Weeks ago the British weekly The Economist published strong criticism of the presidential candidate for La Libertad Avanza, Javier Milei, and now gave him space to exercise his right to reply. Over there The libertarian explained his proposals and maintained that he plans to close the Central Bank if he is elected President.
Milei wrote that he has a million-dollar investment fund offer to implement your transition program. On the other hand, he warned that Argentina is “on the brink of hyperinflation” and denounced that “in the last year Argentines paid US$ 90,000 million in inflation tax.”
“In the last 200 years, Argentine politicians and those who manage them benefited from the status-quo, and stole billions of dollars from workers via the inflation tax“, he continued, emphasizing that the current government stole “US$ 90,000 million.” “On the other side, there are Argentine workers, some living in such poverty that they cannot eat, despite working harder and harder, while others see their children leave the country due to lack of opportunities,” he added.
The presidential candidate with the most votes in the August primaries began his text by relating the creation of the central bank with inflation, since, as he explained, “the peso, which had previously been one of the strongest currencies in the world, began its ignominious decline, laying the foundations for the rise of Peronism.”
He then described the country’s hyperinflationary periods and that finally In 1991 “we rediscovered the healthy currency with the adoption of a new exchange regime that pegged the peso to the dollar.” through convertibility; “we went from having the highest inflation rates in the world to having the lowest.”
Like, according to the libertarian, “Argentine politicians did not like the idea of doing politics without easy money” and that is why convertibility was ended in 2002, which “plunged the economy into the worst recession since 1930.”
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Between 2003 and 2015, the candidate said, “Néstor and Cristina Kirchner returned to old tricks and inflation was sliding until it was more than 30% when Mauricio Macri took office.”
Regarding the current inflation, he blamed “the mixture of monetary excess due to current controls and the explosive deficit of the BCRA”, a situation that “makes the country once again on the verge of hyperinflation.”
“The question to ask is not whether we should dollarize, but rather what reason there is to maintain the peso“, he pointed.
Regarding the closure of the BCRA, the liberal candidate listed three reasons:
- Just as it is a crime to print counterfeit bills, The Central does the same by “falsifying pesos”, because it has the monopoly power of issuance, derived from the condition of the peso as a forced currency. “In other words, it’s okay for a politician to steal, but it’s a crime if a citizen does it.” “Any action taken by the BCRA will take prices out of control,” he warned.
- Secondly, he explained that the BCRA can only determine the price level of the economy, and, since there is also no “optimal monetary policy”, nor does it have all the necessary information, His interventions are “always harmful.”
- Finally, Milei highlighted the insolvency of the BCRA, whose net international reserves are negative and whose debt to the banking system is three times the monetary base. “Together with my advisors I am studying several possible ways to solve this problem, and we have received proposals from international investment funds that could help us in a transition period,” she anticipated. The implicit inflation in a dollarization scenario is much lower than other stabilization plans, she explained and concluded. “Our solution offers a path to more stable prices with a greater probability of success.”
The Economist’s questions to Milei
The British media characterized Milei as “an eccentric academic” “more than a presidential hopeful”, a believer in “conspiracy theories” and a “climate change skeptic”.
“Javier Milei would represent a danger to democracy in Argentina“, was the title with which the weekly presented the note, warning that “despite his neoliberal credentials, the presidential candidate has an authoritarian streak.”
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“The next president will surely have to go to the IMF, and this is the kind of delicate diplomatic task for which Milei clearly lacks the right temperament. His closest advisor appears to be his sister. She says inflammatory things about his opponents. “She suggested that a former presidential aide should be beheaded,” the outlet warned.
Besides, The Economist alarmed that Milei is a “fan of Jair Bolsonaro, a populist former president of Brazil who copied some of Donald Trump’s anti-democratic tactics. He appears to believe in conspiracy theories about electoral fraud in Brazil and, more worryingly, in his own country. Despite coming first in the Argentine primaries, he claims that 5% of the votes were ‘stolen’ from him.”
“His running mate, a former lawyer for soldiers accused of atrocities during the Argentine military dictatorship from 1976 to 1983, highlights the crimes of leftist guerrillas who fought against the junta, rather than the bloodiest acts of the junta itself,” the outlet notes. “Intemperate, reckless and extravagant: little about Milei suggests that he is the savior that Argentina needs,” the publication says.