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“The government also adopted cost-cutting measures while inflation rates increased, allowing nearly 300 per cent annual inflation to erode real public spending

“The government also adopted cost-cutting measures while inflation rates increased, allowing nearly 300 per cent annual inflation to erode real public spending on wages and pensions.” That’s one way to do it.

ayakang31415 2y ago
Help me understand how the inflation has not slowed down in Argentina. I am looking at Argentina peso to usd chart over the past one year, and recent devaluation of peso is relatively flat compared to the declining rate a few months ago.
- mastax 2y ago
  Milei has committed to dollarization, so at some point pesos are likely to be worthless. The government probably will (?) offer to exchange pesos for dollars but the government doesn’t have many dollars so their rate is likely to be terrible. He has removed many of the controls which were intended to protect the peso.
  - guidedlight 2y ago
    The government would need to borrow enough USD for the exchange. So it would need to convince lenders, not an easy task. The entire process would also need to be secret, to preserve the value of the peso as much as possible.
    - skissane 2y ago
      He could also just go with a "soft dollarisation" in which USD is declared to be legal tender, alongside the peso–and then see what happens next. From what I heard (from Argentines I know), a lot of Argentine professionals desire to be paid by their employers in USD not peso, but that is technically illegal (not to say it doesn't sometimes happen anyway). Making that completely legal could be a step towards increasing use of USD and reducing use of peso in the Argentine economy.
IncreasePosts 2y ago
That's not unusual in Argentina, at least they have something to point to as a potential improvement in ongoing operations
chrisco255 2y ago
It was already doing it, inflation rate is plummeting though: https://twitter.com/Alphacast_/status/1783160177530638629 https://twitter.com/Alphacast_/status/1783160177530638629

ayakang31415 2y ago

Help me understand how the inflation has not slowed down in Argentina. I am looking at Argentina peso to usd chart over the past one year, and recent devaluation of peso is relatively flat compared to the declining rate a few months ago.

mastax 2y ago
Milei has committed to dollarization, so at some point pesos are likely to be worthless. The government probably will (?) offer to exchange pesos for dollars but the government doesn’t have many dollars so their rate is likely to be terrible. He has removed many of the controls which were intended to protect the peso.
- guidedlight 2y ago
  The government would need to borrow enough USD for the exchange. So it would need to convince lenders, not an easy task. The entire process would also need to be secret, to preserve the value of the peso as much as possible.
  - skissane 2y ago
    He could also just go with a "soft dollarisation" in which USD is declared to be legal tender, alongside the peso–and then see what happens next. From what I heard (from Argentines I know), a lot of Argentine professionals desire to be paid by their employers in USD not peso, but that is technically illegal (not to say it doesn't sometimes happen anyway). Making that completely legal could be a step towards increasing use of USD and reducing use of peso in the Argentine economy.

IncreasePosts 2y ago

That's not unusual in Argentina, at least they have something to point to as a potential improvement in ongoing operations

chrisco255 2y ago

It was already doing it, inflation rate is plummeting though: https://twitter.com/Alphacast_/status/1783160177530638629 https://twitter.com/Alphacast_/status/1783160177530638629