Great Leap Forward


I can understand that the Trolls are feeling somewhat under the microscope. So here’s a peace offering.

Give it your best shot. Present a coherent argument to justify your position that Argentina has the World’s Worst Banker. Heck, I’ll welcome any coherent argument on any topic of your choosing.

If that sets the bar too high, I’ll publish the incoherent argument, too.

I realize the comment section of a blog is not the venue to display your brilliance. Nor—as I’ve argued—is it the place for a “debate”.

So what I am offering is to post up the Troll position, fully argued, with back-up charts, figures, drawings, and math on anything near and dear to the Troll heart. Heck, if I get enough submissions, I’ll make it a regular feature on GLF—let us devote every Friday to Trolls.

We’ll call it Troll Friday henceforth.  I’ll post it unedited and without comment. I’ll leave it up to GLF readers to choose whether the Troll arguments make more sense than mine.

For the timid Trolls, I’ll post their contributions without their real names or emails or any other identifiers. I know they prefer aliases out of embarrassment that their posts might not be of sufficient quality, or that their employers—perhaps BofA or Citi or Goldman—might frown. Just send your contribution to, and your secret identity will be secure.

I’ll post the first contribution(s) on Friday.

So here’s your chance: international exposure and fame. All you have to do is compose a coherent post.

Or, if you prefer, remain incoherent. Just babble on uncontrollably, as long as you like. I’ll post it—no word limit.

I’d suggest that for maximum affect you leave out the usual ad hominem attacks, racial slurs, comparisons to Hitler, and so on that make up the usual Troll comment. But that is up to you. Be offensive as you want.

Now I know that some of you are wondering whether you are Troll enough to qualify for the challenge—so I’m attaching a checklist. Answer the following truthfully to determine whether you can take the challenge. Answer each of the following.

Do you prefer to visit websites with content that you know you will despise?

Are most of the comments you write in response to blogs with which you vehemently disagree?

Have you created instant alerts for posts to blogs and bloggers you hate, so that you can be the first to respond with hateful comments?

Do you tend to preface most of your comments with personal attacks on the blogger who authored the post to which you are responding?

Do you always respond to other commentators on that blog site with unrelenting vitriol?

Do you frequently use the following names in your comments: Marx, Hitler, Stalin, Chavez, Pinochet, Kirchner, and Castro?

Do you like to use “Joos” in place of “Jews” as you make inflammatory racist comments?

Do you commonly recommend that the blogger to whom you are responding move to Argentina, Cuba, Russia or Hell? Even worse, to Newark? (Sorry—a joke. I drove there yesterday. Garden State, you know.)

Do you use your real birth name?

Or, do you choose aliases that you consider to be clever, foreswearing the name provided by your parents?

Do you consider the choice of name given by your parents to have been a mistake? An affront?

Do the bloggers you hate remind you of your parents?

Do you use a number of aliases? Do you switch aliases as soon as others catch on to your Trolling?

Do your aliases comment on one another’s posts?

Do your aliases compliment one another’s posts?

Are you able to distinguish among your aliases?

When you are writing under one alias, can you recognize that you are the author of the comments of your other aliases?

Re-read the following description of the GLF website (from the first post) and then answer the question below:

This is the first of my weekly blogs addressing economic issues from the perspective of what is commonly called “modern money theory”. (As the great philosopher Yogi Berra said, “you can look it up”—or Google it.) However, the subjects tackled will go far beyond the topic of monetary theory, hence, I will also draw on other traditions including Keynesian theory, the Institutionalist approach, and the work of Hyman Minsky (my dissertation advisor). Still, as indicated by the masthead the blog is mostly forward-looking–with a glance back to history. As Minsky always told me, “we stand on the shoulders of giants”. The perspective adopted is unashamedly progressive and unapologetically critical. As we always said in the 1960’s, “question authority”. If I haven’t pissed-off somebody each week, I’ve failed.

As you read this statement, is your reaction similar to the one you have when fingernails are scraped across a blackboard?

Does it make you want to puke?

Does it make you want to take a club to bash the brains of baby seals?

After reading the statement, would you like to put on the black boots and brown shirt to parade about your suburban neighborhood with goosesteps and salutes?

If your answer to any of the above questions is “yes”, you are probably a Troll.

If you answered “yes” to two or more, you are qualified to Take the Challenge.

Ok, all jokes aside. I’ll publish pieces submitted by the Trolls—however many there are, no matter how many multiple personalities they’ve got.

Trolls: Submit your piece for next Troll Friday.


Appendix: The following are the very first words submitted as comments by each of 7 different aliases for our Multiple Personality Troll, RadicalFidoSpidoCarlosLemonyStanley:

*You’re off your rocker, please get a brain scan and psychological evaluation.

*You got paid in dollars for the conference?

*You clearly do not live in Argentina.

*What a bunch of sycophantic crap. If you get the worst ” economist” of the year, it will be well deserved.

*The shame is that UMKC students like yourself embarrass MMT continually with these immature and stupid comments. LIke Wray, you’re an embarrassment to the entire MMT community. Grow up or shut up.

*MMT rightly emphasises the role of excessive deficit as a cause of elevated inflation in its theoretical approach, but when Randall Wray sees elevated inflation in practice, he never blames the deficit or the government

*So Wray, you’ve not written another critique of Bernanke but rather another unrestrained rant about Wall St. (It was too long so I skimmed some of it. Is it true you missed the opportunity to blame the evil Joos at Goldman? You must be slipping.)

The split personality Troll has questioned whether we really did the research to look into his internet address. The answer is yes we did. It was Fido, who used a number of aliases and posted at several MMT blogs, but all led back to Fido. Once exposed, he switched to new names. Of course, does it really matter whether all of these aliases are the same Troll? No, of course not. If there is more than one, so much the better. Perhaps two or three Troll heads are better than one, so that we can expect some stimulating analysis on Troll Fridays. So far, we’ve seen nothing but vitriol out of our Troll(s).

By contrast, Yves Smith posted my piece at Naked Capitalism, a site visited regularly by a wide spectrum of readers including a substantial contingent of Austrians. Here are their comments. All of them. Unedited. Judge for yourself—compare the Troll comments at GLF with the comments at NC. Are these commentators at GLF just Trolls? Or are they interested parties who want a civilized discussion? Judge for yourself. And sit back and wait for their major contribution next Friday.


October 5, 2012 at 1:39 am

Randal Sir,

May I thank you for an excellent post and significant points of interest you have raised concerning central banking, inflation targets, national sovereignty and employment.

Your post, whilst you have failed to mention it, highlights the fact that the Argentine government and its Central Bank Governor have abandoned any pretext of following the failed neoliberal economic orthodoxy that has been rammed down our throats since Nixon abandoned the Gold Standard in 1971.

