INFOBAE – The abandonment of Convertibility, in 2002, opened the doors to the monetary issue without support (predictable repayment). That the collapse of domestic demand together with the extraordinary expansion of soybeans and cereals was postponed until the end of that decade.
Overissuing to pay expenses without genuine financing is an abuse of dominant power, a scam. The State forces the peso as a means of payment, even knowing that it loses value, like ice under the summer sun, according to the rhythm and conditions set by the issuer. No judge would accept that operation from a private party.
Issuance excesses are reducing the value of the pesos in circulation, causing price increases and operating adjustments for all economic agents. Worse still, to quell protests and dissatisfaction with the results, officials alter, divert, restrict, private businesses, modify values, impose burdens, reiterate and invent new regulations. Everything you need to satisfy your hunger for resources and setbacks with what you have obtained. Although activities, structures, institutions and even the very organization of the economy collapse. Damage to properties is spread by highlighting limits on prices, wages, rents, service fees, interest rates, multiple exchange values. Even raising taxes amid the deprivations of the pandemic: Over-issuing to pay expenses without genuine financing is an abuse of dominant power, a scam (Reuters) Over-issuing to pay expenses without genuine financing, is an abuse of dominant power , a scam (Reuters)
In this confusion of more numerous and less known regulations, they declare to promote activities, preventing layoffs of personnel, deliver, ship, pay for products and services abroad, without compensating the losses suffered. I exposed in Infobae, these arbitrary restrictions impose redistributions of activities, income, and disarticulate the whole.
Only voluntary exchanges of rights (transactions) generate value, satisfy needs. They are all the more beneficial if the rules are fair, equal for everyone, stable over time, since they discover more productive options. Now, while private acts are voluntary, those of the State are forced. It cannot be assured that they meet individual needs that exceed their cost. Which generate value and deserve to be done.
So, it is logical to have strong doubts in the interventions of officials. Maximum that his greatest competence is the speeches, rather than acting efficiently. Therefore, you must obtain the information and be very cautious when evaluating them. Advanced nations develop precise protocols to execute for the benefit of the community. In contrast, the expenses of lagging companies are often ineffective; they favor supporters and less people. They differentiate individual rights according to the political priorities of the particular case. They do not guarantee justice. For example, there is little data from the negotiations on vaccines for COVID-19. Speculative ideologists, politicians of varied hairs, even prestigious ones, promote illusions, fantastic schemes that end in resounding failures
Speculative ideologues, politicians of varied, even prestigious, promote illusions, fantastic schemes that end in outright failures. It is typical not to commit their own resources. The art of the most named obtains goods from third parties, the trust of the unwary, deluded. In that office, politicians excel. They called for world wars and frustrating programs of entire peoples. Mao Zedong, with “the land for those who work it” and “The Great Leap Forward”, promoted movements that ended in the Great Famine and the death of some 50 million people. Much attention with political proposals.
Inflation has been declining in the world and was less than 2% annually, in 2020, while interest rates fell. So much so that the best-rated national state bonds charge investors, offering negative returns even over long periods. Germany, Switzerland, the Netherlands charge negative interest rates of 0.5% per annum on 10-year bonds. Spain recognizes only 0.1% positive.
Latin America accompanies the drop in inflation, except in Venezuela, Suriname (50%), Argentina (36%). It moderates in Uruguay (9.4%). The average of the rest of Latin America 2.7%, including Mexico (3.4%) and Brazil (2.8%). The euro countries less than 1%, the same as the yen, the pound and the Canadian dollar. The US dollar, 1.5%. Countries that use the currency of a prestigious entity, such as the FED or the European Common Bank, suffer similar inflation. Latin America follows the drop in inflation, except in Venezuela, Suriname (50%), Argentina (36 percent).
Prices measure the amount of currency to buy a good. Inflation is the increase in the amount of currency to buy it. If you use another currency, dollars instead of pesos, change the price.
It was learned that inflation is extremely harmful: misinformation, deepens inaccuracies of values, affects the entire monetary community, exacerbates corruption. The survey of corruption in the State, from Transparency International, reports Argentina worsened 12 places in 2020, falling to 78th place, the same as China. Far from Uruguay (21) and Chile (25). A relevant partner now, Russia, ranked 128 among the worst in the table.
As in soccer, coordination and skills in any collective activity worsens with the variability of rules and parameters. The income of the average Argentine today is less than a third of what it earned in 1980, updated by US consumer prices, in dollars at the official exchange rate. Only Venezuela lost more (90%). In the rest of Latin America, per capita income grew 13 percent.
Without stable norms and values, confidence and skills are lost
Excess issuance depreciates money, in changing rates, tranches and times, complicating business. The rulers often take advantage of the confusion trying to prevail their particular objectives, over those of the inhabitants. They emit, cheat, impoverish. They alter external values of the currency, debts and tradable goods abroad. Violating the property rights of the population. Price is the amount of currency exchanged for good. In Argentina, prices in two currencies coexist, which fluctuate among themselves and according to transactions. Without stable prices and rights, property, income and markets languish.
The Country Risk index, which measures the required yield on Argentine public debt, is alarming. Since PASO, it increased from less than 900 to a maximum of 2,500 in November 2019. Then it decreased to less than 1,900 in February 2020. In March it rose to 4,400 and now is around 1,450 points, but with a new composition of the index by the debt swap that is equivalent to more than 2,300 in the previous series.
Such returns, in securities, free of business risk and taxes, for individuals, terribly reduce the opportunities offered by our laws.
Each government follows others. Although each one is usually evaluated for what happened in their management, the administrations continue with each other. Argentina is less and less competitive, corroded by variable rules according to policies, personal affiliation, activities and particular occasion.