Thursday, August 29, 2013

Yglesias Swings And Misses on Syrian Inflation

By, Chris Rossini

Slate's Matthew Yglesias, attempts to paint the rapid rise in prices taking place in Syria as something divorced from monetary policy. His headline reads: Inflation Lessons From Syria's Civil War—Hyperinflation is Never a Monetary Phenomenon.

Yglesias writes:
The larger lesson here is that this is the typical situation. Milton Friedman famously said that "inflation is always and everywhere a monetary phenomenon" which I believe was meant as a rejoinder to people who favored wage and price controls. And there's some truth to that. But really big inflations—the dread hyperinflations people warn about when they tell you Ben Bernanke is turning America into the next Zimbabwe—are really never monetary phenomena. They are the outcome of political crisis: Civil war, foreign conquest, reparations agreements, whatever. Putting a solid conservative central banker in charge of things in Damascus wouldn't change anything. The issue is that the country's real economy has been wrecked by violent conflict.
Taking Yglesias at his word, Helicopter Ben has nothing to fear. He can print with reckless abandon, because if hyperinflation takes place here in the U.S., it'll be 'outside factors' that cause the dollar's demise.

First of all: if 'outside factors' are the cause of hyperinflation in Syria, what's the deal with this guy?

Looks like helicopter money to me.

And The Wall Street Journal backs me up. They spoke with Syria's Deputy Prime Minister for Economic Affairs Kadri Jamil (my emphasis):
Mr. Jamil said the hyperinflation was a result of declining production because of the war and a sharp increase in money supply.

Increase the supply of money (no matter what the excuse: war, famine, welfare payments, etc.) and you decrease its purchasing power. Hyperinflation, or as Ludwig Von Mises called it "the crack-up boom," is monetary to the core.

Yglesias is wrong and The Federal Reserve still on the hook for the dollar troubles ahead.

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  1. Really? Not a monetary phenomenon? Reduce the quantity of money in circulation by a factor of 100 and see what happens...

  2. Yglesias the Jacobin:

    @michaelbd No, pretty easy for me. I take an old-school Jacobin-style line that religion should be stamped out.
    10:11 AM - 29 Aug 13

  3. Wait...hold mean this idiot is so fucking stupid that refuses to accept reality? Inflation is not a monetary phenomenon? Is he mentally ill or just a liar? Now I've heard everything.

  4. The quote specifically says a decline in production due to war which means it is not entirely due to a sharp increase in money supply. Is this a humor post or are you being serious here? Seems like you're doing a parody of Ron Paul.

  5. Didn't he also say Argentina was doing great? Lol