Sri Lanka crisis

[Mekon]

Don't worry it will never happen here. The cANCer poeskoppe will just rename stuff and all will be ok.

 

[konfab]

ECONOMYNEXT – Sri Lanka’s inflation has hit double digit and is just behind Pakistan after two years of activist monetary policy from February 2020 which has been described as ‘modern monetary theory’, despite having a pegged exchange rate.

Pakistan also has a ‘flexible exchange rate’ with contradictory policy involving foreign reserve collection while printing money to target a policy rate, which has led to currency crises in quick succession in Sri Lanka.

Sri Lanka began the current round of inflationary policy around August 2019 buying back bonds from commercial banks with printed money.

From February 2020 Sri Lanka started injected large volumes of money into the banking system in what was later described as Modern Monetary Theory, a throwback to theories proposed by classical Mercantilists like John Law and later Keynesians.

Sri Lanka’s 12 month inflation hit 12.1 percent in 2021 measured by the official Colombo Consumer Price Index.

https://economynext.com/sri-lanka-inflation-soars-as-modern-monetary-theory-demon-roars-89324/

Honk, turns out printing money doesn't solve any economic problems, contrary to the theory beloved by the Paul Krugmans of the world.