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Rise on Argentine agrifood export taxes decreed, effective immediately

Sunday, December 15th 2019 - 10:58 UTC
Full article 33 comments

Argentine President Alberto Fernández signed a decree whereby export taxes on soy, wheat, corn and beef go up. The decree became available Saturday as it appeared in the Official Gazette and is effective immediately. Read full article

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  • imoyaro

    Wonderful news! The attack on farmers large and small begins again, just like under the last Narcokleptocracy!

    Dec 15th, 2019 - 01:02 pm - Link - Report abuse +1
  • Chicureo

    It worked wonderfully last time, so why not commit the same stupid idea again...

    Dec 16th, 2019 - 02:33 am - Link - Report abuse +1
  • Enrique Massot

    As part of one of his first acts of government, the government of Mauricio Macri eliminated most export taxes, with the exception of those on soy. Later in his term, in need of funds, he reinstated them.

    The idea is to make pay those who can, to start reverting back to a more balanced wealth redistribution. Macri and his merry gang operated like a reverse Robin Hood, transferring resources from the lower-income sectors so that a few chosen could make a kill.

    In spite of the prognostications of the two experts above, a conflict such as that of 2018 is not likely to happen again.

    In another topic, it is funny how a MP story will now report on speculations about the constitutionality of a presidential decree when Macri made abundant use of the same instrument -- such as modifying by decree the law of amnesty for offshore capitals to include government officials' family members -- without the mainstream media even noticing it.

    Dec 16th, 2019 - 05:21 am - Link - Report abuse -2
  • pgerman

    In just one week, they have reinstated part of the economic scheme in force until year 2015. Exchange altered rate, “tourist dollar”, restrictions on capital movements, restrictions on access to foreign currency, increased taxes on production and exports, lower rates of interest (rates lower than inflation), tariff barriers, etc. All that remains for them is to disseminate fraudulent official inflation figures and to declare (in a patriotically and festive environment) unilaterally the “default”. Hyperinflation “in sight” and economic failure assured.

    I wrongly imagined that Alberto Fernandez was going to be smarter and would take advantage of all “capital” (low fiscal deficit, high dollar, many exports, excellent international relations with the developed world) inherit from the previous government. I was wrong. In a few days he has begun to destroy everything ....

    Dec 16th, 2019 - 01:33 pm - Link - Report abuse 0
  • Think

    Ermmmmm...

    I would advice them brainwashed foreigners to inform themselves before EMBARRASING themselves...

    The aforementioned Export Taxes were reintroduced more than 15 MONTHS AGO by the former Macri administration...:
    https://www.cronista.com/economiapolitica/Retenciones-la-soja-pagara-ahora-el-285y-los-cereales-el-11-20180903-0078.html

    As you can read on the provided link..., In September 2018..., soybeans paid 28.5% and wheat & maize paid 11%...
    Today..., December 2019..., the tax has been regulated to soyabeans paying 30.0% and wheat & maize pay 12%...

    Where is your biiiig problem me dear brainwashed..., uninformed foreigners...?

    Dec 16th, 2019 - 02:30 pm - Link - Report abuse -2
  • pgerman

    @Think

    I see that you have returned and with the same customs as in the past. Clearly, just as the same characters that have returned to power, with the same ideas and vices, you haven't changed at all in four years either.

    Retentions are taxes that penalize production and exports. Argentina needs, precisely, to produce and export. Mauricio Macri eliminated almost all export taxes but, erroneously (I have no problem criticizing Mauricio Macri's government measures that I didn't like) he reapplied some them, but, let's admit, he reapplied them in a very moderately way.

    This new government has started very badly, isolated internationally (only three Heads of State were present at the assumption ceremony) and applying the same “battery” of economic measures that kept the country in default and delayed for 12 years.

    I had expected much more from Alberto Fernandez. Clearly, I was wrong.

