Progressives and The Venezuelan Political Tactics

[bilby]

Zimbabwe wasn't paying reparations or the like, it was purely the printing press.

I was not aware that printing presses crippled agricultural production by confiscating farms and giving them to people who were incompetent farmers, but good buddies with the president.

Those are some seriously impressive and ruthless printing presses. Mugabe must have been overjoyed to find them.

I don't know. Maybe crashing agricultural production in a mostly agrarian economy doesn't cause a sharp recession. In the mind of a monomaniac who thinks the only way to hyperinflation is increasing money supply, I guess anything's possible.

Sharp recessions causing inflation? Where are you getting this from? It is not consistent with the fact that recessions typically result in deflation as people stop spending money and withdraw it from the banking system.

It's the reason central banks lessen monetary policy during recessions.

Most recessions are not caused by the removal of productive capacity from the economy. If a recession is due to lack of spending - your typical 'consumer confidence' recession - then what you describe is accurate. But neither Wiemar Germany nor Zimbabwe were that kind of recession - they were collapses of production, not collapses of spending.

Fortunately such conditions are rare - so hyperinflation is also rare.

Which it wouldn't be, if mere increased money supply (Loren's 'printing presses') were the cause of hyperinflation.

 

[Loren Pechtel]

Zimbabwe wasn't paying reparations or the like, it was purely the printing press.

I was not aware that printing presses crippled agricultural production by confiscating farms and giving them to people who were incompetent farmers, but good buddies with the president.

Those are some seriously impressive and ruthless printing presses. Mugabe must have been overjoyed to find them.

I don't know. Maybe crashing agricultural production in a mostly agrarian economy doesn't cause a sharp recession. In the mind of a monomaniac who thinks the only way to hyperinflation is increasing money supply, I guess anything's possible.

The land confiscation didn't cause much inflation.

 

[bilby]

Zimbabwe wasn't paying reparations or the like, it was purely the printing press.

I was not aware that printing presses crippled agricultural production by confiscating farms and giving them to people who were incompetent farmers, but good buddies with the president.

Those are some seriously impressive and ruthless printing presses. Mugabe must have been overjoyed to find them.

I don't know. Maybe crashing agricultural production in a mostly agrarian economy doesn't cause a sharp recession. In the mind of a monomaniac who thinks the only way to hyperinflation is increasing money supply, I guess anything's possible.

The land confiscation didn't cause much inflation.

Sure. Everyone knows that Mugabe's Zimbabwe hardly had any inflation at all.

 

[Loren Pechtel]

The land confiscation didn't cause much inflation.

Sure. Everyone knows that Mugabe's Zimbabwe hardly had any inflation at all.

The inflation was because he wanted to spend more than he had in revenue. The printing presses made up the difference.

 

[Canard DuJour]

The land confiscation didn't cause much inflation.

Sure. Everyone knows that Mugabe's Zimbabwe hardly had any inflation at all.

The inflation was because he wanted to spend more than he had in revenue. The printing presses made up the difference.

Most rich countries spend more than they have in revenue and have done for centuries. Not doing so, absent a persistent trade surplus, forces the domestic private sector in deficit and eventually recession/depression. Hyperinflations come with collapse in productive capacity and over-reliance on imports/foreign currency reserves.

 

[Axulus]

The inflation was because he wanted to spend more than he had in revenue. The printing presses made up the difference.

Most rich countries spend more than they have in revenue and have done for centuries. Not doing so, absent a persistent trade surplus, forces the domestic private sector in deficit and eventually recession/depression. Hyperinflations come with collapse in productive capacity and over-reliance on imports/foreign currency reserves.

This is crackpot pseudoscience.

 

[Canard DuJour]

The inflation was because he wanted to spend more than he had in revenue. The printing presses made up the difference.

Most rich countries spend more than they have in revenue and have done for centuries. Not doing so, absent a persistent trade surplus, forces the domestic private sector in deficit and eventually recession/depression. Hyperinflations come with collapse in productive capacity and over-reliance on imports/foreign currency reserves.

This is crackpot pseudoscience.

Then you'll be able to show which bit is wrong. There are three distinct but related claims :

1) Most rich countries spend more than they have in revenue and have done for centuries.

That is trivially true of any country which hasn't run mostly budget surpluses (not to be confused with trade surpluses) and has thus accumulated debt. Look at the US and the UK as examples. Their public "debt" has been steadily accumulating for more than two centuries and three centuries, respectively.

