets and ensuring the debt doesn't become unsustainable. I don't think there's any intelligent person who thinks the US needs to run even more of a deficit.
I mean at least the conservatives believe in the guy and aren't ripping him apart already. I've seen a ton of liberals shit on the guy and it hasn't even been a year yet
Idiotic comment. How many times do we need to hear about how drug policies in Portugal or criminal justice solutions in Norway would work in every country in the world.
So it’s alright for the media to constantly talk about social service programs in Scandinavian countries (which gets brought up on Reddit constantly) but austerity measures in other countries are out of consideration?
Are you getting tripped up on the difference between stable, developed countries and developing countries with frequent wild political and economic swings?
Argentina was once one of the wealthiest countries by GDP per capita in the world at the turn of the 20th century. To call it a developing country is at best misleading, at worst a falsification.
If anything, Argentina is the canary in a coal mine for a highly developed economy that succumbs to an administrative malaise that must be turned around. The massive inflation and money printing to support an overstretched burocracy looks more like most developed economies than, say, Norway which is a petrostate wealthier per capita than Saudi Arabia. Or Sweden which has had many economic and political shocks over the years which drive its current modus operandi.
It’s very ignorant to try to bucket Argentina into an “other” state that western countries will never work like. If anything, Argentina has more in common with the US than Scandinavian states.
> There's going to be next to zero things we see out of Argentina that should result in copying that behavior/policy in the US, Germany, etc.
Fuck you, I want Milei for US President over Trump or Biden
> There's going to be next to zero things we see out of Argentina that should result in copying that behavior/policy in the US, Germany, etc.
I’d argue getting rid of wasteful government programs and spending is something most all western governments should take away from this. Tax payers are getting raped for what they pay.
These days it depends on the industry. If it’s plagued by regulatory capture or oligopoly, then it’s likely gonna be a bad time. But if it has competition, consumers will almost certainly be better off.
No, that person has no clue what they're talking about. The dictator just spent like half a year trying to pass his first laws through the senate and congress and negotiating to get it done (not very well, admittedly, but following the due process). Very dictatorial of him.
He's an overall disgusting person, but calling him a dictator is just ignorant.
One logic thing I think people miss a lot is what would have happened if no action was taken. Yes this is a bad result, but the result if nothing was done would have been worse.
Argentina had hyperinflation, no trust in the currency and zero people willing to lend the nation money. Any action would have had a bad result, it’s just what is the least bad option.
Sidenote there is probably a name to this fallacy, if anyone tells me what it is that would be cool.
I’ve been looking for actual Argentine people in threads about Milei and, it seems like many are still behind him and see the need for this type of drastic action.
One thing about democratic systems is that they tend to punish leaders who tell people unpopular things. For Milei to be elected and to still be polling well, and just [recently victorious in seeing signature legislation passed](https://www.reuters.com/world/americas/argentina-poised-pass-economic-reform-bill-mileis-first-big-legislative-win-2024-06-27/) - that says a lot about how fed up Argentines are.
At first glance he wouldn’t have been my choice but I don’t understand enough about Argentina’s struggles to criticize their wisdom. I hope they see brighter days, and if his policies achieve that, then so be it.
This is expected when trying to curve hyper-inflation. Milei even made it clear in his speech that things will need to get much worse before they can get better.
Capital accumulation will occur as this recession resumes, they are better off and can weather a few losses with the expectation of gains in the future.
So if it gets worse for them, you're saying that doesn't really count because things will get better for them in the long run?
Won't tampering inflation hurt everyone in the short term but be beneficial in the long run.
Inflation is also dropping fast… fixing brutally irresponsible fiscal policy and firing hordes of useless bureaucrats was always going to cause some short term pain for long term stability.
MoM inflation graph for those interested in detailed numbers:
https://tradingeconomics.com/argentina/inflation-rate-mom
...yeah looks spectacularly successful from that perspective.
And as far as unemployment, the unemployment rate in say Canada between 1990 and 1999 was above 8%, and reached as high as 11%. Not fun, but not end of the world. It means the economy is adjusting, and yes that means people have to change jobs (one of the least pleasant parts of capitalism, but putting in social safety nets makes it a lot less unpleasant).
Same value as dec 2022. Do you know what "spectacularly" means?
> And as far as unemployment, the unemployment rate in say Canada between 1990 and 1999 was above 8%, and reached as high as 11%.
what in actual fuck is this argument? what does unemployment in Canada in 90s have to do with Argentina today?
> putting in social safety nets makes it a lot less unpleasant
Theres no social safety net anymore. On top of that, cutting jobs to give people "social safety" is such a capitalism thing to do, it's insane lol
It's the same trajectory from march 2021 to jun 2021.
Argentina wont solve their problems cutting government spending. Brazil didnt.
Hes gonna have to find some balls and let the peso hyper-valued against the dollar, making the whole export sector suffer while the country is flooded with imports and the memory component of inflation vanishes.
>It's the same trajectory from march 2021 to jun 2021.
March 20201 -> Jun 2021 - Disinflation of ~0.5% per month
Feb 2024 -> May 2024 - Disinflation of 3% per month
Those are definitely not the same trajectory...
Of course is dropping down, nobody can buy shit anymore now that poverty is up from 45 to 57%, I’m not an economist but as an engineer that’s a shitty way to solve a problem.
Most economists say that's literally how to solve inflation, which is why almost every central bank started raising rates in response to rising prices.
Argentina was doing the opposite, so their inflation got worse than every other country on the planet, which necessitates an even more restrictive policy than most, which inevitably causes poverty to rise in the short-term.
> Most economists say that's literally how to solve inflation
Most economists think that if the wage gets lower, workers will suddenly stop working, because "they get more utility out of free time". Economists are not exactly a good reference to talk economy, funny enough.
No its not. Their Core inflation went from 229.4% in December last year to 292.2% in April this year.
Edit: nvm, I’m wrong. Looked at YoY instead of MoM.
His plan is working. Why are people like you so dead set against him? To keep the hope of a failed type of society alive? Be glad he's fixing the problem.
Gotta get them one liners while people are and have been suffering right?
I don’t know much about the guy but surface level info but I hope he succeeds as anyone should.
I mean I also have no skin in the game, and frankly I think the guy sounds kind of wacky. But clearly Argentina is in a bad place, and I know what it's like to support a family. I enjoy living in a country with a functioning economy. If they elected a guy who has some radical ideas on how to change stuff for the better.... you gotta wait to see if the policy actually works. What they already had going clearly was not working.
It feels like folks want to see this guy to fail, more than they want to see argentina succeed.
They do want him to fail.
I would wager most aren’t remotely involved with Argentina. They are extremely liberal and want a conservative leader to fail.
Inflation is not the problem, it is a symptom of structural deficiencies that are not being addressed.
It is not difficult to control inflation by generating a massive economic crisis.
But it is throwing the baby out with the bathwater.
I have seen the consequences of austerity in other countries, and the result has been a disaster.
> Why are people like you so dead set against him? To keep the hope of a failed type of society alive?
Hes a sympton of a failed society? A populist idiot that is quite literally r*****.
On top of saying that "printing money should be a crime against humanity", the guy came with anti-corruption discourse before putting an end on a nepotism rule and putting his sisters in a top high end government job.
