Puffer Fish wrote:It's usually the reverse. Usually high inflation rates are what causes interest rates to go up.
If it was not caused by the inflation in the first place, we might want to talk about why free market forces put so much pressure on interest rates to rise.
Right now most news articles are saying that Argentina is "increasing its interest rates to help stop inflation".
I think the problem ultimately stemmed from Argentina getting into too much debt in the first place.
Then the country "needed" help from the IMF.
Argentina was printing money to pay off its debt obligations, and that ended up triggering a spiral of hyperinflation.
I think the problem was dumb wacky Leftists who don't actually understand how economics works.
The Left often seems to have a tendency to think they can borrow money and not have to pay it back, it seems.
If you were put in charge of the country's economy, Steve_American, you would probably permanently ruin the country's credit rating and the country would never be able to borrow again.
Which might overall be a good thing. People cannot trust Leftists to repay money they borrow.
Lurkers, PF made a bunch of replies.
I'll start with this one.
Of course the financial news about Argentina is going to say that it is raising interest rates to fight inflation. PF is just telling us what the MS Theory thinks is true.
MMTers have a different theory. It isn't full of false premises, like every player in the market knows everything about the thing they are selling and buying in "this transaction", as well as what the future will be. This premise easily proves that every buyer is happy with the price he/she paid and with what they bought. And so, the market price is the best and true price at that moment. But, you can't use false premises in a valid proof. This is because with one false premise you can prove any conclusion.
In another reply PF wrote, "I think the problem ultimately stemmed from Argentina getting into too much debt in the first place. Then the country "needed" help from the IMF."
. . I'm sure that is what happened, but not the whole story. Many, maybe most, nations of the "global south" can't sell enough worth of what they produce to buy what they must buy to survive. They are like workers at an isolated mine. They must buy at the company store and their wages are not enough every week. So, they keep going deeper into debt. The problem I'm illustrating is that the global north set the prices that they buy at and that they sell at, in such a way that the global south nations keep going deeper into dept no matter what they do.
The rest of PF's replies are like that. They are just drivel based on the false theory of economics that he believes in like he is trapped in a cult. Yes, Prof. Steve Keen is right, the current MS Economic theory is a cult. See the other thread about his argument of exactly that, on this page of this site.
.