Faith in economic dogmas: ideas and extreme solutions in times of crisis

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Arm firm and extended forward, hand open, gaze straight ahead and serious eyes as if lightning or the levitating charm of Harry Potter came from there, that magic trick of the movies to move objects in the air. But it’s Javier Milei, Argentina’s 2023 presidential candidate, and the picture of him on the cover of his recent book The end of inflation, eliminate the Central Bank, end the inflation tax scam and go back to being a serious country.

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The economist confirms his interest in dollarization. He says the exchange rate for this deal would be between $300 and $3.50 (he mentions $300 first and then $350), which he says is a “more purist” proposition. it would take at least two and a half years to take that step —First, the current banking system should be changed to one called “Simons banking,” the idea of ​​a libertarian economist at the University of Chicago, Henry Calvert Simons, who proposed a banking system with a reserve reserve of 100%—, to then launch a currency competition and only then, once the Argentines choose, “eliminate the Central Bank”.

It also offers another alternative to its “purist”. He is one of the economists Emilio Ocampo “that can be done much faster.” He doesn’t specify for how long.

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Freedom’s candidate advances, deluding readers that thanks to his plan, he pays in dollars “they are going to fly” (NEITHER: refers to ascend), “There will be a sharp decline in poverty and destitution” AND “a huge welfare gain”. All this, continues the candidate, “for the mere fact of having made a monetary change that puts an end to the scam”.

Milei is convinced of liberal ideas and the reforms needed to apply them (three according to him: State, work and economic openness). However, there are other economists who share similar ideas (such as Ricardo López Murphy or José Luis Espert). they think differently from Milei regarding the political strategy to achieve the objectives.

In the end of inflation, Milei criticizes — in addition to Kirchnerism and JxC — socialist ideas. Mentions Axel Kicillof.

It’s one thing to talk about economics and quite another to do economics. In Milei’s case it is not clear —at least in the book— the practical application of your ideas (The same thing happens with those of Kicillof or those convinced of very rigid schemes). Milei accepts those limits. The Central Bank is suppressed and the economy is dollarized. To be realistic, the formula for getting this country off the ground will take many years, at least 35 or 40. The first thing will be to bring inflation down substantially. If the issuance of money stopped today, there would be no more inflation within two years”.

The economist Adolfo Canitrot said: “To lower inflation I am monetarist, structuralist and whatever it takes; and if you have to resort also to the macumba”.

Argentina’s problems can be so complicated that they require the invocation of a power that comes not only from the earth but also from the sky. In crises the convinced capture faith.

Source: Clarin

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