>Javier Milei of Argentina was elected with three mandates: to reduce the inflation rate by stopping monetary creation, to reduce the fiscal deficit to eliminate the reason money was created, and to reform the economy to make it more prone to growth. The three mandates are interrelated. The strategic question is in which order the mandates should be implemented.
>Yet, as soon as he won, it became evident that his priorities had changed. He appointed Luis Caputo, Secretary of Finance, Minister of Finance, and President of the Central Bank in the administration that started the current crisis as the Minister of the Economy. Milei and Caputo put in place a new strategy that began with the transfer of the legislative functions to the executive branch, the immediate elimination of the fiscal deficit, and the liberalization of the economy. Dollarization was left for the future.
>Ocampo left. The peso has remained in place and has become a pivotal instrument to stabilize the economy. Or so was the idea.
>Milei and Caputo used the peso for the same purposes as their predecessors: to extract a tax from the population without passing it through Congress. The tax they imposed on the holders of peso assets, wages, and pensions was massive: a devaluation of 50% and an increase of inflation to 232%, the highest in 32 years. The monthly inflation increased from 12.8% in November to 25.5% in December. Milei had attacked his predecessors for using the currency for this purpose as robbery, yet he is doing the same. In a television interview, he warned he would do this but tried to justify it, asserting that the result would be the end of inflation. The people most affected by this terrible tax (taking away 50% of the purchasing power of your deposits in pesos, your wages, and your pensions in one go) were the salaried people and the pensioners, which is, the middle class, or, more precisely, the former middle class.
>On February 22, 2024, Veronica Smink of the BBC [which does cast doubt] wrote an article about the two faces of the adjustment that President Milei is carrying out in Argentina. On the one hand, the Ministry of the Economy announced that it had attained a fiscal surplus for the first time in over a decade. On the other hand, the Social Debt Observatory of the Catholic University of Argentina estimated that poverty increased from 49.5% of the population in November to 57% in December, the worst since the 2001-2002 crisis. This happened as a massive 50% devaluation carried out by Milei eroded the purchasing power of the peso much faster than under the previous regime. The monthly minimum salary hit $160 (the second worst in Latin America).
>According to the BBC article, the Argentine Confederation of Middle-Sized Enterprises (CAME) estimated that Milei´s inflation tax reduced pensions by more than 38%. The same tax also reduced public salaries by 27%, economic subsidies by 64%, and public works by 86%. As a result of the reduction of subsidies, public transport prices increased more than 200%, and electric tariffs increased between 65% and 150% in reverse relation to income (those with lesser incomes had received higher subsidies, now eliminated). All in one go. An economic consultant, Focus Market, told BBC that retail sales fell 26.8% in January and overall consumption by 18.5%. People cannot afford what they produce.
Any Argentine patriot can confirm or deny this?
manuelhinds.substack.com/p/a-matter-of-strategy-in-argentina
:afire: Third Man :afire: /
npub1ml…fnchm
2024-03-05 22:21:51
Author Public Key
npub1mlnk7vs7qfcgzz40ms4km0mt0c49sk7xy7pg8j0pkx4euxc2hk6qdfnchmPublished at
2024-03-05 22:21:51Event JSON
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"content": "\u003eJavier Milei of Argentina was elected with three mandates: to reduce the inflation rate by stopping monetary creation, to reduce the fiscal deficit to eliminate the reason money was created, and to reform the economy to make it more prone to growth. The three mandates are interrelated. The strategic question is in which order the mandates should be implemented.\n\n\u003eYet, as soon as he won, it became evident that his priorities had changed. He appointed Luis Caputo, Secretary of Finance, Minister of Finance, and President of the Central Bank in the administration that started the current crisis as the Minister of the Economy. Milei and Caputo put in place a new strategy that began with the transfer of the legislative functions to the executive branch, the immediate elimination of the fiscal deficit, and the liberalization of the economy. Dollarization was left for the future.\n\n\u003eOcampo left. The peso has remained in place and has become a pivotal instrument to stabilize the economy. Or so was the idea.\n\n\u003eMilei and Caputo used the peso for the same purposes as their predecessors: to extract a tax from the population without passing it through Congress. The tax they imposed on the holders of peso assets, wages, and pensions was massive: a devaluation of 50% and an increase of inflation to 232%, the highest in 32 years. The monthly inflation increased from 12.8% in November to 25.5% in December. Milei had attacked his predecessors for using the currency for this purpose as robbery, yet he is doing the same. In a television interview, he warned he would do this but tried to justify it, asserting that the result would be the end of inflation. The people most affected by this terrible tax (taking away 50% of the purchasing power of your deposits in pesos, your wages, and your pensions in one go) were the salaried people and the pensioners, which is, the middle class, or, more precisely, the former middle class.\n\n\u003eOn February 22, 2024, Veronica Smink of the BBC [which does cast doubt] wrote an article about the two faces of the adjustment that President Milei is carrying out in Argentina. On the one hand, the Ministry of the Economy announced that it had attained a fiscal surplus for the first time in over a decade. On the other hand, the Social Debt Observatory of the Catholic University of Argentina estimated that poverty increased from 49.5% of the population in November to 57% in December, the worst since the 2001-2002 crisis. This happened as a massive 50% devaluation carried out by Milei eroded the purchasing power of the peso much faster than under the previous regime. The monthly minimum salary hit $160 (the second worst in Latin America).\n\n\u003eAccording to the BBC article, the Argentine Confederation of Middle-Sized Enterprises (CAME) estimated that Milei´s inflation tax reduced pensions by more than 38%. The same tax also reduced public salaries by 27%, economic subsidies by 64%, and public works by 86%. As a result of the reduction of subsidies, public transport prices increased more than 200%, and electric tariffs increased between 65% and 150% in reverse relation to income (those with lesser incomes had received higher subsidies, now eliminated). All in one go. An economic consultant, Focus Market, told BBC that retail sales fell 26.8% in January and overall consumption by 18.5%. People cannot afford what they produce.\n\nAny Argentine patriot can confirm or deny this?\n\nmanuelhinds.substack.com/p/a-matter-of-strategy-in-argentina",
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