We are all Keynesians now

Investment Analysis Clubs Macro Economic Trends and Risks
1

So said Richard Nixon in 1971.

Argentina has suffered from Keynsianism for many years resulting in a bloated government and endless money printing. Things may now change with the election of a new president who rejects Keynes’ ideas as a flawed economic policy:

“The model of decadence has come to an end, there’s no going back,”

Milei is pledging economic shock therapy. His plans include shutting the central bank, ditching the peso, and slashing spending, potentially painful reforms that resonated with voters angry at the economic malaise.

Shutting the central bank sound interesting :slight_smile:

I hope that Milei doesn’t have an ‘accident’ in the near future.

3 Likes
2

Well, he can’t do much worse than the historical record in Argentina. Hopefully.

DB2

2 Likes
3

It’s amazing how quickly things can change. At one time there was a saying in Europe “as rich as an Argentine”. I think that Milei says that it will take 30 years to fix the country and he might be right.

If he can get rid of the central bank that will be a good start. Like most central banks it’s there to transfer wealth up to the rich by money printing. He needs to be careful as tinkering with central banks can be dangerous. Here’s something for the conspiracy theorists :slight_smile:

We shall see!

1 Like
4

The story from SimpleCapacity was originally published on the site HumansbeFree. Here is a screen capture of the homepage of that site.

image
image1692×1794 233 KB

Please check your sources more closely. The JFK/Rothschild story smacks of antisemitism. Please remove it.

13 Likes
5

Perhaps this link dump is after close checking…or what passes for such … and those stories gel so closely with the poster’s belief system/World view that they act as confirmation of said beliefs rather than highlight TEH STOOPID?

Stranger things have happened.

6

Practice makes perfect. Right?

7

Progress in economics is a slow crawl… :slightly_frowning_face:

DB2

1 Like
8

@Divitias

That sort of phrase is a catchall but what does it mean? What are the policies you are citing?

9

Yes, he can. The starvation level will double or triple.

The unemployment rate will rise 10% or more.

The public debt will soar even without taking care of the poor.

His cabinet members will all be corrupt.

The number of wealthy people leaving the country will soar.

If you know of one thing he will make work please tell us.

He is so radical you have to be on edge about the mass extermination of Argentinians.

He is supposed to cut inflation. That is a laugh. He has no valid policies to cut inflation. This means disinflation not deflation.

CNBC subheadline

The far-right libertarian outsider has pledged to dollarize the economy, abolish the country’s central bank and privatize the pension system.

This means inflation will work in reverse. Not what you want. Instead of inflation in Argentina, there will be no economic growth because there is no central bank printing the peso. Instead deeper and deeper recession will occur because industries will decline further. As one declines the next will decline. Worse there will be no economic underpinnings in Argentina. Not that the prior underpinnings were much good but they existed. It is like economies of scale in reverse.

We know from the Great Depression that deflation is worse than inflation. That is the recipe here for Argentina.

The private pension programs will fail eventually. There will be no backup for the losses.

Argentina needs programs to produce its way out of the very high debt-to-GDP ratio. A policy to employ people and manage the Peso with integrity. Instead, they got a guy who likes cloned dogs. Because he has very little grip on how stupid his ideas are.

I will grant you for a month or two inflation will just about come to a complete stop. It will be a party. Then industry will slow…and slow…and slow…the order of the day will be deflation. It will be the most obnoxioius deflation ever seen. In USD the prices won’t drop if it is an import. If it is produced in Argentina the prices will crash. Workers will all lose their jobs. He can not have an investment plan for infrastructure without taxes or borrowing. In other words, he will come begging the US government to also finance this.

2 Likes
10

If Argentina dollarizes their economy, will that stabilize the “currency” part of their economy?

Ie stop the wild swings in currency value, such that citizens have “faith” that their “savings” will have value in the future, and stimulate savings?

What effect has “dollarizing” had on the economy of other countries who’ve dollarized?

*Dollarize - adopt the US $ as the official currency of Argentina, and get rid of the Argentine peso, as well as all the bureaucracy for maintaining a national currency.

Dollarizing is a more “sticky” way of “pegging” a country’s economy to the US $/economy?

