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Javier Milei’s first year: $3 billion surplus and tenfold lower inflation in 2024
(www.financial-world.org)
this post was submitted on 18 Dec 2024
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They would be either way. For the moment there is some hope and evidence things are getting better instead of just endlessly sliding worse and worse.
The evidence is it's getting worse, not better. Poverty is increasing significantly.
How is there hope?
Because inflation rate is decreasing. It's still triple digits but it's going down.
Imagine a wildfire spreading rapidly. Remedial action is taken and then it continues to spread but notably slower. Obviously there's more to do but it is still good news for a place where that is in short supply.
Why is low inflation but high poverty a good thing?
It's not a good thing. No one here is arguing that poverty is good. It's that their current choice is 'still pretty high inflation w/ high poverty' is preferable to 'holy shit that's their monthly inflation w/ high poverty'.
Low poverty is no longer in Argentina's deck for the foreseeable near future. Inflation will rob the working class people of any thing they are given or earn.
The poverty was far lower before Milei started implementing austerity measures, so yes, by saying his measures are a good thing, you are saying high poverty is a good thing.
Only if you believe there is no direct connection between the devaluation of people's savings paired with increased costs of goods and poverty.
Hyper inflation in itself leads to poverty.
Then why is poverty so much higher now than it was before Milei started implementing his libertarian ideas?
Because inflation is compounding in nature just like interest is. The longer you have a high inflation rate the worse the situation gets.
Inflation is getting lower and poverty is rising. You're not making sense. Meanwhile, child mortality is also going way up.
You're not justifying Milei's liberarianism because it's not doing what you are claiming.
Their rate of inflation iis decreasing but they still experience inflation rather than deflation. INFLATION IS COMPOUNDING even if the rate of increase of inflation is slightly lower there is still a lot of inflation.
If you owe $100 and inflation is stuck at 200% per year after one year you'll owe $300, after two years $900, three years $2,700.
Now if you owe $100 and inflation starts at 200% per year then drops to 190% for year 2, and then falls again to 180% for year three you're looking at this: year 1 $300, year 2 $870, year 3 $2,436.
It's better to owe someone $2,436 than it is to owe them $2,700. But owing someone $2,436 sucks a lot more than owing them $100.
I don't know how this couldn't be clear to anyone who understands the concept of inflation.
https://youtu.be/T8-85cZRI9o
https://youtu.be/BHw4NStQsT8
And yet the reality is that inflation is getting lower and poverty is rising and people are dying and it has gotten worse and worse since Milei started implementing his libertarian policies. Those are facts. You are not justifying the poverty and the deaths. Telling me I just don't understand inflation doesn't justify poverty and death.
Inflation is going down. That brings hope. A year ago some saw their life savings' purchasing power cut to a third. That brings despair. This year it only went down by half, which brings hope because it's an improvement. Once inflation is at a reasonable level, economic growth will have to bring hope, which it probably won't, since Milei will be focused on lowering debt and trying to fill the hole in the central bank, which still stands at negative 7 billion dollars in foreign reserves.
Being in poverty with hope is really not any different from being in poverty without hope. You starve either way.
It's why inflation sucks soo much.
The only realistic way to make it so you can keep affording to buy something is to make it so alot of people can't afford anything for now.
Or we could perpetually redistribute the excess wealth of the rich so everyone can have proportional spending power again.
Ir we could tie min wage to inflation.
There's better ways of fixing income inequality than making everyone unemployed and homeless, but i guess it's time humanity learn this economic lesson AGAIN instead of making correct decisions.
First, I fully agree the super wealthy need to pay more tax - let's not get in the way of that.
Redistribution of wealth would only drive up inflation, not actually fixing the problem of inflation v incomes. Basic supply and demand equilibrium - incomes increase, quantity demanded increases (price goes up), new suppliers enter market to meet this new demand that are willing to accept this higher price.. Higher prices and quantity supplied.
Giving everyone more money to buy food doesn't magically create space for new farms, especially not in the short term.
There is not enough wealth in Argentina to distribute to all the poor people. You need to grow the economy first. But if you print a lot of money and spend it, you get inflation.
So Milei is first getting spending and inflation in order which is cratering the economy. But at least it solves the budget and inflation problem.
...at the cost of human lives. Why does that not concern you?
Let me guess what you said about 10% inflation in the US
Now imagine 200%
Please do guess. But not before answering my question.
The inflation concerns me more than the slight contraction in the economy. If the country is stable and the currency is stable, that will encourage investment and help people in the long term.
Argentina has tried redistributive policies and it has caused huge problems for the economy. The man got elected promising to fix the inflation and he already did it.
https://www.reuters.com/world/americas/argentina-inflation-dips-locals-dare-hope-worst-is-over-2024-12-11/
He can't just go back on his election promise
You still didn't answer my question.
60% poverty is not a "slight contraction in the economy."
Edit: You libertarians go ahead and keep downvoting me. Milei is killing people.
Not the person your debating with, and normally I agree with the famous Mr Squid.
In this case I disagree - im not fully knowledgeable on Argentina specifically, just economic application. The problem with inflation is that it harms your entire population - and its horrific when its out of control. 60% poverty (don't know if this is total, increase or increases since these measures came out, very different discussions) is easily obtainable when a significant amount of your population are already close to the poverty line and even a small change comes into effect.
Regarding the cost of human lives, and assuming he's not Trump levels of econ knowledge, its a balance between putting this 60% in poverty now to get a handle on inflation now, or that 60% in poverty due to inflation indefinitely until you put them and more people in poverty.
Anything that increases government spending, including social support services, infrastructure spending, unemployment support would increase GDP and work directly against disinflation measures.
Its cold, it sucks, but the logic and theory are there. Sometimes the best thing you can do is cause the least long term harm.
As I keep saying, poverty has increased by 20% since Milei implemented these measures. If people have to starve to death in order to make inflation go down, how can you say that's worth it the way it's being done?
Because those will end up in poverty regardless - either due to disinflation measures or due to inflation when we do nothing.
Big difference with the disinflation measures is that these an end point.
Please provide evidence that poverty would have ballooned this much whether or not Milei started implementing his libertarian ideas.
I cant, because it didn't happen (these ideas were implemented) and therefore its evidence of poverty increasing by not putting them in place doesn't exist.
What I can give you is the known and proven link between between income, spending, GDP and inflation, which is a combination of Okuns law and the Phillips curve. Both of which have been used by pretty much every country to control inflation since the Great depression- which happened because these wernt known and applied.
You made the claim. If you can't back it up, it's a worthless claim. Either they would have been in poverty regardless as you claimed, in which case you can back that up, or libertarian policies hurt people.
I'm going with the latter until you can show me some evidence.
The fact I can show you the two key economic laws that address inflation, and the effects that a triple digit inflation rate has on a country and its population, and that you consider that not evidence tells me you are about 6 weeks of tertiary education short of knowing what you are actually talking about. I can link you the damn text book if thats good enough evidence, but I doubt that you would consider an internationally recognized and developed, peer reviewed document as evidence.
For the record - im not calling you stupid or uneducated. I suspect you actually give a shit about people and are blinded to the fact that reality doesn't give a shit about feelings and being nice. You're argument is the same as saying that a starving population shouldn't be made to work a fallow farm to feed themselves and others because its putting more pressure on them. They will starve regardless - but this gives a way out.