Tyler Cowen: uncertainty

Transcript context

…Yeah, okay. We were talking before we started recording about Argentina and the reforms they’re trying there. And they’re trying to dollarize because the dollar is more stable than their currency. But this raises the question of why is the dollar so stable? So we’re also a democracy. Right. But the dollar seems pretty well managed. What is the larger explanation of why monetary policy seems well managed in the US? Well, US voters hate inflation, mostly for good reasons, and we have enough wealth that we can pay our bills without having to inflate very much. And 2% has been stable now for quite a while. It’s an interesting question, which I cannot answer, and I have looked into this and asked smart people from Argentina, why does Argentina in particular have recurring waves of hyperinflation? Is there something about the structure of their interest groups that inevitably, recurringly leads them to demand too much? I suppose, but there are plenty of poor, badly run countries that don’t have hyperinflation. African countries historically have not had high rates of hyperinflation, haven’t had high rates of inflation. Why is that? Well, maybe they don’t capture enough through seigniorage. For some reason, currency holdings aren’t large enough, there’s some kind of financial repression, I don’t know, but it’s very hard to explain why some of these countries, but not others, go crazy with the printing press. And this is maybe a broader question about different institutions in the government where I don’t understand enough to evaluate their object-level decisions. But if you look at the Supreme Court or the Federal Reserve or something, just from a distance, it seems like they’re really well-run, competent organizations with highly technocratic, nonpartisan people running them.…

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