8 ms·

For those on the "it's-fine-to-print-money-at-will" bandwagon, please meditate on at least this part: > “everything starts with a large fiscal imbalance, which

For those on the "it's-fine-to-print-money-at-will" bandwagon, please meditate on at least this part: > “everything starts with a large fiscal imbalance, which becomes a monetary imbalance due to printing [money] to finance the deficit.” Says the chief economist of the Agricultural Foundation for the Development of Argentina. A.k.a. someone in one of the best places in the world today to really know this stuff.

RC_ITR 4y ago
Sure, this random guy who works at a foundation who’s mission is “to explain to Argentinians that deficits are bad” [0] is the most qualified person to talk about global monetary policy. [0] https://www.google.com/amp/s/www.infocampo.com.ar/gustavo-vitelli-es-el-nuevo-presidente-de-fada/amp/ https://www.google.com/amp/s/www.infocampo.com.ar/gustavo-vi... Carlos Schilling, el ex presidente de FADA, señaló que “es común que hoy en día nos preguntemos ¿qué estamos haciendo para mejorar nuestropaís? Desde FADA hacemos, y hacemos mucho: trabajamos para que todos entendamos que producir más es bueno para todos, que si el país está en déficit es malo, que si exportamos más nos ayuda a todos.
- kragen 4y ago
  You sound like you're being sarcastic, but certainly it sounds like the things he was trying to divulge are some of the most important and fundamental aspects of global economics, and they are aspects that are poorly understood by the Argentine public: producing more is good for everyone, it is bad if the country is in a [trade] deficit, and if we export more it helps us all. (That's my translation of the Spanish.) I don't know anything about his qualifications.
  - RC_ITR 4y ago
    > it is bad if the country is in a [trade] deficit Argentina has been a net exporter since 2019, largely due to dramatically falling imports that are associated with a lower quality of life for its people. Many of Argentina’s problems can be traced directly back to protectionism that is intended to “keep Argentina’s wealth in Argentina” (a great recent example re-nationalizing their oil company by force). This thinking has left the economy extremely dependent on volatile commodities and all but eliminated the vibrant start-up ecosystem that once existed there (Mercado Libre is still the largest public internet company in Latin America). Suffice to say, inflation in Argentina has much more to do with destructive real economy policies than it does with “money printing,” especially when you consider their interest rate has been above 20% since 2016!
    - kragen 4y ago
      It's good if we no longer have a deficit, but I have no illusions that that situation will last; Argentina's perverse anti-protectionist foreign exchange policies that protect foreign companies from Argentine competition are still in place and show no sign of easing. I don't understand why you would call the renationalization of YPF "protectionist". Did it somehow lower YPF's cost of oil drilling, subsidizing Argentina's oil exports, or at least reducing Argentina's oil imports (we are now a net importer)? I would think rather the contrary: by increasing the risk to investors and lenders, it will raise YPF's effective interest rate for the necessary capex, increasing the cost of Argentina's oil exports. What's your reasoning? For reference, "protectionism" refers to government policies that have the effect of increasing the profits of domestic producers by "protecting" them from foreign competition, or political advocacy of such policies. I don't understand what you're saying about "destructive real economy policies" vs. "money printing" and 20% interest rates. Can you elaborate? I would say the Argentine government's policy of printing lots of money is a destructive real-economy policy that has caused interest rates to be very high, because interest rates have to be higher than the rate of inflation in order for lending to be profitable.
- rmbyrro 4y ago
  Do you disagree with what he said? I don't see how the quote diminishes his qualifications to talk about macroeconomics.
