Argentine Cenbank Hikes Interest Rate By 600 Basis Points To 97% (nasdaq.com) 74
Argentina's central bank on Monday hiked its benchmark interest rate by 600 basis points to 97%, according to an official announcement, as the country battles to bring down inflation that hit 109% on an annual basis in April. From a report: Reuters had reported the hike decision on Sunday, citing a source, as the government announced a package of measures to rein in soaring consumer prices and support the wobbly peso currency.
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Yeah, because Argentina is a mess because of debt limits and no money printing...
That MMT!
Re: This will be the US in two weeks... (Score:3)
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If they wanted to stop inflation overnight, they would just stop selling bonds period. No new debt issued by the central government at all. No spending beyond tax revenue. Period. Operate the federal government like a state. No currency expansion at all. Check back in 12 months. Thank me later.
I love these lil pat answers, they're so naive. The problems with what you suggest which I'm sure you're aware of but have glossed over because they don't support your argument include the following:
Firstly you've got all the existing bonds, that still needs the coupons to be paid for and if you can't refinance it when the bonds mature (aka issue new debt to pay the old debt) then suddenly all your budget goes on paying debt. Before you even suggest repudiating the debt, bear in mind how much of it is owned
Re: This will be the US in two weeks... (Score:2)
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You are so wrong on so many levels, itâ(TM)s hard to know where to begin.
Start by reading a bit of history. We have already tried a lot of these ideas, they're old ideas. What we learnt is that super radical policy be it left or right tends to ruin the economy.
First of all, not issuing new debt doesnt mean foreclosing on the old debt. It means not issuing new debt. You use tax revenue (1/4 their abouts at first, less with each passing year) to continue servicing debt.
You misread this no foreclosure is needed, every debt the US government issues has a maturation date when it has to be paid off. We issues new debt every year multiple times a year. What I was saying is that there is a constant wave of maturing US bonds which are constantly being paid off and replaced with new US bonds. Ol
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Cool.
So who do you want starving in the streets to meet that objective? Social Security recipients? Veterans?
And I guess we better start posting US Navy assets on eBay, because we won't be able to afford to maintain them.
What a fantastically stupid take.
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Name one actual fiscal conservative today. There are none.
Re:This will be the US in two weeks... (Score:5, Insightful)
To be fair, where are the people willing to hold Bush, Trump, and others for their wastrel spending. Their deregulation of the banking system caused a lot of the Democrats to have to spend to fix things. Then there are the wars some of them propagated. Talk about money down a rathole there.
There's no reason we can't have excellent nationalized medicine just like everywhere else. All it takes is some political backbone. Sadly you need to find scanning electron microscopes to find most politicians backbones. Enroll everyone in the country. Take the expenses of the system - pay and benefits, production of drugs, infrastructure, transport and the like and divide it up over the enrolled population. Divide the cost up into people's pay periods and that's your cost for "free" medical care that each person pays. Big families pay more. Sorry. Everybody pays the same. People's pay will be tricky and you'd have to graduate the cost of facilities over on an amortized basis or lease them. Pay out for existing insurance reserves and take on claim liability over time. But it's all doable with perhaps some initial outlays for the existing insurance side of things that can be amortized. Roll private practice, medicaire, medicaid, obamacare, veteran's facilities all into one system. Every year or every six months to start adjust the premium cost to cover projected expenses based on age and health of population. If people overuse the system, everyone's premiums go up. If people treat the system sanely - ha ha - premiums for everyone go down. No US budget cost at all, but great healthcare with no exclusions for pre-existing conditions, in network or out of network, usual and customary bull shit or spending hours on the phone trying to get them to pay what their policy says they should pay without multiple calls where each time they find some item that they claim isn't provided so you have to go back through it again.
