Hacker News Reader

Comment by fazeirony | Hacker News Reader

leave it to ft.com to paint this as a feel good, happy story. meanwhile, argentinians are facing record poverty levels, inflation at extraordinary levels, and extreme wealth inequality. but hey, recession exited! austerity 1 working proles 0.

View on HN

how could it not be a happy story. meanwhile prior, argentinians were facing even higher poverty levels, inflation at even higher extraordinary levels, and were facing extreme wealth inequality.

At least now, their currency isn't being constantly debased, and the savings of ordinary argentinians aren't being inflated away into the hands of an irresponsible government.

While one might argue that by bringing down inflation things could improve in the long run, it's not accurate to say that previously "argentinians were facing even higher poverty levels". From the article poverty rates have gotten worse:

> The country’s poverty rate soared 11 points in the first half of 2024 to 53 per cent.

Not the guy you replied to, but pretty frequently economic stagnation is caused because folks are stuck in an inefficient local minimum.

To end a period of recession or stagnation, governments almost always have to cause unemployment (or respond to natural unemployment) to force people to change jobs.

This is why Chairman Volcker is remembered so villanously and President Reagan is lionized.

Volcker ended stagflation under both Carter and Reagan by dramatically raising interest rates for a few years.

This led to 11% unemployment, but once folks had found new jobs Reagan was able to preside over an era of strong growth.

Maybe when they get to 70 or 80% unemployment they'll finally be able to move towards a more efficient minimum.

I think you meant to say "local maximum". If they were in a local minimum, moving out of it would improve conditions rather than worsen them. The situation where you can't improve without going down is a local maximum.

This was because the government devaluated the fictitious dollar exchange rate, which had like 100% difference with the actual market rate, which then meant that salaries in dollars went down by a lot, though in actuality they were already down. The other thing is that poverty is now at 46%, so things are improving very fast.

Inflation is still extremely high and poverty levels are even higher now. IMHO the pre-Milei status quo was unsustainable and the directionality of changes he's making is positive, but they are still very much deep in the Pain part of trying to break out of where they were at.

Many people really are much worse off right now. It has to be taken on faith that this is a short term suffering that will pay off later.

Argentina has had poverty for decades now. It was glossed over by successive Peronist governments constantly printing money and giving it to people, which is what's lead to the insane inflation (which has come way down under Milei) and destroyed Argentina's economy.

This is a happy story. Argentina actually has a shot at being a real country with a real economy.

Official inflation numbers are extremely low. How does that square with what you just said?

They are not extremely low, they are just lower than they have been. Annualized inflation is still ~160% down from a high of ~300%. Monthly inflation numbers are like what the US sees in a year.

Annualized is around 118%, down from a high of 211%. Last month to month inflation rate was 2.4%, down from 25% on last December. 2.4% annualized is around ~30%, which would give you the following series:

2023 => 211%

2024 => ~120%

2025 (if inflation keeps the same value) => 30%

However, if the government lowers the crawling peg they are instituting, and keep on not printing money, it's possible the inflation rate for 2025 is even lower.

So: Currently not remotely close to "extremely low" as in the comment I replied to.

And it isn't following a nice series like you have, the peak was in April 2024. It's improving! It's not "extremely low", or resolved yet. As I said in another comment, I personally think the directionality of Milei's changes is great. But it is currently still very tough times.

i also hear official inflation numbers in the US are 'low' right now too, yet that doesn't mean prices are down or that things are affordable to the common person. my lived reality talking to actual citizens tells me a lot of folks are struggling. if anything, applying that same experience to argentina is my mistake. i guess.

Low inflation doesn't mean that prices will fall. That would be deflation, and deflation is bad for the economy.

I guess we should ignore statistics and focus on anecdotes when making economic decisions.

I think that you may have seen month-over-month inflation in Argentina, which is 2.4% for November (the lowest in a couple of years). That may seem low, but that's just the change in prices from one month to the next. In USA, the month-over-month inflation is around 0.3%, while yearly inflation is 2.7%. In Argentina, yearly inflation is 166% right now (and it was worse before!), but if they kept 2.4% month-over-month for a year, they'd have 33% yearly inflation - that's still not "extremely low" (e.g. the recent inflation surge in the US only peaked at 9.1% yearly), but it would be the lowest for Argentina since 2018.

https://tradingeconomics.com/argentina/inflation-cpi

https://tradingeconomics.com/argentina/inflation-rate-mom

https://tradingeconomics.com/united-states/inflation-cpi

https://tradingeconomics.com/united-states/inflation-rate-mo...

Wow, this is a perfect example of talking without knowing anything.

Previous government accrued over 1000% inflation over 4 years, and shit was hitting the fan really hard. Money was worthless, and people spent it as soon as they got it because it was losing ~10% of its value per month.

Current government did an amazing turnaround and fix of the economy, inflation this year is down by half, and monthly inflation rates are back to 2019 levels, which for a normal country is horrible, but for Argentina is pretty great.

Because everything was going real well up to now.

Reply on news.ycombinator.com