The trap against the dollar that Cristina asks, the lack of internal control and attention to the evil of business

In her fiery speech at the CTA plenary session, Cristina Kirchner focused on the question: “When the dollars run out, the race to devaluation and break begins.”

But this is not quite the case today in Argentina, which this year will have a records of exports and dollar income hand in hand with the high international prices of wheat, corn and soybeans.

The essential problem with foreign exchange these days is that the dollars that come from rural exports are choose high energy imports and imports in general. The Central Bank fails to increase the level of reserves which, in passing, is noteworthy, is one of the most difficult objectives to achieve in order to comply with the agreement with the International Monetary Fund.

For the vice president, the lack of dollars generated in her vision by Mauricio Macri’s government debt is the root cause of Argentina’s high inflation.

According to Cristina Kirchner, the country’s 60.7% inflation is not due to the fiscal deficit or the monetary issue, but to the lack of dollars even when, as she admits, Argentina has no shortage of dollars today. Her problem from her particular point of view is that the dollars don’t stay in the country because they “run away.”

In addition to the criticism that dollars do not remain in the country (otherwise there would be no imports and economic activity would collapse), the vice president underlined by questioning the exchange “gap” and placing it in the formation of prices, which are part of fulcrum of business evils.

One of the most popular lessons of economics is summarized in what economists refer to as PXQ, where p stands for prices and q stands for quantities.

The next lesson is that a government can control prices or quantities but it ends up being Cannot check both variables at the same time. The most common case these days is that of diesel: controlled and relatively low price and scarcity.

A Dantesque sight is the huge queue of Paraguayan cars on the Encarnación-Posadas bridge waiting hours to get to Argentina to load up diesel and petrol (will anyone bring a drum?).

In the case of the overdue or relatively cheap official dollar, the story is well known: those who have pesos or have to buy products or parts overseas try to do so through the official market.

“Financial repression”, as the economist Marina Dall Poggetto calls it, always generates double or triple market like in diesel or dollar.

The exchange rate gap creates the temptation to underestimate exports in an attempt to leave “dollars free” out of the country or to overvalue imports seeking the same result.

But the key is in the trap. Do we have to remember when Alberto Fernández said that the trap is a revolving door that if a stone stops it prevents dollars from going out but also from entering?

The vice president did not like that argument and went on the attack: she asked for more controls on Production, AFIP and Customs, so that, if it materialized, an increase in import orders was to be expected at what is emerging as a strong hardening of the ring.

Perhaps a tandem Alberto Fernández-Daniel Scioli will take on the tactic required by another tandem: Cristina Kirchner-Axel Kicillof. The governor received several pats of approval from his boss.

The policy of tightening the trap, in the event that the vision of the vice president prevails, is obviously to be sought avoid a devaluation of the peso which would trigger a new leap in inflation.

The dual currency economy

Beyond the fact that Cristina Kirchner tries to pin all the blame on the previous government and the rants against non-working officials, the dollar “counted for liquidation” has risen from $ 210 to $ 240 in recent weeks, bringing the gap. to almost 100% and leaving it clear that the mistrust that the government can balance economic variables the key is active and alert.

What was missing in the concept of the bi-monetary economy is the role of pesos that abound but fail to find a way to cover themselves from galloping inflation despite the Central Bank having been raising the official dollar below the increase in the cost of living for months. .

Perhaps the nine defaults ordered by Argentine governments, the idea that the state and non-productive investments are the engine of the economy, and the tearing inflation in the pockets of people who hopefully have jobs, explain. the lack of confidence in a weight that has lost thirteen zeros in recent years. And that the lack of an efficient diagnosis has led to a bi-monetary economy that, once again, seems destined to be cured with tools that have already proven their failure even when they can prolong the arrival of the end.