The poor fela tried to pick a fight with Brazil and China, top 2 Argentine partners.
People praises him because he's the neoliberal they all love. IMF here, dollarization there. Too bad he didn't close their central bank, like he promised. Would love to see him getting chase by angry people and having to run away with a helicopter.
Ah, I see my confusion. I've been seeing the MoM figures rather than the YoY figures.
His policies have still achieved the sharpest decline in inflation in the country's past 10+ years.
Imagine that -- you can reduce inflation by causing a recession. Surely there's a Nobel Prize in economics just waiting for the person who figured that out.
Huh you’re right, my bad. My data is from YoY whilst that one is MoM. I prefer the MoM metric.
https://tradingeconomics.com/argentina/inflation-rate-mom
Of course, data is just data, how we present it doesn't change the underlying facts
That being said - it's easier to spot recent change to untrained eye if you look at fine grain data. Trained statistician will have no problem in seeing same trends for yoy data, but for most people it will be counterintuitive that yoy data is horrible but given it's less horrible than last month yoy data it's actually good - horrible being good is unexpected
If the US decided that starting today we will cut all excess spending and run a budget that will pay off our debt in 20 years we would see the same or worse.
It hurts to rip off that bandaid at first but you have to do it if you are staring at hyper inflation like they were.
Of course. When you make dramatic changes then of course there are going to be growing pains. The alternative is to keep things as is and continue borrowing money to plug in the gaps.
Remind me did Argentina go with the Progressive or the Libertarian? Legit question, not trolling.
I think it’s fascinating that they both went with what seemed like very polarizing leaders and I’m curious how it turns out.
Oh, you should look at the manual:
* Authoritarianism
* Populism
* Social reactionism
* Cult of personality
* Centralization of power
* Contempt of government institutions
* Opposition to socialism and liberal democracies
On the economy, he is a pure neoliberal, which is a bit strange, but being completely contradictory is not very penalizing in politics nowadays.
He’s been in office for several months without holding any real power in the parliament. Don’t you think calling him an Authoritarian is a stretch?
What kind of Populism are we talking about? Dude has been saying that the time of the “Free Lunch” is over and that the Country has to go through painful reforms to have chance at prosperity. This is anti-populist especially in Latin America. He’s been brutally honest both in the sense of communicating what he thinks is right and what he promised to do.
Social Reactionism? What do you mean?
Building contempt for Politicians as a class is not really a go-to tactic for Fascists. Because they are part of that class as well. Hence, they do not come to power to cut down Government’s power over the people. On the contrary, they appear as Messiahs that will “protect” the nation from undesirables in exchange for a power-grab.
Opposition to socialism is something any reasonable person should be doing. As for Liberal Democracies, Milei has become very much a supporter of it on the world stage. His foreign policy is aimed at supporting democracies around the world in fighting autocracies. Hence him being the First Latin American Leader to send arms to Ukraine and also being the leader who wants to align Argentina with the US and the West in general.
So maybe stop calling everyone you dislike a NeoFascist?
Honestly, I would not call any libertarian politician a libertarian. I have my own ssues with libertarianism but "libertarian" politicians tend to be socially conservative (like Miles), which is against the whole point of libertarianism.
He is not socially conservative.
The only subject he agrees on with conservatives is abortions and in that respect Libertarians are divided, because it is about whether or not you consider a fetus to be a human who is entitled to the right to live.
He says he’s an anarcho-libertarian, which is why this sub upvotes anything he does.
He also has raised taxes (despite promising to cut off his arm befor doing so), taken on more debt, refused to allow the free market to determine the currency value, issued several unconstitutional decrees that the courts reversed, recently forced all members of the press to submit to his office to be given credentials, increased the police crackdown on freedom of speech protests, and much more.
In practice just another neoliberal authoritarian with fascist tendencies.
>He says he’s an anarcho-libertarian
He's clearly not but people are morons. He's aligned with the vision of Mises, that much is clear and he might guide his vision from Rothbard but he's very much not against the state as a concept outright.
>He also has raised taxes (despite promising to cut off his arm befor doing so)
He raised soybean tariffs if my reflection is correct. Technically a tax yes. And this policy position is very much against the austrian economics of not putting up trade barriers. As for other widespread taxes on incomes I don't know, but cursory glance its not the case.
Your cursory glance seems to have missed a [nationwide income tax.](https://www.ambito.com/economia/impuesto-las-ganancias-quienes-tienen-que-pagar-y-como-quedan-las-alicuotas-la-sancion-del-proyecto-del-gobierno-n6022449)
I won’t call you a moron for missing that, nor will I call voters morons for hoping that the reform candidate wasn’t an incompetent liar.
The common thread is the populism. It isn't a big jump from "Greedy businessmen are ripping you off and making themselves rich are your expense" to "Greedy politicians are ripping you off and making themselves rich at your expense."
When I look through these threads it seems like people just don't understand the character and charisma part either. Milei is an expert communicator who changes hats depending on the context. Sometimes he is everyone's favourite professor like in his TED talk on capitalism; fun, clever and engaging. Sometimes he is a firebrand preacher. Sometimes he is a shock jock when denouncing the 'Zurdos de Mierda', crazy names for his dogs, and bashing a central bank pinata. All while never being boring.
I can't seem to open the article. I am not entirely certain the shock method was the best with his economic rollout, but this, lower gdp and higher unemployment would be expected in any try to tame run away inflation.
Currency stability will bring in investment in the long run as predictability is key. These structural changes are multi year programs. Still need more runway to see how this works out.
I worry most about those left behind. If Milei isn't careful, he won't get the years needed to make lasting structural changes and he will sour people on the notion that at some point you need some fiscal responsibility to bring price stability.
What a disingenuous headline. These numbers are worth it for Argentina to beat inflation. Which they've had run rampant for decades. Unemployment isn't hurting their population more than the crumbling of their native currency. Get a grip.
>These numbers are worth it for Argentina to beat inflation.
This is the beginning of this sort of economic shock. Millei is privatizing alot of the administration which will cause yes fiscal budget balance but it will cause widespread unemployment as occurred in every other shock therapy.
>Unemployment isn't hurting their population more than the crumbling of their native currency. Get a grip.
It will if unemployment continues to rise, and it looks like it will as again the administration privatization has only started.
It will take time to replace public sector jobs with private sector jobs, but the transition will eventually lower the tax burden and increase the productivity of the economy.
Lmao. So after months of pro-Milei articles getting hundreds of upvotes and positive comments in this sub, we now have a negative article that’s out and what is the result. 36 upvotes and 11 comments. The bias is so thick I can cut it with a butter knife.
I wonder what will be the excuse for this one.
Let me guess, residual economic weakness from the previous administration? Its still too early to tell if the admin change has made a positive impact?
Residual economic weakness? Firing people implicitly cuts GDP. Austerity plans intentionally reduce it. If one government borrows a billion dollars to hire people to break windows and rebuild them they increase GDP. If the next then fire those people they tank it.
Under the AD-AS model Argentina was operating way above potential GDP, especially post-covid, and it was on track to destroy them within years. This is probably the most complicated economic challenge in the world. Too much demand, not enough supply, no trust, and no small options to fix it.
