By Panam Post
The Central Bank of Argentina released record-setting figures this month: the monetary base is now at AR$510.5 billion, swelling 10 percent since the start of the year. The central government has used this substantial expansion — comprised of banknotes in circulation, cash in financial entities, and demand deposits in checking accounts — to finance its large fiscal deficit.
President Cristina Kirchner’s administration has monetized the debts with new currency channeled through the National Treasury, on top of raiding the social-security system (Anses). Naturally, this has generated inflationary pressure, with the latest reported year-on-year price-level rise at 28.76 percent, as measured by the National Congress and private consultants for May 2015.
In the wake of the July 3 data, Argentinean economist Javier Milei says the government must accept responsibility for the inflation. “As Friedman said: consumers may be wasteful; entrepreneurs may be greedy; trade unionists may be greedy with pay; the Arab sheiks may raise oil prices; it may be that weather conditions are unfavorable; but the government is the only one able to print those colored pieces of paper that we have in our pockets today.”
Although Argentina has yet to arrive at hyperinflation, she is no stranger to it. Residents suffered through months of it in the 1970s and 1980s, with prices exploding at rates of up to 70 percent per month.
“These days Argentina’s inflation rate is 40 times higher than... (Read More)
By Panam Post