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Note, that’s monthly inflation.
In the US we normally discuss annual or annualized inflation. So 4% monthly would be described as 60% annualized inflation. The actual YoY inflation in Argentina is 263%.
Along with the dollarization that is not being an actual peg, these feel like the usual sensationalist pieces created to drum up artificial support for Milei.
Exactly. The article never hides it’s monthly inflation tho, don’t know why to point specifically to that.
Anyways, Annual inflation curve has been going down steadily, that’s very positive for us down here. It peaked at 287% or something in April. And now we are looking at an annual future value of 125% this year and 45% next year
That’s dropping A LOT!
Also 4% monthly is very good for our standard of 18% monthly average from last year. Actually improvement has been great on that front, prices have been steady as well since at least 6 to 4 months ago
A year ago? That would have been impossible to dream about
The Argentine Peso is pegged to the US dollar.
Damn right, thanks for fact checking. I assumed they had a peg, but there is still a linear relation of 15 ARS/USD/month
Yeah, it seems to have worked as expected. Dollarization works to reduce inflation. Now it comes down to a choice: do you impose capital controls and leave monetary sovereignty to the US? (or something hybrid to facilitate import/export)
To some it isn’t obvious that free capital flow is a bad idea for multiple reasons.
From the Wikipedia link:
Option (a): A stable exchange rate and free capital flows (but not an independent monetary policy because setting a domestic interest rate that is different from the world interest rate would undermine a stable exchange rate due to appreciation or depreciation pressure on the domestic currency).
Option (b): An independent monetary policy and free capital flows (but not a stable exchange rate).
Option ©: A stable exchange rate and independent monetary policy (but no free capital flows, which would require the use of capital controls).
My money is on (a) since capital controls doesn’t align with his libertarian platform. Do we know how quickly he’d have to announce his intentions?
It sounds a bit like being a Eurozone country. Free capital flow, fixed exchange rate, no monetary policy. It can work well if you can keep trade balance, but you will be waiting to see what the Fed does and instead of inflation you may have wage stagnation or actual cuts to services to keep a balanced budget. It all depends on being able to export enough to have liquidity to run the economy?
The EU also took option (a) it says below so you’re dead on.
He doesn’t seem opposed to large cuts on services. Issue is if they can’t produce enough goods will they eventually run out of services to cut 👀.
Also seems like stagnation is already at play:
But Argentine wages have remained stagnant or declined, with the monthly minimum wage for regulated workers just $264 as of this month, with workers in the informal economy often paid less.