2) Not doing so, absent a persistent trade surplus, forces the domestic private sector into deficit and eventually recession/depression.

That is a direct consequence of national accounting identities and readily apparent therein :

https://upload.wikimedia.org/wikipe...ctoral_Financial_Balances_in_U.S._Economy.png

http://gimms.org.uk/wp-content/uploads/2018/10/UK-Sectoral-Balances-by-Neil-Wilson-1.png

https://static.businessinsider.com/image/4d81ca554bd7c80119120000-750.jpg

The UK still theoretically owes debt from the South Sea bubble of 1720. The US federal government has been in "debt" nearly every year since 1776. In January 1835, for the first and only time, the public debt was retired, and a budget surplus was maintained for the next two years. In 1837 the economy collapsed into a deep depression that drove the budget into deficit, and the federal government has been in debt ever since.

Since 1776 there have been six periods of substantial US budget surpluses and significant reduction of the debt. From 1817 to 1821 the national debt fell by 29 percent; from 1823 to 1836 it was eliminated; from 1852 to 1857 it fell by 59 percent, from 1867 to 1873 by 27 percent, from 1880 to 1893 by more than 50 percent, and from 1920 to 1930 by about a third. The United States has also experienced six periods of depression. The depressions began in 1819, 1837, 1857, 1873, 1893, and 1929.

3) Hyperinflations come with collapse in productive capacity and over-reliance on imports/foreign currency reserves.

Point to a counterexample. If simply expanding the money supply were sufficient cause, where's the the US or UK or Japanese or you-name-it hyperinflation? Japan's public debt has been ~200% of GDP for 20 years and still underhitting inflation tagets.

 

[Loren Pechtel]

The inflation was because he wanted to spend more than he had in revenue. The printing presses made up the difference.

Most rich countries spend more than they have in revenue and have done for centuries. Not doing so, absent a persistent trade surplus, forces the domestic private sector in deficit and eventually recession/depression. Hyperinflations come with collapse in productive capacity and over-reliance on imports/foreign currency reserves.

Most countries only lightly overspend. You get a small amount of inflation.

Places like Zimbabwe engaged in major overspending.

 

[Canard DuJour]

The inflation was because he wanted to spend more than he had in revenue. The printing presses made up the difference.

Most rich countries spend more than they have in revenue and have done for centuries. Not doing so, absent a persistent trade surplus, forces the domestic private sector in deficit and eventually recession/depression. Hyperinflations come with collapse in productive capacity and over-reliance on imports/foreign currency reserves.

Most countries only lightly overspend. You get a small amount of inflation.

Places like Zimbabwe engaged in major overspending.

So you repeatedly assert. Presumably the productivity collapses and exogenous shocks that almost invariably accompany hyperinflations are just coincidence?

 

[Loren Pechtel]

Most countries only lightly overspend. You get a small amount of inflation.

Places like Zimbabwe engaged in major overspending.

So you repeatedly assert. Presumably the productivity collapses and exogenous shocks that almost invariably accompany hyperinflations are just coincidence?

The problem here is you have the order of events backwards.

Productivity collapses are generally a symptom of the same financial mismanagement that causes hyperinflation. The inflation comes first, then their looting crashes the economy, then they resort to hyperinflation to try to keep ahead of the collapse.

I was in Zimbabwe for about a week in 1982. Even then I saw enough to know they were going in the shitter.

Again and again those of us on the economic right correctly predict what's going to happen, those on the economic left are rarely right. Doesn't that say something about who has a better understanding of what's going on?

 

[Canard DuJour]

Most countries only lightly overspend. You get a small amount of inflation.

Places like Zimbabwe engaged in major overspending.

So you repeatedly assert. Presumably the productivity collapses and exogenous shocks that almost invariably accompany hyperinflations are just coincidence?

The problem here is you have the order of events backwards.

Productivity collapses are generally a symptom of the same financial mismanagement that causes hyperinflation. The inflation comes first, then their looting crashes the economy, then they resort to hyperinflation to try to keep ahead of the collapse.

That's entirely consistent with what I and others - including most academic studies - have said, i.e. hyperinflation is symptom not cause.

I was in Zimbabwe for about a week in 1982. Even then I saw enough to know they were going in the shitter.

Case in point then. The hyperinflation wasn't until 1999. Consequence, not cause.

Again and again those of us on the economic right correctly predict what's going to happen, those on the economic left are rarely right. Doesn't that say something about who has a better understanding of what's going on?

It might if the assertion were true.