The secret of gold increases uncertainty

As net reserves return to the negative level of December 2023, with unpaid imports, undercut tariffs, unusual declines in economic activity, uncertainty grows about the ability to accumulate reserves and regain access to markets, and there are doubts about the risk of intertemporal fiscal insolvency. When it rains it pours, they ask the “Partners in the private sector”, Minister Luis Caputo and the president of the BCRA, Santiago Bausilito reveal what they conceived with the gold of the Argentines that is in the BCRA.

Milei depends on Caputo and Bausili, Sturzenegger wreaked havoc on the BCRA until 2018, for now he relies on the little he learned at university and plays by ear the music that finances economic supremacy. The millionaire Caputo, on the other hand, has expertise in international markets by trading, charging success fees, and continues to proceed like the tero: he establishes a tightening rigor that was never executed by the orthodox ministers who had the opportunity as officials, nor did those who wanted to be ministers and pontificated cruelly imagine possible, while he “does the bicycle”, and fifty thousand barely transparent combinations, like the last one of gold, acts with total impunity.

Caputo was asked for vertiginous fiscal discipline and a primary surplus at all costs, and he has tried to please everyone, in exchange for not being taken off his “bike.” He faced the pension and tax reform, and approved the Ley Bases, giving extraordinary incentives to private investment with the RIGI. Obviously, a more moderate labor reform is coming, but deregulation and economic opening began with the DNU and now Sturzenegger complements it. However, An exchange rate policy is maintained that is inconsistent with the rest of the macroeconomic policy. For this reason there are no, and there will not be, dollars until they proceed to devalue as the minister’s friends and the IMF are demanding..

Remember, they asked the IMF for net funding in dollars, to make an agreement with the grain companies to bring in dollars, and they got nothing. Nobody lends to them, the markets are distrustful and they have been shown with facts who owns the dollars. As a consequence, the country risk is touching 1,600 basis points and the blue dollar at $1,450. So, since nothing works, the new maneuver is to take gold out of the country without giving anyone clear accounts or explanations. In this case, is it a repo with the Bank for International Settlements in Basel? If so, at what rate do they lend us? For what term? Is there a rating? How much would the rating be? Why didn’t the gold travel on Aerolíneas Argentinas? The truth is that there is no “accountability.” There is no transparency and no one is accountable. We only found out because the news circulated that the BCRA was withdrawing gold bullion from the country, without any official communication, and the maneuver was discovered by a deputy by chance, we are talking about the matter.

The request for accountability was made in the form of a request for access to public information, presented by the national deputy and head of the Bankers’ Union, Sergio Palazzo, who requested details of the hypothetical operation. Then the operation was confirmed by Luis “Toto” Caputo, who, when questioned about the issue in a touching interview with LN+, said that it was a “positive operation” so that the country could maximize “the returns on its assets.” A trivial, insignificant and superficial response, consistent with his frequent behavior. He persistently laughs in anyone’s face without moving a muscle in his own. The media outlet “Chequeado” reports: “The Central Bank did not provide further details: “The BCRA received a request for access to public information from the Deputy and National Secretary General of the Banking Association requesting details about the administration of reserves as it refers to the gold belonging to the BCRA. The BCRA is working on the response to that request, which will be provided as established in the regulations.”

There must be accountability and transparency

For good reason, contemporary social sciences have paid attention to trust and its interactions with institutions, distrust and its institutionalized expressions in the political sphere, wrote Guillermo O’Donnell, who goes on to say in his paper “Accountability, Democratic Governance, and Political Institutions in Latin America” … “The existence of state agencies that have legal authority and are empowered to take actions ranging from routine control to criminal sanctions or even impeachment, in relation to acts or omissions of other agents or agencies of the State that can, in principle or presumptively, be qualified as illicit, go in two main directions that can come into play: One consists of the illegal transgression by one state agency of the authority of another; the other (corruption) consists of illicit advantages that officials obtain for themselves and/or their associates.”

The author says that all organizations, including political ones, are subject to a contradiction, an inherent tension that does not admit of a solution, either consensual or stable. As members of a State, we also expect the provision of certain public goods and the solution of various collective action problems. We may disagree with some public policies and/or the procedures by which they are adopted; we may even find these policies offensive to deeply valued aspects of our identity or interests.

So let’s think, if transactions are made in secret and in hiding, we citizens have no way to express our disagreement.

The other pole of the contradiction results from the widely shared belief that it is dangerous to give individuals too much power.. This danger seems to grow geometrically when these individuals have the authority to make collectively binding decisions backed by supremacy in control of the means of coercion in an organization from which it is difficult or costly to withdraw. Even if a given power holder is trusted not to abuse his position, there is no guarantee that this will not happen in the future. The rational conclusion is that somehow power has to be controlled..

However, the same conclusion applies to any solution to be adopted: since there is no certainty that some of us are angelic altruists, the motivations of those who control the powerful and the powers that must be assigned to them so that they can effectively exercise those controls are also suspect. In a world in which not all are scoundrels, but where not many can be considered as truly altruistic and, especially, where no one can presume to be immune to the temptations of power, says O’Donnell almost verbatim.

In the same paper he argues that contemporary democracies or polyarchies are a complex distillation of major historical currents, which have combined to varying degrees in various countries and historical periods. He mentions, in a rather schematic way, what these currents mean in terms of contradiction and marks them. We will only mention Republicanism and Liberalism, because they are what matters today and the use and abuse that is made of these concepts, taking advantage of the ignorance of the average citizen.

With regard to Republicanism, O’Donnell draws a distinction between the private and public spheres, arguing that it is in the latter that true human flourishing can be achieved. Virtue is to dedicate oneself to the public good, without allowing private or factional interests to interfere with that task. Like democracy, republicanism can be dangerous, as it easily leads to elitism and oligarchy: why should those who claim to be virtuous represent, or even listen to, those who are mired in the pettiness of their private pursuits? He reminds us that the tyranny of Savonarola and the cruelty of Robespierre are reminders of this danger.

Regarding Liberalism, O’Donnell states, it is the only one of these great currents that is, to a large but not exclusive extent, a direct manifestation of distrust of political power. Liberalism, like republicanism, postulates a distinction between the public and private spheres, but inverts its value. It is in the multiple activities of the private sphere – beginning, historically, with freedom of contract and religious belief – where the greatest potentialities of the human being can be achieved.

The synthesis of the work that we have to take advantage of is that both democracy and republicanism tend towards the pole of high decision-making effectiveness of political power. But, on the other hand, as Those who implemented the original versions of these currents distrusted those whom they endowed with potentially threatening powers., Democracy and republicanism established institutional mechanisms, with the intention of reducing this risk.

The problem in Argentina today is that none of the three branches of government manages the institutional mechanisms to reduce risks. Abuse, arbitrariness, despotism and illegality are exercised with impunity. In summary, liberalism does not govern, libertinism reigns.

Director of the Esperanza Foundation. https://fundacionesperanza.com.ar/ Professor of Postgraduate Studies at UBA and Masters in private universities. Master in International Economic Policy, PhD in Political Science, author of 6 books, @pablotigani