More Kirchner News

[JHB1216]

Kirchner in the foreign news more since her re-election than she has in the last 3 years. The latest is from the Wallstreet Journal columnist MARY ANASTASIA O'GRADY.

"Last month the Kirchner-controlled Congress delivered what could be the coup de grace for the Argentine economy: a reform of the central bank charter that eliminates a 1991 monetary rule requiring that base money be backed up by international reserves and placed beyond the control of the government. The central bank board now will come up with some formula for the amount of reserves to be kept on hand. Reserves above that amount will be available for Mrs. Kirchner's government to borrow. The formula can be adjusted at any time."

http://online.wsj.com/article/SB10001424052702303404704577313761154794238.html

 

[camberiu]

Let the printing begin!!!!!!

 

[jimdepalermo]

This just "legitimized" the practice that's been going on since Cristina fired the last independent director of the BCRA in early 2010 for refusing to transfer dollar reserves to cover a shortfall in foreign interest payments. It's very old news - typical of the WSj these days.

 

[lucha54]

Is this that much different from what the US does ?? Fiat currency with no need for actual backing... please explain if you can make a comparison or contrast.. cheers

 

[nicoenarg]

This just "legitimized" the practice that's been going on since Cristina fired the last independent director of the BCRA in early 2010 for refusing to transfer dollar reserves to cover a shortfall in foreign interest payments. It's very old news - typical of the WSj these days.

I think WSJ is talking about formally legalizing it through congress which they "just" did.

 

[surfing]

Is this that much different from what the US does ?? Fiat currency with no need for actual backing... please explain if you can make a comparison or contrast.. cheers

Not that one is any better than the other but the U.S. can get away with money printing (for now) because the dollar is (for now) a world reserve currency; the peso, not so much.

 

[wreReynolds]

No nation backs its currency anywhere near 100%, most are in the single digits. Even when the US or the UK were the so-called 'gold standard' they didn't back their currencies totally, rationalizing that everyione wouldn't want gold all at once. Paper was, is and always will be an illusion backed by the billions of peole who believe in it.

And he purpose of foreign reserves has never been to back a nations currency. It is to ensure you can pay your international bills, particularly for oil and other strategic commodities.