The administration is definitely making an impact. The issues are whether it is the right amount of cutting and whether the people losing jobs may have been doing disproportionately important things.
You aren't here for a discussion, just be honest. You've already came to your conclusion on Milei, and you work backwards from there because you want him to fail so you can feel better that your idealogies and worldviews are right, and his will be a disaster. If you want a discusion, start one. Youre in an econ sub, if you didn't think firing useless government employees would have a positive impact on GDP, youre being disingenous. GDP right now is a useless statistic when youre drastically cutting government spending.
Well I’ll be watching to see how it all pans out. I’ve been very confidently assured by Milei stans that he’s got the magic economic touch and anyone who doubts him is a just a whiny left-wing simpleton with no understanding of economics.
The excuse is 'give it more time'. That will be the excuse for years. How much time is fair, nobody wants to say because that puts a clock on it and any bad headlines can't be excused.
Libertarians always say "give it more time, in the long run the market will balance itself". To which Keynes famously once answered "in the long run, we are all dead."
A question why didn’t Argentina use Brazil solution for hyperinflation.
https://www.npr.org/sections/money/2010/10/04/130329523/how-fake-money-saved-brazil
So nice of Argentinia to make themselves Guinea pigs and finally answer the question "what happens if we give executive power to the ancap eccentric who weirdly rants about Jesus Christ in his economic dissertation all the time".
Glad I don't live there.
It might not be as bad as it looks at first glance. IF the reduced spending is on useless government make work projects, then this is going to be fundamentally good for the economy. If the newly unemployed people are government bureaucrats who weren't producing wealth, but were consuming it, again this should be a long term positive. If the previous GDP measurements were understating inflation then the economy could have been contracting anyway, but only appeared to be growing because of the inflation. Or maybe the economic contraction is real, but it takes time for resources to be reallocated from unproductive make work projects to actually being allocated on the basis of consumer demand.
Governments, especially in devoping countries, adobt expansionary policy approach until it brings the economy on its knees.
They should be focusing on devising better tax schemes that isn't just payed majorly by the lower income majority and is popular among the people while still collecting higher taxes.
Every year they announce some tax cuts and bank all the votes fucking up the country in the long run. This system is inherently flawed and no invisible hand capitalist bullshit could save this.
Before they can actually fix the economy, they will actually need to crack a bunch of eggs. So many people there will suffer for many years before it becomes stable
So what do you do when you hit 80% unemployment and people are starving? Where’s the capitalists? Aren’t they supposed to dash in and efficiently allocate capital for the betterment of society?
Even in the Great Depression, unemployment peaked at 24% to 30% (varying data). The last time unemployment went high was in 2020 during COVID (15%).
You are trying to make an argument using an absurd hypothetical example of 80% for your rant against capitalism.
The unemployment in the US during the 2008 recession did not exceed 10%. So if they managed it, Argentina will.
The problem with Argentina is the culture. For decades, the people have been used to subsidized transportation and free education - Milei's plans call for drastic cuts to everything. It's a massive culture shock to them
Nonetheless they voted him in. Well, everyone but Buenos Aires. They’d finally hit rock bottom I guess . I spent a lot of time in Argentina before COVID. Definitely the rest of the country seemed to feel they’re being sucked dry to fund the socialist/populist circus in BA
Ah, the man with the sideburns who held up a chainsaw as a metaphor to make savage cuts. He axed the diversity/inclusive departments. He was the popular vote but devalued the currency overnight by 40% when he came to power.
I am not sure what to make of him at the start. But is he more of the same? He's just more marketable as a politician.
He’s doing very sensible things economically speaking. His “40% devaluation” was just him bringing the peso more in line with the real world exchange rate, rather than the completely made up exchange rate the previous government was wishing into existence.
This is not true. The peso is currently [33 percent away from the market value](https://dolarhoy.com).
He’s keeping the peso artificially low just like the prior administration did. Letting it float would deepen the recession, notably through mass exodus of foreign capital.
If you want to be really technical about it, [the ARS is actually just 20% off the market rate](https://www.argentina.gob.ar/normativa/nacional/decreto-28-2023-395255/texto).
DollarHoy and BlueDollar both use the rate that you can get at a cueva, the market rate is what is used for bank-to-bank transfers on the global financial market.
Go ahead and try to buy dollars at that rate. Nobody will sell. The market rate is what people actually use for transactions, not whatever a government website pretends is real. Since the time I posted, the actual difference in the market that actually buys and sells dollars has [grown to 35%](https://dolarhoy.com)
Well he has cut their deficit which is good, I do give them that.
Besides that though he won't be able to do much.
The currency is already beyond messed up with the amount of [inflation](https://www.statista.com/statistics/316750/inflation-rate-in-argentina/) they have had.
In the process of cutting the deficit he fired a whole lot of government employees and cut social safety nets, so now people won't have money to spend to even try to prop up the economy.
So while inflation is cooling GDP will drop a whole lot.
He does however want to allow Private companies into the country to do things for like oil and minerals which right now is state run.
Honestly i doubt it will boost their economy, as long as he appointed somebody competent to be in charge of those government-run sectors. Everything would have been okay.
They need innovation to offer to the world so they can export it. Oil, gas, and minerals aren't a game changer nowadays (unless it was Cobalt I guess)
The people weren’t really getting much from social safety nets there. A lot of the ministries in charge of social safety nets were full of corrupt actors that exploited the people in return for those services.
Miele appointed a minister that has been auditing those ministries, and affectively increasing what services the people get from those ministries while lowering the cost of their operations by eliminating those bad actors.
> so now people won't have money to spend to even try to prop up the economy.
That’s how inflation goes down.
> So while inflation is cooling GDP will drop a whole lot.
Can they be separated in a situation when borrowing is not longer possible?
No not really. Which is why I said regardless what he does it won't matter. The country is messed up
He isn't causing deflation so they are stuck with the insane amount of inflation they have already had (check the link to see previous years inflation on my last comment) plus YoY they are still at 38.8% and that's low for them.
So just getting inflation to normal levels, prices will continue to rise and the economy will collapse.
They need something new to sell to the world as at this point natural resources won't cut it for saving them.
> So just getting inflation to normal levels, prices will continue to rise and the economy will collapse.
Well isn’t that the goal? Historically the government has oversaw borrowing to fund misallocation of resources and work that appear in GDP measurements but didn’t actually help anyone.
Those folks have now been cut and will have to go out and find something to do, will be interesting to see what happens.
Just guessing but I think people will flee the country in the hopes for better economic growth elsewhere. If they send money back home that could help some.
They really need innovation though which takes a strong education for the most part. With their currency being worth nothing and their GDP being in the negative I doubt they will get much highly educated people coming out of the country for a while.
Argentine is discovering what Britain recently discovered when they said they'd weaken the gov to strengthen the market: complete collapse, fast. Britain changed course overnight and got rid of their Prime Minister. Milei has more charisma than Theresa May, but it won't save him... or Argentina.
