Hyperinflation and (Coming) Empty Store Shelves in Argentina

In May 2012 Nobel laureate (Keynesian) economist Paul Krugman wrote the following regarding Argentina:

Matt Yglesias, who just spent time in Argentina, writes about the lessons of that country’s recovery following its exit from the one-peso-one-dollar “convertibility law”. As he says, it’s a remarkable success story, one that arguably holds lessons for the euro zone.

I’d just add something else: press coverage of Argentina is another one of those examples of how conventional wisdom can apparently make it impossible to get basic facts right. We keep getting stories about Ireland’s recovery when there is, in fact, no recovery — but there should be, darn it, because they’ve done the “right” thing, so that’s what we’ll report.

And conversely, articles about Argentina are almost always very negative in tone — they’re irresponsible, they’re renationalizing some industries, they talk populist, so they must be going very badly. Never mind this:

To the money-printing-deficit-spending-loving-economist Nobel laureate Krugman, Argentina is a “remarkable success story.”

Of course, the Austrian economists warned of coming hyperinflation in Argentina, and it’s here now. See Robert Wenzel’s predictions here and here.

The Argentinean government has just announced a two-month price freeze on supermarket products, reports Zerohedge. The price freeze applies to every product in all of the nation’s largest supermarkets — a group including Walmart, Carrefour, Coto, Jumbo, Disco and other large chains. The companies’ trade group, representing 70 percent of the Argentine supermarket sector, reached the accord with Commerce Secretary Guillermo Moreno, the government’s news agency Telam reported. As AP reports, “The commerce ministry wants consumers to keep receipts and complain to a hotline about any price hikes they see before April 1.”

Next phase is empty supermarket shelves as consumers rush to exchange worthless paper money for consumer goods, while supermarket owners do not replenish sold stock as they cannot raise prices above its cost.