Monday, March 26th 2012 - 08:59 UTC

Printing money does not lead to inflation, argues Argentine central bank president

The president of Argentina’s Central Bank (BCRA), Mercedes Marcó del Pont, stressed the importance of the recently approved bank’s charter reform and denied that printing currency leads to the creation of an inflationary state “since inflation is rooted in other causes”.

Marcó del Pont: tensions with prices must be looked on the supply side and the external sector”.

“The new charter will provide the government with more tools to deepen the development model and to give priority to investment credit” said Marcó del Pont in a Sunday interview with two pro-government local newspapers Página 12 and Tiempo Argentino.

The banker added that “it is totally false to say that printing more money generates inflation, price increases are generated by other phenomena like supply and external sector’s behaviour”.

In that sense, the BCRA president explained that “the priority right now is the investment credit, because it is one of the issues in which Argentina is still with insufficient coverage. We look for credits of longer-term investment plans at reasonable rates with the return of these investment projects.”

“We discard that financing the public sector is inflationary because according to that statement the increase in prices are caused by an excess of demand, something we do not see in Argentina. In our country the means of payment are adjusted to the growth of demand and tensions with prices must be looked on the supply side and the external sector”.

Marcó del Pont remarked that criticism of the way the state is funding itself “have a clear ideological condiment, it is that or either the public sector has to make adjustments or go abroad to get credits and/or loans”. She added that the debate is very similar to that referred to “the use of BCRA reserves to pay for sovereign debt”.

Under the new charter of the bank the primary and main task of the BCRA will not be only to preserve the value of the currency but must also include inflation, jobs, economic development with social fairness, financial stability and the need to coordinate with government policies.

“We’re recovering the sovereign capacity to formulate and implement economic policy”, said Marcó del Pont who anticipated some pictures will be coming down from the bank’s hall of fame “beginning with Milton Friedman.”

The banker explained that the criteria to determine the optimum level of reserves will be determined in coming days and will involve several existing and new elements. Under the new BCRA charter funds above the ‘optimum level’ can be used for other purposes such as development financing.

“The formula will include issues referred to imports, short term foreign debt payments, the evolution of bank deposits and accumulation of foreign currency assets”, said Marcó del Pont who forecasted that in the first quarter the sum will be below two billion dollars but for the whole year the sum is estimated in 9 billion or more.
 

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1 McClick (#) Mar 26th, 2012 - 09:18 am Report abuse
I am a Mercedes & BMW expert not Economy !
2 British_Kirchnerist (#) Mar 26th, 2012 - 09:24 am Report abuse
“criticism of the way the state is funding itself “have a clear ideological condiment, it is that or either the public sector has to make adjustments or go abroad to get credits and/or loans” ” She's right, you only have to look at the likes of Greek Yoghurt on here to see the global finance agenda behind so much of the Cristina/Argentina bashing. Ideological, and a discredited ideology at that.
3 Idlehands (#) Mar 26th, 2012 - 09:37 am Report abuse
So the CFK government is now making up it's own economic theory too. Why not print trillions of pesos and throw a party?
4 Teaboy2 (#) Mar 26th, 2012 - 10:10 am Report abuse
Printing Money, doesn't lead to inflation.....Errr what loppy juice has she been drinking? Sure in argentina the main course for inflation is other issues, but printing money all the time adds to the inflation no matter what. Your basically pouring money into the economy, and flooding it with currency, this leads to the currency being less valuable and higher prices as a result. But off course it depends on how much is printed and whether it is enough to flood the economy with printed money or not.
5 Welsh Wizard (#) Mar 26th, 2012 - 10:40 am Report abuse
2 British_Kirchnerist. I understand that you like the socially inclusive policies of the present government but please don't fall into the trap of thinking that everything the government does is good. I talk with family members regulary about the administration and whenever I talk about the basics of economics with them (like printing money leading to inflation) they come up with the usual stuff about how that only affects captitalist countries and that Argentina has a “new model” to which these fundamental pillars just don't apply. It isn't true and you can see from everything that is happening that the economic situation is controlling the government, not the other way round.
6 GreekYoghurt (#) Mar 26th, 2012 - 11:02 am Report abuse
All I'm going to say is, I'm not sure which economics book she read, but I'm f*cking sure it's not the 10 I've read.