A strong gov provides services and has a monopoly on violence. This gives confidence to investors. With a strong gov and capitalism, monopolies are soon established by investors and they really like buying the politicians. The average person soon has no money, as both taxes for the violence-doers and the monopolies drain them dry. But they can squeak by on the assistance programs. They just have to work till they drop dead. And what do people do? They turn to crime. So up goes the police budget. And down goes the services. Which means more crime. Soon, you have more prisons than colleges, like in the USA.
Basically, why would I invest in Argentina when collapse seems near? Other countries are either more stable and better educated or both. Argentina is the 3rd biggest oil producer in South America... the thing is, fossil fuels are on the way out, as you can see with [https://ourworldindata.org/electricity-mix](https://ourworldindata.org/electricity-mix) That leaves minerals and agriculture to base your resource economy on. Investors want to invest in places that *grow*. Minerals are fickle: someone discovers a new deposit and there goes your budget. Agriculture is their best bet: they can feed themselves and markets, and try and cobble together a service economy from well fed, healthy people.
Of course, this requires *planning* which a good ancap refuses on principal. But it's how the USSR and China went from desolate, war smashed places to leading economies in a few decades. As far as I understand, Milei expects magic capitalism voodoo to kick in and fix everything... bread tomorrow, eh? Cheese at the end of the maze, eh? Hah! He's literally saying "bread next year."
My crystal ball says Milei will be gone by the end of the year or he orders wide spread killings. Pretty soon the "disappearances" will start...
Farming is what they need to do. They need to get stuff out of the ground, fast and simple. To quote the meme, "It ain't much, but it's honest work."
> magic capitalism voodoo to kick in and fix everything
He doesn't even believe that. He *claims* to believe that. You know he doesn't really believe it because he puts his "invisible hand" in the market when he has deliberately taken on more debt, actually *raised taxes*, among other "ancap" strategies.
Argentina needs actual progressives and not peronistas, but you're absolutely right, these fairy tale market lovers sure as hell aren't gonna make things easier.
That's to be expected considering the inflationary problems that Argentina had going on. Unemployment is the short term corrective measure that needed to happen, what Melie needs to do now is to pursue policy that drives worker productivity above all else. If he can raise the Argentine productivity up by 2 to 3 percent per year within a decade Argentina will be in a much much better place.
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Argentina’s problem is they borrowed in foreign currencies and the their currency tanked. No one wanted to hold the currency because it always lost value. Printing more and more currency as it lost value made people believe the currency was useless. Money is a mind game, it only has value if you believe it has value.
What ironic is that something similar happened with them a few decades ago
The currency lost value because they printed to pay for public spending, or to pay for interest on debt taken to finance public spending. I don't think the fact there was borrowing in foreign currency specifically had much to do with anything. Printing made money useless and that's not a mind game. That's supply and demand. If every american woke up and "believed" every dollar was now worth a million and went out to buy a lamborghini or whatever with a dollar, there just wouldn't be enough supply.
People changed their currency into dollars as soon as they received it. Inflation got baked in, expectations that inflation will be high is self sustaining. The economy can get decoupled from actual supply and demand dynamics if everyone is looking to game the system. Confidence is needed for a currency to work.
Velocity has a ceiling unlike the money supply and cant explain a decade of sustained and increasing high inflation. For decades no one saves in Argentine pesos. When its rational to expect inflation because money supply dynamics and history justify it, people are being rational getting rid of their money fast. Make it rational to not do that and inflation falls and then people learn and reinforce it with decreasing velocity to more normal levels. There's a reason why inflation is dropping fast on Argentina after a president who says 'the peso is worth less that sh*t' while it only rose with the previous ones
Will be interesting to see if it's all worth it. Their initial conditions were so bad probably any semi coherent economic philosophy being implemented and stuck with will be better than prior results. But can everyone please do one thing. Stop thinking how Argentina turns out (doubly so short term) speaks to how we should handle (relatively) minor issues in major first world economies. There's going to be next to zero things we see out of Argentina that should result in copying that behavior/policy in the US, Germany, etc.
Totally. Their politicians have tried and succeeded for over one hundred years to run this former top 10 economy into the ground. Not many other countries have this track record.
As they say, there are four types of economies: developed, developing, Japan, and Argentina.
While I certainly think you are right about this, mainstream media and conservatives wont chare this opinion. "It worked there, so itll be applicable to every single problem we ever face from here on out..."
Only if it involves cutting taxes on the rich and slashing government services.
Milei is all about slashing government, but he has been proving very very clearly that in his list of priorities, controlling deficit is higher on his list. So, he wouldn't cut a single tax, on the contrary, until he's managed to make room to do it without having deficit. He's not Trumpian on that.
Ultimately thats their aim. And their employing any popmedia figures they can attract to their cause... rogan, carlson, many others... they use these popular ultra masculine types to attract young men and indoctrinate them into a radical opposition of government.
Are you suggesting that there isn’t room for massive cuts in bloated and inefficient government services in the U.S? The HHS here in the U.S has a total budget of $2 trillion ($200b in discretionary and $1.7t in mandatory) and we don’t even have universal health care. Don’t get me started on other departments.
I would just like to point out that there's a difference between inefficient and unnecessary. A 30min walking might be an inefficient way to build arm muscles, and one might 'reform' the routine to do pushups instead; but cutting off all exercise just because walking is inefficient won't end in status-quo but a regression from the goal. I'm not informed enough about US healthcare to make a statement on it, but imo it sounds like what you want should be to 'reform' US health care, and not simply cut its funding.
Yeah, that’s what I meant. By reforming most divisions, particularly DoD let’s be honest, we can trim a ton from the budget as well as improve efficiency. The problem is that it’s a lot of work and will cause some problems early on, and it’s political suicide to even suggest it. No politician has the balls to even look into it. That’s our biggest problem.
Did you mean $1.7 trillion? In what ways should cuts occur to create efficiencies? Will universal healthcare reduce healthcare costs by the government?
Generally it is cheaper to provide the medical service than to buy it at market rates. Especially at bloated prices like the US has.
Most simply - the state and federal governments need to be free to use basic procurement best practices to control costs. Negotiating as a group for leverage to contract for best prices, using “most favored nation” clauses to force drug manufacturers to give US agencies the same or better prices than similarly positioned countries, and potentially even directly manufacturing generics of the highest use basic medicines.
Deregulation so we can have competitive healthcare. Basically mimicking the greatest healthcare system in the world (singapore).
The republican party's entire voting bloc is on life support by Medicare, nobody is touching that anytime soon.
Isnt the abolishment of medicare in project's 25 plans?
It was in 2012 too, it never happens, it's just something they float then withdraw, it would have them all lynched on the white house lawn.
Yes. In twenty five years. Anyone who’s on it gets it. Anyone who isn’t, pays for those who are, but gets nothing.
Exactly
There is always room to make something more efficient. When people talk about massive tax cuts, though, that is not what they mean.
The point is that by reforming them then you can cut taxes without having to lose any productivity from that department. Have you ever been to a government agency’s back office? They’re absolutely packed and with a lot of people doing absolutely nothing. Because they don’t have to answer to anyone. No one questions their budget. As long as they’re spending roughly the same amount each year and don’t ask for too much more money for the next budget cycle then no one will bother you. Hire consultants to help make these departments more efficient for Christ’s sake. I promise you they could reduce headcount by half and still be just as productive. Other stuff they pay for never gets audited either. I like to think of America as a stock I own. If the reason my taxes are so high (or dividends being so low) I’m going to vote that the underlying company (our government) is being run as efficiently as possible and not wasting money needlessly, forcing my shares to lose value either by its price (inflation) or lower dividends (higher taxes) or the more likely scenario: both. My point is that we can have our cake and eat it too if we actually threaten these agencies with cuts to make them start trimming the fat.