Obviously, a central banker not corrupted by neolibralism is a danger to the existing status quo – a status quo that presides over the greatest ever theft from the majority to a very small minority in the history of mankind.

To put it bluntly, I’m surprised the Argentine Governor has not been accused of being a Communist for wishing to assist the majority in her nation, rather than its elite and multinational corporations.

As for the Indian who once worked at the IMF and now who is employed by the Indian Central Bank, suffice to say they are an insult to humanity – particularly in their homage to Indian society, one of the most unequal societies ever and one I certainly would never laud.

Again, many thanks for the post, its pleasing to know that sanity exists, regrettably it does not exist in the World Bank, IMF, WTO, European Union, European Central Bank and numerous governments the world over.

October 5, 2012 at 5:49 am

It sounds like Argentina may be on the right track, but without more details who can say. Its history suggests the future may provoke shortages, strikes, whirlwind inflation, social catastrophe. The country is very rich but I believe the wealth is very concentrated, even worse than America’s. The writer doesn’t indicate whether Argentina has a private debt problem. To say that the central bank is targeting social welfare is not to say what is being done about it.

We need more than just a rejection of neoliberal insanity.

October 5, 2012 at 7:22 am

“Hope is the last thing that dies in man; and though it be exceedingly deceitful, yet it is of this good use to us, that while we are traveling through life it conducts us in an easier and more pleasant way to our journey’s end.” La Rochefoucauld

October 5, 2012 at 1:49 pm

On the surmise that Argentina’s inequality is worse than the USA (which is a form of fallacious argumentation by purporting a fact of which one is ignorant but could Google it…) it looked it up for the commentariat:

The USA is estimated by the CIA to be at 45.0 as of 2007 and Argentina at 45.8 as of 2009. The Whirled Bank estimates are of too disparate years to be compared sensibly for argumentation’s sake.


October 5, 2012 at 6:47 pm

Yes, but economic inequality is going down in Argentina, and up in the United States. The same trend is, logically, observed in poverty and share of the gdp taken by the lower stratas.

Anyway, the idea that such a highly developed nation has now a similar gini index to a latin american country (probably the most unequal region on the planet) is just stunning. Of course, from a latin american point of view, I can`t resist to connect my enthusiasm for our own advances with some schandenfreude.

October 5, 2012 at 8:04 am


Great Post, the incredible growth Argentina has experienced since it walked away but tried to re-negotiate its debt has been under-reported. And when it has been reported the stories of rampant inflation follow quickly. A discussion of the causes and a more in depth report of the inflation components would be welcome. Argentina is an important example of a courageous government w/ the fortitude and morality to design policies aimed at helping argentinians and not just narrow well monied interests.

I would like to hear more of a discussion on how Mercedes is implementing the varied philosophy of stability, growth and employment.

October 5, 2012 at 1:42 am

Related to unorthodox approaches, the Argentinian gov’t passed an anti-trust law 3 yrs ago that limits the concentration of electronic media property, with the consequence that the largest media group, a honest entrepreneural conglomerate that voices the views of the Argentinian job creators, the 1%, will have to sell or lose at auction hundreds of cable licenses and a few radio and TV licenses as well, a law that the Clarin groups is courageously resisting.

October 5, 2012 at 7:15 am

You wrote “honest” but meant “monist”.

Misspelling can happen to anyone.

October 5, 2012 at 10:44 am

In what way can a group that is trying to hoard media licenses and promote concentration of media ownership be deemed “courageous”? What is courageous is taking on such powerful interests and knocking them out. We in the west could use some more of the courage that finds the leadership confronting and dismantling the levers of concentrated oligarchic power, or do you think that the problem in the west is that media ownership is too diverse? Please. “Courageously resisting”. What a laugh.

October 5, 2012 at 12:41 pm

Hey yankee, to call them ‘job creators’ and the ’1%’ was not enought to catch the irony?

October 5, 2012 at 2:12 am

Just because Wray doesn’t like central bankers doesn’t mean Wray isn’t the biggest nutcase in the world. I mean really, he thinks central bankers can fix these things.

October 5, 2012 at 5:01 am

“I mean really, he thinks central bankers can fix these things.”

That you think Wray believes this means you don’t understand the point. What Wray is saying is central bankers should not be ramping up interest rates to throttle growth every time inflation ticks up a quarter point.

October 5, 2012 at 7:06 am

“What Wray is saying is central bankers should not be ramping up interest rates to throttle growth every time inflation ticks up a quarter point.”

How about every 5 points or maybe 10? What is the inflation rate there? Don’t get arrested telling us….

October 5, 2012 at 10:56 am

Did you even read the piece?

And how high is inflation in the US? Or will they arrest you if you try to find out the real numbers? Nah, they’ll just relegate you to the backwater and viciously suppress any attempts you might make to promote your message.

If Argentina fails in its mission to broaden its middle class and built a stable economy it will be because a) internal politics bring enemies of the current process into power or in some way allow them to hamstring and destroy the current efforts underway, or b) the international banking community, headed by the IMF and the other usual suspects, game the system to punish Argentina for not playing by their rules.

One thing is certain, more than trying to obtain “WMD” or violating any number of international laws, what puts a nation in the crosshairs of the west is if it dare to go “off the reservation” of their economic hegemony. The only hope these South American nations have that are trying this grand experiment is that they have each other. I do sincerely hope that is enough to protect them from the ongoing and inevitably increasing attacks from the IMF and co.

And please don’t try to point out how imperfect their systems are as some kind of proof of their failure. They have an uphill climb, as would any nation after decades of neoliberal destruction and control, and surely they will make mistakes, as well as be attacked relentlessly from outside, for their “hubris”. I wish them success and the wisdom and strength to succeed, and to help show the world that there is an alternative to the horrible inequality and misery the west has wrought.

October 5, 2012 at 3:04 pm

Nicely stated, thanks!

October 5, 2012 at 3:49 pm

South America is kind of ahead of the curve on this. Its break from its formal colonial empire happened early, and the “economic domination” strategy started being applied in the Monroe administration.

They’ve had several hundred years to figure out how to respond. They are therefore well ahead of Asian or African countries which are trying to get out of the same trap.

October 5, 2012 at 3:21 am

Excellent stuff from Wray. We’re currently being lead by mad men, who are sacrificing many people’s lives at the altar of neo-liberalism.

October 5, 2012 at 4:46 am

Quote: “Wall Street wants de-development, a return to a feudal economy as finance plays the role of wealth-extracting feudal lord.”

That’s the sole purpose of this predatory ‘industry’. Making money out of money, not out of real stuff. And not for re-investing it in real enterprises but just to … make more of it. This unimaginative goofiness is a sign of mental retardation and the retardation stems from intellectual incest. That is what you get and where you end up if you marginalize each and every dissenting voice, if you surround yourself only with like-minded others, like, say, in Jackson Hole. It gets transformed into a Brainless Hole, no sound critics allowed.