From a psychological standpoint, she's some lackey put in place by a authoritarian crypto-fascist government, so she's not even very persuasive when it comes to communications...

She reeks of FAIL.
7 DouglasBlammo (#) Mar 26th, 2012 - 11:10 am Report abuse
Another Georgetown university alumni ?
Brilliant ! Someone help it tie it's shoes.
8 briton (#) Mar 26th, 2012 - 11:31 am Report abuse
not so long ago, in a far distant galaxy,
most of the argie blogers on here, were openy comdemming the west , like America of printing money,
how stupid and pathetic it was.

and now they are doing the same,
so what has changed there minds.
9 Britishbulldog (#) Mar 26th, 2012 - 12:34 pm Report abuse
No wonder Argentina is in so much trouble if this is the way they think and act. The loopy loons have actually taken over the loopy hospital. Nothing more to say on the matter exept to send my best wishes for a speedy recover.
10 yankeeboy (#) Mar 26th, 2012 - 12:38 pm Report abuse
I guess they are probably embarrassed and crawled back under their rocks. Even Think and OGara my two favorite loons don't post any longer! Maybe they can't afford internet any longer after paying the 500% increases in their other utilities?
11 thorpeman (#) Mar 26th, 2012 - 12:40 pm Report abuse
The only way it wouldn't impact inflation is if you didnt import any commodities ie you were a net exporter of everything including cars & electrical items because as sure as night follows day it devalues your currency in the same way as a company with a million shares doesn't increase its value by issuing another million of them. I'm afraid when it comes to Argentina the lunatics have taken over the asylum!
12 ManRod (#) Mar 26th, 2012 - 12:48 pm Report abuse
“Printing money does not lead to inflation” and “death to the ones who insist that the earth isn't flat!”
13 Truth_Telling_Troll (#) Mar 26th, 2012 - 01:19 pm Report abuse
@2

You fool! Just because feathers float softly towards the ground when dropped from 10 stories of your balcony, doesn't mean you will float softly to the ground if you jump! Just because another system has shown flaws does not mean everything CFK does is right.

Tell me, if you give me a gold coin to hide and I give you a sheet of printing paper with an “$” sign on it and I tell you “bring this back to me and you can take your gold coin”, we know the value of that paper.

What if I later decide to give 10 more sheets to other people and tell them to come back later and they'll get something... I still have that same ONE gold coin. Or if they also give me gold coins, but I decide to go on a world vacation and spend half of the coins.

You come back one day and discover there are 10 others that are asking for for their coins... is your sheet of paper worth the same now as when I gave it to you? Think hard before you answer.

Hint: this bitch is the laughing stock of Argentina this morning, read the newspapers and the reader comments!

www.losandes.com.ar/notas/2012/3/25/marco-pont-falso-decir-emision-genera-inflacion”-632110.asp
14 GreekYoghurt (#) Mar 26th, 2012 - 01:30 pm Report abuse
Georgetown University seems to be about living Jesuit (Catholic) values. Apparently that includes not knowing a great deal about the basics of economics when you leave, saying stuff which blatantly isn't correct, and then running a central bank.

Hmm... fun for all the family!
15 xbarilox (#) Mar 26th, 2012 - 02:29 pm Report abuse
@ 2 Don't worry, time will tell, and we will see.
16 St.John (#) Mar 26th, 2012 - 03:01 pm Report abuse
Sra. Marcó del Pont is quite right. Printing money does not lead to inflation.