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Our system works just fine if you don't get hurt somewhere without in-network coverage or your supposedly in-network surgery doesn't all of a sudden substitute an out-of-network doctor since the expected doctor was busy, you work for a company that has a decent health plan or for a union that forces a decent health plan, and a host of other caveats. Many in the country don't have access to affordable good coverage through their work or have had a random selection of genetics with their child thrown them int
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The fundamental problem is that as people get very advanced in age or as they get very seriously ill the cost of keeping them healthy rises exponentially, with the ever more advanced and expensive technology and care to delay the inevitable as long as possible, and naturally everyone wants the best and the most expensive for themselves or their loved ones.
And that is assuming that EVERYTHING else is right: that people live responsibly and take care of their health, that the beneficiaries in the chain (from
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While I don't disagree on some points, the reality is that anyone who can keep paying their premiums as they age if they are on private insurance or covered by a supplemental policy can still drain the system. Then there are all the old folks who are on medicaire only and may not even be able to find a doctor who will take medicare patients. Whether you like the system or not, it is fundamentally broken as it stands and getting worse.
With a nationalized care system where you could even set up a bronze, sil
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Re: This will be the US in two weeks... (Score:3)
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Why did your heroes completely disappear while Trump was running up the credit cards? 25% of the entire debt happened in his 4 years in office.
Anything these people have to say about it is pure political horseshit. They only care about spending when it's not their guy signing the checks.
You want to get rid of "boondoggles" like Social Security and Medicare, but then you also probably bitch about homeless people. Guess what? without Social Security and Medicare, you're going to have a whole lot more home
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Re:This will be the US in two weeks... (Score:4, Insightful)
Retired in 2013.
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The original quote was
Name one actual fiscal conservative today.
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This is the guy who fled the country when things got a bit chilly, then blamed his daughter for wanting to leave.
What a patriot.
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How exactly does Cruz have "Biden against the wall" when he's a member of the minority party in the chamber in which he serves, where others in the minority party (including the minority leader, by the way) have been willing to cross that party line in the past in order to not drive the national economy off a very tall cliff onto a very rocky landing, while also on fire and loaded with volatile explosive compounds?
This would have been done already if not for one guy standing in the way: Kevin McCarthy. You
Re:This will be the US in two weeks... (Score:4, Insightful)
A politician's definition of wasteful spending is whatever the other party wants to spend money on. Nobody is fiscally conservative when their own party is fully in power and can fully push their own agenda. Fiscal conservatism is what the minority party uses to attack the majority.
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Name one actual fiscal conservative today. There are none.
Everyone single politician is a "fiscal conservative." Obviously fiscal conservatism still allows the necessities of life and only targets minimizing discretionary spending. That is exactly what every politician believes. It's just that the buckets of necessities and discretionary items are viewed differently by each politician.
McCarthy and Biden are both putatively fiscal conservatives. They just want to preserve and cut different things. McCarthy purports to be a fiscal conservative but has his own b
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Rand Paul. Just need another 300 of him.
Basic economics (Score:5, Insightful)
If you want inflation to come down then you must stop increasing the money supply. There is no way around this.
The government's deficit spending is hugely increasing the money supply and hence hugely responsible for the current rate of inflation. This is a readily-observable fact.
So, reigning in government deficit spending is precisely what we must do in order to avoid the very fate you are predicting. There really isn't much room for argument here (at least among those who understand economics).
Having the US government default on its loans would be a Big Hairy Deal, and I don't want that any more than anyone else. Ideally we would cut spending instead. It's the clear right thing to do. It is hard because it requires biting a bullet or two and creating political enemies out of whoever's favorite pork barrel just got yanked. Also it does present a risk of causing economic harm if these decisions are made in a heavily politicized way rather than a rational way. These harsh realities are the reasons we keep making the deficit worse and worse, and hence keep making inflation worse and worse. But, we will never get out of this hole until after we put down the shovel, and that's that.
The right way forward is clear. The only things that stand in the way are ignorance, greed, and selfish politics.
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Or you could just increase the top marginal tax rates.
