I think in his bigbrain libertarian mind, the money market pricing of the peso to usd is what defined the value previously and he decided that the market’s pricing is not correct for that of the Argentinian currency.
You’re half right here. The idea is that the black market Peso:USD price represents the actual real value of the Peso, while the government’s official rate was miles away from this and completely divorced from reality and only remotely sustainable by endless amounts of borrowing, price controls, and money printing, which just contributes to worsening the problem. The hope is that a necessary but painful adjustment to the actual economic reality will eventually provide the stability necessary for real growth.
A smart government will know that, if you want to actually pull this kind of thing off, you need to do everything possible to make the transition as minimally painful as possible and do what you can to help protect the most vulnerable. We’ll see how Millei does, but I can’t say I’m exactly confident.
You’re half right here. The idea is that the black market Peso:USD price represents the actual real value of the Peso, while the government’s official rate was miles away from this and completely divorced from reality and only remotely sustainable by endless amounts of borrowing, price controls, and money printing, which just contributes to worsening the problem. The hope is that a necessary but painful adjustment to the actual economic reality will eventually provide the stability necessary for real growth.
A smart government will know that, if you want to actually pull this kind of thing off, you need to do everything possible to make the transition as minimally painful as possible and do what you can to help protect the most vulnerable. We’ll see how Millei does, but I can’t say I’m exactly confident.