In a television interview about the federal deficit, the “expert” guest made the amazing observation that the nation’s debt wasn’t really a problem because all the government had to do was run the printing presses.

I was amazed that any so-called authority could possibly display such little understanding of economic principles and yet qualify as an “expert.” If nothing else, it’s stark testimony to the economic ignorance of the media, who willingly report such nonsense.

First, the U.S. government has been “running the printing presses” for years. The trend has taken a sharp turn upward since President Barack Obama has been in office, but it has been going on for years.

The problem is, no one seems to be paying any attention, particularly to the fact that “running the printing presses” is inflationary.

A good example of the consequences of such government action occurred in Argentina in the 1980s, when the rate of inflation escalated to more than 2,000 percent as a consequence of printing money.

A Wikipedia article noted: “Since the early 1990s, Argentina had relied on the IMF (International Monetary Fund) to provide the country with reliable access to credit and to guide its economic reforms. … GDP growth projections proved to be overly optimistic … lagging tax receipts prompted the government to freeze spending and cut retirement benefits … Standard & Poor’s placed Argentina on a credit watch, and a treasury bill auction required paying 16 percent interest (up from 9 percent … ) … the second-highest rate of any country in South America at the time …

“The government instituted an unpopular across-the-board pay cut of up to 13 percent to all civil servants and an equivalent cut to government pension benefits … triggering nationwide strikes and, starting in August, it paid salaries of the highest-paid employees in IOUs instead of money. This further depressed the weakened economy. The unemployment rate rose to 16.4 percent in August 2001 … and it reached 20 percent by December.

“Public discontent with the economic conditions was expressed in the nationwide election … Over 20 percent of voters chose to enter so-called ‘anger votes’ by returning blank or defaced ballots rather than indicate support of any candidate.

“By the end of November 2001, people began withdrawing large sums of dollars from their bank accounts, turning pesos into dollars and sending them abroad, causing a bank run. On Dec. 2, 2001, the government enacted measures … that effectively froze all bank accounts for 12 months, allowing for only minor sums of cash to be withdrawn, initially $250 a week.

“The freeze enraged many Argentines, who took to the streets of important cities, especially Buenos Aires. They engaged in protests … especially in 2001 and 2002. At first (they) were simply noisy demonstrations, but soon they included property destruction, often directed at banks, foreign-owned privatized companies, and especially big American and European companies.

“Confrontations between the police and citizens became a common sight, and fires were set on Buenos Aires avenues … a state of emergency (was declared), but the situation worsened, precipitating … violent protests … where clashes between demonstrators and the police ended up with several people dead and precipitated the fall of the government.” (Comment: We have already seen such protests in the United States, in the Occupy Wall Street demonstrations.)

“Inflation and unemployment worsened during 2002. By that time the … accumulated inflation since the devaluation was about 80 percent. … The quality of life of the average Argentine was lowered proportionally; many businesses closed or went bankrupt, many imported products became virtually inaccessible, and salaries were left as they were before the crisis.”

“Since the supply of pesos did not meet the demand for cash (even after the devaluation) complementary currencies kept circulating alongside them. Fears of hyperinflation as a consequence of devaluation quickly eroded their attractiveness …

“Several thousand newly homeless and jobless Argentines found work as … cardboard collectors … (It was) estimated 30,000 to 40,000 people scavenged the streets for cardboard to sell to recycling plants. Such desperate measures were common given the unemployment rate of nearly 25 percent.”

“The economic outlook was completely different from that of the 1990s … the devalued peso made Argentine exports cheap and competitive abroad and discouraged imports … The government encouraged import substitution and accessible credit for businesses, staged an aggressive plan to improve tax collection, and allocated large sums for social welfare, while controlling expenditures in other fields … The peso slowly rose, reaching a 3-to-1 rate to the dollar. Agricultural exports grew and tourism returned.”

“While unemployment has been considerably reduced (to around 8.5 percent after 2006), Argentina … failed to reach an equitable distribution of income (the wealthiest 10 percent of the population receives 31 times more income than the poorest 10 percent). This level of inequality compares favorably to levels in most of Latin America.”

“During the economic collapse, many business owners and foreign investors sent their money overseas. As a result, many small and medium enterprises closed due to lack of capital, thereby exacerbating unemployment. Many workers at these enterprises, faced with a sudden loss of employment and no source of income, decided to reopen the closed facilities on their own, as self-managed cooperatives.”

“A study … found out that … the wealth gap between the 10 percent poorest and the 10 percent richest among the population grew continuously since 2001, and decreased for the first time in March 2005.”

As philosopher George Santayana (1863-1952) noted: “Those who cannot remember the past are condemned to repeat it.”

How quickly we forget.

— Harris Sherline is a retired CPA and former chairman and CEO of Santa Ynez Valley Hospital. Click here to read previous columns. The opinions expressed are his own.