Originally posted July 19, 2010
~ Rebuilt like the 6-million dollar [$42,649,324.32]* man ~
- During this runaway inflation, Hitler coined the telling phrase, “starving billionaires,” for there were Germans with a billion marks that would not buy enough food to feed themselves. — Thomas Sowell, Basic Economics 4th Ed (See PDF excerpt of “inflation” and “deflation” from this 4th edition. As a reminder the UK Conservative Party leader had her worldview rocked by this book.)
Eating the rich in other words.
NewsBusters h/t – their video is dead, but I found the Mc Laughlin Group’s PBS (July 18, 2010) video and combined it to update the issue to today.
HYPERINFLATION:
… Hyperinflations are caused by extremely rapid growth in the supply of “paper” money. They occur when the monetary and fiscal authorities of a nation regularly issue large quantities of money to pay for a large stream of government expenditures. In effect, inflation is a form of taxation in which the government gains at the expense of those who hold money while its value is declining. Hyperinflations are very large taxation schemes ….
WHO WANTS TO BE A TRILLIONAIRE?
How would you like to pay $417.00 per sheet of toilet paper? Sound crazy? It’s not as crazy as you may think. Here’s a story of how this happened in Zimbabwe. Around 2000, Robert Mugabe, the President of Zimbabwe, was in need of cash to bribe his enemies and reward his allies. He had to be clever in his approach, given that Zimbabwe’s economy was doing lousy and his people were starving. Sow what did he do? He tapped the country’s printing presses and printed more money. ….
How did Milei of Argentina fix the problem of their countries inflation? Deregulate, deregulate, deregulate. Price controls are the worst possible response — another proclivity of the Left! 3 Examples:
Javier Milei Slashes Argentina’s Inflation in Just 1 Year
Argentina’s annual inflation rate fell to 117.8 percent in 2024, marking a significant drop of 93.6 points compared to the record 211.4 percent inflation rate of 2023. The sharp decline signals a significant turnaround for Argentina’s economy under President Javier Milei.
In December 2024, inflation stood at 2.7 percent, Argentina’s National Institute of Statistics and Census (INDEC) claimed in a new report. While slightly higher than the record low of 2.4 percent in November, Economy Minister Luis Caputo attributed the uptick to “seasonal factors” tied to the holiday season and the start of summer vacations.
Despite the minor increase, December marked the third consecutive month in which prices rose by less than 3 percent. The data “confirms the disinflation process is continuing,” Caputo posted on X following the report’s release. …
Javier Milei Deregulates Food Imports and Exports
In a sweeping move to overhaul Argentina’s food trade policies, Javier Milei’s administration officially deregulated food imports and exports on Monday. The reform, outlined in Decree 35/2025, seeks to boost foreign trade, cut bureaucratic red tape, and lower consumer prices.
Federico Sturzenegger, head of the Ministry of Deregulation and State Transformation, explained in a post on X that the measure “seeks cheaper food for Argentines and more Argentine food for the world.”
Under the new policy, food products and packaging certified by countries with “high sanitary surveillance” can now enter Argentina without any additional registration or approval processes. These items will be automatically recognized under the Argentine Food Code, cutting down on administrative delays and costs for importers. ….
Javier Milei Got Rid of Rent Control in Argentina. Housing Supply Skyrocketed
Argentina’s recent repeal of rent control by libertarian President Javier Milei has led to a surge in housing supply, with the freedom to negotiate contracts, previously restricted, directly causing a drop in rental prices.
Milei, a self-described “anarcho-capitalist” known for his free-market approach, repealed the 2020 Rental Law, enacted by former leftist President Alberto Fernández, which had imposed restrictions on landlords and led to a significant decline in rental availability.
With Argentina’s inflation reaching 211.4%—the highest in 32 years—rent prices were adjusted every 12 months, and leases had to last at least three years. The law, introduced in 2020, ended up distorting the real estate market and hurting both landlords and tenants.