    Dec 16th, 2019 - 03:24 pm - Link - Report abuse 0
  • DemonTree

    Aw, are you disowning poor pgerman? The headline saying it was a RISE in taxes and not a reintroduction should have been a big clue. The figures given in the article are a bit different, but the taxes probably changed since 2018.

    I love the fact students in Argentina will be learning law from their moonlighting President, though. Hope he leaves time to sleep!

    Dec 16th, 2019 - 03:26 pm - Link - Report abuse -2
  • Pugol-H

    This Argy Gov does seem much more measured and less frequent, in its statements about “The Islands”, when compared to that rabid lunatic CFK.

    As for the economy, it really doesn’t seem to matter who is in power, they have rampant inflation and corruption (I’m told).

    Maybe it takes longer than four years to curb inflation, if you don’t have a Margret Thatcher???

    Has Argentina ever not had “high Inflation”, in living memory???

    Dec 16th, 2019 - 05:29 pm - Link - Report abuse 0
  • DemonTree

    “Has Argentina ever not had “high Inflation”, in living memory???”

    The peso was held at parity with the USD in the 90s. But we all know how that ended up...

    Dec 16th, 2019 - 08:46 pm - Link - Report abuse 0
  • Enrique Massot

    Before any evaluation can be done of ongoing measures taken by new Argentine president Alberto Fernandez, ineffable pgerman is already criticizing them as intrinsically “baaaaad.”

    ”Exchange altered rate, “tourist dollar”, restrictions on capital movements, restrictions on access to foreign currency, increased taxes on production and exports, lower rates of interest (rates lower than inflation), tariff barriers, etc.“ notes our esteemed commentator.

    Pgerman does not realize that the neoliberal fiesta is finished. President Fernandez wasn't elected to continue the disastrous economic policies of former president Macri -- he was elected to do something else and that is exactly what's he is doing.

    For example:

    ”Restrictions on capital movements.” One of the most acute consequences of Macri's dismantling of regulations was massive capital flight. No more of that.

    Even if AF makes mistakes, it will be difficult to do as bad as Macri did.

    Dec 16th, 2019 - 09:23 pm - Link - Report abuse -1
  • Tarquin Fin

    @DT

    Oh yes, low to non existent inflation was the norm before the Arg. Central Bank was created in 1935. Still it was ok until it was nationalized in 1946. It's obvious what the main cause of inflation in Argentina is.

    @Enrique,

    I kind of support what you are saying. It is too early to judge the results of AF policies. But please stop talking about neo-liberalism. WTF is that?
    Implying that Macri's administration had something 'liberal' about it is like peeing in your fridge. F+++ing bizarre!

    Dec 16th, 2019 - 11:20 pm - Link - Report abuse 0
  • Enrique Massot

    TF

    I acknowledge that there is much discussion about whether defining Macri government as neo-liberal is appropriate. I use it as a close-enough characterization. Some say gives too much stature to a government team made of a group of friends working to get business opportunities for themselves, family and associates.

    Neo-liberalism as a concept is ill-known because neo-liberalism has remained low profile as a doctrine -- it's more difficult to fight an ideology if you don't know it.

    Neoliberalism has been losely defined as free market trade, deregulation of financial markets, individualisation, and the shift away from state welfare provision. All traits present in Macri's administration.

    Dec 17th, 2019 - 04:47 am - Link - Report abuse 0
  • DemonTree

    TF
    According to Wikipedia Argentina was on the gold standard until 1929, this probably had something to do with the lack of inflation back then.

    Neoliberalism is what Pgerman supports, and he seems to think Macri's government was practicing it. But whatever Macri did obviously wasn't what was needed for growth.

    Dec 17th, 2019 - 07:34 am - Link - Report abuse 0
  • Think

    Sr. Massot...

    Mr. Tarquin Fin is evidently too young an inexperienced to remember the Argie 1976/1982 Neo-liberal economic period that immediately after its failure and demise was deemed Non-Neo-Liberal by them Neo-Liberals...

