Argentina’s newly elected president thinks dollarization will help his inflation-plagued economy

Fiscal shock therapy...? 

Argentinas inflation rates are soaring over 140% and prices almost doubled last year. The peso’s losing value fast, and after decades of runaway inflation, Argentines have lost hope in their leaders’ ability to stabilize the economy. 

Will Milei’s plan to call in Congress to review an XL package of fiscal reforms work?

https://www.wsj.com/world/americas/argentinas-new-president-wants-to-adopt-the-u-s-dollar-as-national-currency-86da3444

#The Most Important Thing

Argentina’s New President Wants to Adopt the U.S. Dollar as the National Currency

The Most Important Thing

Argentina’s newly elected president thinks dollarization will help his inflation-plagued economy  Fiscal shock therapy...?   Argentinas inflation rates are soaring over 140% and prices almost doubled last year. The peso’s losing value fast, and after decades of runaway inflation, Argentines have lost hope in their leaders’ ability to stabilize the economy.   Will Milei’s plan to call in Congress to review an XL package of fiscal reforms work?  https://www.wsj.com/world/americas/argentinas-new-president-wants-to-adopt-the-u-s-dollar-as-national-currency-86da3444  #The Most Important Thing

Sam Mendoza

I don’t think so, do you?

https://mostimportant.the.select/posts/ennbppz?linkId=yajj

I don’t think so, do you?  https://mostimportant.the.select/posts/ennbppz?linkId=yajj

I strongly doubt this for 2024

the IMF is unenthusiastic an...

[2024 Group Prediction] Will Argentina dollarise i...

Jerome Cody

Inflation in Argentina continues to be rampant, as the newly elected president Javier Milei has begun implementing the first policies. Milei has vowed to make radical changes in the government structure and has even promised to dissolve the Central Bank. Expect more news this week on how increasing prices during the holidays affect public perception of his economic policies.

https://www.ft.com/content/3bba65ac-6e4f-4f0a-a80e-8bde8735dcff

Inflation in Argentina continues to be rampant, as the newly elected president Javier Milei has begun implementing the first policies. Milei has vowed to make radical changes in the government structure and has even promised to dissolve the Central Bank. Expect more news this week on how increasing prices during the holidays affect public perception of his economic policies.  https://www.ft.com/content/3bba65ac-6e4f-4f0a-a80e-8bde8735dcff

feels like a coin toss - every fix has its catch…Dissolving its central bank and switching to USD means Argentina would lose the ability to pull economic levers like printing money and controlling rates, leaving it to the US Fed. Since America’s central bank prioritizes America’s economy, monetary policy could be misaligned, and Argentina’s recessions could actually worsen. But if Milei’s reforms succeed, they could become a playbook for other countries flirting with hyperinflation. And as the greenback softens, Argentina’s dollarization could help bolster the dollar’s status as the world’s reserve currency.

Argentina’s size means it would need in the neighborhood of $30B to swap pesos for bucks — and it won’t find that under the cushions (it would likely need a loan).
Speaking of that… Argentina is the IMF’s largest debtor and has missed targets on its $44B lOU. Milei’s gov’t is expected to need to borrow more, but it’s TBD if it can.

Argentina has the third-largest economy in Latin America and the 22nd biggest in the world, with major exports like oil, agricultural products, and lithium (used in EVs). 

Besides the US, just four sovereign countries are dollarized: Ecuador, El Salvador, Panama, and Timor-Leste. Dollarization helped steady their economies, but they’re a lot smaller than Argentina. 

In the country of nearly 46M people, sudden economic measures could spook citizens (think: bank runs) and rattle global markets.

No pesos, no problems?…

Argentina has the third-largest economy in Latin America and the 22nd biggest in the world, with major exports like oil, agricultural products, and lithium (used in EVs).   Besides the US, just four sovereign countries are dollarized: Ecuador, El Salvador, Panama, and Timor-Leste. Dollarization helped steady their economies, but they’re a lot smaller than Argentina.   In the country of nearly 46M people, sudden economic measures could spook citizens (think: bank runs) and rattle global markets.  No pesos, no problems?…

Nate

Argentina’s size means it would need in the neighborhood of $30B to swap pesos for bucks — and it won’t find that under the cushions (it would likely need a loan). Speaking of that… Argentina is the IMF’s largest debtor and has missed targets on its $44B lOU. Milei’s gov’t is expected to need to borrow more, but it’s TBD if it can.

Sam Mendoza

A group of likeminded people in The Most Important Thing are talking about this.