The worst thing is that, over time, people get tired of people taking purchasing power out of the pesos they have stored or saved. It costs everyone a lot of effort and sacrifice to gather that money that they intend to use for the benefit of their families or to be able to face some eventual expense; they do not do it to finance the government with inflationary tax. Therefore, as we have been seeing in recent months, they stop demanding local currency. Well, if people want to eat fewer oranges, the price of said fruit falls and the same happens with the weight, which ends up losing even more purchasing power; which is also reflected in the rise of parallel dollars.
It is true what officials say that the rise in the Blue does not generate inflation; but the loss of purchasing power of the local currency does, which, to a large extent, justifies the rise in free exchange rates. Then, someone wants to go to the supermarket to buy something and the merchant is going to tell them: “That thing you want to take is worth the same as before and the pesos you want to give me are worth much less, you are going to have to give me more of them” . When this person calls the gas to fix his water heater, he will receive the same clarification regarding the relative value of the work to be done and the lower purchasing power of the currency with which it is intended to pay. That is what we call inflation.
In conclusion, I have bad news for government and BCRA officials, but especially for my fellow citizens.: A large part of the escalation of parallel dollars is the loss of purchasing power of the peso and, in the coming months, it will be reflected in the rise in the prices of what they consume. Another fact, the more inflation tax, the greater the impoverishment of all; since they are taking away our purchasing power so that the government can spend more. A clarification, when someone becomes poor, it costs them more and more to buy things, does it ring a bell?
I have another bad news for you. If we see the parallel dollars and the country risk “fly” as it is happening, it is because the small, medium and large savers or investors, Argentine or foreign, consider that the current management is leading the country to a crisis. Therefore, they want to protect themselves from possible losses by getting rid of everything that is Argentine assets, eg. Pesos, and they do so by switching to foreign currency or assets. That is why those currencies of reliable and stable countries become so demanded and rise in price strongly. Question: Can anyone think that with this widespread perception of the country’s future there will be many investing in generating employment, goods and services for Argentines?
Let’s add something else. It is convenient to analyze the prices at which the local foreign currency bonds are listed that we deliver to creditors in exchange for their defaulted papers in 2020 and with a haircut. They point out that those who buy and sell them today think that in two or three years they will restructure those titles with a similar haircut. In other words, Argentina is going to another crisis.
If, unlike all those Argentine or foreign investors and savers, government officials and the BCRA think that the current one is a “growth crisis”, they should be buying with their savings all the Argentine assets that the others are “underselling” and they are going to become extremely rich. The reality is that none of them are doing it. They all have a large part of their liquid savings dollarized. None would sell a single dollar at that official exchange rate (which they preach has a correct price); because they know they would be losing money. However, they force a poor SME industrialist who cost him a lot of effort and investment to place his products abroad to liquidate the foreign currency he brings in at that “stock” exchange rate that implies a confiscation of about half of his work. Of course, then they tell us that the solution is to export more. It does not seem to be the path that is being followed.
Economist and Director of the “Libertad y Progreso” Foundation
Source: Ambito