October 5, 2012 at 5:01 am

While I would agree in theoretical terms that inflation and for that matter deflation (except where consumer debt is high) should not be harmful I perceive the practicalities to be different. I would be concerned that price and wage inflation do not react with the same speed and there are delays involved. I think there is also a risk that global perceptions (rightly or wrongly) about currency values and government and central bank policies elsewhere which can morph inflation into stagflation.

In conclusion I would argue there is a tipping point where inflation does become harmful especially if it changes rapidly, it also has a tendency to morph into stagflation especially where a central banker is not responding to policies and changes outside the local economy. I would however agree that the fears about inflation are somewhat misguided and should help with a consumer balance sheet recessions.

I think central bank policy should be about controlling the balance between wage inflation and price inflation to control growth. Blame it on speculation if you like but something seems to have gone very wrong with the balance between the wage and price inflation globally.

October 5, 2012 at 7:58 am

This is a surface assessment, probably heavily biased by the US situation. Our labor market has become decoupled from other price inflation, but Argentina’s has not.

October 5, 2012 at 9:48 am

If anything I think the link you provided confirms the idea that if wage inflation keeps pace with or is above price inflation then damage to the economy is limited. I did note from the link that there is some concern about wage inflation in Argentina. Google translate provides this quote :

He noted that the pattern of wage increases set by the national government in recent years, have always been overwhelmed by the collective bargaining agreements made effective: “In 2010 it was 24% the pattern was set, but the conventions were 29, and last year we set a standard of 25%, and agreements were 30%, “he said.

It is important to seperate the inflation now in Argentina with that in 1989. Inflation at argentinian 1989 levels has to be bad. Once inflation reaches certain levels (I not suggesting Argentina currently is) it becomes difficult to forward plan or invest. Not everybody is entirely happy with the current level of inflation in Argentina either.The following quote is from the following link.

Monica Guglielmini runs a haberdashery near the centre of Buenos Aires and says. “Inflation is something that everyone who comes in here complains about,” she says. “It’s also difficult for me to plan anything. The price of stock goes up, so does the rent and if you’ve got employees, they expect their wages to go up to keep pace.”

I still think stagflation is the real economy killer, but very high levels of inflation can be equally bad. What the level of inflation is before it impacts citzens rather than banks is in my view the essence of Randy Wrays article. Namely inflation can be a lot higher than some central bankers think before it really inpacts the 99%.

October 5, 2012 at 5:02 am

There’s a 6-minute video up on Youtube of Marco del Pont and Boudou being interviewed by (I suppose) a TV reporter. My ear for Spanish is rather feeble, so I can’t decode the sounds into words very well.

Here’s a link to the Oct. 2 video:

October 5, 2012 at 5:53 am

specialist cures for specialist ills

October 5, 2012 at 8:46 am

The scales have been lifted from my eyes.
While all the talk of global “growth” continues unabated, and petroleum “production” remains in a plateau since 2005, Global Austerity Is The Plan.
Global austerity is not a misguided means to an unreachable end. that’s the cover story. Austerity is the global financial elite answer to declining global resources, having confirmed peak oil, peak copper and apparently even peak gold. There will be political gridlock in Amerika after the election, and to get gridlock the House remains Republican, the Senate at least evenly divided and the Oval Office remains populated by team Obama.
The sequesters and end of tax cuts, which were acrimoniously put in place last year will infuriatingly come to pass while all politicians bemoan their inability to protect their constituents from this unforeseeable event.
It’s the plan; well, that and fracking and the police-state…

October 5, 2012 at 8:56 am

This is kind of dangerous and very unfair way of correcting the economy. I’m all for central banks focusing a bit more on the unemployment aspect of monetary policy but creating this much inflation is a poor way of doing it.

I’m surprised that some people here think that inflation helps the majority when if fact it is equivalent to a transfer of wealth from workers and and retirees (wage earners and bond savers) to government, banks, corporations and people in debt (wage payers and bond issuers).

Sure it will help create jobs since corporations will now have to pay everybody less relative to what they charge for their product and can thus afford to hire more people.

But would you advocate for a large country wide wage reduction and retirement benefit reduction along with a new tax where a large part of the money is given to big banks, especially leveraged ones in order to create jobs? If you like inflation, that is what you want.

In my opinion, a progressive tax along with government stimulus (maybe even in the form of a tax cut on some specific job creating sectors) would be a much fairer way of doing it. At least it wouldn’t be all on the back of the working and retiring class.

October 5, 2012 at 11:05 am

Did you read the piece? The inflation Argentina is experiencing isn’t planned, its largely the result of the massive continuing global commodities bubble. Perhaps this difficulty for nations like Argentina is just one of the side-benefits of the commodities bubble being generated by and for the benefit of the global rich.

October 5, 2012 at 10:58 am

Can you check to see if Mercedes Marco del Pont is descended from our own Marriner Eccles? They sound so much alike!

Marriner S. Eccles and the Federal Reserve Policy, 1934-1951


October 5, 2012 at 9:40 pm

@Roger Erickson,

Your first Eccles link doesn’t work.

October 6, 2012 at 6:37 am

Been published, so use the wayback machine.

October 5, 2012 at 11:22 am

Time will tell whether the path Argentina’s monetary and fiscal authorities is effective long term. In the interim, if inflation isn’t a problem, why is the government suppressing independent (accurate) assessments of inflation? You contend that commodity demand is to blame for inflation, and that once it subsides so will inflation. Argentina is a large export beneficiary of said commodity boom. BTW, this “refreshing” “maverick” approach has resulted in oil output down 20% and gas output down over 10% in the last seven years despite much higher oil prices and large untapped resources.

October 5, 2012 at 11:48 am

Surely this is the BEST nude capitalism headline EVAH:

Randy Wray: The World’s Worst Central Banker

Ol’ Randy’s workin’ for Mercedes del Pont now, ain’t he?

October 5, 2012 at 12:57 pm

Randall Wray’s story about the Indian neo-liberal is awful. India is in for the world’s worst ever rude awakening. I do hope we leave this guy and his ilk to fend for themselves when the time comes. India is a democracy of poverty and deprivation combined with an aristocracy of extreme and obscene wealth. But never mind. I have some quesitons: Has/can Argentina inoculate itself with sovereign banking so that sanctions against it, either under a military or a trade (or both) aegis, will have no effect? It is instructive to look now at Iran and the rial. The rial has lost 70+% of its value, sovereignty and all. And it will be painful because Iran imports food and medicine.

