Value Of The Usd V.s. The Peso

[Noesdeayer]

rickulivi:
A very good ,clear and concise explanation.However,it is not necessary to almost "berate" other posters who fail to grasp your point of view from the onset.Not everyone is that interested in finance in inflationary economies.

 

[UK Man]

The traditional recipe calls for forcing a tough enough recession that no one dares to raise prices to avoid losing even more sales. At that point you may be able to devalue a currency without causing inflation. There are other ways to devalue without causing inflation, like allowing imports to arrive freely. In sum, devaluing without causing inflation is a tough act. Will Macri b Abo to do it? With his track record, he just might, if a heart attack does not kill him before he can work the magic.

Makes sense to me and works perfectly in countries that have a healthy economy.

And the best thing about it is it gives power back to the consumer rather than the seller which hasn't been happening for a long time here.

 

[Rich One]

The traditional recipe calls for forcing a tough enough recession that no one dares to raise prices to avoid losing even more sales. At that point you may be able to devalue a currency without causing inflation. There are other ways to devalue without causing inflation, like allowing imports to arrive freely. In sum, devaluing without causing inflation is a tough act. Will Macri b Abo to do it? With his track record, he just might, if a heart attack does not kill him before he can work the magic.

Traditional Economics Do Not Apply in Argentina....!

 

[Rich One]

The traditional recipe calls for forcing a tough enough recession that no one dares to raise prices to avoid losing even more sales. At that point you may be able to devalue a currency without causing inflation. There are other ways to devalue without causing inflation, like allowing imports to arrive freely. In sum, devaluing without causing inflation is a tough act. Will Macri b Abo to do it? With his track record, he just might, if a heart attack does not kill him before he can work the magic.

Traditional Economics Do Not Apply in Argentina....!

As Explained by an Argentine businessman "When sales Go down he increases the prices to have the same total sales revenue...! Supply and Demand ??? Porteño Economics 101

 

[Chaya]

As Explained by an Argentine businessman "When sales Go down he increases the prices to have the same total sales revenue...! Supply and Demand ??? Porteño Economics 101

What an idiot. Sure way of going out of business. Higher prices will equal less customers the next month. So he again increases his prices to get the same income. The logic of this is he will have an ever decreasing number of customers each month as he increases his prices each month.

Eventually this logically will lead to him having one customer in the month to pay for all of his rent, power, wages, cost of 1 good sold at an enormous markup.

The damage to a society of long term socialism is far worse than most realize. This man has lost the ability to think like a businessman. Very sad.

 

[Chaya]

Does anybody have an idea as to why the peso value is INCREASING relative to the dollar in the face of 40% inflation?

I would have though that the USD would be a natural hedge against inflation but it seems that the reverse is happening.

The only explanation I have is that there is somehow a huge inflow of USD buying pesos but from where and whom?

Theories..... anybody?

You are correct in there being a large influx of $US. For example EXXON his pouring in $US10 billion into oil drilling in the south. Massive projects are coming to Argentina that have the potential to dramatically increase the wealth of the nation. Dislocation due to change is expected. But I for one am very positive for the future of Argentina.

 

[Rich One]

You are correct in there being a large influx of $US. For example EXXON his pouring in $US10 billion into oil drilling in the south. Massive projects are coming to Argentina that have the potential to dramatically increase the wealth of the nation. Dislocation due to change is expected. But I for one am very positive for the future of Argentina.

EXXON US$ 10 billion over what period of time has it started already ??? Chevron has only invested US$ 250 million so far nad is slowing down on drilling??

 

[Rich One]

What an idiot. Sure way of going out of business. Higher prices will equal less customers the next month. So he again increases his prices to get the same income. The logic of this is he will have an ever decreasing number of customers each month as he increases his prices each month.

Eventually this logically will lead to him having one customer in the month to pay for all of his rent, power, wages, cost of 1 good sold at an enormous markup.

The damage to a society of long term socialism is far worse than most realize. This man has lost the ability to think like a businessman. Very sad.

The local butcher has a captive market , local customers can't go to more distant supers or shops, they will buy no matter what LESS asado at higher prices . Keeping the constant income flowing-


We all read the buggy whip case study Does it apply here

 

[TrevorCito]

The exxon investment in Argentina... http://www.bloomberg.com/news/articles/2016-06-03/exxon-ceo-says-argentina-shale-investment-may-exceed-10-billion

 

[TrevorCito]

Here's a radical idea...

The current theory of inflation blames money printing but is this the real cause?

I think it's actually caused by how quickly people buy things (velocity of money) AND the lack of trust people have in the money. Of course, excess supply must exist as fuel but it's not the cause.

What I'm saying is that Argentina could easily soak up international investment USD by printing more pesos without stoking inflation and this will prevent pesos over valuation.

Thoughts anybody....?