The law aimed to provide tenants with more financial security, but by the end of last year, an estimated one in seven homes in Buenos Aires was sitting empty as landlords chose not to rent them out in Argentine pesos. Deposits were capped, and it was nearly impossible to end tenancies early.
For many locals, finding a new apartment had become “mission impossible.” But after the repeal, Buenos Aires saw a doubling of available rental units, and rental prices have stabilized. Under the new rules, landlords and tenants have more freedom to agree on lease terms. If the duration isn’t specified, it defaults to two years.
“We’ve seen a significant increase in rental apartments, and in some cases, we had to lower prices in pesos because of fewer viewings,” Soledad Balayan, head of the real-estate agency Maure Inmobiliaria, told Argentine newspaper La Nación.
Since Millei’s repeal of rent control laws took effect on December 29, the supply of rental housing in Buenos Aires has jumped by 195.23%, according to the Statistical Observatory of the Real Estate Market of the Real Estate College (CI).
[….]
The debate over rent control is not specific to Argentina. In the U.S., where housing affordability is a major issue, the Argentine example is drawing attention. The libertarian Cato Institute in Washington D.C. pointed out that Argentina’s experience shows the inherent problem of price controls, which in the case of housing can both limit supply and worsen affordability problems more broadly.
“Milei cut rent control and other tenancy regulations. The result confirmed economic theory: the supply of rental accommodation is surging, and rents have fallen,” said Ryan Bourne, chair for the public understanding of economics at Cato.
President Joe Biden has proposed federal rent control measures, saying they’re needed to protect tenants from corporate landlords. He proposed limiting rent hikes to 5% a year for the next two years for landlords with more than 50 units.
Vice President Kamala Harris has also recently indicated support for rent controls, saying at her first major rally since becoming the nominee that she wanted to “take on corporate landlords and cap unfair rent increases.” In 2019, after Oregon passed a statewide rent control measure, she praised the bill on Twitter.
Biden’s plan was meant to last two years, which the White House argues is enough time to build more housing that would relieve some of the affordability issues, particularly in cities. However, critics argue that even with exemptions for new construction, rent caps discourage building more homes.
“Evidence shows that rent caps may push landlords to convert rental units into condos, cut back on maintenance, and become more selective about tenants,” read a Cato Institute analysis of Biden’s proposal.
TO WIT …
Argentina Offers a Textbook Study in Why Rent Controls Are a Bad Idea
…. An environment of high inflation worsens these risks for landlords. With surging prices, it makes sense to change rent levels more regularly. This allows tenants and landlords to find contract provisions to make sure rents both reflect market realities and tenants’ ability to pay (as wage growth often lags inflation). Yet these regulations only allowed rent adjustments once per year (or twice from October 2023). High and volatile inflation thus interacts with these regulations to raise rent risk and vacancy risk (given the sharp jumps in rents). Landlords might therefore like to hedge against inflation by charging in another currency, like dollars. But this was prohibited too.
The results of all this were predictable. Around the policy’s introduction, it’s estimated that 45% of landlords stopped renting to instead sell their properties, not least because most home sales were made in dollars. A lot of landlords shifted to short-term rentals on AirBnB too. In 2019, Buenos Aires had 10,000 properties listed on AirBnB; now it’s over 29,500. There have thus been no end of stories about a rental housing crisis, with tenants unable to find rental accommodation, despite the Financial Times reporting late last year that energy use implies ‘one in seven homes’ in Buenos Aires, the capital, laid empty.
This supply crunch led to soaring rents. Bloomberg reported that rents jumped sharply after tenancy rent controls were announced, as landlords opted out of the market or front-loaded rent increases to protect against inflation. Having been falling in real terms through 2018 and 2019, and tracking inflation for most of the previous decade, rents in Buenos Aires grew at 1.7 times the pace of inflation in 2020, broadly tracked inflation in 2021 and 2022, and then accelerated much faster than inflation again in 2023 as the rate which rents could be increased within tenancies was tightened further to the lower of wage growth or inflation.
