3 ms·

Indeed I am using a shorthand her to summarize the issues as well. My response is meant to highlight the fact that the situation is not nearly as “simple” as a

Indeed I am using a shorthand her to summarize the issues as well. My response is meant to highlight the fact that the situation is not nearly as “simple” as a government that runs fiscal deficits. I don’t know every detail about Argentina, but broad strokes, when you have a failing political class that is unable to effectively levy taxes and maintain international credit worthiness, you are going to have financial trouble. People love to blame spending and get moralistic about it but that’s typically not the primary issue.

Izikiel43 5y ago
Ehh, in this case it is, they are spending much more than we earn, and to cover that they used to take debt. Now no one lends to Argentina at a nice rate, so they emit internal debt by printing a ton of ARS to finance themselves, thus generating inflation. If they stop printing, they have to stop spending as well as cutting spending, leading to a raise in interest rates and a quick economic crash instead of the slow burn situation as of now. The current government is just trying to hold on until next elections, so when the economy explodes they can blame the next government for it.
- wbsss4412 5y ago
  It’s not that what you’ve written here is incorrect, but that this doesn’t say anything about what the remedy should be. Simply letting the economy crash isn’t a good solution as it doesn’t address the fundamental reforms that are needed and doesn’t get you any closer to solving the structural issues. All it does is create unnecessary pain for people. Again, if an entire society is engaging in rampant tax evasion, that is going to need to be addressed in order to turn things around.
  - Izikiel43 5y ago
    The remedy are 10 years of austerity measures and free market reforms in order to start seeing the light at the end of the tunnel. This is also known as a political suicide.
  - ephbit 5y ago
    Those fundamental reforms - which aren't only necessary in Argentina but basically in every major country, apart from maybe China - would be to: Reverse the ever more effective mechanisms big corporations have come up with in almost every jurisdiction to siphon an ever increasing proportion of all revenues from the total of economic activity and bypass taxation, making only maybe the richest ten percent (who are the shareholders) richer. Governments can borrow as much money as they want and central banks can allow banks to create as much money as they want to feed it into the economy to try in a futile way to keep the engine going .. as long as this trickling up of revenue is happening to the extent it is right now, the whole economic/monetary/social system is instable and heading towards either collapse or drastic political reform. Unfortunately apart from some minor patches (plans to actually tax big players in the EU) I don't see much evidence for elected politicians trying to improve the situation.

Izikiel43 5y ago

Ehh, in this case it is, they are spending much more than we earn, and to cover that they used to take debt. Now no one lends to Argentina at a nice rate, so they emit internal debt by printing a ton of ARS to finance themselves, thus generating inflation. If they stop printing, they have to stop spending as well as cutting spending, leading to a raise in interest rates and a quick economic crash instead of the slow burn situation as of now. The current government is just trying to hold on until next elections, so when the economy explodes they can blame the next government for it.

wbsss4412 5y ago
It’s not that what you’ve written here is incorrect, but that this doesn’t say anything about what the remedy should be. Simply letting the economy crash isn’t a good solution as it doesn’t address the fundamental reforms that are needed and doesn’t get you any closer to solving the structural issues. All it does is create unnecessary pain for people. Again, if an entire society is engaging in rampant tax evasion, that is going to need to be addressed in order to turn things around.
- Izikiel43 5y ago
  The remedy are 10 years of austerity measures and free market reforms in order to start seeing the light at the end of the tunnel. This is also known as a political suicide.
- ephbit 5y ago
  Those fundamental reforms - which aren't only necessary in Argentina but basically in every major country, apart from maybe China - would be to: Reverse the ever more effective mechanisms big corporations have come up with in almost every jurisdiction to siphon an ever increasing proportion of all revenues from the total of economic activity and bypass taxation, making only maybe the richest ten percent (who are the shareholders) richer. Governments can borrow as much money as they want and central banks can allow banks to create as much money as they want to feed it into the economy to try in a futile way to keep the engine going .. as long as this trickling up of revenue is happening to the extent it is right now, the whole economic/monetary/social system is instable and heading towards either collapse or drastic political reform. Unfortunately apart from some minor patches (plans to actually tax big players in the EU) I don't see much evidence for elected politicians trying to improve the situation.