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Thursday, 23 January 2014

Argentina's Consumer Price Inflation, Money Supply and the Collapsing Peso

Reuters today reports that, according to some estimates, consumer prices in Argentina surged "more than 25% in 2013". At time of writing, the Argentinian peso has plunged 15% "amid growing worries about the country's foreign-exchange reserves" according to the WSJ and as the central bank apparently has pulled its support of the country's currency.

Could the crazy expansion of the money supply during the past decade have anything to do with the culmination of today's events perhaps (yes, is the answer)?

FRED Graph