Referring to the possibility of a further escalation of inflation leading to hyperinflation, Werner considered that “there is a whole network of controls that limits the speed at which an economy can fall into hyperinflation, but clearly the fall in demand for assets in pesos, the lack of trust and the lack of governance means that no exchange rate is attractive enough to stay in pesos”.
Along these lines, he indicated that the panorama described “can feed a bank run, a run on government bonds and this can generate increases in the interest rate inflation They come to life very quickly.”
The economist expressed that there is “a lot of concern about the outlook for the Argentine economy” because “for three years we have not seen a program that reflects how the government is going to seek to restore the macroeconomic order and how it is going to lay the foundations, the microeconomic, to generate incentives for investment and employment”.
“It seemed that the government was betting that the problems would come from restructuring the debt and they realized that the debt was more a symptom than the cause fundamental part of the problem,” he said during a television interview.
In addition, he considered that there is a lack of “social consensus on what is the size of the State that is wanted and how it is wanted to finance that State”.
In this sense, he stated that “there is an incompatibility in the objectives of the current Government of wanting to have a State that is very present and that it grants a social protection network but without being willing to generate social consensus to collect the necessary taxes to face that State”
He also indicated that the Government must ensure that “taxes are not so distorting that they inhibit any investment in the country. This situation cannot and must be decided,” he concluded.
Coincidence with the JP Morgan
JP Morgan bank in a The report said that political crises such as the one in which Argentina is submerged are part of the “necessary conditions” to reach hyperinflation.as evidenced by economic events in the recent past.
According to the entity, “we point out that macroeconomic imbalances required a stabilization programalthough the lack of political will made such an approach extremely unlikely.” “As economic history shows, political crises appear as necessary conditions for very high/hyperinflation scenarios,” he added.
Source: Ambito
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