Long-Term Predictions For The Peso?

[Matiasba]

It's funny you should place the time period at 50 years.

The solution in the 1950s was import substitution: start producing things in Argentina instead of importing them from abroad. After the 1955 coup, Aramburu and Frondizi favoured foreign capital in order to provide capital goods that Argentina had been producing. This decimated what until then had been surging industrial capacity. Still, there is no reason why Argentina cannot someday produce most of what it now imports for heavy industry.

yeah, I was thinking of desarrollismo when I put 50 years..

The other problem of not having industry is that, unlike other countries, our competitive sector (entrada de divisas) is the agro... so its like we must finance industry from agro dollars, which means a political fight with the people that hold the power here.
And it never continues growing itself, you have to constantly put money on industry... the farther you go industrialising, the more you need to import capital goods... thats why I dont see a solution.. maybe in the future with a little help from Brazil, some exchange can beneffit us

 

[Mockingbird]

Devaluation is caused by inflation. That is never good for the working middle class. Unless youre claiming job salaries are keeping up with real inflation rates Its only good for those who have access to current and future monetary policies like NIRP and ZIRP and yes QE. The EU just introduced NIRP, calling it failed is premature. Although its great for big business. You most certainly arent up to date with how current monetary policy works. Thats my point, the only people benefitting from current central bank monetary policies are the top 1%. If you want to argue otherwise, im all ears.

Trickle down, QE, ZIRP(NIRP) are all failed policies to benefit the 1%. They are the opposite of demand side stimulation and a weak currency. The 1% want a strong currency and a weak labour market. You are confused.

 

[thorsten]

Devaluation is caused by inflation.

What?

 

[EdRooney]

I agree completely: the only ones benefiting from the Quantitative Easing and Zero Interest Rate policies in the US/EU/Japan are the extremely wealthy. I have been arguing that for years on this forum, just search my previous posts.

But let's compare what is happening in those countries to what is happening here. In the US for example, the Consumer Price Index has barely budged in ages; there is little to no inflation. Meanwhile, real wages have been steadily decreasing, accompanied by a dismal jobs market. Sure that Frappuccino costs the same as it did in 2006, but with crappier low paying jobs, increased debt for education, healthcare and housing, who the hell can afford it?

Meanwhile, Argentina has excessive inflation, but it also has paritarias to keep wages on pace with or ahead of inflation. Thus, to take a basic staple, in 2006 the minimum wage was equivalent to 160 L of petrol. It is now equivalent to 300 L. Prices have gone up, but overall real wages are increasing here, while real wages are decreasing in countries practising Quantitative Easing. (Remember real wages= wages adjusted for inflation).

On the other hand, whom does deflation and a strong currency benefit? Lenders and employers. A weak currency, as I described above, creates jobs; a strong currency (->trade deficit) destroys jobs. That is exactly why the capital concentrations that run the US have worked to keep the dollar very strong for at least the last 25 years: in order to weaken labour.

 

[Chet]

But let's compare what is happening in those countries to what is happening here. In the US for example, the Consumer Price Index has barely budged in ages; there is little to no inflation.

The US CPI is a lie. The tow biggest expenses for real people are not included - food and energy.
Real inflation is much higher.
And wages/retirement incomes are mostly geared to the published CPI, real purchasing power in the US is dwindling.

 

[Rich One]

The US CPI is a lie. The tow biggest expenses for real people are not included - food and energy.
Real inflation is much higher.
And wages/retirement incomes are mostly geared to the published CPI, real purchasing power in the US is dwindling.

What about housing? rentals go up with the CPI or are frozen ? as far as I know...!
Ed you are an expert in pinpoint flaws of the USA economic system! can you outline a few of your Suggested winning policies??

 

[Matiasba]

Meanwhile, Argentina has excessive inflation, but it also has paritarias to keep wages on pace with or ahead of inflation. Thus, to take a basic staple, in 2006 the minimum wage was equivalent to 160 L of petrol. It is now equivalent to 300 L. Prices have gone up, but overall real wages are increasing here, while real wages are decreasing in countries practising Quantitative Easing. (Remember real wages= wages adjusted for inflation).

So when I tell you that this government is the first one in decades that support the working and middle classes, having, for instance, the Argentine the real (not nominal) salary being the best of the region, you believe me? can you see the things that have been made right? you know we come from the worst crisis ever? have you any idea of what former governments were? You will see after 2015 to compare.

edit: theres a 30% of people outside paritarias, but are heavily subsidiados.

 

[Ries]

I am a little amused when you say there is "no heavy industry" in argentina.
Certainly, its not the Ruhr or China- but for the size of the country, there actually IS heavy industry. There is a steel industry, Siderar, with a steel mill, and several processing plants downstream capable of making pipe and sheet.
There are shipyards.
There are several automobile factories.
There are tractor and agricultural implement factories.
There are foundries.
There are machine tool manufacturers.

Certainly, Argentina is not completely self sufficient in heavy industry, but it has the infrastructure, and possibility, to build cars, trucks, construction equipment, agricultural equipment, ships, and, without too much of a stretch, it could build trains and airplanes again, as it has on a small scale in the past.
It could increase its steel making capacity, but it does have 2.7 million metric tons a year steel making capacity right now.
It has Aluar, the one of the largest Aluminum smelters in South America.

There are things missing, for sure- but overall, heavy industry in Argentina is better than in dozens of other countries of similar size.

 

[Don Alberto]

On a micro scale yes. Certain industries that are dependent on difficult to replace imported goods will inevitably have a harder time finding domestic suppliers. But the upside is that it opens up the opportunity to start producing those goods locally, thus giving jobs to people locally instead of abroad.

How on Earth will you start producing anything but Panamahats etc. without capital goods (machines)? Building e.g. a 380,000 ton bulk carrier based on handicraft without the help of machines is a tedious affair.

 

[Mockingbird]

Im sorry. I honestly stopped reading when you quoted the CPI as accurate.

I agree completely: the only ones benefiting from the Quantitative Easing and Zero Interest Rate policies in the US/EU/Japan are the extremely wealthy. I have been arguing that for years on this forum, just search my previous posts.

But let's compare what is happening in those countries to what is happening here. In the US for example, the Consumer Price Index has barely budged in ages; there is little to no inflation. Meanwhile, real wages have been steadily decreasing, accompanied by a dismal jobs market. Sure that Frappuccino costs the same as it did in 2006, but with crappier low paying jobs, increased debt for education, healthcare and housing, who the hell can afford it?

Meanwhile, Argentina has excessive inflation, but it also has paritarias to keep wages on pace with or ahead of inflation. Thus, to take a basic staple, in 2006 the minimum wage was equivalent to 160 L of petrol. It is now equivalent to 300 L. Prices have gone up, but overall real wages are increasing here, while real wages are decreasing in countries practising Quantitative Easing. (Remember real wages= wages adjusted for inflation).

On the other hand, whom does deflation and a strong currency benefit? Lenders and employers. A weak currency, as I described above, creates jobs; a strong currency (->trade deficit) destroys jobs. That is exactly why the capital concentrations that run the US have worked to keep the dollar very strong for at least the last 25 years: in order to weaken labour.