In a significant legislative move, Argentine President Javier Milei has successfully passed his omnibus law, known as “Ley Bases.” This marks a crucial milestone in his administration as he transitions into the second phase of his government.
While I believe I get your point I wonder how difficult is it for a future government to issue a new monetary sign, to enforce it and to print it without limits. On the other hand, if it’s possible to establish a law classifying the printing of ‘more’ money as a crime against humanity (lesa humanidad) it could actually be a sustainable and strong mean to preserve monetary sanity. Don’t you think so?
Issuing a new (fiat) money is not an easy task, because there is no market "history" and information to set prices.
I wouldn't classify "printing money" as a crime against humanity. It is not that type of crime. It can easily be ignored legally. For instance, having a national bank buy pesos from the central bank (by issuing debt), and then having the national banks' lending that money to the Treasury. Argentina has done this before. Finally, not printing money is not a good monetary policy, so I wouldn't recommend going that route.
It’s a good point that issuing a new fiat currency might be complicated but you would agree it’s not a deterrent for thirsty Argentinian politicians.
I take your point about legal challenges to consider printing money a crime against humanity.
With respect to ‘not printing money’ as monetary policy, isn’t this what happens in the scenario of a full dollarization? I understand that in both cases (full dollarization and currency competition while forcefully preserving a specific monetary base) the total monetary base would expand as the result of incoming dollars during economic expansion. Is this the right understanding?
1. It is a real complication (see the recent failed attempt to issue "Chachos").
2. In a formally dollarized economy, there is no base money as typically understood. Yet, money supply is not fixed. "Primary" creation of money takes place through international flow and "secondary" creation of money takes place as usual. The point is, *if* a country is going to manage its own BM, fixing its quantity as a bad rule.
While I believe I get your point I wonder how difficult is it for a future government to issue a new monetary sign, to enforce it and to print it without limits. On the other hand, if it’s possible to establish a law classifying the printing of ‘more’ money as a crime against humanity (lesa humanidad) it could actually be a sustainable and strong mean to preserve monetary sanity. Don’t you think so?
Issuing a new (fiat) money is not an easy task, because there is no market "history" and information to set prices.
I wouldn't classify "printing money" as a crime against humanity. It is not that type of crime. It can easily be ignored legally. For instance, having a national bank buy pesos from the central bank (by issuing debt), and then having the national banks' lending that money to the Treasury. Argentina has done this before. Finally, not printing money is not a good monetary policy, so I wouldn't recommend going that route.
It’s a good point that issuing a new fiat currency might be complicated but you would agree it’s not a deterrent for thirsty Argentinian politicians.
I take your point about legal challenges to consider printing money a crime against humanity.
With respect to ‘not printing money’ as monetary policy, isn’t this what happens in the scenario of a full dollarization? I understand that in both cases (full dollarization and currency competition while forcefully preserving a specific monetary base) the total monetary base would expand as the result of incoming dollars during economic expansion. Is this the right understanding?
1. It is a real complication (see the recent failed attempt to issue "Chachos").
2. In a formally dollarized economy, there is no base money as typically understood. Yet, money supply is not fixed. "Primary" creation of money takes place through international flow and "secondary" creation of money takes place as usual. The point is, *if* a country is going to manage its own BM, fixing its quantity as a bad rule.
Thanks!