    Mr. Tarquin Fin is apparently still too young an inexperienced to remember the Argie 1989/1999 Neo-liberal economic period that immediately after its failure and demise was deemed Non-Neo-Liberal by them Neo-Liberals...

    Mr. Tarquin Fin seems even to be too young an inexperienced to remember the Argie 1999/2001 Neo-liberal economic period that immediately after its failure and demise was deemed Non-Neo-Liberal by them Neo-Liberals...

    Mr. Tarquin Fin would do good in remembering our last Argie 2015/2019 Neo-liberal economic period and not repeat the same old Neo-Liberal story of deeming their blatant failures as Non-Neo-Liberal...

    To end..., an auld (favourite of mine) Mexican film clip that quite nicely pictures the elasticity of doctrinaire definitions...
    https://m.youtube.com/watch?v=DWxoCjI7di8&t=33s

    Enjoy...

    Dec 17th, 2019 - 08:36 am - Link - Report abuse -1
  • DemonTree

    No true neoliberal...

    Naturally they are all disclaiming Macri now, but I wondered what the neolibs were saying earlier; when he had been in power long enough to judge his policies, but before the writing appeared on the IMF's wall. It's surprisingly hard to find anything, so apologies for the Portuguese:

    https://www.mises.org.br/Article.aspx?id=2645

    To be fair to the Austrian Schoolers, it's definitely not unqualified support. Wonder if any leader can be neoliberal enough for them?

    Also found this, which is long but an interesting analysis:

    www.nybooks.com/daily/2019/12/09/is-another-dose-of-peronism-the-cure-for-macri-economics/

    And this paragraph reminded me strongly of Think:

    “There was a snobbery toward Macri throughout his term, particularly from the political elite, that it’s important to distinguish from the resentment toward Macri so common among poor Argentines. In Argentina, this elite traditionally goes to high-powered public high schools and public universities, whereas Macri’s circle largely went to private Catholic schools and universities, institutions more noted for their rugby prowess than their academic rigor. Indeed, one of the dismissive terms for Macri and his close advisers was “Newman Boys,” after the prep school Macri attended.”

    It goes on to say about 'the cultural and artistic elite':

    “Both in private and in the pages of the “Cristinista” daily, Página/12, there was much hysterical talk about Macri’s victory representing a return of the military dictatorship. This Buenos Aires-based intellectual circle, always jealous in guarding its privileges, is inordinately full of itself—the only other country that comes close is France.”

    It does talk about politics in the rest of the article. ;)

    Dec 17th, 2019 - 01:14 pm - Link - Report abuse 0
  • Tarquin Fin

    DT,

    There is just economic liberalism (also understood outside of economics as an individual's life choices). It is a philosophy that should apply to every individual in society, not just the well educated elites.

    The periods that Think bring forth are not examples of liberalism in any sense. These are just examples of free market and economic liberties only for the “friends” and “friends of friends”.

    Gold pattern or not, there is just one thing that destroys the credibility of money.

    I hope you understand what money really is. Sometimes it is sad to see that people at large just have no idea about this. Not that imply that you don't. Just talking about our populist friends in this thread.

    Dec 17th, 2019 - 03:12 pm - Link - Report abuse 0
  • Think

    Uhhhhhhhhhhhhhhhhhh....
    Tarquin is going conceptual now...!
    For a humble auld man like me..., money is Fiat...
    I reckon that for a bright young comet as Tarquin..., it's Ford...

    Chuckle..., rechuckle... requeterecontrachuckle...

    Dec 17th, 2019 - 03:55 pm - Link - Report abuse -1
  • DemonTree

    TF
    If these policies have been promised several times but never implemented correctly, maybe it's time to accept they never will be? Much like how no communist country was ever run as Marx intended - some ideas simply conflict with human nature.

