Last week, during the anniversary ceremony of the Buenos Aires Stock Exchange, President Javier Milei He tried to generate an exposition wanting to justify what has been done since December 11, 2023 until now and as always he was left with water in it. Well, as a first point he took the data to try to justify the well-known inflation of “17,000%” for which he expressed that it ran at 1.2% daily and if we annualize it, that is, raise it to 365, it gives us a figure of 17,000% annually for which we can tell you the following.
There are 2 ways to measure inflation:
- It is measured weekly inflation of the 850 varieties of goods and services and then averaging the 4 weeks of the month taken, this is how INDEC measures it according to its current CPI methodology that was approved by the United Nations with the consent of world experts.
- Taking the prices at the end of the month to be measured and comparing them with those at the end of the previous month, this is how the CPI was previously measured and was also approved by the UN via a group of world experts.
He then expressed that “…the Argentine currency (peso) has had 13 zeros removed since its launch and if we remove 3 more zeros, no one would notice… (verbatim)”.
Therefore, concomitantly with the statements of the Minister of Economy Luis Caputo that the relationship with the IMF is excellent and fullbut was immediately denied by both the director of the organization, Kristalina Giorgievaas his spokeswoman Julie Kozack said at the same time that they ratified the Head of the Western Hemisphere as the person in charge of the Argentina issue – at the request of the Minister to remove him, since he was working so that Federico Sturzenegger would be his immediate replacement – saying “…there is no scheduled date to begin to see Argentina’s request…”.
Blue dollar investments finances
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This means that they went to ask for a new loan to be granted. between 10,000 and 15,000 dollars are added to the requirements demanded by the Fund for this.
These requirements are, as we have already expressed above:
- Positive interest rate so that the pesos do not go to the exchange market disappearing as happened between May and August 2018 when the current Minister was President of the BCRA, which must rise from the current 4.25% nominal monthly rate since on Friday the inflation of 4.6% corresponding to the month of June was known and promises to be higher for July
- Reinstate the Income Tax for employees, which was enabled by the National Congress and promulgated on July 8.
- That the currency depreciates again in the order of 105% (with the June inflation of 4.6% already known) since the 118% devaluation was absorbed by the inflation accumulated to May 2024. With that data and knowing that the wholesale value of the US dollar on Friday, July 12 was $922.50, the new exchange rate value should be close to $1,900 leaving the IMF and even the countryside satisfied to export and settle retained exports, which are estimated today at US$13 billion.
Knowing that it is not the position of the current Minister of Economy to devalue to that level, since it would mean bringing poverty to 90% of the population of our country, it would not be illogical to think of replacing it with the head of the Economic Advisory Council Demian Reidel and/or head of the Budget Commission of the National Deputies José Luis EspertThey would not hesitate to depreciate our currency to the order of $2,000, then remove 3 zeros from our currency and then establish a new convertibility with a fixed exchange rate of 2 to 1.
As he expressed last Wednesday Milei in the Buenos Aires Stock Exchangealthough this would also be a case of very high inflation in the first few months as a result of the new rise and readjustment of prices to the new exchange rate.
Although these readjustments always forget something essential: workers’ salaries do not rise and in the midst of a brutal, self-inflicted recession, it can become terrible on a social level.
Source: Ambito
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