And to further this point and the danger it poses for Argentina or any country brave enough to take on the neoliberal international banksters: A month ago, during the previous incarnation of the Mittster, he said glibly that when he is president he is going to go into South America MILITARILY. I thought he must be referring to Venezuela, maybe Bolivia and possibly Colombia and the usual Central American mini-nations. But maybe he was looking directly at Argentina. Then at the Denver “debates” Mitt tried to launder that comment with another one that was less strident, but no less menacing, and he said he wanted to open up trade with South America. Virtually the same attack because trade implies a certain fidelity to the protocols of the IMF, Just monitoring the direction of the wind. What dangers for Argentina?

October 5, 2012 at 1:31 pm

Indeed … there are the ‘good guys’ (‘workers’ and ‘masses’ eating their helpings of beef out there somewhere in ‘little-people landia’), there are the evil monsters (the Wall Street cabal) and there are the Hollywood fools (orthodox financiers eating their own helpings of beef at conferences). How convenient.

“But here’s the more important point. Argentina has been growing very quickly since its financial crisis in the early 2000’s. It abandoned its currency board fix to the US dollar, it adopted a job guarantee program (Jefes), it defaulted on its dollar-denominated debt, and it told the IMF to take a long hike to hell. Rapid growth was thus inevitable. Unemployment and poverty plummeted and living standards rose.

Whoopie. Argentina is growing! Whoo f**king Wray! Besides beef, the workers and masses can run out and buy new cars, office towers, freeways, tract housing, auto insurance, military equipmen … no? Give them time. Economies don’t exist until they build a collection of ‘progress’ fetishes that are a) completely worthless, and b) costly enough to bankrupt said economies. Argentina’s growth represents the extinguishment of its non-renewable capital. Great job, Mercedes Marco del Ponzi.

Please make note that Argentina is a petroleum exporter, its progress excrescences are supported by + $100/barrel price of its crude. As Argentina ‘grows’ its net exports fall, at the point where net exports are zero. The country then needs to import its +$100 fuel, it falls bankrupt like Spain or Greece for the same reason. Capital is exhausted … regardless of whether Mercedes Marco del Pont or Jeesuz Haich Christ is central banker. Tab down to ‘Argentina’ at the following site:

The country’s net exports are near zero now. A brief hurrah for Mercedes Marco del Pont before denoue-ment

October 5, 2012 at 2:00 pm

Did you even follow your own link? The exports from Argentina have fallen to near zero from the site you mention and net Oil imports are rising.

Your argument is based on a ‘fact’ that you failed to even look at while giving others the link to do so. Good going.


October 7, 2012 at 4:36 pm

What on earth are you saying?

October 5, 2012 at 1:53 pm

At first I thought the headline said that Professor Wray is, himself, the world’s worst central banker.

Oh Boy, I thought, “this plays right into the hands of all the pundits out there” who think they know more about economics than the professors and the central bankers.

I don’t know who that would be. haha.

I look forward to reading the PowerPoint slides, which I will do because I appreciate and respect provocative thinking.

I just wonder who will print what when inflation is 20% someplace and so is unemployment — because the group consciousness structures that underly social cooperation are inherently unstable and dysfunctional, and so are the madmen in charge. By that point, I’m not sure they’ll call it “money” anymore.

October 5, 2012 at 2:28 pm

I get tired of reading, craazy, but if you come across any enlightment, let us know.

One thing I wonder is why in the world do these counties keep borrowing from foreigners if it causes all these bad things to happen? I mean, like sheesh, this has been going on since the LatAm debt crisis way back in the 80s! And why do they need other people’s money when they can make their own pesos?

I sure wouldn’t do that to them with any of my money!

October 6, 2012 at 6:53 am

They keep doing it because the psychotic mainstream economists brainwash their moron elite, like the Indian Central Banker above, that it is OK. Their masters at the banks & the IMF know perfectly well what they are doing – creating debt-peonage. These banksters make out like bandits on the interest on the usually, eventually unpayable loans, which are then just rolled over into another unpayable loan. Any loss by the TBTF crooks will be covered by their home central bank, ultimately the public. The main thing is keeping them in the debt-peonage system.

And the ultimate weapon is military force and sanctions, again using the suckers of their “home”. Which would be used against a country which is less white European-descended than Argentina that tried to travel a sane MMT/ New Deal path to development. Overall, the bad guys have had very few failures.

There’s a great passage in probably the first expose of the “international loan-sharking institutions” (his phrase) – Jonathan Kwitny’s Endless Enemies. He naively exclaims to an IMFer that what they are doing to African country X is debt-peonage, imposing debts which can never be paid, but which will bleed the country white forever. The bankster basically pats him on the head & says “Yes. That is our plan.”

October 6, 2012 at 8:49 am

Their masters at the banks & the IMF know perfectly well what they are doing – creating debt-peonage. @Calgacus

Well, yeah. But how on earth do MMTers not see that pattern in the US? The privately owned central bank. The elected government’s need to go hat in hand to the financial digitizer for its funding, in exchange for bond-contracts that oblige USG to repay, and thus to re-borrow. Every other sector of the economy up to its eyeballs in debt.

MMTers believe that government debt enriches the “non-government” through employment, incomes, support of aggregate demand. But that “non-government” formulation counts the financial sector, which immediately takes ownership of virtually all the new Reserves AND virtually all the new USG debt. Circulating our medium of exchange as interest and fee burdened private debt at a high multiple of those reserves. The multiple which everything we buy is priced in.

Support for adjusting reserve requirements? Support for any change whatsoever in the engineering of money? Nah, just fiddle with interest rates, borrow or print to fund public works. Not the slightest sense of where the problem actually lives.

Cal, I’ll follow up our previous threads here.

October 6, 2012 at 8:53 am

Sorry, shoulda set that up offline.

October 6, 2012 at 9:03 am

Their masters at the banks & the IMF know perfectly well what they are doing – creating debt-peonage. @Calgacus

Well, yeah. But how on earth do MMTers not see that pattern in the US? The privately owned central bank. The elected government’s need to go hat in hand to the financial digitizer for its funding, in exchange for bond-contracts that oblige USG to repay, and thus to re-borrow. Every other sector of the economy up to its eyeballs in debt.

MMTers believe that government debt enriches the “non-government” through employment, incomes, support of aggregate demand. But that “non-government” formulation counts the financial sector, which immediately takes ownership of virtually all the new Reserves AND virtually all the new USG debt. Circulating our medium of exchange as interest and fee burdened private debt at a high multiple of those reserves. The multiple which everything we buy is priced in.

Support for adjusting reserve requirements? Support for any change whatsoever in the engineering of money? Nah, just fiddle with interest rates, borrow or print to fund public works. Not the slightest sense of where the problem actually lives.

Cal, I’ll follow up our previous threads HERE. (Perhaps an admin will be kind enough to junk the misformatted one.)

October 7, 2012 at 7:09 pm

On second thought, it’s best to retain context. @Calgacus, additional follow-up is at our prior thread.

October 5, 2012 at 2:10 pm

The worst central banker?