{{Dollarization
As an alternative to maintaining a floating currency or a peg, a country may decide to implement full dollarization to reduce its country’s risk, thereby providing a stable and secure economic and investment climate. Countries seeking full dollarization tend to be developing or transitional economies.}}

Investopedia says these countries are dollarized.
USA
Puerto Rico
Ecuador
El Salvador
Zimbabwe
Guam
US Virgin Islands
British Virgin Islands
Timor-Leste
Bonaire
American Samoa
Northern Mariana Islands
Federated States of Micronesia
Palau
Marshall Islands
Panama
Turks and Caicos

What has happened to inflation in these countries since they “dollarized”?

This expert describes Ecuador and Panama.
{{Despite the controversy around dollarization and the consequences of its application, it is evident that in these two cases, it has been successful so far. Both Ecuador and Panama have maintained surprisingly low levels of inflation for the LATAM region, bringing stability to their economic systems and country as a whole. One must never forget, however, that a…}}

Take this source (the new global order ,com) with a grain of salt?

:face_with_monocle:
ralphstrong text

1 Like
11

It is certainly a conspiracy junk theory site, but I don’t see that the article says anything that is antisemitic.

I imagine everyone on TMF knows that the Federal Reserve is not a government owned institution, but one owned by the banks but that’s not antisemitic either.

Puzzled am I.

1 Like
12

You understand that’s not Keynsian economics, right?

3 Likes
13

I am looking into it. The other economies are much more dependent on the world bank and US, EU. This ads one more to the almost totally dependent column.

The standard of living might fall even with a stable currency not their own.

See Ecuador has a lower per capita income.

I was pulling for their economy and their incomes but if I look at it another way, this is good for the US against China in the region.

The other plus it takes Argentina out of contention for industrial development to a degree and leaves that to the US/Mexico. Not nice but reality.

@rainphakir I did not know this was happening. It took this big a case of it for me to find out.

14

That’s not quite right. Each of the regional banks are owned by the banks in that region, but the Federal Reserve itself is a government organization. It doesn’t have an owner.

Saying the Rothchilds own the Federal Reserve and assassinated Kennedy. Besides being bonkers, it is anti-semitic.

5 Likes
15

From The Federal Reserve site:

The Federal Reserve System is not “owned” by anyone.

This is a blatent lie. If they are not owned by anyone why do they pay dividends?

They are all owned by the banks in their area and pay dividends to their owners:

You have requested my opinion upon the question of whether a Federal reserve bank, which has accumulated a surplus fund out of earnings of past years, has authority to use a part of this fund to pay to its stockholding member banks the dividend for a subsequent year during which the current earnings of the federal reserve banks are insufficient to pay such dividend.

For more details read The Creature from Jekyll Island:

From the intro of the book:

This book is about the most blatant scam of history.

16

Yes, it’s bonkers. Yes, Rothchilds owned a bank. The article did not say the Rothchilds assassinated Kennedy. It hinted (like most conspiracy theories) that perhaps it was a warning.

Sometimes it seems to me that some people are seeing antisemitism everywhere. One can be anti-Israel without being antisemitic. Or even be against a specific jewish family without being antisemitic.

But yes, the article has no place on this thread.

3 Likes
17

LOL!

Oh the irony!!!

He will get rid of their central bank by turning to the US dollar, effectively giving control of the Argentine economy to the US central bank.

And how would they do that? They would have to buy US dollars. With what, an Argentine Peso that will eventually be worthless?

Too funny, especially coming from someone that is so opposed to the US Central Bank.

Edit: I will add that this also increases the dollarization of the world economy and boosts our status as the reserve currency.

The dollar should go up in value if this actually ever happens.

2 Likes
18

I think that the idea is that they won’t be able to print the US dollar like they can pesos.

There are a lot of US dollars being used in Argentina today. There were in the 1990s when the government then froze dollar acounts and converted the money to pesos. I’d be a bit wary if I lived there.

There is no good way out for them, but this might be the best that they can do to help stop this:

19

Some years/decades ago, I read of Argentine economics, as described by a Buenos Aires cab driver “every ten years, the government takes all our savings”. Why should this time be different?

Steve

20

And the pattern goes all the way back over 150 years.

david fb

1 Like