Javier Lanari, Milei’s Media Sub-Secretary, claimed that Argentina’s annual inflation dropped from 17,000% to 8% in record time. This statement has been heavily promoted by Milei’s administration, likely for political reasons—face-value numbers are easy to market as a success. However, I
Creo haberlo escuchado a Milei explicando que el 17.000% es el resultado de anualizar la inflación de la primera semana de diciembre del 2023, sería una inflación del 10,4% semanal anualizada da 17.000%.
Economists know that “inflation expectations” are as much a problem as actual inflation. Is this not (to be charitable) a combination of attempting to dampen inflation expectations as well as take credit politically for some actual progress, despite the methods?
You have been quite negative on Milei’s policies (perhaps he did not follow your suggestions). But I have invested in Argentina (in the past, out before the big devaluation in 2001) and have many friends there. I think to break the psychology of inflation, “free stuff”, and statism is a really difficult thing to do in practice. I thing that Psyops helps.
If the point is to reduce inflation *expectations*, the monetary and fiscal plan must be credible. Looking at the reaction of analysts and markets, this does not seem to be the case. I also think exagerations like the "17,000% inflation rate" undermine his credibility.
In the following video Milei explains where the data comes from https://www.youtube.com/watch?v=rm9X0QcEszg min 15:45 ish. So basically companding the wholesale inflation from December which was around 54%. I would tend to agree with you that this might be a bit of cherry picking, however, given the existing dynamics at that time, I would not find surprising that inflation reached those levels. 17.000% or 6.000% does it really matter?
I do think it matters for credibility. Especially if this is about free-market ideas and not about Milei.
Also, as I explain in the post, it is not obvious that that is a representative number, since the "17,000%" was the result of a temporary (not permanent) shock to the inflation rate.
Creo haberlo escuchado a Milei explicando que el 17.000% es el resultado de anualizar la inflación de la primera semana de diciembre del 2023, sería una inflación del 10,4% semanal anualizada da 17.000%.
To look at the two last weeks of December can easily be interpreted as cherry-picking.
Economists know that “inflation expectations” are as much a problem as actual inflation. Is this not (to be charitable) a combination of attempting to dampen inflation expectations as well as take credit politically for some actual progress, despite the methods?
You have been quite negative on Milei’s policies (perhaps he did not follow your suggestions). But I have invested in Argentina (in the past, out before the big devaluation in 2001) and have many friends there. I think to break the psychology of inflation, “free stuff”, and statism is a really difficult thing to do in practice. I thing that Psyops helps.
If the point is to reduce inflation *expectations*, the monetary and fiscal plan must be credible. Looking at the reaction of analysts and markets, this does not seem to be the case. I also think exagerations like the "17,000% inflation rate" undermine his credibility.
In the following video Milei explains where the data comes from https://www.youtube.com/watch?v=rm9X0QcEszg min 15:45 ish. So basically companding the wholesale inflation from December which was around 54%. I would tend to agree with you that this might be a bit of cherry picking, however, given the existing dynamics at that time, I would not find surprising that inflation reached those levels. 17.000% or 6.000% does it really matter?
I do think it matters for credibility. Especially if this is about free-market ideas and not about Milei.
Also, as I explain in the post, it is not obvious that that is a representative number, since the "17,000%" was the result of a temporary (not permanent) shock to the inflation rate.