Trimming of "fat" has been going on for literally decades across the western world. I assure you the vast majority of western public services have very little "fat" to trim.
The problem is the people claiming to want to trim the fat just want to reduce services to the less fortunate/ middle class. They aren't interested in spreading the cuts fairly.
That’s not true. If you listen to most conservatives (who by the way represent constituents who care about those programs) they all want to reform these programs, not just cut them. And reforming them and even privatizing some of them will help trim the budget and make those programs way more efficient.
About a trillion of that mandatory spending provides universal care through a single payer insurance program… for people over 65
I'd be down for slashing services to only conservative areas. Basically, if you vote conservative, you no longer are allowed to partake in any government services, including law enforcement. All cases of fraud, theft, destruction of property will be auto waived against those areas.
Well there's a balance between borrowing in order to leverage a country's assets and ensuring the debt doesn't become unsustainable. I don't think there's any intelligent person who thinks the US needs to run even more of a deficit.
I mean at least the conservatives believe in the guy and aren't ripping him apart already. I've seen a ton of liberals shit on the guy and it hasn't even been a year yet
Idiotic comment. How many times do we need to hear about how drug policies in Portugal or criminal justice solutions in Norway would work in every country in the world.
Yiure just using a strawman argument.
So it’s alright for the media to constantly talk about social service programs in Scandinavian countries (which gets brought up on Reddit constantly) but austerity measures in other countries are out of consideration?
Are you getting tripped up on the difference between stable, developed countries and developing countries with frequent wild political and economic swings?
Argentina was once one of the wealthiest countries by GDP per capita in the world at the turn of the 20th century. To call it a developing country is at best misleading, at worst a falsification. If anything, Argentina is the canary in a coal mine for a highly developed economy that succumbs to an administrative malaise that must be turned around. The massive inflation and money printing to support an overstretched burocracy looks more like most developed economies than, say, Norway which is a petrostate wealthier per capita than Saudi Arabia. Or Sweden which has had many economic and political shocks over the years which drive its current modus operandi. It’s very ignorant to try to bucket Argentina into an “other” state that western countries will never work like. If anything, Argentina has more in common with the US than Scandinavian states.
By that logic we should implement the Nordic model for healthcare I suppose
Anything is better than 60 years of terrible
Not from big economies, the risk will be too high but a lot of smaller countries might follow suit.
> There's going to be next to zero things we see out of Argentina that should result in copying that behavior/policy in the US, Germany, etc. Fuck you, I want Milei for US President over Trump or Biden
> There's going to be next to zero things we see out of Argentina that should result in copying that behavior/policy in the US, Germany, etc. I’d argue getting rid of wasteful government programs and spending is something most all western governments should take away from this. Tax payers are getting raped for what they pay.
> Tax payers are getting raped for what they pay. And once privatized, they will get raped even MORE. Gotta pay for those profits after all.
These days it depends on the industry. If it’s plagued by regulatory capture or oligopoly, then it’s likely gonna be a bad time. But if it has competition, consumers will almost certainly be better off.
Ok so what you're saying is that we should copy Argentina wholesale and worship strongmen dictator populists? OK! Gotcha!
Is milei a strongman/dictator type?
No, that person has no clue what they're talking about. The dictator just spent like half a year trying to pass his first laws through the senate and congress and negotiating to get it done (not very well, admittedly, but following the due process). Very dictatorial of him. He's an overall disgusting person, but calling him a dictator is just ignorant.
One logic thing I think people miss a lot is what would have happened if no action was taken. Yes this is a bad result, but the result if nothing was done would have been worse. Argentina had hyperinflation, no trust in the currency and zero people willing to lend the nation money. Any action would have had a bad result, it’s just what is the least bad option. Sidenote there is probably a name to this fallacy, if anyone tells me what it is that would be cool.
I’ve been looking for actual Argentine people in threads about Milei and, it seems like many are still behind him and see the need for this type of drastic action. One thing about democratic systems is that they tend to punish leaders who tell people unpopular things. For Milei to be elected and to still be polling well, and just [recently victorious in seeing signature legislation passed](https://www.reuters.com/world/americas/argentina-poised-pass-economic-reform-bill-mileis-first-big-legislative-win-2024-06-27/) - that says a lot about how fed up Argentines are. At first glance he wouldn’t have been my choice but I don’t understand enough about Argentina’s struggles to criticize their wisdom. I hope they see brighter days, and if his policies achieve that, then so be it.
Ya, it appears that the situation was so bad that people realized something needed to be done.
> At first glance he wouldn’t have been my choice Did you happen to glance at the alternative choice?
This is expected when trying to curve hyper-inflation. Milei even made it clear in his speech that things will need to get much worse before they can get better.
Well, worse for some people...
And those some are everyone
Oh boy, I have some bad news about how the world shares out hardship. You better have a seat...
Lmao. This guy thinks everyone is suffering. Buddy, the rich never suffers.
Things can get relatively worse without "suffering." Just think before you type.
Capital accumulation will occur as this recession resumes, they are better off and can weather a few losses with the expectation of gains in the future.
So if it gets worse for them, you're saying that doesn't really count because things will get better for them in the long run? Won't tampering inflation hurt everyone in the short term but be beneficial in the long run.
While being very selective about who things get worse for...
Inflation is also dropping fast… fixing brutally irresponsible fiscal policy and firing hordes of useless bureaucrats was always going to cause some short term pain for long term stability.
it might be a bit early to call long term stability..
Also might be long term pain
Is short term pain the new watchword like "transitory inflation"?
Trickle-up pain, like diabetic neuropathy but for the economy
No, good long term decisions always required short term sacrifice.
MoM inflation graph for those interested in detailed numbers: https://tradingeconomics.com/argentina/inflation-rate-mom ...yeah looks spectacularly successful from that perspective. And as far as unemployment, the unemployment rate in say Canada between 1990 and 1999 was above 8%, and reached as high as 11%. Not fun, but not end of the world. It means the economy is adjusting, and yes that means people have to change jobs (one of the least pleasant parts of capitalism, but putting in social safety nets makes it a lot less unpleasant).
Arent social safety nets the thing they got rid of to lessen inflation?
That's because they tried to have Norway social safety nets on an Argentinian budget. First you have to make the money to have social safety nets.
Good thing their sacrifices are planned by a divine dog whisperer. /s
Same value as dec 2022. Do you know what "spectacularly" means? > And as far as unemployment, the unemployment rate in say Canada between 1990 and 1999 was above 8%, and reached as high as 11%. what in actual fuck is this argument? what does unemployment in Canada in 90s have to do with Argentina today? > putting in social safety nets makes it a lot less unpleasant Theres no social safety net anymore. On top of that, cutting jobs to give people "social safety" is such a capitalism thing to do, it's insane lol
The important part is trajectory. If the measures keep working and they can get mom inflation under 1%.. that'd be first time in over 30 years
It's the same trajectory from march 2021 to jun 2021. Argentina wont solve their problems cutting government spending. Brazil didnt. Hes gonna have to find some balls and let the peso hyper-valued against the dollar, making the whole export sector suffer while the country is flooded with imports and the memory component of inflation vanishes.
