The most dangerous words in monetary policy and economics are “this time is different.” The big mistake of politicians in Argentina is to believe that inflation is multicausal and that everything is solved with increasing doses of interventionism.
The consumer price index in Argentina experienced a year-on-year rise of 58% in April 2022, which means 2.9 percentage points above the variation registered last March. A real catastrophe. Inflation in Argentina is more than six times higher than that of Uruguay, five times higher than that of Chile, four times higher than that of Brazil or Paraguay, neighbouring countries exposed to the same global problems.
No, inflation in Argentina is not multi-causal, it only has one cause: an extractive and confiscatory monetary policy. Printing pesos without control and without demand. Argentina balloons its monetary base to finance excessive, inflated, and destructive public spending.
So far this year, the monetary base has increased by ...