It's printing too much money (i.e. money not balanced by a similar increase in productivity) that leads to inflation - she just forgot to address that aspect of the subject.
17 GreekYoghurt (#) Mar 26th, 2012 - 03:06 pm Report abuse
@16 what you did there was say she's right, and then you said she's wrong. Then you made an excuse for her being wrong by correcting her being wrong, saying 'oh she forgot'. You showed your cognitive need to have her be right by aligning her incorrectness with an explanation that suited your dissonance, thereby creating balance.

The issue is when you tried to project this dissonance righting onto other people through a comment board and made yourself look like a liar and a tit.
18 DanyBerger (#) Mar 26th, 2012 - 03:57 pm Report abuse
@ GreekYoghurt

She is right because printing money per se does not create inflation meanwhile the money supply is in balance with the size of a given economy.

For example it is like to say that expending money creates debt, while you expending is in balance to your earnings and savings there is not problem. You will not fall into debt.

This Idea that printing money creates automatic inflation comes from Milton Friedman's thesis.

Well if that would be true USA will be a super hyper-inflation state since 1970 when Nixon abandoned the gold standard convertibility and USA since then start to print money like crazy.
19 Think (#) Mar 26th, 2012 - 04:05 pm Report abuse
16 St.John

Mercedes and you are quite right, printing money does not necessarily lead to inflation.
And she did address that and many other aspects of the subject.
It's just not been reported by the main newspapers.
God knows why?
20 British_Kirchnerist (#) Mar 26th, 2012 - 04:07 pm Report abuse
#5 Well your relatives are right that its a problem with capitalism, not “economics” in general. Thats why I welcome each nationalisation and every step to make the economy less capitalist, so that it can be made progressively easier to develop the economy in the people's interests. The other thing is that this isn't simply a question of whether the government's policies are right or wrong, there are other actors here and the more the government tries to make the economy serve the people, the more the special interestsand the 1% will try to “make the economy scream” as Nixon and Kissinger said of Allende's Chile. So its a struggle, but I know what side I'm on
21 Retroqqq (#) Mar 26th, 2012 - 04:22 pm Report abuse
@18 DanyBerger

is correct
22 ElaineB (#) Mar 26th, 2012 - 05:00 pm Report abuse
Why have a free capitalist society when you can have CFKC's state capitalist society?
23 briton (#) Mar 26th, 2012 - 05:37 pm Report abuse
Well to be truthful,
It matters not what she does at this moment in time.
But
If you guys nothing of printing all that money,
Then print some for us would you .
A billion would do

.
24 TipsyThink (#) Mar 26th, 2012 - 05:39 pm Report abuse
( 22 )

Dear mate Elaine....

Please tell us ,where are you from in India ?

Don't be shy telling from India who will be a superpower also has Jaguar right now.....
25 Truth_Telling_Troll (#) Mar 26th, 2012 - 05:42 pm Report abuse
British_Kirchnerist, you so avoided my reasoned argument. Why?

You Fool!

...and yet Another Victory of reason, logic, and intellect, brought to you by the TTT™ (all rights reserved).

Till la proxima fools!
26 Fido Dido (#) Mar 26th, 2012 - 06:26 pm Report abuse
Printing money does not lead to inflation, as long it goes to productive areas of the economy that procuduces wealth to balance the budget. Although, you cannot print money forever and specially not only use it to keep payments of government jobs (that don't create wealth at all) in tact above official inflation. That will lead to a dog tail dog situation, who will eventually kill itself.

Printing money does lead to inflation if it doesn't enter productive areas, for example bailing out the zombie banks and other corporations who continue to enrich themself at the cost of the taxpayers.
27 GreekYoghurt (#) Mar 26th, 2012 - 06:38 pm Report abuse
I love how you're all suddenly answering the questions for her and filling in the important parts (required increase in productivity) on her behalf without her actually saying it. She's clearly an imbecile when it comes to the basics of economics, and you Argies are all pretending she's not.

We're not talking about currencies linked to the gold standard, we're talking about FIAT currencies.