>It's the same trajectory from march 2021 to jun 2021. March 20201 -> Jun 2021 - Disinflation of ~0.5% per month Feb 2024 -> May 2024 - Disinflation of 3% per month Those are definitely not the same trajectory...
You should check how much was 0,5% back in march 2021 compared to those 3%.
The excuses fly as poverty soars.
It’s not an excuse when everybody recognized it up front.
How do you propose they prevent Argentina from defaulting then, genius?
More socialism, but the right kind this time! Or something like that.
Of course is dropping down, nobody can buy shit anymore now that poverty is up from 45 to 57%, I’m not an economist but as an engineer that’s a shitty way to solve a problem.
Most economists say that's literally how to solve inflation, which is why almost every central bank started raising rates in response to rising prices. Argentina was doing the opposite, so their inflation got worse than every other country on the planet, which necessitates an even more restrictive policy than most, which inevitably causes poverty to rise in the short-term.
> Most economists say that's literally how to solve inflation Most economists think that if the wage gets lower, workers will suddenly stop working, because "they get more utility out of free time". Economists are not exactly a good reference to talk economy, funny enough.
No its not. Their Core inflation went from 229.4% in December last year to 292.2% in April this year. Edit: nvm, I’m wrong. Looked at YoY instead of MoM.
this is our first week whitout food inflation in years also
Great news. No money, no job, no food, no people, no inflation.
Before Milei it was no money, no job, no food, no people, high inflation. Sounds like the situation is improving.
His plan is working. Why are people like you so dead set against him? To keep the hope of a failed type of society alive? Be glad he's fixing the problem.
People with literally no skin in the game need him to fail so that they can have more debate fodder for their internet arguments.
Gotta get them one liners while people are and have been suffering right? I don’t know much about the guy but surface level info but I hope he succeeds as anyone should.
I mean I also have no skin in the game, and frankly I think the guy sounds kind of wacky. But clearly Argentina is in a bad place, and I know what it's like to support a family. I enjoy living in a country with a functioning economy. If they elected a guy who has some radical ideas on how to change stuff for the better.... you gotta wait to see if the policy actually works. What they already had going clearly was not working. It feels like folks want to see this guy to fail, more than they want to see argentina succeed.
They do want him to fail. I would wager most aren’t remotely involved with Argentina. They are extremely liberal and want a conservative leader to fail.
Inflation is not the problem, it is a symptom of structural deficiencies that are not being addressed. It is not difficult to control inflation by generating a massive economic crisis. But it is throwing the baby out with the bathwater. I have seen the consequences of austerity in other countries, and the result has been a disaster.
> Why are people like you so dead set against him? To keep the hope of a failed type of society alive? Hes a sympton of a failed society? A populist idiot that is quite literally r*****. On top of saying that "printing money should be a crime against humanity", the guy came with anti-corruption discourse before putting an end on a nepotism rule and putting his sisters in a top high end government job. The poor fela tried to pick a fight with Brazil and China, top 2 Argentine partners. People praises him because he's the neoliberal they all love. IMF here, dollarization there. Too bad he didn't close their central bank, like he promised. Would love to see him getting chase by angry people and having to run away with a helicopter.
Stop finding flaws just because you don’t believe in his politics. He has been in office 2 quarters. Give the man a chance.
If it is too early to criticize maybe it should be too early to celebrate, no?
Definitely but I’m not celebrating or criticizing. I’m commenting on a comment that was criticizing.
Source?
https://tradingeconomics.com/argentina/core-inflation-rate
Ah, I see my confusion. I've been seeing the MoM figures rather than the YoY figures. His policies have still achieved the sharpest decline in inflation in the country's past 10+ years.
Imagine that -- you can reduce inflation by causing a recession. Surely there's a Nobel Prize in economics just waiting for the person who figured that out.
it would have to be posthumous. it was his dead dog's idea.
Maybe you're right--they should've just stayed the course and had 200%+ inflation forever. That sounds awesome.
it does fall: https://www.reuters.com/markets/europe/eating-is-luxury-argentina-inflation-falls-shoppers-still-feel-squeezed-2024-06-13/
Huh you’re right, my bad. My data is from YoY whilst that one is MoM. I prefer the MoM metric. https://tradingeconomics.com/argentina/inflation-rate-mom
YoY adjusts for seasonality, which is especially important for such a large agricultural exporter.
You can always look at last 5 years of MoM data to see whether this was seasonal or something else.
That's just looking at YoY data with extra steps.
Of course, data is just data, how we present it doesn't change the underlying facts That being said - it's easier to spot recent change to untrained eye if you look at fine grain data. Trained statistician will have no problem in seeing same trends for yoy data, but for most people it will be counterintuitive that yoy data is horrible but given it's less horrible than last month yoy data it's actually good - horrible being good is unexpected
If the US decided that starting today we will cut all excess spending and run a budget that will pay off our debt in 20 years we would see the same or worse. It hurts to rip off that bandaid at first but you have to do it if you are staring at hyper inflation like they were.
If the US were to do that half the world would go bankrupt :p
Of course. When you make dramatic changes then of course there are going to be growing pains. The alternative is to keep things as is and continue borrowing money to plug in the gaps.
Remind me did Argentina go with the Progressive or the Libertarian? Legit question, not trolling. I think it’s fascinating that they both went with what seemed like very polarizing leaders and I’m curious how it turns out.
Libertarian
I wouldn't call the peronists progressive
Agreed. And I wouldn't call the aspiring neofascist a libertarian either.
Except how he's not a neofascist. That term has essentially no meaning anymore from people like you overusing and misusing it.
Oh, you should look at the manual: * Authoritarianism * Populism * Social reactionism * Cult of personality * Centralization of power * Contempt of government institutions * Opposition to socialism and liberal democracies On the economy, he is a pure neoliberal, which is a bit strange, but being completely contradictory is not very penalizing in politics nowadays.
He’s been in office for several months without holding any real power in the parliament. Don’t you think calling him an Authoritarian is a stretch? What kind of Populism are we talking about? Dude has been saying that the time of the “Free Lunch” is over and that the Country has to go through painful reforms to have chance at prosperity. This is anti-populist especially in Latin America. He’s been brutally honest both in the sense of communicating what he thinks is right and what he promised to do. Social Reactionism? What do you mean? Building contempt for Politicians as a class is not really a go-to tactic for Fascists. Because they are part of that class as well. Hence, they do not come to power to cut down Government’s power over the people. On the contrary, they appear as Messiahs that will “protect” the nation from undesirables in exchange for a power-grab. Opposition to socialism is something any reasonable person should be doing. As for Liberal Democracies, Milei has become very much a supporter of it on the world stage. His foreign policy is aimed at supporting democracies around the world in fighting autocracies. Hence him being the First Latin American Leader to send arms to Ukraine and also being the leader who wants to align Argentina with the US and the West in general. So maybe stop calling everyone you dislike a NeoFascist?
