Are you saying there was no inflation in Argentina? Or are you saying there was hyperinflation and then the prices started to fall?
I'm saying overall there was deflation in Argentina. Millions of prices (like salaries, rents, services, prostitution, assets like bonds and stocks, taxi costs etc) fell and some FEW prices increased (like food, medicine etc). Suppose, I calculate an aggregate CPI as 40% rent and 5% food. And food prices increases 300% and rents fall 50%. What will be net effect in CPI? It will be negative!! (-50*40+300*5). If people believe in such CPI, it is a negative value. Wouldnt you call that a deflation? In one of the links, a women says Buenos Aires has become affordable after the bust!! That is deflation. i.e if someone had money to spend, they will find that overall they are spending less, primarily because rents fell - even though food prices increased!! What do you call that? Inflation? If you want to call food price increase ALONE as inflation - then sure, US has had food price deflation in the 90s. I hope you dont call 90s as deflation in US. BTW, I would consider 1929 as deflation inspite of meat and oil price increases!! And I would call 1970s as inflation as I can not recall which prices fell!! BTW, if you read the Argentina articles, you will find that government employees seemed to be having no problem at all!! It is only non-govt jobless guys who had problem as in 1930 deflation in US.
BTW, my definition of deflation is credit deflation. I was trying to look for charts on credit growth in US. I've Peter Warburton book and it only has charts from 94 and obviously credit has been growing since then - including after 2000 bust in stock market (but it misses the S&L crisis. I'm not sure what happened to total credit then). But interestingly, Peter Warburton has charts for Japan!! Japan had DOMESTIC credit fall about 5-10% (again not as badly as Argentina) - However, TOTAL PRIVATE debt (i.e corporations, fin. inst. credit creation etc) was ALWAYS POSITIVE!! i.e Total PRIVATE CREDIT NEVER DECREASED in JAPAN for the LAST 20 years!! I dont call that as deflation. I only say, it is yet to come!! |