Printing money in isolation, because that's what she's talking about, is an increase to the money supply. Given you have a finite amount of things to possibly buy with that money you're increasing demand. If you increase demand the value of that commodity rises, and hey presto you have inflation.

She gave no mention of an associated productivity increase, and let's face it, Argentintians are as productive as a slug... just look at your failed $42 a barrel oil strategy. That's dripping with productivity increases, that is. Or your farming.... et cetera, et cetera, et cetera

HEREIN ENDETH THE LESSON

I'll now let you all get back to pretending she was right... because let's face it, you cannot cognitively deal with the fact she was wrong.
28 briton (#) Mar 26th, 2012 - 06:41 pm Report abuse
Money money money
www.youtube.com/watch?v=WCkOmcIl79s

www.youtube.com/watch?v=qMxX-QOV9tI
you either have it
or you don’t lol.
.
29 British_Kirchnerist (#) Mar 26th, 2012 - 07:28 pm Report abuse
#19 Reporting without context, from the corporate mainstream press....who'd have thunk it?!

#25 You really are atroll, you seem to hate my Queen and the British equally, that'll make you popular round here =)
30 yankeeboy (#) Mar 26th, 2012 - 07:29 pm Report abuse
This stupid women was put in after the previous BCRA President defied CFK. She is a CFK minion and dumb as she is crooked.
Argentina is the only country to have a room full of the World's finance ministers burst out laughing because their FM said the normal rules of economics don't apply to Argentina! Yeah neither does gravity.
31 GeoffWard2 (#) Mar 26th, 2012 - 07:35 pm Report abuse
The UK has a similar issue with monetary balancing, and had adopted a 'printing money solution called 'Quantitative Easing'.

Quantitative easing may cause higher inflation than desired if the amount of easing required is overestimated, and too much money is created.

Sounds like printing money is hard to disentangle from inflation.
32 GreekYoghurt (#) Mar 26th, 2012 - 07:42 pm Report abuse
@30 You know you're not very good when you need all the Le Camping commenters on a news-site to tell people what you 'were going to say' or what you 'meant by the statement'. It just shows a terrible ability to communicate facts.

To be fair to Argentina they have already rewritten the rules by following Iran and North Korea back into a prehistoric 'barter' system of trade. In this system you only pay companies you buy things from in soy-oil rather than return to the credit markets.

Let's see how that one works out for them?

(answer: it's not working out for them, all the oil companies said no)
33 yankeeboy (#) Mar 26th, 2012 - 08:43 pm Report abuse
BTW all of this new peso printing is going to the VPs company which is currently under investigation....you could not make this stuff up if you tried!
It has got to be so embarrassing to be Argentinian!
34 GreekYoghurt (#) Mar 26th, 2012 - 09:07 pm Report abuse
@33 I don't think they feel any kind of guilt of embarrassment about anything they do. It's all fairly sociopathic. With regards to printing money and then sending it to the VPs company as a stimulus, they'd probably just tell you that it's meet and right so to do.

Funny.
35 Xect (#) Mar 26th, 2012 - 10:53 pm Report abuse
Hi Tobias, I see you are back as Truth_telling_troll. You didn't manage to leave for very long did you?

n economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy.A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.

Inflation's effects on an economy are various and can be simultaneously positive and negative. Negative effects of inflation include a decrease in the real value of money and other monetary items over time, uncertainty over future inflation may discourage investment and savings, and high inflation may lead to shortages of goods if consumers begin hoarding out of concern that prices will increase in the future. Positive effects include ensuring central banks can adjust nominal interest rates (intended to mitigate recessions),[5] and encouraging investment in non-monetary capital projects.

Economists generally agree that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply.Views on which factors determine low to moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities, as well as to growth in the money supply. However, the consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth.
36 St.John (#) Mar 26th, 2012 - 11:58 pm Report abuse
@17

My mistake, I shall try to write it more slowly.

