Posts Tagged ‘price controls’

Argentina has another nail in its coffin. Price controls in all supermarkets, to be active for 2 months. How much you bet that store shelves start looking empty within a week or two? Or less?

We remind the reader that price controls have never worked. Ever. Throughout all known history. Simply because they are incompatible with simple mathematical and physical reality. And each and every time they have been tried, they end up in shortages. Look no further for a recent example than the glorious Bolivarian revolution in Venezuela to see how this plays out.

“This time will be different!” they think. Well, they can’t really get honest information anymore because they tend to arrest those who tell the truth about how printing too much money results in the loss of value and credibility.

I’ve gone past the point where I wonder if they really believe that they are doing the right thing, and now it’s clear that they know they are destroying their country, and don’t care. And the Argentine people will cart Kristina through the streets in her golden chariot, cheering as she brings the whole place down on their heads.

Read more here.

Also interesting commentary on ZeroHedge, here.

Thanks to SustainableBob for the heads-up.

According to this announcement, the Ministry of Economy and Finance and the Association of Uruguayan Supermarkets are putting a freeze on prices for over 200 supermarket products, in more than 300 stores, “in order to fight inflation.” Not only will the prices be frozen but they will be discounted 10%.

Our old friend Lorenzo, who scared off just about all the big fish from investing in Uruguay with his proposal and subsequent law to tax foreign holdings of UY residents, now thinks he can fix the problem with price controls. Well, it’s not just his idea; it’s the Association of Uruguayan Supermarkets too. They are “volunteering” to the price freeze. Why, who knows. Probably a political stunt. If they can afford to freeze prices *and* discount them, maybe they’ve been doing a bit of scalping. I’ve suspected this for a while.

Let’s see… every single time, ever, in all of recorded history, whenever price controls are enacted, that creates shortages of those goods and hoarding by those who have them. Why sell when the government forces you to do it at a loss? Those products then suddenly find themselves missing and/or not produced in the first place.

I have a prediction, based on this evidence from all of recorded history: those 200+ items will simply vanish from supermarket shelves and not be replaced. Meanwhile whoever actually produces them will either fill warehouses with unsold merchandise, or just stop production.

I also have a better suggestion to fight inflation: stop inflating the currency supply. All it takes is to do nothing, which Uruguayans are experts at. Doing nothing requires no employees, no printing press, no ledger entries.

I have been wondering for a long time how Uruguayans can afford to feed themselves as these crazy inflated prices. Now we see firsthand. And I don’t think it’s lack of material– there have been absurd prices on things that are sourced and made in-country. My opinion as to the price absurdity: Uruguayan greed. Really there’s no need to charge US$5 for 100 grams of cheese when it’s made in your backyard. Or $5 for a bag of potato chips which contains maybe 5 potatoes which cost a whopping 10 cents apiece from field to fryer?

Thanks to GermanBob for the link.