That’s like trying to pick the ugliest locust amongst swarms of locusts.

October 5, 2012 at 3:29 pm

But why do you even need Central banks when we have a declining resourse base…..what are they going to provide credit for exactly ?
More of their Junk ?

Exchequers should just produce fiat and tell both the Com & Central banks get the fuck out of the country.

The “Irish” central bank today wanted the goverment to reduce wages & benefits even further so as to create a bigger current account surplus in Ireland and transfer that surplus to deficit London…..
If they reduced domestic consumption for a rational capital programme such as a Tram system through Cork I might think it was worth doing……but to transfer a surplus to London and the various NAMA entropy enginneers which infest this country……Fuck off Central banks……they are a alien presence in all countries.

The biggest selling car in Ireland this September was the BMW fucking 3…….says it all really.

October 5, 2012 at 4:15 pm

Central banks should, as you suggest, simply be part of the Treasury/Exchequer department.

“Central bank independence” is bullshit, an excuse to let the 0.1% steal money.

October 6, 2012 at 12:47 am

But isn’t everything an excuse for the 0.1% to steal money?

Central Banks, fiat currency, hedge funds, political parties, the media, pharmaceutical companies, the IMF, Hollywood, the Illumaniti, the Freemasons, the Knights Templar.

Who else? Goldman Sachs, surely. Also, the Bilderberg Society. The Council on Foreign Relations. The New World Order.

They are all lurking in the shadows, siphoning money from you. So let’s fight them through these blogs! That’s cost efficient.

October 5, 2012 at 3:43 pm

PS …the normally conservative Philip Lane has posted 3 unusual articles on the Irish economy blog….

1.Tall Ships and Sovereign Default
2.Currency Depreciation
3.Nominal GDP

Is Ireland finally thinking of giving it a Punt ?

It will be back to buying cheap 1 litre petrol cars like in the mid 80s and not……..
The truely Absurd Nissan Qashqai

It is the number 2 top selling “car” model in Ireland so far this year with 3,256 units sold (2,611 Jan -Sep Y2011)
Who the hell is buying these capital & fuel intensive cars ?

October 5, 2012 at 4:21 pm

Jean-Claude Trichet is unassailable. Head of the ECB (in charge of ensuring the stability of the Euro) who triggered an existential crisis in the region with an insane interest rate increase. Come on, who can compete with that?

October 5, 2012 at 5:38 pm

The Euro is in the business of transfering capital to BMW & oil merchants of Germany & Arabia….
Its a Gigantic capital export machine.

But to be fair – its not just Germany , the corporations have no real home now….they just are…
The Nissan Quashqai is made in the UK for example…

The basic 1.5 litre diesel sells for 25,945 Euros in Ireland…..
The most basic 1.0 litre petrol Volks “Up” sells for 11,745…
3,256 of the Quashqai were sold in Ireland this year so far
248 UPS were sold
So 7160 ~ UPS could be bought rather then 3,256 Quashqais……
You must understand the Irish car fleet is ageing at a rapid pace…….
A small section of the population have very large deposits in a strong currency…..which means they can afford to waste whatever surplus is in the system…
The remaining must buy second hand cars with higher long term running costs……
The Irish capital account is run down…….
We are held withen the vice of a seriously non optimum currency.

October 5, 2012 at 11:46 pm

An article praising Argentina’s economic management… Whatever negative thoughts I have about our leaders melt when I realize that people like this author could be doing the job.

October 6, 2012 at 12:42 am

My thoughts exactly.

Americans have weirdly romantic visions of other countries.

It’s almost pathological. The USA is flawed, but people here really struggle to wrap their heads around the fact that there are few countries out there that don’t have even larger flaws (Argentina certainly is not one of the few).

I think it stems from the fact that everyone wants to believe that there is a paradise.

Some place, some country where the righteous and virtuous are in charge and these good, kind people will fight the Dark Side and win and dispel from this world all that is wrong.

Just recently I encountered a very intelligent guy who thought China was some kind of worker’s heaven where everyone was provided for and that the “Chinese model” would soon come rescue America from the clutches of the oppressors.

October 6, 2012 at 12:14 am

Wow, that’s nice that everyone loves a fun, rousing martyr of a country that can “thumb its nose” at that pesky IMF and turn its central bank into some kind.

Because of course things are just dandy in Argentina.

There’s no cronyism there, no corruption, everyone is equal, and equally rich. The wealthy are firewalled from the government and everyone gets an equal say.

The Central Bank sees the future with its all-seeing eye and moves cash around with prescient benevolence towards those most worthy and most deserving.

And Kirchner and del Pont are fighting for the 99%, no doubt. They are good and virtuous and they guilty shall weep at their righteous feet one day.

I am just so inspired…

October 6, 2012 at 12:16 am

First sentence should end with “some kind of enlightened despot”.

I was writing the post through tears of joy and inspiration, so please pardon my error there.

October 7, 2012 at 9:49 am

{i]Cheap housing loans form part of Argentina stimulus plan

Thursday, June 14, 2012 – 08:51 AM

Argentina is rolling out a major economic stimulus plan, using pension and treasury funds to provide nearly cost-free housing loans of up to 77,000 each to 400,000 people who have been closed out of private-sector borrowing.

Buenos Aires governor Daniel Scioli ordered all “non-productive” government-owned land to be made available to the programme President Cristina Fernandez de Kirchner announced hours earlier.[/i]

Obviously argentinians believe that way to “stimulate” economy is to create housing bubble and increase household debt. What a surprise.




RonTOctober 8th, 2012 at 2:17 pm

No trolling but I would like to see a thorough discussion of Argentina.

It is a very good test case, its recent history has everything: a peg, inflation, then boom, but continuing inflation, not independent central bank , jefes program. Sounds like an MMT test case. The critics point out high inflation, I noticed that too. What is MMT take? I think MMT says the CB alone has a weak control of inflation. But does anyone? Is 10% inflation a good price to pay for high growth? If not, what can be done to control it? MMT strength lies in being grounded in institutional structure. I think the critics have a point that bureaucracy and corruption are also a part of the structure we have to work with. Do they make JG programs like jefes ineffectual in curbing inflation?