# Sarcasm starts here.
Sra. Marcó del Pont is quite right.
/ End of sarcasm.

# Marcó del Pont spin follows.
Printing money does not lead to inflation.
/ Marcó del Pont spin ends.

# What Marcó del Pont should have said begins.
Printing too much money [parenthetical note: as Argentina is presently doing] (i.e. money not balanced by a similar increase in productivity) leads to inflation.
/ End of what Marcó del Pont should have said.

# Irony starts here.
- she just forgot to address that aspect of the subject.
/ End of irony.

# Implicit note begins.
When the expression “just forgot” is used in connexion with a - in common language self evident, but in economy patently false - statement as “Printing money does not lead to inflation” it is used ironically to show that the statement in question is meant to mislead the uninformed reader.
/ End of implicit note.

PS When you point your index finger at others, do note that three fingers point back on yourself.

PPS I love tits, especially 36D and 38DD
37 robhood (#) Mar 27th, 2012 - 01:08 am Report abuse
Consider this: recently a group of physicists (Opera) announced that subatomic particles known as neutrinos had traveled faster than the speed of light in a 457-mile trip through the earth!! If confronted with Albert Einstein's theory of relativity there would be no credible model to explain the phenomenon. So they'd better be wrong....
That may happen in other fields....
So what if Ms Marcó del Pont is right?
If Argentinean government let her to do it, ok....go ahead!!...Future will show results...
Man is always inclined to deny what is opposite to all he knows...
38 Ernie4001 (#) Mar 27th, 2012 - 01:28 am Report abuse
I´ve heard many things, but this.. is the most fantastic ( and laughable) argument that anyone can invent. Let´s see how long till 3 digits inflation rate.
39 GreekYoghurt (#) Mar 27th, 2012 - 08:49 am Report abuse
@38 (answer: 7 months)
40 Dr Carrizal (#) Mar 27th, 2012 - 09:35 am Report abuse
Have a look at her family input into Argentina's economic and politic situation, pre-independence!

lanic.utexas.edu/project/etext/llilas/tpla/8714.pdf

Hellooo... guess where all ze real loot eez going...
41 El Supremo (#) Mar 28th, 2012 - 03:16 am Report abuse
What a very sad, sad state of affairs. With what appears to be a totally manic and ignorant leadership class in charge in Argentina, I am sad to conclude that there appears to be no hope whatsoever for this country that has SO MUCH potential. The worst thing that ever happened to Argentina and the southern cone, generally, was that the British failed to make it a colony when they had the chance. Instead, they seem to be stuck in a cesspit of Spanish-inspired madness.
42 Skåre (#) Mar 30th, 2012 - 11:24 am Report abuse
There is no hope for Argentina's economy when their central bank president doesn't even have a basic grasp of economics.
43 Skaftafell (#) Mar 31st, 2012 - 12:19 am Report abuse
Wow. It seems that they don't know what happened when Germany printed a whole freaking load of money. The value went straight down the drain. Somehow, it doesn't seem so surprising that the Argentine inflation rate is so high.
44 robhood (#) Apr 01st, 2012 - 02:37 am Report abuse
You guys and yr commets are incredible. I guess that what you say is what it's called a self-assurance commet issued from a comfortable armchair and pouring a good long drink without any responsibilities on the matter...It seems it's impossible for an economist to be wrong since the knowledge learnt at school about that matter does not allow any other possibility, no room for other practice or whatever . Funny, again, 'cuz Mr Albert Einstein once said that imagination is more important than knowledge...but of course you all are out of this, aren't you? Imagination is out of your vocabulary. Economics is economics the way you learnt it, but if somebody comes up and says something different....he will be tied up to the electric chair!!!
But ok, just for fun's sake, let's say that as Mr Saul Bellow once said when he quoted the Jewish proverb “A fool can throw a stone in a pond that 100 wise men can not get out”, it sounds like the 100 “unwise” men were economists.....

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