[Steve_American]

He really knows about the real economic facts. Like what has been going on in Argentina. Why is its unemployment rate low while interest rates and inflation have been high for over a decade?


Remove the [==] to see it.
https://www.you[==]tube.com/watch?v=BwZp8YsL_CU&list=TLPQMDgwNzIwMjPtGAUY0l_xVw&index=42

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[Puffer Fish]

Any highlights or takeaways from those videos you want to share with us?

You know, for readers who can't be bothered to watch entire long videos, and don't really know what the point or main message in those videos are really about.

[Puffer Fish]

Why is its unemployment rate low while interest rates and inflation have been high for over a decade?

Because the U.S. is turning into a Third World country.

In a Third World country, unemployment rates are relatively low, but large numbers of people are still living in poverty.

In other words, plenty of jobs exist, but most of the people are poor and most of the jobs do not pay very well.

[Steve_American]

Steve_American wrote:
Why is its unemployment rate low while interest rates and inflation have been high for over a decade?

Because the U.S. is turning into a Third World country.

In a Third World country, unemployment rates are relatively low, but large numbers of people are still living in poverty.

In other words, plenty of jobs exist, but most of the people are poor and most of the jobs do not pay very well.

PF, the "its" in the sentence refers to Argentina. You seem to be confused.
This only happened in the US for 2 years after covid.

Mosler explains that he told the Gov/ there that this would happen, but they are trapped by the IMF. Mosler explained how raising the interest rate from 30% slowly to 100% kept pushing the inflation rate up, because the income going to the rich was being used to buy dollars and this drove dour (up?) their fiat currency. This makes imports cost more. Etc.
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[Puffer Fish]

Steve_American wrote:
Why is its unemployment rate low while interest rates and inflation have been high for over a decade?

PF, the "its" in the sentence refers to Argentina. You seem to be confused.

Inflation is probably high in Argentina, I would expect, because the government's Central Bank has expanded the money supply.

Governments often do that when they want to spend money that they have not collected in taxes.

It is a stupid policy, but politics is often not motivated by good thinking, logical reasoning, or what is good for a country's long-term economic interests.

The interest rates are naturally going to follow the high inflation rates. If you have a very high inflation rate, the interest rates are going to need to be at least as high to keep up.

So the real issue or question is only one of the inflation, not the interest rates, which are only a secondary effect.

[Puffer Fish]

Mosler explained how raising the interest rate from 30% slowly to 100% kept pushing the inflation rate up, because the income going to the rich was being used to buy dollars and this drove dour (up?) their fiat currency. This makes imports cost more. Etc.

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.

[Puffer Fish]

I just want to say that this problem always seems to repeat over and over again in different parts of the world.
A government run by the Left borrows too much money, they get into a problem with debt, and then need assistance from the IMF to bail them out, but all the Leftists in the streets riot and complain about the conditions imposed on their country by the IMF.

The IMF imposes these conditions in an attempt to try to help make sure they will be repaid when they make the emergency loan.

[Puffer Fish]

Mosler explains that he told the Gov/ there that this would happen, but they are trapped by the IMF. Mosler explained how raising the interest rate from 30% slowly to 100% kept pushing the inflation rate up, because the income going to the rich was being used to buy dollars and this drove dour (up?) their fiat currency. This makes imports cost more. Etc.

Sounds a bit like a chicken and the egg problem.

That's ultimately what happens when you get into a debt problem. You become a debt slave.

Whatever policy Argentina chooses at this point will result in some bad outcome.

If they pay those interest rates, it will drain their wealth. If they print more money, it will contribute to hyperinflation and drive interest rates even higher.

[Steve_American]

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.
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[Puffer Fish]

. . 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.

A conservative perspective would say the country lived beyond its means.

This is part of the reason why maintaining a balance of trade is important. Argentina seems to have had an ongoing trade deficit.
And maintaining a balanced budget. (Not relying on getting into more debt to pay for part of the normal annual government budget)

[Puffer Fish]

Mosler explains that he told the Gov/ there that this would happen, but they are trapped by the IMF. Mosler explained how raising the interest rate from 30% slowly to 100% kept pushing the inflation rate up, because the income going to the rich was being used to buy dollars and this drove dour (up?) their fiat currency. This makes imports cost more. Etc.

Translation: Argentina owing debt to people in foreign countries was bound to contribute to inflation of Argentina's currency.
People living in other countries don't want Argentina's money and will just try immediately trading it for some other currency as soon as they get it. This means a lot of Argentina's money is going to be dumped on the world markets, reducing its purchasing power to buy anything else in the world outside of Argentina.

This could possibly have been avoided if Argentina had a strong export market and a surplus balance of trade, but such is not the case.