If Paul Wittgenstein could go around the world giving one-armed piano concerts, we can surely type with one hand for a couple of weeks!
And today, we bring you an update from Argentina…to see where this ‘Inflate-or-Die’ trap takes us.
‘I’m still in shock,’ wrote our man in Salta province after the election results were announced.
The fairly sensible, pro-business president — Mauricio Macri — lost the primary by a wide margin. Most likely, the big spenders will be back in power by the end of the year.
‘We’re headed to Venezuela,’ concluded our correspondent.
The peso fell 30% on the day after the election.
Blame the boneheads
Back to Argentina in a moment…
First, we note that another of our predictions has been fulfilled: We’re all boneheads now!
Yes, DJT has gone for MMT.
We predicted that President Donald J Trump would never go Full Retard in his trade war. And we still think he’ll try to save face, make up with the Chinese, and claim victory.
On the other hand, we also predicted that he would go Full Retard in the Inflate-or-Die war…fully embracing MMT (Modern Monetary Theory)…along with Bernie, Liz, and AOC. Here’s the latest from the Oval Office:
‘The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term. We have the great currency, power, and balance sheet…The USA should always be paying the lowest rate. No Inflation! It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing. A once in a lifetime opportunity that we are missing because of “Boneheads.”’
According to MMT, the politicians can and should spend all the money they want, until consumer prices rise.
‘No Inflation,’ says POTUS. So, the coast is clear. The once-in-a-lifetime opportunity is for the boneheads at the Fed to enable the boneheads in the White House and Congress to spend more money we don’t have on more boondoggles we’re not willing to fund honestly.
The real message: Spend, spend, spend…inflate, inflate, inflate.
Why? Because there’s an election coming.
But wait. According to the old-timers, what goes around comes around. And so, we turn to the pampas to see what’s going around…
Mauricio Macri won the last election in 2015 because the economy was going to hell; he promised reform.
The previous government had done all the usual claptrap…overtaxing, overregulating, overspending, overborrowing, over-boondoggling…and had gotten the country deep into the Inflate-or-Die trap.
By this time, many voters had come to rely on government price-fixing for cheap energy and cheap food, for example. It was the classic model — bread and circuses, on credit, of course.
The result was a collapsing economy, corruption, and increasing debt.
Consumer price inflation was already running at 25%, though the government fiddled with the figures to avoid admitting it.
What could Macri do?
Improving the economy meant cutting out the lies, giveaways, meddles, subsidies, and restrictions…that is, letting the fake, inflation-fueled economy die.
Or he could add more inflation and debt. Sooner or later someone was going to pay for it. If he let the chips fall, the bill would come in right away — unemployment, stock crash, defaults, strikes…etc.
If he kept the inflation going, maybe he could keep the jig up for a while longer. The economy would get weaker and the bill would be bigger, but maybe someone else would have to pay it.
A Trumpian promise
Macri tried to do a little of both. He instituted honest statistics. And he freed up the economy. But as he freed prices, they rose. Inflation hit 54% in July of this year.
By August, consumer price inflation finally seemed to be coming down. But it was too late. The plain people had turned against him.
Severely wounded in the August primary, he is unlikely to survive the general election. The next president (the second round of voting takes place next month) won’t make the same mistake.
Alberto Fernández gave the yearning masses a Trumpian grand promise:
‘I will take care of work, debt, and hunger,’ he said, making no mention of male pattern baldness.
How? Inflate, inflate, inflate!