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You could increase the top marginal tax rate to 100%, and the deficit would still exist. Both the R and D are incapable of spending "less" and Zero based budgeting is critically flawed. And with 25 Million new immigrants that need pandering we know that spending "less" is never going to happen.
In short, we're doomed because people don't have the faintest idea how economics works. Especially not the politicians (both R and D.
My personal take is, we should set the tax rate at 10% for everyone, and require gov
Re:Basic economics (Score:5, Insightful)
Flat taxes are ridiculously regressive. 10% of the income for somebody making $300,000 is not the same as 10% of someone making $30,000 a year. Basically it's just another form of "the poor are free to starve" policy.
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Someone making $300,000 will pay 10 times as much in taxes as someone who makes $30,000. Is the military protecting one more than the other? The person making $300,000 isn't likely to use Medicaid or Medicaid so they're getting less government for their taxes.
I can only ask why you believe it's a sin for the
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The military is protecting someone making millions of dollars infinitely more than it is protecting someone making minimum wage and having no assets. In fact the military views the latter as more of a resource than something to protect
And the person making $300,000 is probably going to use more Medicaid resources than someone making $30,000 even though the person making $300,000 only pays Social Security and Medicare taxes on the first $160,000 in income. So, much of your argument falls.
So yes, a person wit
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A person making $300K is going to use exactly no Medicaid spending.
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Because it is called Medicare for those over 65 and comes from the same pool of funds.
So while you are in one way correct, in another way you are very wrong.
The increased life expectancy from the higher income means that the person who makes $300k can expect to get about five x the benefits as the person who makes $30k from Medicare/Medicaid over their lifetime.
Additionally, many people would happily pay more taxes to not walk out and see addicts unable to care for themselves and doing what they need to do
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People in California are already paying the highest taxes in the country and the result is an ever-increasing number of homeless addicts. There is no indication that more taxes would change that.
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A person taxed $30000 on $300k still has a helluva lot more money left than someone who.lpses $3000 on $30000. It's incredibly regressive and punitive, and would drive even more low-income earners right into poverty.
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If I get the same amount of government as someone else why should I pay more for it just because I make more?
Call it the price of society in general recognising undisputed your ownership of your wealth, aka the social contract. A person is only wealthy and gets to enjoy that wealth in peace because society as a whole has agreed to recognise you own specific things and thus allows you to keep them without a fight. There are a lot more poor people than rich people, so if it came down to it rich vs poor the poor would win just by sheer numbers. The only way to counter this would be to go the expense of employing a lo
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If you are making more money you are not getting the same government. You're making greater use of all of the infrastructure that government has created. You are benefiting from police actually protecting you, living in districts where fire department or ambulance will be there in time to save you.
As I'm sure you already know, the poor pay more in taxes as a percentage of their income than the rich by a wide margin. Sales tax harms them greatly and a flat tax on top would just make it worse.
Would I like m
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Look into FairTax. It's basically a flat tax plus Universal Basic Income.
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yet only 2.3% of US population make over 300K. So what exactly makes you think that 2.3% should be subsidising 97.7% and somehow that is sustainable and fair?
The correct thing to do is to abolish the IRS and get rid of all income and investment and savings and inheritance related taxes.
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Its a sensible idea but clearly it will never happen.
Voters don't vote based on competence, they vote based on promises. It doesn't matter if the promises will require deficit spending, most voters won't connect the dots. Any politician that promises a reduction in the programs that voters love will be voted down, whether or not that also fixes the problems that voters hate.
When nobody is willing to let go of their spending, the only option left is to spend more than is avaiable. It is a bad option, but
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... Voters don't vote based on competence, they vote based on promises. ...
Voters vote based on party affiliation. I will never understand this cult mentality.
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That's basically the point of a party having members who aren't actual politicians running for office. You join the club, you vote with the club.
In the UK and Canada party members are a weird 1-2% minority. Australia is more like half a percent.
The US makes party votes practically, if not officially, part of their electoral system, so more like 2/3s of voters are registered as affiliated with at least one party.