    I've never studied economics, I don't think I do understand what money really is. To me it seems like a shared conspiracy; money has value as much and as long as people in general believe it has. The only difference with gold is that governments do not control the supply of that; it would be equally useless if society really collapsed. When Spain and Portugal brought back tons of gold and silver from the new world, it caused massive inflation and trashed their economies the same way printing money does. If traders lose confidence then the value of money falls, except this stuff is all controlled by algorithms nowadays so there's no one at the wheel...

    Dec 17th, 2019 - 04:18 pm - Link - Report abuse 0
  • Tarquin Fin

    Think, I'm glad you've done your homework. You are applying yourself lately. Congrats.

    The classical conception of money, taken as an act of God as in “fiat lux” or let there be light.
    In other words something you take value from because it is ordered by an authoritative figure: Whatever the king says it is. The “Real” in “Estate”.

    An act of faith if you will?

    That was probably the case when people used tally sticks to record transactions. Hardly would you realize that the currency has been debased at some point. Whatever the king says it is. Blindly obey.

    Enter the modern era. Not to mention the most recent internet revolution.

    Faith no more.

    So you see DT, no matter how much gold or silver you hold when people have second thoughts about the King's behavior. As peasants would start to notice a price increase because the burgueoise have probably noticed half a gram of silver missing from the royal coins here and there.

    Nowadays, money is just a measurement of value in general and by extension a country's currency would reflect its economic worth (unless of course you happen to be represented by the world's reserve currency).

    If you are serious about your measurements, then people will trust your paper notes.

    If you are a crook, not even your own kids will take your promises for real.

    BTW, there is always someone at the wheel unless you are referring to crypto.

    Dec 17th, 2019 - 05:05 pm - Link - Report abuse 0
  • Pugol-H

    Well, if both economic models have been tried several times before, and never really worked, just been slightly less bad, how about trying something different and expecting a different result?

    Probably need to do something about corruption as well, from the sound of it, that doesn’t seem to change whoever is in power, only who the money goes to.

    Dec 17th, 2019 - 05:12 pm - Link - Report abuse 0
  • Tarquin Fin

    PH

    One thing is for sure. Marxism -or whatever substance it is diluted into- has never worked and will never work. Marxism goes against human nature.

    There are a number of systems that have more or less worked. (quite obviously not the Arg. one).

    Corruption is only possible when you enable discrete power. Corruption also thrives the bigger the attack surface you expose to it. Hence, big state, big corruption.

    Dec 17th, 2019 - 06:15 pm - Link - Report abuse 0
  • DemonTree

    TF
    When a king or government debased the currency, that would've caused inflation just like printing money today?

    As for measuring a country's economic worth, it is a bit like the stock market. Share prices are supposed to represent a company's value, and to some extent they do, but they also go up and down randomly and regularly form bubbles. Exchange rates behave similarly. And in both cases a lot of the decisions to buy or sell are made by algorithms with no human supervision, forming a feedback loop. That is what I mean by no one being at the wheel.

    PH
    Macri was supposed to be something different. It didn't work out.

    Dec 17th, 2019 - 08:10 pm - Link - Report abuse 0
  • Tarquin Fin

    DT,

    1. Yes, debasing metallic coins causes inflation just like printing money (when noticed)

    Yes, you are right, most forex trading nowadays is done by machines (high frequency trading). However every HF trader does have an strategy in place -that the traded can adjust at will - and there are limits in volume per transaction (in order to avoid pump & dump or similar schemes).

    Stocks are a very different thing from sovereign currency. Yet your analogy is quite good. You usually vet stock based on a company's balance sheet and you judge a currency based on the issuer (Central Bank) balance sheet.

    However, when it comes to currency, Central banks have political pressures on them that companies don't (directly).
    Also a currency is supposed to be a store of value, not an investment (riskier), so currencies and stock play different economic roles.

