the dollar vigilante blog
Madonna Had it All Wrong
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[Editor's Note: The following post is by TDV Managing Editor, Redmond Weissenberger]
If uber-Keynesian and New York Times columnist Paul Krugman wants to find paradise, he should journey down to Argentina. Immediately following the International Monetary Fund's censure over fudging its economic data, the government has frozen prices on every item in the nation's supermarkets. This just begs the question of why the Argentinean government needs to lie about its economic statistics. The answer is simple really. Like any state, it wants to paint itself in the best light by presenting a Potemkin village of happy citizens and a booming economy. In reality, the people in Argentina are suffering under a brutal bout of inflation. Private economists estimate the inflation rate has reached 30%- the very definition of hyperinflation.
Try as they might to deny it, this is the Keynesian wet dream playing out in living color. To finance government spending, the Central Bank of Argentina has been putting the pedal to the metal of his its printing press. Under Keynesian theory, the economy should be taking off like Bill Clinton alone with a White House intern. Instead, there is panic in supermarkets as people are trying to ditch the peso in favor of, well, just about anything.
This is not the first time Argentina has wrecked its economy. In fact, it's the fourth time in forty years. President Cristina Fernández de Kirchner has merely adopted the tried-and-true method of using increased government intervention to undo the mistakes of previous policy. Critics have called her administration corrupt, deceptive, and eager to assist big business with favorable regulations. In other words, she is pulling the reigns of government as any other president would. The only difference is that Kirchner has managed to destroy a national currency faster than the rest of the developed world.
But don't count the United States out of the global race toward monetary self-destruction just yet. With over a trillion dollars floating around the banking system and Federal Reserve Chairman Ben Bernanke intent on eroding even more of the greenback's value to boost the economy, there is no telling when the whole convoluted scheme will blow up in his face. We are already in "uncharted territory" according to Julia Coronado, chief economist for North America at BNP Paribas. The day of reckoning for the US dollar could come any day now.
Americans should start looking at Argentina as a sign of what's to come rather than a possible vacation destination. And they should start looking at gold as a safe haven instead of their bank accounts.
Redmond Weissenberger is the Managing Editor of The Dollar Vigilante and the Founding Director of the Ludwig von Mises Institute of Canada, the centre for the study of the Austrian School of Economics within Canada.
Redmond founded the LvMIC in 2010 to address the lack of knowledge about the true cause of our booms and busts of the last 100 years and the need for sound money and sound economics to be applied to the Canadian and global economy.
I am trying really hard not to make any clichéd comments about crying for Argentina or Argentina crying for anyone else. I'm also trying hard not to make any jokes about Argentina's economy and women drivers. Because economies don't do well with people trying to control them, period. It's not President Cristina's type of genitals or her inherent lack of spacial reasoning and parallel parking ability that is causing the Argentinian economy to head into a hyperinflationary crash. It's that she's "managing" the economy at all, and "managing it" good and hard.
Your sentimental editor read about Argentina years ago and started making plans to expatriate to it. Back then I only dreamed of being an Internet writer and loudmouth who could live wherever he wanted to (as long as it had a reliable Internet connection and could chemically support human life). But when I was free to go, I told myself, it would be to Argentina. This was more than ten years ago and the latest financial collapse had resulted in firesale prices on property. I imagined myself in a trenchcoat and hat, a suitcase full of silver in hand, and walking the gangway in the foggy night onto a boat bound for South America. There was even a foghorn! I'd show up in Buenos Aires and by some colorful property in a down at the heels but character-filled neighborhood like La Boca and while away my days by writing in cafes and taking long strolls in the evening.
As luck would have it, my new writing career would bring me into contact with the granddaddy of anarchist soul himself: Doug Casey. Doug graciously invited me to come visit him and check out his real estate development in the northern reaches of Argentina. Part of the trip included a tour of Buenos Aires, destination city of my youthful dreams. The trip was one of the best times of my life, not least of which was because I got to meet Doug in person for the first time and share a cigar with him!
But I -- like many others -- wondered only half-jokingly when Argentina would be coming undone again. That country seems to have made a sport of it in the last century. Seriously. If you were to read about how regularly there is a political or currency crisis -- or both! -- you'd think they were putting all of us on. I'm sure Doug and his La Estancia development will be fine because the place is removed enough from Buenos Aires that geography and distance will force the politicians to look for easier pickings nearby....
...But there is another South American country that struck TDV editor-in-chief Jeff Berwick as destined for a brighter economic future, and as a great place to build a Galt's Gulch of his own. So it is that TDV's Galt's Gulch, Chile came to be. Thanks to Jeff and the efforts of TDV's development manager Ken Johnson, Galt's Gulch, Chile, just an hour or so outside of Santiago, is going to be the premiere destination for those who want to live a lot freer, and in a country whose best economic times are still ahead of it. If you'd like to learn more about the project, be sure to click here. I will always have a special place in my heart for Buenos Aires and my too brief time in Argentina, but Santiago and its environs are looking like an awfully good choice these days. Quite possibly the very best choice in the world.
Editor, The Dollar Vigilante
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