Currently facing inflation rates of 113% and a heated presidential race, the people of Argentina have some serious decisions to make in order to attempt to stabilize their economy. Javier Milei has thrust himself into the presidential race lead as his unconventional practices and bold policies have caused a division amongst the Argentine people. The libertarian radical has said that he wants to get rid of the central bank and dollarize the economy. Countries like Venezuela, El Salvador, Panama, and even Argentina in 1991 have undergone dollarization, with the goal of dollarization being to create stability throughout the economy while still keeping administrative roles within the country itself.
Many Argentine people are against this practice because there is fear of losing their economic independence and becoming too reliant on the United States. Whether you support Milei or not, the Argentine people have recognized that the peso may be on its way out and have begun exchanging their pesos for dollars. In 2022, 2,000 pesos could get you $10, but now with inflation as high as it is, you will only receive around $2.70. The streets of Buenos Aires have also begun reflecting the potential switch to the dollar with signs showing store prices in dollars.
With an October election looming large, the people of Argentina are left with a decision that has the ability change the economic landscape of their country. The younger population of Argentina continues their support for dollarization as they search to find a solution to their future, but many opponents to dollarization were alive in 1991 when Argentina first tried dollarization. This came to an abrupt end as Argentina faced another economic crisis, and the run on the peso created riots. As the divide between pro-dollarization Argentine's and anti-dollarization grows, the underlying issue of all-time high inflation looms large.
I listened to a podcast that addressed the Argentina inflation and presidential campaigns on Planet Money. The presidential candidate, Javier Milei, has actually been a soccer player, playing goalie specifically. He is said to be somewhat like Donald Trump so take that as you will.
ReplyDeleteThe issue involving the Argentina currency is mind blowing to me because in the States we have not had to deal with an issue like this. Specifically the whole idea that they could potentially be switching from pesos to dollars in the near future. All Americans have had to adjust to is going from paper money to online money realistically.
It will be interesting to continue to watch how Argentinas economy changes over this month into the election.
The 113% inflation rate is way worse than America is facing right now. We think we have it hard when stuff we typically buy is up a few dollars. At that point, Argentina has goods that would sell for $100 now beiing well over $200 which is outrageous. There seems to be a lot of political unrest in Central America countries not only Argentina. I wonder what is causing all this drama?
ReplyDeleteThe inflation rate at 113% is ridiculous and must be top 5 in the world. Despite the opposition of dollarization due to it's earlier failure, it is probably the best option for Argentina as they are suffering from bad hyperinflation. It is so bad their their money (the peso) has devalued so much that another go at dollarization seems like the best option. I wonder what other plans other candidates have presented in order to combat the inflation. Luckily in America we have not had to deal with something like this, it will be interesting to see which route the Argentine people take and if it provides any relief.
ReplyDeleteThe Argentine economy is in a tough spot right now. Inflation is on the rise, and the election is coming up. The peso is losing value, so Argentina needs to think about dollarization really carefully. It's a big decision that could change the country's financial landscape, so it's important to weigh stability more.
ReplyDeleteIt is very interesting to read about the economic situation in other countries. I feel as though American media is so fixated on putting out domestic stories that not many foreign topics are touched on. It is also interesting to see the decrease in purchasing power the peso has had in Argentina in just a year.
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