    A Central Bank's only role should be to defend the currency´s value when it plays the role of legal tender for a nation or economic zone.. It is also the issuer of credit (make its own money) and setting interest rates. Companies can't make its own money (thank God!) or set it's own interest rate.

    Dec 17th, 2019 - 11:32 pm - Link - Report abuse 0
  • DemonTree

    ”Yes, debasing metallic coins causes inflation just like printing money (when noticed)“

    Does it have to be noticed? I thought printing money caused inflation sort of automatically, by there being more money around? And getting more silver or gold suddenly would also have the same effect?

    ”Also a currency is supposed to be a store of value, not an investment (riskier)”

    Traders do treat them as investments though, which must distort the value aspect. Like when the UK was forced out of the ERM because international currency speculators were dumping the pound; suddenly it was valued much lower, but the economy wasn't any different from one day to the next, the amount of goods and services produced didn't change. In fact, the economy came out of recession afterwards thanks to lower interest rates and the weaker pound boosting exports.

    But why is it that inflation continued under Macri and then suddenly worsened? Especially at the beginning, Argentina had continued high inflation but the peso didn't fall against other currencies, which seems counter-intuitive.

    Also, Pgerman complained above about interest rates lower than inflation, which the UK has had for a good part of the last 10 years. So what's the problem with that?

    Dec 18th, 2019 - 11:20 am - Link - Report abuse 0
  • Pugol-H

    Perhaps the economy did not improve under Macri, because corruption did not improve under Macri.

    Probably no system will work very well being bled dry at every joint.

    Conventional wisdom was that inflation was caused by more and more money (or more and more dilute Gold/Silver coins) chasing fewer and fewer goods.

    Thatcher pushed the BOE interest rate up high, until she had taken enough money out of the economy that inflation fell rapidly.

    Painful business I can tell you, if it wasn’t for N. Sea oil revenues she may well not have been able to do it.

    Dec 18th, 2019 - 05:49 pm - Link - Report abuse 0
  • Tarquin Fin

    DT,

    Sorry to leave you hanging. Nice of you to keep posting. It's become a worthy debate.

    “Does it have to be noticed? I thought printing money caused inflation sort of automatically, by there being more money around?”

    It is mainly noticed by the financial markets as they obviously see an unusual expansion in credit that has got nothing to do with an increment in savings (the concept of money out of thin air). This event is passed down to big businesses who raise prices. When devalued currency reaches consumers it is too late. People notice but they can't do anything about it. That's why I think financial education should be started in elementary school.

    “ ... In fact, the economy came out of recession afterwards thanks to lower interest rates and the weaker pound boosting exports.

    .... Argentina had continued high inflation but the peso didn't fall against other currencies, which seems counter-intuitive. ...”

    Don't forget about these factors:
    + GBP is a healthier currency
    + UK has a mostly industrial and diversified economy

    Your currency could somehow have swings but there is a bigger diversified economy that will find ways to stabilize things. Argentina quite bluntly just depends on more primitive things such as a good harvest. Also a good harvest depends on imported staples such as agro chemicals and engineered seeds. That's why a devaluation can boost exports on one hand but increases cost for producers on the other. Also keep in mind that most of our industry (automotive, steel, aluminum, mining) also depends highly on imports.

    The value of the peso is sometimes kept artificially (by central bank intervention) high to mostly mitigate the cost of imports.

    “ ... interest rates lower than inflation ... ” May be pgerman is referring to a way to hedge against devaluation without having to put your savings in USD. Ideally any country would like to have its people's savings in the currency it deems as legal tender.

    Dec 18th, 2019 - 08:12 pm - Link - Report abuse 0
  • DemonTree

    Tying the ARS to the USD produced a vastly bigger explosion than linking sterling to the Deutsche Mark via the ERM, but Argentina's economy did also recover pretty dramatically afterwards, which makes it seem like bad policies rather than a fundamental problem. UK economy is mostly services, and the post-referendum fall in the pound did little to boost exports. Argentina also has the large agricultural sector so theoretically should get more benefit from a cheaper currency, but that doesn't seem to have happened. Must be the reliance on imports you mentioned. D'you think Macri was deliberately trying to keep the peso high against the dollar back in 2016-2017? Seems like a gradual fall would have been better.

