QOTD: Argentina-esque Inflation

QOTD: Quote of the Day

Though not the norm in the U.S., this is the type of inflation I saw in Argentina in the late 1980s for almost all goods and services and is unlikely to be the convention here unless the Fed is forced to support and finance the Treasury market.  More likely today than six months ago, but highly unlikely, nonetheless.  

‘It was March 2021, and the Federal Reserve Bank of St. Louis president couldn’t find the model he wanted in the local store, which was 90% empty. So he ordered online — only to be asked, when the bike was delivered four months later, for an inflation surcharge of around $200. He refused to pay, but came away distressed.

The idea that you’re changing prices in the middle of some transaction was alarming to me,” Bullard recalled in an interview last month. “It was very telling about the environment.”’  – James Bullard,  St Louis Fed President,  Bloomberg

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4 Responses to QOTD: Argentina-esque Inflation

  1. Leonardo says:

    Late 80’s prices changed twice a day at least in Argentina. My father was building a new home for the family, one day he bought materials for the house and pay full in advance to be deliver the next day. When he arrived at the construction site the contractor told him that the materials hadn’t been delivered. He called the seller and the reply he got was “I can’t deliver, prices have increased 50% during the night”. He got his money back but was able to buy only a fraction of the materials. The thing is we haven’t learnt a thing since our CPI is aproaching 100% annualized rate.

    • macromon says:

      Thanks for the comments, Leo. I used to visit Banco Central de Argentina at least twice a year to kick the tires and try and get our money back for the big money center bank I worked as an international economist. I am too familiar with this picture. The global economy has two major inflationary problems: 1) the price of money, which is being rapidly repriced by the Cen Banks, though market rates are still quite distorted, and 2) the amount of money (however defined) that we will call “base money” created by central bank balance sheets still in the system. Everyone focused on the former but not the latter. FinTech’s rapid advances make it difficult to get a clear picture of monetary policy and its trajectory. IOW, it’s a black box. Don’t let Wall Street or the policymakers convince you otherwise.

  2. SL says:

    He and his friends at the Fed caused all this so….

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