Post originally published on EconLib. Argentina, a nation that epitomizes inflationary finance, finds itself once again at a crucial juncture. The recent shift in leadership, marked by economist and self-described libertarian Javier Milei’s unequivocal statement that closing the central bank is non-negotiable, has reignited debates about the prospect of dollarizing the Argentine economy. Milei has initiated a tough austerity plan, to be succeeded by substantial deregulation. If these reforms are forthcoming, why dollarize? Here are three reasons.
I am afraid that Caputo is trying to increase demand for pesos while at the same time using a pegged rate. As we know from the Holy Trinity this will need capital controls, something Milei wants to abolish. Perhaps that explains his new 5% tax dollar withdrawals?
I am afraid that Caputo is trying to increase demand for pesos while at the same time using a pegged rate. As we know from the Holy Trinity this will need capital controls, something Milei wants to abolish. Perhaps that explains his new 5% tax dollar withdrawals?