Finally, the range of tools of the Ministry of Economy began to be deployed. Detail of the first measures, such as exchange rate, subsidies, public works, imports, public employment, official advertising, transfers to the provinces, employment plans and social policies.
Understanding the measures announced by the Minister of Economy Luis Toto Caputo, you can understand the direction that this portfolio would seek to contain a situation that is looming as an emergency. The range of tools has finally begun to unfold.
What is repressed inflation
Repressed inflation It is one that in the time frame has not yet impacted the population’s pockets in final terms.. As a general rule, it is understood that there is a period of time between the implementation of both direct and indirect macroeconomic measures until their effective consequence on society’s currency. resulting in a loss of purchasing power of the population.
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Argentine News
Now, if during the last 8 months of economic management of the outgoing government of Alberto Fernández, The economic direction injects artificial resources without support, it is expected that the absorption of these resources in the economic cycles of the different areas will enhance inflation. At this time, faced with a necessary honesty of the variables, we will find vanishing points that are neither more nor less than the pass at the final price of that cycle. inflation started and strengthened during those 8 months.
How it can affect society
A clear example, if you can drive a car and accelerate speed of the same, heat speed it could well be inflation and its auto the economy. You would drive that car on a route, that route being time, a variable that the average Argentine might not analyze on a daily basis. If you accelerate your vehicle, at each acceleration you can crash, to avoid doing so you need to balance in a lane, in economics you need a balance if you intend to arrive safely at your destination.
For every time you accelerate, when you try to brake, you need more space on the road to be able to brake, since if you do it without balance and suddenly, you would simply be crashing with all the damage that this entails. If you Inflation accelerated as a result of a fiscal deficit with debt issuance among other triggers, you will need more time to be able towithout hyperinflationary danger, reverse the situation and contain the economy without lulling her.
The brake that the Government expects
Obviously the new government needs to reverse these variables and understands that the market will not happily place its trust without seeing signs of correction in the discipline of Argentine fiscal spending. For it seeks an open awareness of the macroeconomic genesispaving the way for implementation of the spending reduction shock.
However un first abrupt brake, needs containment the most vulnerable population basethis is reflected in the nominal duplication of perceptions of the AUH and a 50% increase in the food card. It is understandable that these nominal increases could arise from the brake on compulsive spending of the most discretionary and easily implemented executive items also provided for in the battery of announcements.
Understand repressed inflationis to understand that the consequences of macroeconomic measures of the outgoing government must be diminished and repelled facing a few months of transition where market expectations are organized and the economic cycle of next year begins to be energized. All of this without prejudice to the economic plan that the new government has and that we will begin to learn about as this emergency is contained.
Source: Ambito
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