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Shock therapy like the one in Argentina is what turned the tide of inflation in the 1980s in the US: https://en.wikipedia.org/wiki/Early_1980s_recession_in_the_
by H8crilA 3y ago
Shock therapy like the one in Argentina is what turned the tide of inflation in the 1980s in the US: https://en.wikipedia.org/wiki/Early_1980s_recession_in_the_United_States https://en.wikipedia.org/wiki/Early_1980s_recession_in_the_U.... Milei got a strong mandate, but we will have to see if his mandate and his conviction is ultimately strong enough.
At the time Volcker, the president of the Fed, was a target of many social groups - for example he would get in his mail, along with very explicit an threatening letters, car keys from dealerships that went bankrupt. Reagan himself waged wars against some groups, for example he had a huge falling out with Air Traffic Controllers that resulted in sacking most of them and substantial problems with air traffic management due to understaffing.
But it worked, and we got the prosperous but greedy 80s. Soviet Union never recovered from the inflationary pressures, except that over there the system lacked price discovery so inflation manifested in other ways, through extreme shortages of goods / very long queues.
The situation in the late 1970s was so severe that the US even started issuing bonds in foreign currency! People preaching "the end of the Dollar" or some other similar extreme ideas usually don't realize that we're not even close to the Carter bonds stage yet. And even that stage was ultimately reversed. https://en.wikipedia.org/wiki/Carter_bonds https://en.wikipedia.org/wiki/Carter_bonds
- fmobus 3y agoBrazil cured its hyperinflation by what could be described as the opposite of shock therapy.
- asah 3y agointeresting - where can I read more?
- jowea 3y agoWikipedia has a start https://en.wikipedia.org/wiki/Plano_Real https://en.wikipedia.org/wiki/Plano_Real
- fmobus 3y agoSibling comment linked to Wikipedia English article, which describes the overall thing, but I think it lacks a bit on the "being the opposite of shock therapy". The thing about Plano Real is really about its previous context. In the preceding 10 years, government tried fighting hyperinflation by introducing measures that, by their nature, could not be revealed to society beforehand. They did things like freeze prices of goods, blanket freezes of bank deposits and savings, etc. None of that worked, either because implementing price freezes was impractical and easily circumvented, or because freezing deposits hurt people's ability to invest, etc. For Plano real, everything was laid out by the team proposing it far in advance, everything was clearly communicated by the government, all dates of transitions and rules were known in advance by all actors of the economy. Really, the only unknown variable was the final conversion rate, but everyone knew it was going to kind of resemble the dollar ratio. In fact, I remember it crisp in my mind (I was a child), the final rate was CR$ 2750 = 1 R$. And it worked. Oh, and we also won the world cup that year, whiiiich in my mind, helped.
- andrepd 3y ago>But it worked, and we got the prosperous but greedy 80s. What does it matter that the nominal GDP total is increasing if that doesn't translate to prosperity for most of the people or better objective material conditions? https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/