you need to take the necessary medicine

In recent months, there has been public debate about whether Argentina is heading toward hyperinflation. Obviously we have not achieved this. Those of us who have had the misfortune to experience one or more of the three previous problems that the country has experienced know the degree of impoverishment, stress and social breakdown this leads to. A few years ago in Venezuela, the “traps” set by dictator Hugo Chavez burst, and more than 80% of Venezuelans found themselves in poverty.

Real data shows that in Argentina the leadership of Alberto Fernandez and Sergio Massa created a hyperinflationary process. If we look at the rate of inflation or the equivalent value of idle dollars (at today’s prices) as in recent months, we will find that they only occurred before or after hyperinflation. That is, if someone has not yet exploded, then we go to him.

Fortunately, the change of government created a pause in the acceleration of this process. On the one hand, the current administration sought to quickly eliminate excessive expenditures that needed to be financed by the Central Bank (BCRA); which allowed us to stop broadcasting on this matter. Thus, the machine stopped working as hot as before to “put money in people’s pockets” for elections.

On the other hand, voters elected President Miley to clean up public accounts and change Argentina’s course in the hope that it would become a normal country. This hope helped curb the growing flight of the peso, with which people were trying to protect themselves from the BCRA scam, which was taking away purchasing power to finance the excessive spending of the previous government.

This decline in demand for currency also contributed to the acceleration of the decline in the value of our currency. Unfortunately, the destruction of the peso’s purchasing power that has already occurred will take up to four months to be reflected in overall prices of goods and services. So, even if everything goes very well from here on out, high inflation will continue until at least the first quarter of 2024; although it will then tend to decline faster and faster.

The political leadership thus has an inescapable obligation to voters to change Argentina’s course. The taste of the medicine necessary for self-medication may not be liked by the enemy; but you have to take it. Yes, and you shouldn’t add water so it doesn’t taste so bad. A heavily diluted medicine loses its healing power, and there is no time for childishness.

The patient is in a terminal condition and unless he is given the correct treatment to ensure that people see the pattern change he requires, he will die. The flight from pesos will return and they will be held responsible for our descent into hyperinflation, and in this chaos we cannot rule out a return to demands for “Let ’em all go” in the face of a leadership that shows it prefers to protect its own and others’ corporate interests, not the demands and well-being of the vast majority of Argentines.

Aldo Abram is an economist. Director of the Freedom and Progress Foundation.

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