What are you talking about? This is what Krugman actually had to say about Argentina in 2001:
"Argentina entered the new century in straits similar to those of a disquieting number of European counties today. With the peso shackled to the dollar, it had (as Greece, Spain, and the other so-called PIIGS on the periphery of the Eurozone do today) what appeared to be an irremediably overvalued currency sapping the competitiveness of its exports, along with mounting difficulties servicing its debt as tax receipts dwindled in the face of recession. The counsel of the IMF was naturally for austerity. The Argentines should maintain dollar convertibility—that is, a pricey currency—and trim public expenditure in order to cover interest payments. . . . [Yet] austerity in the face of gigantic indebtedness . . . yielded precisely the devaluation and default it was supposed to prevent. If the Argentine experience is truly as exemplary as the IMF once maintained, the story can’t be a heartening one in light of the turn toward austerity today being undertaken in Europe and threatened in the US."
In contrast, the Forbes article is entirely unclear. It fails to explain the key point that the IMF was not just advocating depreciation, but was pushing for the sort of restrictive government austerity that has been forced on Greece.
"it’s also difficult to see quite what is unorthodox or heterodox about following the standard IMF prescription for a country in such problems. Default, renegotiate the debt burden and devalue the currency to try and spark an export boom."
Krugman's point is simple and stands. A simple comparison of Argentina's GDP growth post-2001 with Greek growth post-2008 shows this plainly enough: one economy recovered quickly and the other is still sinking.
The actual situation is very different from the 2001 situation.
In 2001 we had ~10 years of 1%-2% annual inflation with the “convertibility” plan, that fix the exchange as $US1=$ARS1. So the dollar was 30% undervalued. But during that time, there was very little money emission. Some provinces had to make their own money, it was technically a bond, but it looked like a bill and was used like a bill. One of the few successful case was the Patacón ( http://en.wikipedia.org/wiki/Patac%C3%B3n_(bond) ). It was successful, because it was emitted by the biggest province, it was one of the last bonds created and it lasted only for a few years. Most of the other province bond started with a $X1=$ARS1=$US1 but after a few years the exchange rate became something like $X1=$ARS0.7=$US0.7, and the public employees of the province were paid in the bonds, as if still $X1=$ARS1=$US1.
Now we have a 20% - 30% annual inflation. Interestingly, the dollar is 30% undervalued. But the emission is so height that we used all the latin alphabet to name the series, and more emission will be translated directly to more inflation.
I wouldn't disagree with any of these points, but I'm not sure what any of them have to do with Krugman's comments about the relative merits of austerity in 2001.
"Argentina entered the new century in straits similar to those of a disquieting number of European counties today. With the peso shackled to the dollar, it had (as Greece, Spain, and the other so-called PIIGS on the periphery of the Eurozone do today) what appeared to be an irremediably overvalued currency sapping the competitiveness of its exports, along with mounting difficulties servicing its debt as tax receipts dwindled in the face of recession. The counsel of the IMF was naturally for austerity. The Argentines should maintain dollar convertibility—that is, a pricey currency—and trim public expenditure in order to cover interest payments. . . . [Yet] austerity in the face of gigantic indebtedness . . . yielded precisely the devaluation and default it was supposed to prevent. If the Argentine experience is truly as exemplary as the IMF once maintained, the story can’t be a heartening one in light of the turn toward austerity today being undertaken in Europe and threatened in the US."
In contrast, the Forbes article is entirely unclear. It fails to explain the key point that the IMF was not just advocating depreciation, but was pushing for the sort of restrictive government austerity that has been forced on Greece.
"it’s also difficult to see quite what is unorthodox or heterodox about following the standard IMF prescription for a country in such problems. Default, renegotiate the debt burden and devalue the currency to try and spark an export boom."
Krugman's point is simple and stands. A simple comparison of Argentina's GDP growth post-2001 with Greek growth post-2008 shows this plainly enough: one economy recovered quickly and the other is still sinking.