So my rant boils down to this: if you could do a thorough analysis of outcomes in Argentina and how they square with what MMT would predict and prescribe, it would be great.

ollyOctober 8th, 2012 at 4:05 pm


What do you think of this analysis of Argentina' situation by Miguel Kiguel (another Economonitor author)?:

A few quotes:

"the Government is making two big mistakes in its analysis of the causes of the inflation process. First, it argues that this is a realignment of relative prices (namely meat and wheat) instead of realizing that this is a generalized and persistent increase in the price level…

ollyOctober 8th, 2012 at 4:06 pm

…The second and certainly more risky mistake is that the Government has been arguing that “supply constraints” are the main reason for the recent acceleration of inflation, so-called as “relative price adjustments” by the Government. Indeed, there are some “supply constraints” in some durable and non-durable final consumption products, as some food products. Specifically, the indexes of capacity utilization in the durable and non-durable final consumption products have remained in the last two months in the maximum levels of at least the last ten years, suggesting that there is excess demand in those sectors, despite the 2009 recession, in part as a result of a relatively lower investment. This result may not be a surprise, since several of those sectors in last years have been under Government intervention and regulation, such as several food sectors (meat, milk, wheat, etc.) or public utilities (electricity, natural gas, etc.), with regulated prices and exports quotas. Due to the lack of investment incentives, output and installed capacity in those sectors remained relatively stagnant in past years, and even decreased in several cases."

ollyOctober 8th, 2012 at 4:06 pm

While the supply constraints have been a factor affecting inflation, though it is wrong to conclude from this evidence that the Government will be able to deal with this issue through increases in supply. Here, there and everywhere when there are generalized pressures by aggregate demand excesses in the short run the only solution is to restrain demand or to increase imports. Argentina is not likely to follow neither recipe so the effects should be very clear.

Aggregate demand is now growing at around 20/25% per year in nominal terms. The Government believes that the answer is to increase supply, and hence it is meeting with producers to diagnose where the bottlenecks are and to try to provide credit lines to get them to invest and increase production. The argument does not take into account that investment takes time to mature and to have effects on production, nor does it calculate how much investment needs to increase to generate real growth of around 8 percent (certainly much more that the current 22% of GDP)."

ollyOctober 8th, 2012 at 4:08 pm

"The confrontation between the government and a large sector of the business community has been escalating rapidly, and all of the sudden there is a perception of a sharp deterioration in the business climate.

The government’s strategy is already backfiring, as the new events raised again fears among middle class voters about the authoritarian nature of the government and its lack of tolerance…

One direct effect is that investment is likely to suffer and that Argentine spreads are likely to remain on the high side.

…we expect that if the economy continues to move at the current pace the limits to growth will be reached very quickly, as bottlenecks will become widespread and there will be labor shortages. In this environment inflation could become a larger problem."

LRWrayOctober 8th, 2012 at 5:53 pm

Spido: Uhm, dude. Completely irrelevant to my post. Did you actually read any of it? Nowhere did I call for despoiling the environment through development. And Deus provided to you links on sustainable development by MMT; if you do not like those, look at Billyblog.

So you call me names for writing on an entirely different topic? And you still cannot begin a post without name calling? Troll is as Troll does, you know. (My bet is you answered virtually every question in the quiz affirmatively.)

So, are you up to the Troll Challenge? You can write on this topic if you dare. We'll all look for your post on Friday.

Olly and Ron: if you go back to my earlier comment I already said I'd write something on views on inflation. Patience please.

spiderOctober 8th, 2012 at 6:29 pm

Here's what you said;
Heck, I’ll welcome any coherent argument on any topic of your choosing.
I took you at your word…which apparently is worthless.

In your previous thread you extolled the Argentine Central banker for choosing "promoting development" as a goal equal or superior in value to "inflation control". Or have you already forgotten?

Don't refer me to tedious texts. The purpose of a debate is to clarify issues by asking difficult questions and receiving direct answers. Such as what exactly is sustainable development and how are you going to achieve it in today's world which, by most expert accounts, is already overpopulated by 4 or 5 billion people?

Troll is a highly demeaning and insulting name. You were called out on your use of double standards on the last thread but your personality is so weak you can't function without the crutch. Too bad. Either its a debate between equals or no debate at all.

ollyOctober 8th, 2012 at 7:17 pm

Sorry, in your comment above you indicated that you think your preferred policies would result in "the death of many millions".

Thanks for putting that on the record.

L. Randall Wray L. Randall WrayOctober 8th, 2012 at 7:20 pm

Troll, dude: Here are the first words from your first comment: So Wray, you’ve not written another critique of Bernanke but rather another unrestrained rant about Wall St. (It was too long so I skimmed some of it. Is it true you missed the opportunity to blame the evil Joos at Goldman? You must be slipping.)

Joos? Quack like a Troll and you will be taken for a Troll. You are dishonest. I’ve never, ever, blamed Jews or any other ethnic, religious, nationality, or cultural group for Wall Street’s depravity. You are a Troll.

In any event, I do not debate in the comments section. I will answer direct questions that appear to be genuine. I will correct what I perceive to be genuine misconceptions. I don’t “debate” Troll-like comments.

Your call for debate “between equals” is silly. You are an alias (actually, several), completely hidden, no name, no reputation, no CV, a complete unknown. You can say any silly thing you want, make any accusation, invoke racial slurs, and threaten, all hidden behind a cloak of anonymity. No one can “debate” a hidden unknown Troll. Come out of your closet, and I’ll be glad to debate you.

I welcome your contribution for Troll Friday on any topic of your choosing. Not a brief little name-calling comment–a contribution that you email to me and I will post it up for you. A featured guest piece.

The offer stands. Go for it Spido!

ollyOctober 8th, 2012 at 8:02 pm

Apparently the guy's main problem is that you are in favour of economic development. He prefers "the death of many millions". Bonkers.

RonTOctober 8th, 2012 at 8:39 pm

Thank you. Argentina is interesting. And inflation seems poorly understood in general.

Btw, pls don't get upset at the troll/trolls. We MMT advocates also annoy other economists with our comments, they have to live with that, because we are frequently right 🙂 MMT should be able to take criticism, pls ignore the ad hominems, they are only a sign of weakness.

ribOctober 8th, 2012 at 9:37 pm

Mr. Wray:

Me ain't no troll.
I do have a blog in spanish.
Many times I've even linked it to yours.
I am not an econonist but your take on argentinian inflation
does seem wrong to anyone living in here.

With inflation at 25% and middle class savings at 15% one is only paying
a tithe to the industrial sector wich is subsidized with loans by BCRA.
Just saying.


LRWrayOctober 8th, 2012 at 10:14 pm

spido: you seem to trigger spam. Or trash. Cannot imagine why. Anyway, we are all waiting on pins and needles for your big debut on Troll Friday. Better get working. Explain your Triage strategy to kill millions of innocents.

LRWrayOctober 8th, 2012 at 10:19 pm

Spido: write up your plan and make the case for killing millions. We're all waiting for the argument. I'll post it on Troll Friday. Offer stands.

LRWrayOctober 8th, 2012 at 10:22 pm

Rib: and so your argument is what? Stop subsidizing industry, raise rates, kill investment, and then…….what? Have high unemployment so that workers will not be able to save at possibly less negative real rates?

Anyway, as I said, I will post up a piece examining views on inflation as well as Central Bank culpability in matters (including your complaint).

