Erik Valium on Nostr: saifedean is completely mistaken about @JMilei Based on my notes from the ...
saifedean (npub1gdu…6nak) is completely mistaken about @JMilei
Based on my notes from the masterclasses and books by Professor @juanrallo , I believe that most of the points in this opinion article are highly debatable and not well-founded in the deep and complex reality of Argentina.
1. Claim: “Money supply measures under Milei have grown at astonishing rates (M0: 209%, M1: 133%, M2: 93%, M3: 123%), dwarfing previous administrations.”
This rapid money supply growth indicates Milei’s policies are fueling inflation and economic instability, undermining his free-market promises.
Counterargument: Context Matters in Money Supply Expansion
From an Austrian perspective, money supply expansion cannot be judged in isolation but must be contextualized:
• Productive Growth vs. Monetary Manipulation: Austrian economists emphasize that if money supply increases to match real economic growth (e.g., expanding markets or productive capacity), it does not necessarily lead to inflation. Conversely, if driven by government deficits and central bank printing without real backing in goods and services, inflationary distortions arise.
• Argentina’s Context: Historically, Argentina’s monetary expansions were driven by unproductive government spending and deficits. However, Milei may have strategically expanded the money supply to address pre-existing distortions, such as servicing unsustainable debt or stabilizing the economy during transition periods.
• Short-Term vs. Long-Term: Austrians argue that short-term monetary interventions can be justified during periods of systemic adjustment, provided they aim to enable market-oriented reforms.
The claim overlooks the nuanced reasoning behind money supply growth. The central issue lies not in absolute growth but whether it facilitates productive investment or exacerbates distortions.
2. Claim: “Public debt increased from $370 billion to $442 billion in six months (19.4%), signaling fiscal irresponsibility.” Milei’s borrowing mirrors the populist strategies of his predecessors and mortgages Argentina’s future.
Counterargument: Differentiating Productive and Unproductive Debt
Austrian economics distinguishes between debt types:
• Productive Debt: If debt is used to finance productive investments (e.g., infrastructure, reducing transaction costs, or stabilizing markets), it can lead to economic growth that exceeds the cost of borrowing.
• Unproductive Debt: Borrowing to fund consumption or sustain inefficient government programs creates a burden without future returns.
• Argentina’s Situation: Given Milei’s libertarian platform, it is plausible that this debt is transitional, aimed at restructuring liabilities or stabilizing reserves to facilitate long-term reform. The article fails to provide evidence that the debt was used for unproductive purposes.
Without deeper analysis of the debt’s purpose, the criticism lacks substance. Austrians emphasize how debt is used, not merely its magnitude.
3. Claim: “Milei abandoned his campaign promise to abolish the central bank, revealing his inconsistency and statist tendencies.”Failure to shut down the central bank perpetuates inflation and economic instability, betraying Austrian principles.
Counterargument: Practicality and Transitionary Reform
• Institutional Realities: Austrian economists like Ludwig von Mises and Murray Rothbard acknowledge that dismantling entrenched institutions, such as central banks, requires gradual reform. Immediate abolition could cause severe disruptions, particularly in a fragile economy like Argentina’s.
• Strategic Transition: Milei’s shift likely reflects a pragmatic approach to avoid political backlash or economic collapse while setting the stage for eventual reform. This aligns with Austrian recognition of real-world constraints.
• Intermediate Goals: Stabilizing inflation, reducing deficits, and cleaning up central bank balance sheets could be necessary prerequisites to abolition.
While ideological purity is ideal, Austrian economics recognizes the need for strategic pragmatism. Milei’s decision may reflect a calculated approach rather than a betrayal of principles.
4. Claim: “Milei’s refusal to default on public debt perpetuates generational debt slavery.” A Rothbardian solution would involve defaulting on unsustainable debt, freeing Argentina from creditors.
Counterargument: Default Risks and Strategic Alternatives
•Austrian View on Default: Rothbard supports defaulting on unpayable debt to reset the economy. However, Austrians also acknowledge the severe consequences of default, including loss of creditworthiness, banking crises, and capital flight.
