From Janet Yellen’s ‘I was wrong’ in the US to Lorenzino’s ‘I want to go’ in Argentina

“I think I was wrong about the path inflation would take.”

That was the phrase of Yanet Yellen, secretary of the US Treasury, to Wolf Blitzer, journalist and presenter of CNN on “The Situation Room” last Tuesday. Blitzer reminded the economist on camera of her comments from 2021, that inflation posed only a “small risk” despite warnings from her colleagues.

“I was wrong”admitted the official.

In Argentina, the closest thing a Minister of Economy was to a statement of this nature was when Eleni Varvitsioti, a journalist from Financial Times, asked Hernán Lorenzino, Cristina Kirchner’s former Economy Minister, how much inflation was. The official stammered a “I want to go”.

Yellen is one of the leading voices in the global economy. It is a case that mixes the academic path with the professional one. A Ph.D. from Yale and professor emeritus at UCLA-Berkeley, her training is Keynesian. She was a student of James Tobin, Nobel Prize in Economics, and is married to George Akerlof, another Nobel Prize in Economics. He worked almost 30 years at the Federal Reserve (US Central Bank) and which she led between 2014 and 2018. She is now the secretary of the Treasury, equivalent to the position of economy minister.

“There have been large, unforeseen shocks to the economy that have sent energy and food prices skyrocketing, and supply bottlenecks that have severely affected our economy. that I, at the time, did not fully understand, but we recognize now”was the explanation that Yellen provided to CNN.

For the economist, the tensions on the costs derived from the war in Ukraine and the excess demand at the end of the pandemic will disappear over time, although she herself admitted that she believed that it would happen faster and now, then, we will have to waitin part, to the effect of the contractionary policy of the Fed.

Yellen was interviewed after President Joe Biden and her, in person, received in the Oval Room of the White House nothing more and nothing less than the president of the Federal Reserve, Jerome Powell. It was this week. A day earlier, Biden himself, in a letter in The Wall Street Journalsaid “The Federal Reserve has primary responsibility for lowering inflation” and two days later he asserted that “Inflation will not drop any time soon”.

The relationship between the presidents or the ministers of Economy, and the Central Banks, generally entails tensions. Especially when the monetary authority faces a process of raising rates as is happening now in most countries (a chapter that will be addressed with explicit scenes from the world and Argentina in the ‘Economy of Non-Fiction’ next Sunday so that you can reserve your copy). But in Argentina, the economy minister ‘is’ also pressured by inflation.

—I have a very simple question but it seems very complicated these days. How much is the inflation today in Argentina?— Varvitsiotis asked Lorenzino in April 2013. The journalist had traveled to the country to make a documentary about the 2001 crisis. The dialogue was filmed.

The Indec would measure inflation that year at 10.9%. The same level as in 2012. For the consultant Buenos Aires City it would give 26.6% (it had given 21.8% the previous year). The IMF had stopped publishing the data from the official body and had warned in its publications that the official statistics were questioned by private analysts.

—Official statistics record inflation month after month. The only public office with the technical capacity to measure statistics is Indec, which depends on the Ministry of Economy.

“But how much is it?”

— I believe that the index accumulated in the last twelve months is 10.2%.

—The IMF said that it will impose sanctions on Argentina for the publication of these statistics. What is it that you intend to do?

At that moment the camera focuses on the face of Lorenzino who stops his gaze on Varvitsiotis.

“Look, I insist again…” says the minister.

But quickly he stands up and turns his face back, looking for his assistant and saying: “Can I cut this?” He looks at Varvitsiotis again and almost begging he throws:

“Can I cut this for a minute?”

With the camera off but the microphones on, the minister launches:

“I want to go, yes, I want to go.” And besides, talking about statistics in Argentina is complex, okay? I prefer to stay with the last answer and not delve further into the subject.

After a while, the camera turns on again. Now a voice is heard, that of one of his assistants.

—Talking about inflation when we don’t talk to the Argentine media about it…

Yellen talks about inflation. And he admitted his error in forecasting. Lorenzino directly said “I want to go” when asked. And he complied. former minister today he lives in Puerto Madryn, where he set up a brewery. “I’m off the radar. I read the newspaper every day but I dedicate myself to something else”responded to Clarion for this note.