    Also, why didn't the government start subsidising factories making pesticides and agricultural equipment, and funding agricultural research instead of building electronics factories? Or maybe they did?

    As for keeping savings in Pesos, that's definitely a matter of confidence and you'd have to be crazy to trust your money wouldn't be inflated away or frozen by the government. It's chicken and egg, as long as people keep buying dollars it's bad for the peso and gives them continued incentive to buy dollars.

    Dec 19th, 2019 - 11:03 am - Link - Report abuse 0
  • Tarquin Fin

    DT

    “D'you think Macri was deliberately trying to keep the peso high against the dollar back in 2016-2017?”

    Most definitely yes.

    “Also, why didn't the government start subsidising factories making pesticides and agricultural equipment, and funding agricultural research instead of building electronics factories? Or maybe they did?”

    Agricultural technology is being developed and researched but the main problems is that whatever you develop on top of the current state of the art (pesticides and seeds mostly) have royalties which must be honored in USD.

    “Tying the ARS to the USD produced a vastly bigger explosion than linking sterling to the Deutsche Mark via the ERM,”

    Having a “cheap” dollar as it has been termed here also produces a false sense of prosperity in consumers. Everything is cool until reserve levels become critical and we either default or depreciate, or both things combined.

    This is an Argentine trait after all since the public here has never trusted the BCRA for good reasons. You need at least 20 years of orthodox monetary policies to restore our faith in the peso. Even so, people will save in dollars if given a chance. If exchange limits are imposed, people will turn to the “blue” illegal market to buy dollars with a 20-25% premium. Also, quite logically, people is turning to bitcoin as well. Anything but the peso because we know all to well who are the scumbags that manage the monetary policy around here.

    Crisis - Recovery - Cheap dollar - Recession - Devaluation - Crisis ... etc

    Every time this happens implies a whole new generation of impoverished people since neither the state, big protected businesses or union partisans will pay for the crash. Wages' purchase power plummets ... and I guess you can figure it out from there on.

    Dec 19th, 2019 - 03:26 pm - Link - Report abuse 0
  • Think

    “Crisis - Recovery - Cheap dollar - Recession - Devaluation - Crisis - Recovery... etc.......” huhhhh...?

    Well put me dear Pichón de Pipjo Resucitado....

    Now why don't you try to..., using a bit of intellectual honesty..., to tell us...:

    1) Which were the time periods of economical recovery during the..., lets say..., 45 years...?

    2) Who was at the helm during those few periods...?

    3) Eureka...!

    Dec 19th, 2019 - 04:25 pm - Link - Report abuse 0
  • DemonTree

    TF
    Sorry for the late reply, I was out yesterday.

    I remember reading that the high Peso was a side effect of Macri's borrowing, but not whether it was an intended one. I still think it would have been better to let it depreciate gradually, rather than fall off a cliff later, and that sounds like what you are saying too.

    “...royalties which must be honored in USD”

    Unless you're China and just ignore the patents.

    It's unfortunate, especially if the system meant to encourage innovation ends up stifling it.

    “You need at least 20 years of orthodox monetary policies to restore our faith in the peso.”

    Brazil manged to fix inflation and the Real has been relatively stable for over 20 years now, through a succession of different governments. Couldn't Argentina do the same?

    “Crisis - Recovery - Cheap dollar - Recession - Devaluation - Crisis”

    There was a recovery under Menem, wasn't there, after the Peso was fixed to the dollar? But that led to the Peso being overvalued and the consequences you listed.

