Dollar vs pesos: the explanation of the devaluation
“A friend calls me and asks me how she can explain to her son Tomy -7 or 8 years old- what devaluation is (…) To understand the value of silver, Tomy receives a monthly payment in pesos. Tomy plays Fortnite and asks: “Mom… why did I buy an armor with four monthly payments before and now I buy half an armor? Reasonable question. Because the price is in dollars, and the peso depreciates,” Álvarez Agis explained.
And he continued: “How do we make it so that Tomy, when he is 25 years old, can convince him that the Minister of Economy stands up and says: ‘Now yes, we have to save in pesos’?”
“They have been shitting me as a child, from Fortnite. When you learned that at 7 years old, you need decades to get rid of it. They screwed it up 5 times. Argentina has been like this for 100 years,” he said and concluded: “Retrieve a coin it is super complex, because you have to convince people not to save in dollars”.
On the other hand, the head of PxQ was in favor of a common currency in the region, but as long as Brazil makes the appropriate investment under Lula’s command.
The Maradona theory
The former Deputy Minister of Economy during the Government of Cristina Fernández de Kirchner Emmanuel Álvarez Agis explained the “Maradonian Theory” of the interest rate of the Central Bank of England.
“The Maradonian theory of the interest rate is invented, which speaks of the game of expectations. What the Central Bank of England did was build such a reputation that what happened to Maradona happened to him in the second goal against the English,” he explained. Agis.
This is how he explained it: “Maradona ran in a straight line. As he had built the reputation of being the best player in the world, only if the defender thought that with a feint he was leaving him paying and that he was not going to run in a straight line, everyone left pulling by the expectation that engages, only by the expectation”.
“Conclusion: it didn’t even have to hook up, it ran in a straight line. How does it apply to the Central Bank? If the economy gets complicated, you say ‘it seems to me that the interest rate is going to rise’, you have the expectation and since it has such a reputation the people react earlier… throw yourself away because you’re going to get hooked. When you achieve that, you don’t have to touch the interest rate,” he said.
Inflation
Regarding inflation, he said: “When you hear an economist who says: ‘do you know why inflation goes up? Because there are four sons of bitches who raise prices?’ And I say: if it were so, we would have already killed those four, and we would have zero inflation. That is a simplification, and it is more complex. Although sometimes it is that.”
“The most pressing problem is inflation. We have chronic inflation, and it is more difficult to solve than hyperinflation. Because what you do to get out of inflation is what consolidates chronic inflation,” Álvarez Agis explained.
In this regard, he argued that there is a problem with the relative prices of the economy. And he exemplified that renting a studio apartment costs the same as two pairs of slippers.
The problem is that what one does individually can be very good, but collectively it is bad.
It’s what happens with an avalanche in a grandstand. It’s enough for one idiot to do it for the rest to do it. That happens with prices
Rates
Regarding the rates of public services, he considered that they are not touched today to the extent that they should be because it is a measure “it is macrista”, but he claimed that it should be done. “The tools do not have ideologies,” he said, arguing that Macri was wrong in the abrupt correction, just as Peronism did by freezing it.
“We are giving electricity and gas to the rich,” he said.
Source: Ambito
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