  - RC_ITR 4y ago
    I do! I think inflation is usually a real economy problem that has a bad quote about being a monetary phenomenon associated with it (which has confused a generation of lay people). The implication of the economist doesn’t even really make sense - both Argentinas trade and budget deficits aren’t that big vs. the rest of the world, but their inflation and level of government intervention into the real economy sure is. In general, my philosophy on economics is to notice what’s different about a country than just accepting the “easy” answer; a <10% of GDP deficit doesn’t phase me (Major trading partner Brazil is similar in both ways), but a government willing to renationalize a company it sold on the open market sure does!
tiahura 4y ago
Sounds like they should separate fiscal policy and monetary policy like the US, Congress/President and the Federal Reserve.
- xhrpost 4y ago
  Related, I kind of wish that Congress would _not_ separate the budget from fiscal policy. Right now they vote on debt limit increases completely separate from the budget, which is bizarre to me because _they_ approved the budget! The side not in power just uses it as political leverage saying "we can't keep spending money we don't have". Well, I dunno, maybe you shouldn't have approved a budget you can't afford then? The budget and the _financing of the budget_ need to be a single bill.
FabHK 4y ago
Look, nobody disputes that extremely bad policy can lead to hyperinflation - there are obvious cases of that. But that doesn't mean that it is impossible to manage fiat money sensibly, or do QE responsibly without subsequent inflation. It is not fine to print money at will, but it is fine to run expansive monetary policy when warranted.
- canadiantim 4y ago
  It's not that it's impossible to manage fiat money sensibly. It's that the incentives are perverse such that politicians have every incentive to keep the gravy train going and little to no incentive to be disciplined about spending. The end result is a system that necessarily has a greater likelihood to evolve into an inability to manage fiat money sensibly. So it's not about impossibilities, so much as it is about incentives and probabilities. Note, there are definitely cases where deficit spending is warranted (e.g. recessions) and even a good investment during boom times. But when deficit-spending during good times goes towards not infrastructure but ephemeral program spending, which much of the world is currently doing, then it's easy to see why it is so difficult to manage fiat money responsibly.
  - Retric 4y ago
    Incentives don’t need to be perfect to work out. US has had a much more stable economy post fiat money than before fiat money. https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit...
    - djbebs 4y ago
      (X) doubt Any evidence for that?
      - deleted 4y ago
        [deleted]
      - Armisael16 4y ago
RcouF1uZ4gsC 4y ago
A lot of depends on if you are the reserve currency of the world. Oil sales are in USD. US Taxes are in USD. US debt is in USD. The USD is backed by the most powerful military in the world. The US is in a much different place than Argentina or Greece.
- lvass 4y ago
  The functions don't matter much when you're talking about the few dominating currencies, but shitcoins are doubly suspicious when their contracts include a centralized_mint().
- TMWNN 4y ago
  >The US is in a much different place than Argentina or Greece. There are many countries with stable economies and currencies despite not using the US dollar natively.
xkcd1963 4y ago
I was given to understand that the owners of the Argentinian agriculture industry are the most corrupt part of Argentinian politics
- argentinian 4y ago
  No way. If it were so, they would not have to pay such high taxes when they export grains ("retenciones a las exportaciones").
- the_af 4y ago
  You understand correctly. They aren't the only ones, but they have a big sway because they are the richest in Argentina.
ankaAr 4y ago
"It is fine to print money at will", maybe some words from the ex vice president that bought the printing company that print the cash. Literally, he bought that.

