Javier Milei’s inflation ‘miracle’ in Argentina is a warning to the world, not a blueprint

[import export]

This is a good read.

Javier Milei’s inflation ‘miracle’ in Argentina is a warning to the world, not a blueprint

Inflation has fallen in Argentina, but at enormous cost.

theconversation.com

 

[MikeYoung]

It is very confusing because the government shows all these charts about how things are improving and people are spending more money. But everyone I talk to in BA mostly talks about how expensive everything is and how everyone is struggling to pay bills. It just sounds like two realities.

 

[Avocado]

This is a good read.

Javier Milei’s inflation ‘miracle’ in Argentina is a warning to the world, not a blueprint

Inflation has fallen in Argentina, but at enormous cost.

theconversation.com

Thank you! Very good article. I agree.

It is very confusing because the government shows all these charts about how things are improving and people are spending more money. But everyone I talk to in BA mostly talks about how expensive everything is and how everyone is struggling to pay bills. It just sounds like two realities.

The government can make anything look good. We have tried this model before and it didn't work. It's all carry trade and only a few industries are doing well.Sooner or later it all crashes.

 

[Peabody]

But can anyone explain to me how/why the peso is doing so strong over the past few months? I don't understand. Add in the War risk. I just saw YPF had to halt price increases. Seems so delicate yet the peso stays strong.

 

[Dick]

But can anyone explain to me how/why the peso is doing so strong over the past few months? I don't understand. Add in the War risk. I just saw YPF had to halt price increases. Seems so delicate yet the peso stays strong.

I saw the governor of BA the one that stole YPF in the first place on TV last week saying how they needed to stop price increases and then they did it today. If things were going so well they wouldn't have to do this. I can't imagine having a company in Argentina and being stuck with price controls.

I don't understand how Argentines can really survive these prices.

 

[Uncle Wong]

But can anyone explain to me how/why the peso is doing so strong over the past few months? I don't understand. Add in the War risk. I just saw YPF had to halt price increases. Seems so delicate yet the peso stays strong.

Someone asked how the peso is staying so strong. @BuySellBA posted about it.

 

[CraigM]

Someone asked how the peso is staying so strong. @BuySellBA posted about it.

That is a great explanation. In the long run valuation really matters for currencies, but in the short term it's all about flows which can surprise the heck out of you.

 

[Bingo]

I think that Argentina is just such a wacky country that you can't treat it like a normal one.

This is a good read.

Javier Milei’s inflation ‘miracle’ in Argentina is a warning to the world, not a blueprint

Inflation has fallen in Argentina, but at enormous cost.

theconversation.com

Read it. Some of it is ok but other you can't compare Argentina like a normal country. There is no way a typical "blue print" would work for Argentina. They did a great job of slowing down inflation but if the country is going to grow it can't be just what they are doing.

 

[Edgardo]

That is a great explanation. In the long run valuation really matters for currencies, but in the short term it's all about flows which can surprise the heck out of you.

You sound like you are in the finance game. Have read some of your posts and they always seem on point. Is your background in finance @CraigM ? What do you think of the economy here? Do you think it is on the right track or another eventual crash? Caputo seems really nervous lately.

 

[LongIslander]

This article completely misses the bigger picture of Caputo's monetary strategy. The real danger isn't the headline-grabbing dollar interventions meant to soothe the "psychological" panic around inflation. The actual threat is "sterilization". Specifically, sterilizing domestic bonds to aggressively pull pesos out of circulation.

By doing this, they are suffocating the domestic credit market. When credit dries up, investments stall, wages stagnate, and imports suddenly become far more attractive than domestic exports. It’s an absolute recipe for an employment disaster, and it’s an illusion that can only be sustained for so long.