“Will not all of them taunt him with ridicule and scorn, saying, ‘Woe to him who piles up stolen goods and makes himself wealthy by extortion! How long must this go on?’Will not your creditors suddenly arise? Will they not wake up and make you tremble? Then you will become their prey.” – Habakkuk 2:6-7
The Argentines are at it again – printing money at an awesome pace in order to generate “free money” – which they can do, and it will be worth exactly what the name implies. Articles are all over the place on the continuing flail there, including “Argentine leader’s image falls as inflation soars” and “Argentine inflation resilient despite slowing growth“. I thought the title in that last one was nice, but perhaps could have read “slowing growth resilient because of inflation” instead.
It’s hard to tell sometimes what leaders are thinking. Are they really absurdly clueless about the way things work, or are they just covering their desire for absolute power in the guise of some easy-to-sell ideology? I tend to believe the latter. Folks who rise to power aren’t idiots.
So the Argentines are printing. The government is using it as a means to “pay” for crazy promises that they’ve made through their populist rhetoric. They’re squashing objections too, fining economists who produce independent analysis (showing about a 20% inflation rate) which goes against “official” government estimates.
State workers are protesting that their pay increases don’t keep up with price increases, and farmers are launching protests demanding price increases (they have strict price controls) to make up for, again, dramatically rising input costs. Twenty percent inflation is massive.
Imagine the price of a new car going from $30,000 to $180,000 in ten short years … that’s 20% inflation. Of course, it’s nothing like the 5000 percent inflation Argentina suffered the last time they turned on the printing presses to gin up some free money. (Side note: one of the articles had this brilliant claim – “many economists say inflation will remain high because of the central bank’s heavy volume of money-printing” – well, three cheers for “many economists” who figured out that “heavy volumes of money-printing” actually is inflation, and causes price inflation on an equally heavy scale.)
So, why this sudden interest in Argentina? (We’ve not written about it before … except perhaps a random Falkland Island reference.) Is America headed toward hyperinflation? I don’t think so – I don’t think it’s even plausible right now (sorry, hyperinflationists). No, my concern/interest is slightly different. Argentina is suffering this peril, this economic stagflation, this crushing economic despair – because they elected these current leaders.
Cristina Fernandez is now in her second term. She won re-election amid 20% inflation! Why? Because enough people have been promised “something for nothing, at someone else’s expense” that they vote for it – even though it is obviously fraudulent and can’t possibly lead to long-term prosperity or sustainability. Think about that for a second. Enough people have been promised enough goodies from somebody else’s pocketbook that they will vote for Fernandez despite the clear and rational conclusion that she’ll destroy the entire economy.
We the People quite easily delude ourselves into believing that this time we can have it all. This time we can have free stuff. This time we can get away with it. This time we will finally satisfy our envy and pride.
No, printing money has never solved it, but this time it’s different. No, Socialism has never worked, but this time it’s different. No, socialized medical care has never produced anything but a crumbling, failing medical system with exceedingly low standards of care … but this time it’s different.
This won’t work – but so great is the craving for something-for-nothing that we’ll believe a lie. Argentina, Europe, Canada, these should all serve as cautionary tales. But the Argentines are people just like we, susceptible to the same delusions.