RC_ITR 4y ago

Sure, this random guy who works at a foundation who’s mission is “to explain to Argentinians that deficits are bad” [0] is the most qualified person to talk about global monetary policy. [0] https://www.google.com/amp/s/www.infocampo.com.ar/gustavo-vitelli-es-el-nuevo-presidente-de-fada/amp/ https://www.google.com/amp/s/www.infocampo.com.ar/gustavo-vi... Carlos Schilling, el ex presidente de FADA, señaló que “es común que hoy en día nos preguntemos ¿qué estamos haciendo para mejorar nuestropaís? Desde FADA hacemos, y hacemos mucho: trabajamos para que todos entendamos que producir más es bueno para todos, que si el país está en déficit es malo, que si exportamos más nos ayuda a todos.

kragen 4y ago
You sound like you're being sarcastic, but certainly it sounds like the things he was trying to divulge are some of the most important and fundamental aspects of global economics, and they are aspects that are poorly understood by the Argentine public: producing more is good for everyone, it is bad if the country is in a [trade] deficit, and if we export more it helps us all. (That's my translation of the Spanish.) I don't know anything about his qualifications.
- RC_ITR 4y ago
  > it is bad if the country is in a [trade] deficit Argentina has been a net exporter since 2019, largely due to dramatically falling imports that are associated with a lower quality of life for its people. Many of Argentina’s problems can be traced directly back to protectionism that is intended to “keep Argentina’s wealth in Argentina” (a great recent example re-nationalizing their oil company by force). This thinking has left the economy extremely dependent on volatile commodities and all but eliminated the vibrant start-up ecosystem that once existed there (Mercado Libre is still the largest public internet company in Latin America). Suffice to say, inflation in Argentina has much more to do with destructive real economy policies than it does with “money printing,” especially when you consider their interest rate has been above 20% since 2016!
  - kragen 4y ago
    It's good if we no longer have a deficit, but I have no illusions that that situation will last; Argentina's perverse anti-protectionist foreign exchange policies that protect foreign companies from Argentine competition are still in place and show no sign of easing. I don't understand why you would call the renationalization of YPF "protectionist". Did it somehow lower YPF's cost of oil drilling, subsidizing Argentina's oil exports, or at least reducing Argentina's oil imports (we are now a net importer)? I would think rather the contrary: by increasing the risk to investors and lenders, it will raise YPF's effective interest rate for the necessary capex, increasing the cost of Argentina's oil exports. What's your reasoning? For reference, "protectionism" refers to government policies that have the effect of increasing the profits of domestic producers by "protecting" them from foreign competition, or political advocacy of such policies. I don't understand what you're saying about "destructive real economy policies" vs. "money printing" and 20% interest rates. Can you elaborate? I would say the Argentine government's policy of printing lots of money is a destructive real-economy policy that has caused interest rates to be very high, because interest rates have to be higher than the rate of inflation in order for lending to be profitable.
rmbyrro 4y ago
Do you disagree with what he said? I don't see how the quote diminishes his qualifications to talk about macroeconomics.
- RC_ITR 4y ago
  I do! I think inflation is usually a real economy problem that has a bad quote about being a monetary phenomenon associated with it (which has confused a generation of lay people). The implication of the economist doesn’t even really make sense - both Argentinas trade and budget deficits aren’t that big vs. the rest of the world, but their inflation and level of government intervention into the real economy sure is. In general, my philosophy on economics is to notice what’s different about a country than just accepting the “easy” answer; a <10% of GDP deficit doesn’t phase me (Major trading partner Brazil is similar in both ways), but a government willing to renationalize a company it sold on the open market sure does!

tiahura 4y ago

Sounds like they should separate fiscal policy and monetary policy like the US, Congress/President and the Federal Reserve.

xhrpost 4y ago
Related, I kind of wish that Congress would _not_ separate the budget from fiscal policy. Right now they vote on debt limit increases completely separate from the budget, which is bizarre to me because _they_ approved the budget! The side not in power just uses it as political leverage saying "we can't keep spending money we don't have". Well, I dunno, maybe you shouldn't have approved a budget you can't afford then? The budget and the _financing of the budget_ need to be a single bill.

FabHK 4y ago

Look, nobody disputes that extremely bad policy can lead to hyperinflation - there are obvious cases of that. But that doesn't mean that it is impossible to manage fiat money sensibly, or do QE responsibly without subsequent inflation. It is not fine to print money at will, but it is fine to run expansive monetary policy when warranted.

canadiantim 4y ago
It's not that it's impossible to manage fiat money sensibly. It's that the incentives are perverse such that politicians have every incentive to keep the gravy train going and little to no incentive to be disciplined about spending. The end result is a system that necessarily has a greater likelihood to evolve into an inability to manage fiat money sensibly. So it's not about impossibilities, so much as it is about incentives and probabilities. Note, there are definitely cases where deficit spending is warranted (e.g. recessions) and even a good investment during boom times. But when deficit-spending during good times goes towards not infrastructure but ephemeral program spending, which much of the world is currently doing, then it's easy to see why it is so difficult to manage fiat money responsibly.
- Retric 4y ago
  Incentives don’t need to be perfect to work out. US has had a much more stable economy post fiat money than before fiat money. https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit...
  - djbebs 4y ago
    (X) doubt Any evidence for that?
    - deleted 4y ago
      [deleted]
    - Armisael16 4y ago

RcouF1uZ4gsC 4y ago

A lot of depends on if you are the reserve currency of the world. Oil sales are in USD. US Taxes are in USD. US debt is in USD. The USD is backed by the most powerful military in the world. The US is in a much different place than Argentina or Greece.

lvass 4y ago
The functions don't matter much when you're talking about the few dominating currencies, but shitcoins are doubly suspicious when their contracts include a centralized_mint().
TMWNN 4y ago
>The US is in a much different place than Argentina or Greece. There are many countries with stable economies and currencies despite not using the US dollar natively.

xkcd1963 4y ago

I was given to understand that the owners of the Argentinian agriculture industry are the most corrupt part of Argentinian politics

argentinian 4y ago
No way. If it were so, they would not have to pay such high taxes when they export grains ("retenciones a las exportaciones").
the_af 4y ago
You understand correctly. They aren't the only ones, but they have a big sway because they are the richest in Argentina.

ankaAr 4y ago

"It is fine to print money at will", maybe some words from the ex vice president that bought the printing company that print the cash. Literally, he bought that.