Philip PilkingtonOctober 8th, 2012 at 11:13 pm

This is the key problem with the Argentina critics. They often don't have a plan of action. I'm sure no one is mad enough to suggest a hard peg again. That would be a disaster and much worse than double digit inflation.

The only demand-side solution that I can see is wage-price controls. I think this might be worth considering, but its going to be tough negotiating with unions etc. Certainly though, there's more of a chance of the Kirchner government considering such a policy rather than the monetarists that are waiting in the wings.

ollyOctober 8th, 2012 at 11:18 pm

RonT, one troll in particular has waged a bizarre obsessive campaign of abusive trolling against Wray for some reason.

ribOctober 8th, 2012 at 11:32 pm

Mr. Wray:

As I said I am not an economist.
I do know that workers here connot even afford their own houses.
Me … I am just one of many paying this tithe on the middle class savings.

But argentinian industrialists are not leninists … right ???

Looking forward to learing your views about it.

RadicalCenterOctober 9th, 2012 at 2:35 am

I made this comment, and I fully stand by it:
"MMT rightly emphasises the role of excessive deficit as a cause of elevated inflation in its theoretical approach, but when Randall Wray sees elevated inflation in practice, he never blames the deficit or the government"

In term of writing a post for you, meaning doing the homework you did not do in your first post when you blamed inflation in Argentina on weather patterns among others, nice try! however, since I'm a nice guy, I will provide you with some clues as to why inflation got out of control in Argentina.
As per textbook MMT, out of control deficit will (could) bring high inflation. Have a look at the balance sheet of the Central Bank of Argentina: . Have a look at the increase in government bonds on the asset side…. And keep in mind, the government was supposedly in surplus for most of the last 10 years… where do the piling on of government bonds coming from then? Also, have a look at the monetary base, in particlar the increase in the last two years. Do you think a modest inflation of 10 percent would bring about such a massive increase in notes in circulacion?

Next time, do your homework, or rather, use your MMT, instead of ideology to explain inflation.

RadicalCenterOctober 9th, 2012 at 2:54 am

For those of you not reading spanish, argentinian government bonds on the asset side of the BCRA went from 85 billion pesos at the beginning of 2011 to 175 billion pesos in september 2012. (and in early 2010, it stood around 50 billion pesos)

MRKOctober 9th, 2012 at 5:56 am

Dear L. Randall Wray,

I commented on a piece you wrote: "THE WORLD’S WORST CENTRAL BANKER". I never comment on any website, because I don't feel like registering, etc. But as I could comment right away without a hassle, just like right now, I took the liberty to do so. I was rather emotional, because the inflation here in Argentina hits me hard and I can't help myself but to get angry when I hear people defending it as if it were a good "thing". Or worse, when they are denying its existence, and thus denying reality, or saying it's around or below 10% which is the same as denying reality.

I was responsable for the phrase: "You clearly do not live in Argentina."

It just occurred to me to take a look in order to see if someone had replied, or to see if other people commented. So I took a look around and I saw you wrote a new piece in which you call me a "Troll". I had to look it up in wikipedia and I saw its not exactly flattering. As I didn't call you any names, I think it's a little bit uncalled for, especially taking into account you're a professor and therefore should know/behave better than this. But ok, there's freedom of speech, etc. and I am not offended that easily. However, it did gave me an insight on how/what you think of your readers. This situation makes me sad, or no, better said, disappointed, you fact-checked erroneously in my case. I am not a "Troll" posting with different names, etc., I am just a person sharing my experience with the BCRA and its leadership, I have a unique IP address which no one else could have been using in order to comment. I have only used one name when posting one comment (later adding another comment, just to correct a failed link).

I sincerely hope this is not the level nor the kind of language you usually busy around here. I do would like to see your follow up on the BCRA's "policy", as I try to keep an open mind, but I would like to stress the point that for me personally, so far, the inflation is hideous. I doesn't let me save, its impossible to think about buying a house due to ultra high interest-rates, etc.

If you want to defend the BCRA then please make an effort and defend:
– the high mortgage rates and the fact that mortgages are only available for people who have such an high income that they don't need one.
– no credit to companies (if you don't know people with money, you will have a hard time starting a company)
– high capital flight (enough data on the i-net about this)
– lack of investment (everything here is falling apart, trains, roads, I personally have power cuts all the time)
– gas rationing when you want to fill up your tank (I don't own a car, but I occasionally rent one)
– the pension funds (my money is in there!) being nationalized and spend amongst other expenses on "Football(Soccer) for Everyone"
– maintaining a failed airline (and supporting the airline by imposing MINIMUM prices that competitors should charge in order to avoid even bigger losses for AA)
– the need to prohibit the buying of foreign currency
– the need of a fake official exchange rate
– blocking imports (incl. important medicines)
– punishing exporters with export tariffs (as maybe the only (or a few) country in the world doing so)
– the need to impose maximum prices on goods in the supermarket, as we know that throughout the history of man kind, this NEVER (!) worked and will not last.
– …………… leaving a spot for you to fill in and to defend, to give you a home field advantage.

Kind regards

LRWrayOctober 9th, 2012 at 11:51 am

RadicalNiceGuy: So, you've read all of my stuff so that you can use a word like "never"?

But if you've read all my stuff how could you have missed the point that government bonds are interest rate maintenance accounts, sort of like savings accounts for banks at the central bank; and reserves are the alternative, sort of like checking accounts for banks at the central bank.

And so what has the Central Bank of Argentina done? It has bought bonds and credited reserves; the other side of the coin is that banks gained reserves and lost bonds. And as such, most government bonds have moved out of the private sector and into the public sector (with the Central Bank holding them).

And for that you want to call this the World's Worst Central Banker?

Did you notice that the US Fed has tripled its balance sheet through 3 phases of QE–approx $3 trillion now? Much of that by purchasing government bonds.

Using MMT, I see that neither of these actions can possibly generate inflation of the claimed 25%.

Do your homework.

LRWrayOctober 9th, 2012 at 11:55 am

MRK: OK you are not a Troll but you start with what should be fairly obvious to anyone who bothers to visit this blog and to look at my affiliations. Of course I do not live in Argentina. Indeed, in my post I talked about an invitation to Argentina, which should have made that point obvious. Not living in Argentina certainly does mean that one needs to be careful, but if you will carefully read my post you will see I did not take a strong position either way on the inflation rate (I will argue that I doubt it is 25%, although I am not sure it is as low as 10%). Do you attribute everything in your laundry list to the actions of the Central Bank? Is that what makes her the worst central banker in the world? Me thinks you greatly exaggerate her power and culpability.

