Re: Keynesian Christmas!-- and the collapsiing international

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

The situation in Argentina is now beyind economics. It is now a full blown
political crisis.  It is similar to the fall of the Weimar Republic.  Time will
tell if history reppeats itself in Argentina.

Henry C.K. Liu

Alan Cibils wrote:

> First, it now seems (not official yet, but almost) that the "argentino"
> will never see the light of day.
>
> Interestingly, it is government officials themselves who fed the
> expectations that the argentino would be worth less than the peso (or
> dollar, they are still pegged). This, in part, contributed to Friday
> night's "cacerolazo" (street protests where people bang pots and pans).
> Some government officials had come out and said that people would be able
> to get their money out of the banks in argentinos, which effectively meant
> that they would be getting less than the full amount. This rumour, the long
> lines and poor attention in banks, and the appointment of some of the Menem
> era's emblems of corruption to the cabinet fueled people's frustration and
> anger, resulting in another large, spontaneous protest.
>
> Alan
>
> At 09:25 AM 12/30/2001 -0500, Alan G. Isaac wrote:
> >On Fri, 28 Dec 2001, Warren Mosler wrote:
> > > The new currency will function just fine if it is acceptable for
> > > payment of taxes.
> >
> >Thought experiment:
> >A country introduces two currencies, both of which
> >are acceptable in the payment of taxes but one of which has a higher
> >expected rate of inflation.  (Keep things simple: only these point
> >expectations matter for the asset decision.)  Who will hold the high
> >inflation *currency*?
> >
> >As always, expectations are a crucial determinant of asset holding.
> >
> >Cheers,
> >Alan Isaac
>
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