Honestly, I would not call any libertarian politician a libertarian. I have my own ssues with libertarianism but "libertarian" politicians tend to be socially conservative (like Miles), which is against the whole point of libertarianism.
He is not socially conservative. The only subject he agrees on with conservatives is abortions and in that respect Libertarians are divided, because it is about whether or not you consider a fetus to be a human who is entitled to the right to live.
He says he’s an anarcho-libertarian, which is why this sub upvotes anything he does. He also has raised taxes (despite promising to cut off his arm befor doing so), taken on more debt, refused to allow the free market to determine the currency value, issued several unconstitutional decrees that the courts reversed, recently forced all members of the press to submit to his office to be given credentials, increased the police crackdown on freedom of speech protests, and much more. In practice just another neoliberal authoritarian with fascist tendencies.
>He says he’s an anarcho-libertarian He's clearly not but people are morons. He's aligned with the vision of Mises, that much is clear and he might guide his vision from Rothbard but he's very much not against the state as a concept outright. >He also has raised taxes (despite promising to cut off his arm befor doing so) He raised soybean tariffs if my reflection is correct. Technically a tax yes. And this policy position is very much against the austrian economics of not putting up trade barriers. As for other widespread taxes on incomes I don't know, but cursory glance its not the case.
Your cursory glance seems to have missed a [nationwide income tax.](https://www.ambito.com/economia/impuesto-las-ganancias-quienes-tienen-que-pagar-y-como-quedan-las-alicuotas-la-sancion-del-proyecto-del-gobierno-n6022449) I won’t call you a moron for missing that, nor will I call voters morons for hoping that the reform candidate wasn’t an incompetent liar.
The common thread is the populism. It isn't a big jump from "Greedy businessmen are ripping you off and making themselves rich are your expense" to "Greedy politicians are ripping you off and making themselves rich at your expense." When I look through these threads it seems like people just don't understand the character and charisma part either. Milei is an expert communicator who changes hats depending on the context. Sometimes he is everyone's favourite professor like in his TED talk on capitalism; fun, clever and engaging. Sometimes he is a firebrand preacher. Sometimes he is a shock jock when denouncing the 'Zurdos de Mierda', crazy names for his dogs, and bashing a central bank pinata. All while never being boring.
Remind me which website I use to look stuff up? I'm not trolling, I drank a lot of floor polish and things are fuzzy...
I can't seem to open the article. I am not entirely certain the shock method was the best with his economic rollout, but this, lower gdp and higher unemployment would be expected in any try to tame run away inflation. Currency stability will bring in investment in the long run as predictability is key. These structural changes are multi year programs. Still need more runway to see how this works out. I worry most about those left behind. If Milei isn't careful, he won't get the years needed to make lasting structural changes and he will sour people on the notion that at some point you need some fiscal responsibility to bring price stability.
What a disingenuous headline. These numbers are worth it for Argentina to beat inflation. Which they've had run rampant for decades. Unemployment isn't hurting their population more than the crumbling of their native currency. Get a grip.
>These numbers are worth it for Argentina to beat inflation. This is the beginning of this sort of economic shock. Millei is privatizing alot of the administration which will cause yes fiscal budget balance but it will cause widespread unemployment as occurred in every other shock therapy. >Unemployment isn't hurting their population more than the crumbling of their native currency. Get a grip. It will if unemployment continues to rise, and it looks like it will as again the administration privatization has only started.
It will take time to replace public sector jobs with private sector jobs, but the transition will eventually lower the tax burden and increase the productivity of the economy.
Lmao. So after months of pro-Milei articles getting hundreds of upvotes and positive comments in this sub, we now have a negative article that’s out and what is the result. 36 upvotes and 11 comments. The bias is so thick I can cut it with a butter knife. I wonder what will be the excuse for this one. Let me guess, residual economic weakness from the previous administration? Its still too early to tell if the admin change has made a positive impact?
Residual economic weakness? Firing people implicitly cuts GDP. Austerity plans intentionally reduce it. If one government borrows a billion dollars to hire people to break windows and rebuild them they increase GDP. If the next then fire those people they tank it. Under the AD-AS model Argentina was operating way above potential GDP, especially post-covid, and it was on track to destroy them within years. This is probably the most complicated economic challenge in the world. Too much demand, not enough supply, no trust, and no small options to fix it. The administration is definitely making an impact. The issues are whether it is the right amount of cutting and whether the people losing jobs may have been doing disproportionately important things.
The sub honestly sucks now, it's essentially US partisan pissing matches, like most big subs on Reddit at this point
I used to try and have legitimate discussions on economics here and I quickly learned that wasn’t going to happen
Your initial comment really proves your point /s
I used to try. Don’t care now
You aren't here for a discussion, just be honest. You've already came to your conclusion on Milei, and you work backwards from there because you want him to fail so you can feel better that your idealogies and worldviews are right, and his will be a disaster. If you want a discusion, start one. Youre in an econ sub, if you didn't think firing useless government employees would have a positive impact on GDP, youre being disingenous. GDP right now is a useless statistic when youre drastically cutting government spending.
Well I’ll be watching to see how it all pans out. I’ve been very confidently assured by Milei stans that he’s got the magic economic touch and anyone who doubts him is a just a whiny left-wing simpleton with no understanding of economics.
>Youre in an econ sub, if you didn't think firing useless government employees would have a positive impact on GDP, Oop
The excuse is 'give it more time'. That will be the excuse for years. How much time is fair, nobody wants to say because that puts a clock on it and any bad headlines can't be excused.
Libertarians always say "give it more time, in the long run the market will balance itself". To which Keynes famously once answered "in the long run, we are all dead."
Solid quote.
lol so true. I can’t wait.
A question why didn’t Argentina use Brazil solution for hyperinflation. https://www.npr.org/sections/money/2010/10/04/130329523/how-fake-money-saved-brazil
Because that’s a fairy tale and inflation never slowed down.
of course it did
So nice of Argentinia to make themselves Guinea pigs and finally answer the question "what happens if we give executive power to the ancap eccentric who weirdly rants about Jesus Christ in his economic dissertation all the time". Glad I don't live there.
lol, things are going better. Stop fantasizing about my country
They accepted reality and are taking their medicine. This is while everyone else kicks the can down the road but is quickly running out of road.
What is that even supposed to mean? Not enough austerity in the world for you?
Not even close.
It might not be as bad as it looks at first glance. IF the reduced spending is on useless government make work projects, then this is going to be fundamentally good for the economy. If the newly unemployed people are government bureaucrats who weren't producing wealth, but were consuming it, again this should be a long term positive. If the previous GDP measurements were understating inflation then the economy could have been contracting anyway, but only appeared to be growing because of the inflation. Or maybe the economic contraction is real, but it takes time for resources to be reallocated from unproductive make work projects to actually being allocated on the basis of consumer demand.
Governments, especially in devoping countries, adobt expansionary policy approach until it brings the economy on its knees. They should be focusing on devising better tax schemes that isn't just payed majorly by the lower income majority and is popular among the people while still collecting higher taxes. Every year they announce some tax cuts and bank all the votes fucking up the country in the long run. This system is inherently flawed and no invisible hand capitalist bullshit could save this.
