Argentines have Italian blood, and in the best Italian tradition, they also learned that there are better stores of value than their own national currencies.
We are all Italo-Argentines now - Ben Bernanke has just acted on his speech which delivered the nickname Helicopter Ben (and that nobody took too seriously back in 2002). The United States of America's Central Bank has just declared to the world: we want to be a Banana Country, please follow us. It is this new Central Banker's belief that you can rescue an economy by printing your way out of trouble, in other words, that you can rescue an economy by inflating your way out of trouble. I believe its always been about establishing a balance between Keynesian economics and Friedman economics, but, not sure how much even Keynes would agree with this one. Last I checked, inflation was bad for the economy, and inflation is created by excess money pursuing too few goods. We have a problem of too few goods, and it is the countries' belief that by printing money, there will be an incentive to buy more goods, thus produce more goods... or worse yet that the additional money will pursue the same goods, thus increasing the nominal value and growth of our economy... The problem is that those that produce goods, and those that buy goods are not producing/purchasing not because of a lack of confidence but because of an excess of debt - so, Bernanke will essentially will be inflating us out of our debt.
My friends, before we know it, when all is said and done about this episode we will all be Argentina - and when the whole world plays the same trick, we will all go back to the age when Gold was a currency not a commodity... because when something has a fixed supply, it will always have an upward value bias against those things that don't, especially when there is an intent to augment the supply with a free hand. There might be deflation in the short-term, but, salvaging this crisis will simply mean funny money and significant inflation in the future.
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