February 04, 2013

Weather Report, Argentina

Forecast: Freezes, with a strong potential for food shortages and even more inflation.

Argentina freezes prices to break inflation spiral

Argentina announced a two-month price freeze on supermarket products Monday in an effort to break spiraling inflation. The price freeze applies to every product in all of the nation's largest supermarkets — a group including Walmart, Carrefour, Coto, Jumbo, Disco and other large chains. The companies' trade group, representing 70 percent of the Argentine market, reached the accord with Commerce Secretary Guillermo Moreno, the government's news agency Telam reported.

The laws of economics make some unambiguous predictions about the results of price freezes in inflation-plagued markets. We saw them in action here in the United States during the Nixon and Carter years. There will be shortages. And sooner rather than later, as people start stocking up to avoid the inevitable shortages.

None of which will break the inflationary spiral being experienced by Agrentina, which is solely the result of their printing-press spending.

UPDATE: Tyler Durden says it in more detail, and some caveats for America.