•Strategic Non-Default: Milei may have opted against default to maintain investor confidence, access global markets, and avoid immediate economic collapse. Austrian principles emphasize long-term market trust, which default might undermine.
•Restructuring as an Alternative: Using IMF loans or similar mechanisms to restructure debt, rather than adding to it, aligns with Austrian strategies of restoring solvency.
While default might align with Austrian theory in theory, the pragmatic approach of restructuring debt may better serve Argentina’s long-term stability.
5. Claim: “Raising taxes betrays Austrian principles and fuels government intervention.” Tax increases contradict Milei’s libertarian stance and illustrate his drift toward Keynesian policies.
Counterargument: Temporary Taxation for Transition
• Austrian Tax Critique: Austrians oppose taxes as they distort market signals and reduce individual freedoms. However, transitional taxation could be justified to stabilize fiscal deficits while implementing long-term reforms.
• Key Question: Are these taxes financing productive restructuring or perpetuating government inefficiency? If they aim to bridge short-term fiscal gaps while reducing long-term dependence, they align with Austrian pragmatism.
Conclusion: While inherently negative, taxation can serve as a transitional tool if it ultimately reduces government intervention.
6. Claim: “Shipping gold reserves to London for yield continues Argentina’s inflationary legacy.” Selling gold undermines Argentina’s monetary independence and security.
Counterargument: Strategic Asset Management
• Gold as Reserve Asset: Austrians value gold for its role as sound money and hedge against inflation. However, utilizing gold to improve liquidity or stabilize debt can be a strategic move if it reduces inflationary pressures or strengthens reserves.
• Argentina’s Unique Position: Given Argentina’s history of inflation and fiscal mismanagement, using gold to secure immediate stability could outweigh long-term theoretical losses.
While counterintuitive, gold sales could reflect a strategic move to restore fiscal stability in the short term, aligning with Austrian emphasis on sound monetary policy.
Milei’s Critique of Hoppe:
1. Personal Insults and Professional Criticism:
* Milei refers to Hoppe as an “imbecile,” arguing that although Hoppe may be knowledgeable in political philosophy and libertarian theory, his understanding of economic theory, particularly monetary policy, is flawed. Milei’s criticism extends to Hoppe’s proposition of shutting down Argentina's Central Bank without addressing the consequences of such a move.
1. Monetary Theory and Inflation:
* A central point in the debate is the treatment of the Argentine peso, which Milei emphasizes is a liability or "passive" of the Central Bank. This is a critical insight because many within the Austrian school of economics, including Hoppe, have failed to recognize that the money issued by central banks is, in fact, a debt obligation.
* Milei criticizes Hoppe for not understanding basic monetary principles, particularly the distinction between stocks and flows. In essence, if you shut down the Central Bank without addressing its liabilities (the pesos in circulation), the money would lose all value, resulting in hyperinflation.
1. The Condition of Transversality and Hyperinflation:
* Milei expands on a concept called the "condition of transversality" which, in simple terms, means that people demand money for its purchasing power, or "real balances." Over time, however, if people believe the money will lose its value, they will seek to spend it immediately rather than hoard it. This leads to inflationary pressures.
* Milei implies that Hoppe’s suggestion of closing the Central Bank without addressing the debt (the pesos) would lead directly to a collapse in the value of money, precipitating hyperinflation, where prices rise uncontrollably.
1. Strategic Political Considerations:
* Milei also critiques Hoppe’s approach from a strategic political perspective. He argues that Hoppe's proposal to create hyperinflation would have led to a massive social upheaval, similar to the crisis that led to the 2001 economic collapse in Argentina. According to Milei, such a scenario would have set the stage for a return of Peronism, with a shift toward left-wing policies and more state intervention, destabilizing the country for decades.
* Milei emphasizes that hyperinflation as a solution would have been politically suicidal, leading to the discrediting of libertarian ideas and the return of Peronist leadership, similar to how Néstor Kirchner's administration followed the 2001 crisis.
Key Points of Milei’s Defense:
1. Monetary Policy Understanding:
* Milei demonstrates a deeper understanding of monetary policy than Hoppe by acknowledging the role of the Central Bank as a crucial institution for managing a country’s money supply and the implications of shutting it down without resolving its liabilities.