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You could increase the top marginal tax rate to 100%, and the deficit would still exist.
I mean, this is true. The real rich person trick is to not make income, let your assets appreciate, and take out loans for things you want to buy. Someday you die, basis is recalculated on your assets, and and your heirs get them without anyone ever needing to pay capital gains.
So yes: changing the top marginal income tax rate would have a limited effect on revenue because rich people have a wide array of legal ways to avoid interacting with the income tax system.
The biggest change I would make to the US ta
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Yes, taking in more in tax money would also reduce the deficit, stem the growing of the money pool, and hence reduce inflation.
But that is also a lot easier said than done. Taxes focused on the wealthy encounter resistance from the wealthy, who are the most politically powerful demographic. Taxes spread out are self-defeating, in this case, since the thing people hate about inflation is that it costs them more money. So if they have to spend more money in taxes to get inflation down, that is a net neutra
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Ideally we would cut spending instead. It's the clear right thing to do. It is hard because it requires biting a bullet or two and creating political enemies out of whoever's favorite pork barrel just got yanked. Also it does present a risk of causing economic harm if these decisions are made in a heavily politicized way rather than a rational way. These harsh realities are the reasons we keep making the deficit worse and worse, and hence keep making inflation worse and worse. But, we will never get out of this hole until after we put down the shovel, and that's that.
The right way forward is clear. The only things that stand in the way are ignorance, greed, and selfish politics.
Kansas tried cutting spending and the results were disastrous. https://en.wikipedia.org/wiki/... [wikipedia.org]
Last time I posted that link the replies were basically "they didn't do it correctly" like when someone mentions communism.
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Or you could increase production. An increase in goods available reduces the competition for any particular item and drives down prices.
Fixing the supply chain issues by raising interest rates or reducing the money supply isn't guaranteed to work if the supply of goods falls faster. If we could have increased the production of goods, we could have avoided the recession we are heading into. But, as the saying goes "When all you have is a hammer everything looks like a nail."
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Conflicts a bit with the whole protectionist gestalt. Oh, and running around sparking trade wars.
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If you want inflation to come down then you must stop increasing the money supply. There is no way around this.
Not really. Inflation is a complex multivariate problem. The supply of money is a singular variable. Somehow Slashdot, full a technical people and programmers seem to have only the most primitive understanding of economics.
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Argentina has been having the inflation problem for the last 20 years when the people in power started printing money like crazy and justified themselves saying what you just said ("inflation is multicausal").
Yet, when Argentina's money was pegged to the USD from 1991 to 2002 (which effectively prevented Argentina from printing money without backing), there was no inflation.
But yeah, keep repeating that. It may just become true one day, along with other excuses like "X isn't REAL socialism" for every countr
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Or get your news from elsewhere. Monetary policy is only responsive for 1/4th of the current rate of inflation. Please do tell us how a lack of supply due to global disrupted supply chains is helped by making money harder to get?
It's like people that refused to believe Covid was a thing for 3 years still pretend it wasn't a thing even though it upended the entire world.
Couple supply issues in a supply/demand economy with unfettered corporate greed and you have your real causes of modern inflation. People
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This will not be the US in a few weeks, young one. It has happened many times before.
And it takes two to tango. To facetiously claim wanting a few spending cuts in response to invreasing borrowing is no great evil. Refusing that is also playing chicken with the debt.
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Decreasing the budget deficit would reduce US inflation, not increase it. Nice try, though.
Not that the GOP has any intention of actually reducing spending. Assholes all of them.
Defining a few terms (Score:4, Informative)
In case you were wondering "600 basis points" means they hiked it from 91%, so it's not a drastic as you might think.
I might note that an interest rate of 97% when inflation is 109% means that they're still effectively paying you to take their money.
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Yep, this means real interest rates are still negative in Argentina. So same as here in the US where real interest rates are also still negative..
yay! we'll pay you to borrow our money!