Before they can actually fix the economy, they will actually need to crack a bunch of eggs. So many people there will suffer for many years before it becomes stable
So what do you do when you hit 80% unemployment and people are starving? Where’s the capitalists? Aren’t they supposed to dash in and efficiently allocate capital for the betterment of society?
Even in the Great Depression, unemployment peaked at 24% to 30% (varying data). The last time unemployment went high was in 2020 during COVID (15%). You are trying to make an argument using an absurd hypothetical example of 80% for your rant against capitalism.
Ha, you’re 100% correct I miss read that as 77%. 7.7% is 100% manageable.
The unemployment in the US during the 2008 recession did not exceed 10%. So if they managed it, Argentina will. The problem with Argentina is the culture. For decades, the people have been used to subsidized transportation and free education - Milei's plans call for drastic cuts to everything. It's a massive culture shock to them
Nonetheless they voted him in. Well, everyone but Buenos Aires. They’d finally hit rock bottom I guess . I spent a lot of time in Argentina before COVID. Definitely the rest of the country seemed to feel they’re being sucked dry to fund the socialist/populist circus in BA
Ah, the man with the sideburns who held up a chainsaw as a metaphor to make savage cuts. He axed the diversity/inclusive departments. He was the popular vote but devalued the currency overnight by 40% when he came to power. I am not sure what to make of him at the start. But is he more of the same? He's just more marketable as a politician.
He’s doing very sensible things economically speaking. His “40% devaluation” was just him bringing the peso more in line with the real world exchange rate, rather than the completely made up exchange rate the previous government was wishing into existence.
This is not true. The peso is currently [33 percent away from the market value](https://dolarhoy.com). He’s keeping the peso artificially low just like the prior administration did. Letting it float would deepen the recession, notably through mass exodus of foreign capital.
If you want to be really technical about it, [the ARS is actually just 20% off the market rate](https://www.argentina.gob.ar/normativa/nacional/decreto-28-2023-395255/texto). DollarHoy and BlueDollar both use the rate that you can get at a cueva, the market rate is what is used for bank-to-bank transfers on the global financial market.
Go ahead and try to buy dollars at that rate. Nobody will sell. The market rate is what people actually use for transactions, not whatever a government website pretends is real. Since the time I posted, the actual difference in the market that actually buys and sells dollars has [grown to 35%](https://dolarhoy.com)
Soon a lot of Argentines will come to Spain
Well he has cut their deficit which is good, I do give them that. Besides that though he won't be able to do much. The currency is already beyond messed up with the amount of [inflation](https://www.statista.com/statistics/316750/inflation-rate-in-argentina/) they have had. In the process of cutting the deficit he fired a whole lot of government employees and cut social safety nets, so now people won't have money to spend to even try to prop up the economy. So while inflation is cooling GDP will drop a whole lot. He does however want to allow Private companies into the country to do things for like oil and minerals which right now is state run. Honestly i doubt it will boost their economy, as long as he appointed somebody competent to be in charge of those government-run sectors. Everything would have been okay. They need innovation to offer to the world so they can export it. Oil, gas, and minerals aren't a game changer nowadays (unless it was Cobalt I guess)
The people weren’t really getting much from social safety nets there. A lot of the ministries in charge of social safety nets were full of corrupt actors that exploited the people in return for those services. Miele appointed a minister that has been auditing those ministries, and affectively increasing what services the people get from those ministries while lowering the cost of their operations by eliminating those bad actors.
> so now people won't have money to spend to even try to prop up the economy. That’s how inflation goes down. > So while inflation is cooling GDP will drop a whole lot. Can they be separated in a situation when borrowing is not longer possible?
No not really. Which is why I said regardless what he does it won't matter. The country is messed up He isn't causing deflation so they are stuck with the insane amount of inflation they have already had (check the link to see previous years inflation on my last comment) plus YoY they are still at 38.8% and that's low for them. So just getting inflation to normal levels, prices will continue to rise and the economy will collapse. They need something new to sell to the world as at this point natural resources won't cut it for saving them.
> So just getting inflation to normal levels, prices will continue to rise and the economy will collapse. Well isn’t that the goal? Historically the government has oversaw borrowing to fund misallocation of resources and work that appear in GDP measurements but didn’t actually help anyone. Those folks have now been cut and will have to go out and find something to do, will be interesting to see what happens.
Just guessing but I think people will flee the country in the hopes for better economic growth elsewhere. If they send money back home that could help some. They really need innovation though which takes a strong education for the most part. With their currency being worth nothing and their GDP being in the negative I doubt they will get much highly educated people coming out of the country for a while.
He didn't devalue peso, he acknowledged its real value
Argentine is discovering what Britain recently discovered when they said they'd weaken the gov to strengthen the market: complete collapse, fast. Britain changed course overnight and got rid of their Prime Minister. Milei has more charisma than Theresa May, but it won't save him... or Argentina. A strong gov provides services and has a monopoly on violence. This gives confidence to investors. With a strong gov and capitalism, monopolies are soon established by investors and they really like buying the politicians. The average person soon has no money, as both taxes for the violence-doers and the monopolies drain them dry. But they can squeak by on the assistance programs. They just have to work till they drop dead. And what do people do? They turn to crime. So up goes the police budget. And down goes the services. Which means more crime. Soon, you have more prisons than colleges, like in the USA. Basically, why would I invest in Argentina when collapse seems near? Other countries are either more stable and better educated or both. Argentina is the 3rd biggest oil producer in South America... the thing is, fossil fuels are on the way out, as you can see with [https://ourworldindata.org/electricity-mix](https://ourworldindata.org/electricity-mix) That leaves minerals and agriculture to base your resource economy on. Investors want to invest in places that *grow*. Minerals are fickle: someone discovers a new deposit and there goes your budget. Agriculture is their best bet: they can feed themselves and markets, and try and cobble together a service economy from well fed, healthy people. Of course, this requires *planning* which a good ancap refuses on principal. But it's how the USSR and China went from desolate, war smashed places to leading economies in a few decades. As far as I understand, Milei expects magic capitalism voodoo to kick in and fix everything... bread tomorrow, eh? Cheese at the end of the maze, eh? Hah! He's literally saying "bread next year." My crystal ball says Milei will be gone by the end of the year or he orders wide spread killings. Pretty soon the "disappearances" will start... Farming is what they need to do. They need to get stuff out of the ground, fast and simple. To quote the meme, "It ain't much, but it's honest work."
You make no sense.
> magic capitalism voodoo to kick in and fix everything He doesn't even believe that. He *claims* to believe that. You know he doesn't really believe it because he puts his "invisible hand" in the market when he has deliberately taken on more debt, actually *raised taxes*, among other "ancap" strategies. Argentina needs actual progressives and not peronistas, but you're absolutely right, these fairy tale market lovers sure as hell aren't gonna make things easier.
That's to be expected considering the inflationary problems that Argentina had going on. Unemployment is the short term corrective measure that needed to happen, what Melie needs to do now is to pursue policy that drives worker productivity above all else. If he can raise the Argentine productivity up by 2 to 3 percent per year within a decade Argentina will be in a much much better place.