Inflation is an important problem that Argentina has, but production and employment can never be subordinated to lowering inflation, the solution must be such that there is synergy between lower inflation and an increase in production, productivity, employment , salary and exports. So, the problem is politics because depending on how the issue is addressed there will be different levels of production and quality of life, thus, if there are several ways of addressing the issue, then there are different social and political representations that can be exercise. And that is what our political parties do, the differences are not as light as they sometimes want to tell us.
Regarding Olivera’s sentence that begins this text, Argentina is affected by the movements of both variables, but with an emphasis clearly placed on the structural side. When the problem emphasizes wages and the dispute over their level, inflation is manageable, because it depends on local actions. When the problem has to do with the level of dollar flows, structural inflation can hit very hard.
Reasons for this inflation
If inflation were determined by the monetary issue, it would be enough to stop issuing. It’s not enough. Stopping issuing only serves to anchor the movement of prices as a result of other effects, such as lower activity (less transactions, because there is less money, in terms of the same quantity theory), and an increase in unemployment, for example, and, therefore, thus affect the real economy, which is the real space where changes in relative prices occur (exchange rate, wages, rates, price formation of salary goods) that affect the set of prices, their inertia , and to possible changes in price formation.
So ceasing to issue does not guarantee that the increase in prices will be deflated, because it does not ensure that this bidding will stop (it only helps to tilt it towards the concentration of capital). Let us insist with a point: it is not about the existence of the distributive dispute, which exists everywhere, but not everywhere there is inflation. The distributive dispute is inflationary when that dispute generates changes in the distribution of income. It is an eminently factual problem.
Let’s not just stay in the substantive debate. Because we want to give an account of what is currently happening with prices in our country. Inflation is a generalized process of price change. To find the causes of inflation in Argentina, it is necessary to see what is changing that affects all prices. Possibly these are changes in relative prices, examples of which are the dollar or wages, with rates being a consequence of the combination of the price of the dollar and the distributive dispute. However, the debate starts when we want to identify what changes first. It is not usually the level of money in circulation that changes first. But as in a badly conceived Gestalt, many insist on believing that the money issued is given away and that affects prices.
Members of the Foundation for Sustainable Urban Development (FUNDUS).
Source: Ambito
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