The more things change, the more they stay the same :-)
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Basis points are a great tool for obfuscation for the populace at large. If you want to hide something, or be alarmist, it's a great tool. Don't get me wrong... there's nothing wrong with it, either as a metric, or a concept. Once it's explained to you, "100 basis points is 1 percent", it's trivial to apply - but only if you care to do so. If your preference is to be alarmed, indignant, outraged, or uninformed, it's a perfect thin veil behind which to place your ignorance (not a pejorative, a state of being
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Well, of course, 600 basis points is usually quite a lot--it just looks less impressive when measured against 91%. If the US were to increase its interest rate 600 basis points it would more than double its interest rate (which has already had several smaller but notable increases) The results would be drastic.
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Saying basis points makes it easier to comprehend - because in most nations you rarely move more than 50 basis points at any one time. But tell someone the interest rate went up to 2.25% from 1.75% and they can't calculate that.
I agree with your sentiments on fractions and percents, but I disagree on the particulars.
I gaurantee that nobody who can't handle the difference between 2.25% and 1.75% could even tell you what a "basis point".
The main reason its used is simply that it's also more concise; instead of writing 0.10% or even just 0.10 they can just write 10.
A lesser advantage is that it removes confusion. If I tell you a 10% interest rate went up 10%, then is that 11% (a 10% increase to 10% is 11%) or 20% (10% plus 10% more is 20%)... But to say it went up 100 vs 1000 basis points is pretty clear.
Longer article here (Score:3)
Or, if you can get past the paywall, Bloomberg: https://www.bloomberg.com/news... [bloomberg.com]
It will have little effect (Score:2)
If you want to buy a house or a car, you better save up-front, otherwise tough luck!
Borrowing in Foreign Currency (Score:2)
Argentina's fundamental problem is one that is common in developing and middle-income countries: it borrows and has debts in a foreign currency. That means, when the Argentinian government runs a budget deficit, it can't simply monetize the debt by printing more Pesos. If it tried to print Pesos to pay Dollars, it would quickly end up with Zimbabwe style inflation as the Peso would quickly become completely worthless well before it satisfied all of its Dollar-denominated debt. By contrast, the U.S. could pa
Re:Borrowing in Foreign Currency (Score:5, Informative)
argentina's problems are worse actually: it borrows to pay for everyday expenses. politicians have made subsidies their platform, so a good chunk of the GDP goes into subsidizing electricity.
instead of subsidizing solar panels and solve a long term problem, Argentina chose to subsidize power itself. The previous president removed a large portion of subsidies (some parts of buenos aires were paying a symbolic fee for "flat rate" electricity). this costed him the re election.
the peso devaluation doesn't really come from external debt (as much), but from printing more and more money to keep half of the population in some sort of government benefit. the "social plans" and "retirement" pensions. the latter were catastrophic, they gave a retirement pension to 3.5M people that never contributed to the system, and basically broke it.
argentina's lack of dollars comes from a decision made some in the last 2 decades, politicians who said they wanted to "industrialize" and, in order to do this, they needed to destroy the country's main industry, which is agricultural exports. this was of course never about industrializing, but about removing perceived "power" from those classes. so now the country exports less beef than Paraguay.
in short, Argentina is an insane, self-harming country with no fix in the horizon, due to a broken democratic system. its only hope is a foreign intervention as was done to Germany or Japan - but Argentina chose to be on the wrong side of history every single time in its history, for which it'll always be punished.
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I agree that subsidies and the like are a problem, but Argentina does have large IMF loans. The need to repay that when coupled with its problematic spending is a huge part of the problem.
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Mostly irrelevant. The IMF is sort of a trap, it doesn't want repay. It's a way to keep Argentina's under Washington's grip (which is probably the main reason Argentina hasn't caved in to China's money). IMF payments can be refinanced again and again (as Argentina does all the time). Argentina first needs to fix its spending problem, and then the repay will happen.
As a reminder, Argentina cleared its debt with IMF fully in 2003, which was the enabler for kirchnerism to do whatever they wanted with the econo