As a result, the average rent for a two bedroom apartment in Buenos Aires has surged from 18,000 pesos per month at the end of 2019 to 334,000 pesos today, far above the 210,000 pesos if prices had merely tracked broader inflation, as used to happen. This relative price hike obviously hurts the poor most, because they cannot easily afford deposits to buy homes, or more expensive shorter-term dollar rentals. ….
What are the Left’s response to all this inflation today? PRICE CONTROLS. Here is another combo video discussing how our inflation happened as well as discussing the Soviet idea of price controls.
Biden/Harris & Harris/Walz Monetary Policy Cause Inflation and Shortages
Supply chains were broken by Government Regulation and Enforcement (already discussed above) during covid. It just “didn’t happen” by accident or natural causes. Supply chains were cut by enforcement. As above… long haul video! NEWSBUSTERS: “Brooks Surprised ‘Responsible’ Harris Would Endorse Soviet-Like Price Controls”
If you have the time, watch this series on hyperinflation from the National Inflation Association:
A Bag Of Money To Buy A Loaf Of Bread?
One of the stories that she would tell took place after the First World War. Germany lost and, in so doing, agreed to the Treaty of Versailles. In addition to the loss of geographical territory, the German Weimar Republic was forced to pay enormous sums in reparations. In essence, the Germans had to pay for all of the damage done in the war. Germany did not have the financial means to pay these damages and their solution was to just print money.
Catastrophic Consequences
As this new money moved into circulation the impact was devastating to the German economy. The inflation rate was absolutely staggering. A few years after the end of the war the German economy had an inflation rate in excess of 300% per month! The economy had essentially collapsed and the country was experiencing a depression of enormous proportions. This set the stage for the rise of the Nazi party several years later.
Which brings us back to my grandmother’s story. She would tell me how her father and brothers, all coal miners, would get paid twice a day. The currency was devaluing so fast that it needed to be spent as fast as it was earned. My grandmother told of collecting the money and going shopping for food. The grocers didn’t even bother counting it, they just estimated the amount by how large the stack was. A loaf of bread could be purchased for two bags of money in the morning, by the afternoon the price might be three bags. The currency had so little value that people would burn it in their stoves for heat because wood had more value than the money.
We Are Getting $700 Billion From Where?
The US dollar is a fiat currency. That means that it is not backed by gold or any other asset but instead is backed by “the full faith and credit” of the United States Government. As we increase the national debt we are destroying faith that the rest of the world has in our economy. As that faith erodes the dollar will fall further, and imported goods (read oil) will cost more and more. The inflation that we are already experiencing can quickly turn to hyper-inflation if we keep spending money that we don’t have.
Hyper-inflation is an end-stage terminal cancer to any fiat currency. However that inflation does not immediately follow the event that caused it. In Germany the Weimar republic began printing excess money in 1919, but the hyper-inflation didn’t take hold until a few years later. It may be several years before we see the real effects of the proposed bailout that we have before us.
…(DEAD LINK)…
Full faith and credit in the backing power of our fiat money depends on the faith in our government. Which means honesty. Lol.
(September 6, 2009)
* $6,000,000 in 1973 is equivalent in purchasing power to about $42,649,324.32 today [January 2025], an increase of $36,649,324.32 over 52 years. The dollar had an average inflation rate of 3.84% per year between 1973 and today, producing a cumulative price increase of 610.82%.
This means that today’s prices are 7.11 times as high as average prices since 1973, according to the Bureau of Labor Statistics consumer price index. A dollar today only buys 14.068% of what it could buy back then.
The inflation rate in 1973 was 6.22%. The current inflation rate compared to the end of last year is now 2.89%. If this number holds, $6,000,000 today will be equivalent in buying power to $6,173,283.43 next year. The current inflation rate page gives more detail on the latest inflation rates.