Endless inflation: the economic crisis in Argentina
Argentina is facing an unprecedented economic crisis. Galloping inflation and the constant devaluation of the currency have plunged the country into an economic slump from which it is struggling to emerge. Faced with this disastrous situation, more and more Argentines are turning to a radical solution: dollarization of the economy.
Javier Milei, “anarcho-capitalist” candidate for the Argentine presidency, has made this proposal one of his main campaign axes. With an anti-elite discourse and a liberal economic vision, he succeeded in attracting many voters disillusioned with the political class in place. The idea of replacing the peso with the dollar indeed seems to be a viable solution to put an end to the country’s galloping inflation and monetary instability.
However, this proposal is far from unanimous among economists. Dollarization of Argentina’s economy would require a large stock of liquid dollars to replace the country’s monetary base. However, Argentina does not currently have sufficient reserves to make such a transition. Moreover, borrowing on international markets proves difficult for a country constantly on the verge of bankruptcy.
Despite the criticism, Javier Milei’s speech resonates with many Argentines, desperate by the economic crisis which is hitting them hard. Poverty has reached record levels, and economic measures put in place by previous governments have failed to reverse the trend.
The issue of dollarization also raises important social and political issues. Indeed, this would call into question Argentina’s monetary sovereignty, as well as the economic policies pursued by successive governments. This could also have consequences for social policy and the redistribution of wealth in the country.
It is still too early to know whether the dollarization of the Argentine economy will really be implemented. But one thing is certain: the current economic crisis is pushing Argentines to consider radical solutions to break the deadlock. The upcoming presidential election will be a crucial moment in determining the economic path the country will take. In the meantime, Argentines continue to face endless inflation and a declining economy.