RadicalCentrerOctober 9th, 2012 at 1:09 pm

why did you leave a aside the increase in notes in circulation as a symptom of elevated inflation? (irrevalant?)
As for bonds being interest rate maintenance, thanks, but I am already aware of all the MMT stuff. So here's an MMT question for you: how could you know that the increase in government bonds on the balance sheet of the central bank is the result of a QE style policy or the result of deficit spending by the government whereby bonds are bought directly by the central bank? Ex-post, the result of these two policies would be exactly the same on the balance sheet of the BCRA, but only one of these two policies -as per MMT- could prove inflationnary. Are you so well connected to the BCRA to know these are the results of Fed-style QE? In all likelihood, you don't know, you are just guessing (continued below).

RadicalCentrerOctober 9th, 2012 at 1:15 pm

(continued from above)
So here's another clue: the Argentininean government has managed its exchange rate (no, it is not a pure float, far from it) for most of the past 10 years with the goal of generating a current account surplus and accumulating dollars. And it worked (thanks also to the commodity boom), look at the amount of dollars accumulated on the asset side of the BCRA. But then, forgetting the lessons of Godley, the government also started producing massive fiscal deficit. How could you maintain a budget deficit while generating a current account surplus? You can't (assuming private sector in balance). So the current account started to to go down the tube. So the managed peg became totally ovevalued, with a black market exchange rate flourishing. Inflation kicked in high gear and people wanted to save in U.S. dollars to protect their savings.
(continued below)

RadicalCentrerOctober 9th, 2012 at 1:19 pm

(continued from above)
Seing this, then the government imposed capital control to make sure that the people could not escape inflation by converting their savings to U.S. dollars (the government also wanted to protect its holding of U.S. dollars parked at the BCRA). Accumulated U.S. dollars have slightly decreased at the BCRC in the last two years, and Argentinean pesos have skyrocketed, that should tell you something.

So the main culprint for Argentinean inflation: government incompetence. Message to all MMTers: beware before creating a pink-glasses MMT narrative on Argentina.

L. Randall Wray L. Randall WrayOctober 9th, 2012 at 1:38 pm

In high inflation, you try to reduce cash holding–not increase it.

You can tell whether accumulation of bonds at the central bank is QE or Deficit spending by looking to the Government’s budget outcome; while the primary budget surplus has declined it has not gone to “massive fiscal deficit” as you claim.

Unless you are arguing yet another conspiracy: government is cooking its budget books as well as inflation.

It is possible, but if you want to make the claim you’ve got to get evidence.

So far as “managing” its exchange rate, there is no conspiracy there–most countries manage exchange rates and often do so to obtain current account surpluses. But the global slowdown of developed countries and the crash of Euroland and the slowdown of China make that extremely hard to do.

It is a bit much to blame the Central bank of Argentina for China’s slowdown?

Finally, it is very hard to get good numbers for the 3 sectors to do the Godley balances. There are quick methods, such as calculating the private balance as the residual. In that case you need good numbers on both the government and foreign balances. But as you apparently don’t believe the government, I do not see how you can say anything about the private balance. My suspicion is that it has been in substantial surplus. But you can believe it was balanced if you want to deny the govt’s budget report.

Edward StevensOctober 9th, 2012 at 2:43 pm

Yea, a great central bank: Lying to their own citizens— over and over again. If I recall history, Argentina had the 7th highest GDP poer capita less than 100 years ago. Done a great job theose public officials.

Argentina: BCRA imposes de facto "pesofication" of provincial local law bond
The Central Bank (BCRA) refused to sell US dollars to the Province of Chaco which was due to pay a small ($54 million) bond issued under local law held by Argentine
residents, forcing Chaco to settle the payment (Friday) in pesos. Central Bank sources explained that the decision was a result of applying the FX regulation (that have been
in place since July) on resident purchases of US dollars.
FX regulation does not affect sovereign local law bonds or provincial foreign law bonds

RonTOctober 9th, 2012 at 2:52 pm

Olly, I noticed the troll/trolls. I would say:

if ad hominem, remove the comment.
if has substance, address, even if very briefly, without getting upset. Economist bloggers have to deal with that all the time, and MMT "trolls" are one of the most abrasive ones, we have a reputation 🙂

RadicalCentrerOctober 9th, 2012 at 3:11 pm

I am not calling for any conspiracy and I won't go into the debate about government budget numbers. But have a look at the more recent stuff (presidential election was in late 2011, lots of porks south american style).

Notes in circulation increase with inflation: you need more notes to pay for basic day-to-day stuff. In fact, this relationship is so strong that it has lead monetarist to beleive that the increase in notes causes inflaiton, when in fact notes in circulation is a symptom of inflation.

also, you sound like the slowdown in China has caused a crash in commodity prices. It didn't. Commodity prices are still very high. Don't look to China to explain Argentina's current account fortune.

MrLemonOctober 9th, 2012 at 3:13 pm

I couldn't think of a better name for a blog in which to discuss policies to kill millions of innocents than a Great Leap Forward!

MrLemonOctober 9th, 2012 at 3:25 pm

Not really an MMT case. The exchange rate is managed, and the Jefes program, if it still exists is not a universal one, and if the wage is adjusted to inflation it doesn't provide any anchor to the price level.

The main question is why is Argentina along with Venezuela the only Latin American country with an inflation rate above 20% keeping in mind all Latin American countries are growing because of the commodities boom?

If MMT is right, the government is to blame, regardless of whether it's the Central Bank or the Treasury.

L. Randall Wray L. Randall WrayOctober 9th, 2012 at 3:42 pm

Not really correct on either of your points.
a) Monetarist story is about M1 or M2, not cash. Read Cagan on money demand in high inflation.
b) I am talking about external markets for exports, not commodities prices. As you will recall, I said we are in the biggest commodities bubble ever. Prices will crash but they have not yet done so.

L. Randall Wray L. Randall WrayOctober 9th, 2012 at 3:46 pm

You are correct that Argentina is not following MMT policy proposals; but of course Argentina does have a modern, sovereign, currency. So MMT analysis does apply.

But to say (as some have claimed) that MMT is wrong because its policies have failed in Argentina misunderstands the difference between description and prescription (a mistake you have not made here, but others frequently have).

I have no idea why you believe that MMTers believe inflation must be government’s fault. Why not blame price-setting firms? Wage-setting unions? Commodities prices? Supply constraints? Inflation pass-through from currency depreciation? Any number of other factors?

RayPhenicieOctober 9th, 2012 at 10:03 pm

When anonymity is used to hide, to intimidate and to attempt to engage in discussion, one thing is certain. The person hiding behind the anonymity, clearly indicated by the vitriolic stream, is afraid to face their own inner rage, anger and fear. This usually in almost all instances, indicates a state of psychological imbalance and insecurity; the proverbial 'afraid to get in touch with my feelings of impotence so I'll attack the nearest person.' Understood in this light of the inner workings of an emotionally unbalanced dialogue the person hiding behind the mask of anonymity can only be seen as pathetic and in dire need of professional help.