You need to take the medicine you need

In recent months, there has been public discussion over whether Argentina is heading towards hyperinflation. It is clear that we have not reached there. Those of us who had the misfortune to experience one or more of the last three that the country experienced know the extent to which it leads to impoverishment, stress and social disintegration. A few years ago, the “trap” implemented by dictator Hugo Chávez in Venezuela broke and more than 80% of Venezuelans fell into poverty.

In Argentina, reality data shows that the management of Alberto Fernandez and Sergio Massa created a hyperinflationary process. If we look for inflation rates or free dollar equivalent values ​​(at today’s prices) like in recent months, we will find that they only occurred before or after hyperinflation. That is, if there has not been an explosion yet, we are moving towards it.

Fortunately, the change in government halted the pace of this process. On the one hand, the current administration sought to rapidly end excess spending, which was to be financed from the Central Bank (BCRA); Which allowed us to stop broadcasting it. In this way, the machine quickly stopped working, as it was doing it to “put money in people’s pockets” for the elections.

On the other hand, voters elected President Meili to set the public accounts in order and change the direction of Argentina, with the expectation that it would be a normal country. That hope made it possible to stop the rising flight of the peso, with which people sought to protect themselves from the scandal of the BCRA, which took away purchasing power to finance the excess spending of the previous government.

This reduction in demand for money was also helping to accelerate the decline in the value of our currency. Unfortunately, the destruction of the purchasing power of the peso that has already occurred will take up to four months to be reflected in the overall prices of goods and services. Therefore, even if things are done very well from now on, high inflation will persist until at least the first quarter of 2024; However then it will tend to go down faster and faster.

Changing Argentina’s direction therefore requires an indispensable commitment from the political leadership to the electorate. The taste of the medicine necessary to cure oneself cannot please the opposition; But it is important to take it. Oh, and there’s no water added so it doesn’t taste so bad. Medicine that is too diluted loses its healing power and there is no time left for childishness.

The patient is terminally ill and, if he is not given the right treatment that guarantees that people will see the change in the model he is seeking, he will die. The flight of the peso will return and they will be responsible for leading us to hyperinflation and, in this chaos, we cannot rule out the return of demands to “let them all go”, in the face of a leadership that Shows that it prefers to protect its own and others’ corporate interests, rather than the demands and well-being of the vast majority of Argentines.

Aldo Abrams is an economist. Director of the “Freedom and Progress” Foundation.