1. Political Strategy:
* Milei shows shrewd political awareness, arguing that pursuing an inflationary policy as Hoppe suggests would have resulted in widespread social unrest and allowed Peronism to regain power, which would have been disastrous for the long-term future of Argentina.
1. Practical Considerations:
* Milei’s approach involves carefully managing the money supply and focusing on monetary reform in a way that avoids the kind of catastrophic outcomes Hoppe suggests. For example, Milei works to “clean up” the Central Bank’s balance sheet to manage the currency issue without triggering hyperinflation.
The debate between Milei and Hoppe underscores the tension between theoretical purity and practical application in economics and politics. Milei argues that while Hoppe's libertarian ideals may be valuable in certain contexts, his economic proposals are misguided and could have catastrophic consequences for Argentina. Milei not only defends his position with sound economic reasoning but also demonstrates political acumen in his strategy to avoid the mistakes that could have led to further instability in Argentina’s already fragile economy.
Milei’s response highlights the importance of understanding both economic theory and political strategy to navigate the complexities of governance. While Hoppe may offer theoretical insights on libertarian philosophy, Milei presents a more nuanced and pragmatic approach to managing Argentina’s economic crisis.
Strengths of Saifedean Ammous ’s opinion:
•It identifies key economic indicators (money supply, debt, and inflation) and critiques inconsistencies in Milei’s policies.
•The critique aligns with Rothbardian ideals of minimal government and sound money.
Weaknesses of tSaifedean Ammous ’s opinion:
•Lack of Context: The article fails to account for transitional measures necessary in a politically and economically unstable environment.
•Overemphasis on Ideological Purity: Austrian economics allows for pragmatism in achieving long-term goals, which the article overlooks.
•Insufficient Evidence: The critique assumes bad faith in Milei’s decisions without analyzing their underlying rationale.
While Saifedean Ammous ’s opinion raises valid concerns, it oversimplifies complex economic realities. From an Austrian perspective, Milei’s policies can be seen as transitional measures designed to stabilize Argentina’s fragile economy while laying the groundwork for market-oriented reforms. Dismissing these efforts as failures without understanding their context undermines the nuance of Austrian economics.
Based on my notes from the masterclasses and books by Professor @juanrallo , I believe that most of the points in this opinion article are highly debatable and not well-founded in the deep and complex reality of Argentina.
1. Claim: “Money supply measures under Milei have grown at astonishing rates (M0: 209%, M1: 133%, M2: 93%, M3: 123%), dwarfing previous administrations.”
This rapid money supply growth indicates Milei’s policies are fueling inflation and economic instability, undermining his free-market promises.
Counterargument: Context Matters in Money Supply Expansion
From an Austrian perspective, money supply expansion cannot be judged in isolation but must be contextualized:
• Productive Growth vs. Monetary Manipulation: Austrian economists emphasize that if money supply increases to match real economic growth (e.g., expanding markets or productive capacity), it does not necessarily lead to inflation. Conversely, if driven by government deficits and central bank printing without real backing in goods and services, inflationary distortions arise.
• Argentina’s Context: Historically, Argentina’s monetary expansions were driven by unproductive government spending and deficits. However, Milei may have strategically expanded the money supply to address pre-existing distortions, such as servicing unsustainable debt or stabilizing the economy during transition periods.
• Short-Term vs. Long-Term: Austrians argue that short-term monetary interventions can be justified during periods of systemic adjustment, provided they aim to enable market-oriented reforms.
The claim overlooks the nuanced reasoning behind money supply growth. The central issue lies not in absolute growth but whether it facilitates productive investment or exacerbates distortions.
2. Claim: “Public debt increased from $370 billion to $442 billion in six months (19.4%), signaling fiscal irresponsibility.” Milei’s borrowing mirrors the populist strategies of his predecessors and mortgages Argentina’s future.
Counterargument: Differentiating Productive and Unproductive Debt
Austrian economics distinguishes between debt types:
• Productive Debt: If debt is used to finance productive investments (e.g., infrastructure, reducing transaction costs, or stabilizing markets), it can lead to economic growth that exceeds the cost of borrowing.