    Dec 20th, 2019 - 09:28 am - Link - Report abuse 0
  • Tarquin Fin

    DT

    “Brazil manged to fix inflation and the Real has been relatively stable for over 20 years now, through a succession of different governments. Couldn't Argentina do the same?”

    I go back to my previous idea. Argentines are in love with the USD.
    If you talk to a Brazilian right now, they will not show that exaggerated concern for the Real-USD rate. We on the other hand have always distrusted our own institutions. As en ex Uruguayan president put it “Argentines are all thieves”. We are really aware who we are dealing with and basically politicians (and or the military when in power) have up to this day failed to restore that confidence.

    “There was a recovery under Menem, ..”
    Watch out for expressing yourself like this or you will experience the wrath of some posters. Menem is the devil, didn't you know? :-P

    Certainly, when Menem decided to implement the peso peg to the dollar, the terrible toll of inflation was lifted.
    Things started to get ugly as that peg implied an increased cost of Argentine labor costs (both industrial and services). The big mistake was not the peg, but the failure of Menem to cut down on public spending and corruption. Also due to his peronist background, he was somehow impeded to push for a relevant labour reform. A substantial overhead of labour costs is the Unions' share (when you meassure it, they get from 45 to 60 % of the workers' income) their corruption (dealing behind the table with big bizz) and a whole lot of assorted perks that this true oligarchy is used to.

    Dec 20th, 2019 - 09:31 pm - Link - Report abuse 0
  • DemonTree

    Not much point asking today, you'd need to speak to a Brazilian back in ~1990 to see if they were concerned about the dollar rate. But perhaps they did deal with inflation differently there, by indexing wages and savings to inflation rather than trying to convert everything to dollars. Brazilian politicians appear to be even bigger thieves than the Argentine ones, so that can't be what makes the difference.

    “The big mistake was not the peg, but the failure of Menem to cut down on public spending and corruption.”

    It still would have become a problem eventually. Just look at the effect of the Euro on the weaker economies like Spain and Italy, and most of all Greece. For similar economies a shared currency can work, but Argentina is in no way similar to the US.

    As for corruption, it seems impossible to get rid of, because whoever is supposed to find and stop it can also be corrupt.

    Dec 20th, 2019 - 10:43 pm - Link - Report abuse 0
  • Tarquin Fin

    Honestly, back in 1990 I was more concerned with what to do with the meager 7000 australes that I got paid under the table for working as an apprentice in IT. It wasn't until later in the decade that I traveled twice to Brazil for vacations that I realized that Brazilians would demand tourists to pay with Reais instead of dollars. This is what I refer to as a trait, I've know a ton of Brazilian people either at work or just occasional acquaintances and many of them just told me that they started to worry about the dollar when they traveled to or had to live in Argentina. Certainly an attitude like that helps to stabilize a currency.

    I see a fundamental problem with indexing an economy. This is just my point of view, but I wouldn't keep savings that need to be indexed. Usually savings are not indexed unless you put your money in remunerated deposits or invest it somehow. Wage indexation also happens when high inflation has already eroded your purchasing power so wage increases by indexation are merely the carrot in front of the jackass.

    There is a point in which you will have to agree as a society to put a hard stop to everything and have people commit to not raise prices, demand wage increases and stop getting money out of the local financial system. Alberto is doing that right now. I wish and pray for this to work (as we have had this kind of plans before in the country: 1973, 1985 and 1988. the first and the last ending in hyperinflation blasts).

    So I think the discussion is not about indexing everything or freezing but about what the plan will be after the truce.

    “It still would have become a problem eventually. Just look at the effect of the Euro on the weaker economies like Spain and Italy, and most of all Greece. For similar economies a shared currency can work, but Argentina is in no way similar to the US.”

    Yes of course, the peg should have only been just a temporary treatment drug. The problem was that we became addicted to it.

    Dec 22nd, 2019 - 06:34 pm - Link - Report abuse 0

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