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What is the rationale behind switching to the US dollar? I sort of get why US libertarians are opposed to fiat currency (they don't want the Fed to have the power to interfere in markets), but Milei just wants to switch to a fiat currency that someone else controls? What makes him think that would end well for Argentina?
Argentina's runaway inflation is caused by the central bank printing money (to finance the government's out of control spending). The rationale for dollarization is to remove the ability for the government to do this. It's not an inherently crazy idea, since (i) there are smaller Latin American countries that use the dollar, and (ii) the dollar is already used de facto for many purposes in Argentina because of how debased the peso has been. But there are lots of practical problems; notably, Argentina simply does not own enough dollars in the entire country to keep the economy running normally if they switch (whatever "normally" means for an economy like theirs).
Macroeconomists don't really agree that that issuing money in and of itself causes inflation, but it certainly can lead to it in some cases. Instead, if you issue money you need to spend it on something that increases the productivity of your economy, otherwise it can lead to waste and inflation down the line. You can actually use money issuing to fight inflation if you spend the money you issued on addressing the problem at hand - for example, the supply side problems we faced following the pandemic that caused the inflation we're at the tail end of right now.
By adopting the US dollar, Argentina would effectively give up monetary autonomy to the US central bank (so, just another central bank outside of their control). In fact, the US central bank could decide to issue money in a positive way as mentioned above, without any of that having a similarly positive impact on the countries that depend on the US dollar.
Money & Macro (PhD Joeri Schasfoort) has made multiple videos on the topic, but here are two (the first one short, the second one a deep dive) if you want to hear this side of the story told in greater depth:
You might be confusing debt issuance with money issuance.
Governments often issue debt to fund various kinds of spending. And despite concerns about debt levels, they can have a pretty fuzzy relationship with inflation; Japan has public debt of over 200% of GDP, and an underinflation problem.
But issuing money for the purposes of government spending -- the monetization of fiscal policy -- is almost always a bad idea, outside of wartime. The practice is behind every single episode of hyperinflation in economic history. And governments know this. Fiscal monetization is only resorted to by countries that have exhausted their ability to borrow; if cutting spending isn't politically feasible, the remaining resort is monetization. That's basically how you get to Argentina's situation.
As for giving up monetary autonomy, it is indeed a serious drawback to dollarization. But this is a second order problem compared to the kinds of problems facing Argentina, like findng a guy bleeding out after a road accident, and worrying about his obesity.
Nope. Let me quote Joeri from his second video (19 minutes in):
Pointing to Japanese money supply versus inflation is irrelevant because Japan doesn't fund its fiscal deficit via monetization. It issues debt, just like every other non-basket case economy on Earth.
The distinction is important. Debt is tied to a promise to repay later. Monetization has no such promise, so it's functionally equivalent to issuing debt and then immediately defaulting. So long as lenders believe debt will be repaid, the effects are different from monetization.
Here is an alternative Piped link(s):
https://www.piped.video/watch?v=prF1aUeTzzM
https://www.piped.video/watch?v=VEZsgAgYDhw
Piped is a privacy-respecting open-source alternative frontend to YouTube.
I'm open-source; check me out at GitHub.
Which other countries use it in Latin America? There are places which have used it relatively successfully, and de facto usage at least gives people more confidence.
It's because every time the argentinian government needs to pay something, and don't have the cash to do that, they print some billions and pay it. By literally printing monopoly money in huge quantity, they're devaluing their currency every time they print a batch.
The rationale is that if they're using the us dollar, the inflation will stop because it's controlled externally
But by using the us dollar, every time the argentinian government needs to pay something and doesn't have the cash to do that, need to borrow some heavy debt (at insane interest rate given their history where they didn't repay previous debts)
And would need an huge quantity of them in a short time to exchange and dispose the pesos from people and banks
If it was as easy as "just don't print monopoly money" they would have solved it.
Maybe it would be easier to just stop printing money than officially switching to a different currency
Politicians here don't hesitate on printing money to pay for things. Always have, and probably always will. He wants to take that possibility from their hands.
like zimbawee i think foir make a "stability" in the curency. (still worth nothing)