• Unproductive Debt: Borrowing to fund consumption or sustain inefficient government programs creates a burden without future returns.
• Argentina’s Situation: Given Milei’s libertarian platform, it is plausible that this debt is transitional, aimed at restructuring liabilities or stabilizing reserves to facilitate long-term reform. The article fails to provide evidence that the debt was used for unproductive purposes.
Without deeper analysis of the debt’s purpose, the criticism lacks substance. Austrians emphasize how debt is used, not merely its magnitude.
3. Claim: “Milei abandoned his campaign promise to abolish the central bank, revealing his inconsistency and statist tendencies.”Failure to shut down the central bank perpetuates inflation and economic instability, betraying Austrian principles.
Counterargument: Practicality and Transitionary Reform
• Institutional Realities: Austrian economists like Ludwig von Mises and Murray Rothbard acknowledge that dismantling entrenched institutions, such as central banks, requires gradual reform. Immediate abolition could cause severe disruptions, particularly in a fragile economy like Argentina’s.
• Strategic Transition: Milei’s shift likely reflects a pragmatic approach to avoid political backlash or economic collapse while setting the stage for eventual reform. This aligns with Austrian recognition of real-world constraints.
• Intermediate Goals: Stabilizing inflation, reducing deficits, and cleaning up central bank balance sheets could be necessary prerequisites to abolition.
While ideological purity is ideal, Austrian economics recognizes the need for strategic pragmatism. Milei’s decision may reflect a calculated approach rather than a betrayal of principles.
4. Claim: “Milei’s refusal to default on public debt perpetuates generational debt slavery.” A Rothbardian solution would involve defaulting on unsustainable debt, freeing Argentina from creditors.
Counterargument: Default Risks and Strategic Alternatives
•Austrian View on Default: Rothbard supports defaulting on unpayable debt to reset the economy. However, Austrians also acknowledge the severe consequences of default, including loss of creditworthiness, banking crises, and capital flight.
•Strategic Non-Default: Milei may have opted against default to maintain investor confidence, access global markets, and avoid immediate economic collapse. Austrian principles emphasize long-term market trust, which default might undermine.
•Restructuring as an Alternative: Using IMF loans or similar mechanisms to restructure debt, rather than adding to it, aligns with Austrian strategies of restoring solvency.
While default might align with Austrian theory in theory, the pragmatic approach of restructuring debt may better serve Argentina’s long-term stability.
5. Claim: “Raising taxes betrays Austrian principles and fuels government intervention.” Tax increases contradict Milei’s libertarian stance and illustrate his drift toward Keynesian policies.
Counterargument: Temporary Taxation for Transition
• Austrian Tax Critique: Austrians oppose taxes as they distort market signals and reduce individual freedoms. However, transitional taxation could be justified to stabilize fiscal deficits while implementing long-term reforms.
• Key Question: Are these taxes financing productive restructuring or perpetuating government inefficiency? If they aim to bridge short-term fiscal gaps while reducing long-term dependence, they align with Austrian pragmatism.
Conclusion: While inherently negative, taxation can serve as a transitional tool if it ultimately reduces government intervention.
6. Claim: “Shipping gold reserves to London for yield continues Argentina’s inflationary legacy.” Selling gold undermines Argentina’s monetary independence and security.
Counterargument: Strategic Asset Management
• Gold as Reserve Asset: Austrians value gold for its role as sound money and hedge against inflation. However, utilizing gold to improve liquidity or stabilize debt can be a strategic move if it reduces inflationary pressures or strengthens reserves.
• Argentina’s Unique Position: Given Argentina’s history of inflation and fiscal mismanagement, using gold to secure immediate stability could outweigh long-term theoretical losses.
While counterintuitive, gold sales could reflect a strategic move to restore fiscal stability in the short term, aligning with Austrian emphasis on sound monetary policy.
Milei’s Critique of Hoppe:
1. Personal Insults and Professional Criticism:
* Milei refers to Hoppe as an “imbecile,” arguing that although Hoppe may be knowledgeable in political philosophy and libertarian theory, his understanding of economic theory, particularly monetary policy, is flawed. Milei’s criticism extends to Hoppe’s proposition of shutting down Argentina's Central Bank without addressing the consequences of such a move.
1. Monetary Theory and Inflation:
* A central point in the debate is the treatment of the Argentine peso, which Milei emphasizes is a liability or "passive" of the Central Bank. This is a critical insight because many within the Austrian school of economics, including Hoppe, have failed to recognize that the money issued by central banks is, in fact, a debt obligation.
* Milei criticizes Hoppe for not understanding basic monetary principles, particularly the distinction between stocks and flows. In essence, if you shut down the Central Bank without addressing its liabilities (the pesos in circulation), the money would lose all value, resulting in hyperinflation.
1. The Condition of Transversality and Hyperinflation:
* Milei expands on a concept called the "condition of transversality" which, in simple terms, means that people demand money for its purchasing power, or "real balances." Over time, however, if people believe the money will lose its value, they will seek to spend it immediately rather than hoard it. This leads to inflationary pressures.
* Milei implies that Hoppe’s suggestion of closing the Central Bank without addressing the debt (the pesos) would lead directly to a collapse in the value of money, precipitating hyperinflation, where prices rise uncontrollably.
1. Strategic Political Considerations:
* Milei also critiques Hoppe’s approach from a strategic political perspective. He argues that Hoppe's proposal to create hyperinflation would have led to a massive social upheaval, similar to the crisis that led to the 2001 economic collapse in Argentina. According to Milei, such a scenario would have set the stage for a return of Peronism, with a shift toward left-wing policies and more state intervention, destabilizing the country for decades.
* Milei emphasizes that hyperinflation as a solution would have been politically suicidal, leading to the discrediting of libertarian ideas and the return of Peronist leadership, similar to how Néstor Kirchner's administration followed the 2001 crisis.
Key Points of Milei’s Defense:
1. Monetary Policy Understanding:
* Milei demonstrates a deeper understanding of monetary policy than Hoppe by acknowledging the role of the Central Bank as a crucial institution for managing a country’s money supply and the implications of shutting it down without resolving its liabilities.
1. Political Strategy:
* Milei shows shrewd political awareness, arguing that pursuing an inflationary policy as Hoppe suggests would have resulted in widespread social unrest and allowed Peronism to regain power, which would have been disastrous for the long-term future of Argentina.
1. Practical Considerations:
* Milei’s approach involves carefully managing the money supply and focusing on monetary reform in a way that avoids the kind of catastrophic outcomes Hoppe suggests. For example, Milei works to “clean up” the Central Bank’s balance sheet to manage the currency issue without triggering hyperinflation.
The debate between Milei and Hoppe underscores the tension between theoretical purity and practical application in economics and politics. Milei argues that while Hoppe's libertarian ideals may be valuable in certain contexts, his economic proposals are misguided and could have catastrophic consequences for Argentina. Milei not only defends his position with sound economic reasoning but also demonstrates political acumen in his strategy to avoid the mistakes that could have led to further instability in Argentina’s already fragile economy.
Milei’s response highlights the importance of understanding both economic theory and political strategy to navigate the complexities of governance. While Hoppe may offer theoretical insights on libertarian philosophy, Milei presents a more nuanced and pragmatic approach to managing Argentina’s economic crisis.
Strengths of Saifedean Ammous ’s opinion:
•It identifies key economic indicators (money supply, debt, and inflation) and critiques inconsistencies in Milei’s policies.
•The critique aligns with Rothbardian ideals of minimal government and sound money.
Weaknesses of tSaifedean Ammous ’s opinion:
•Lack of Context: The article fails to account for transitional measures necessary in a politically and economically unstable environment.
•Overemphasis on Ideological Purity: Austrian economics allows for pragmatism in achieving long-term goals, which the article overlooks.
•Insufficient Evidence: The critique assumes bad faith in Milei’s decisions without analyzing their underlying rationale.
While Saifedean Ammous ’s opinion raises valid concerns, it oversimplifies complex economic realities. From an Austrian perspective, Milei’s policies can be seen as transitional measures designed to stabilize Argentina’s fragile economy while laying the groundwork for market-oriented reforms. Dismissing these efforts as failures without understanding their context undermines the nuance of Austrian economics.