Businessmen do not buy Milei’s plan to dollarize the economy. Photo: Twitter.

“There are dollarization issues that I notice that not even economists are clear about”, “the problem is that people and economists do not understand the nature of the demand for money. And there is all the salad. What’s more, the formulation of the books is wrong, in the general equilibrium, income is not used as an argument and neither is the interest rate, because it arises from the relative price of present goods with respect to future ones,” he said on Tuesday. noon Javier Miley before the businessmen in the Llao Llao Forum.

The maneuver of saying many concepts and numbers in formulations that seem to be endowed with technical and theoretical rigorcomes in handy in armed television interviews and media appearances, but do not pass the test of a minimum level of seriousness.

As reported in the media, the ultra-right candidate’s explanation failed to convince his audience of the supposed effectiveness of dollarization as a plan to curb inflation. Rather, as we have been denouncing in this newspaper since the libertarian economist stirred up his dollarizing idea, it is a plan, not only unfeasible with the current level of reserves and the critical situation of the country, but a real catastrophe for workers and popular sectorssince it would generate a mega-devaluation with a collapse of wages, savings, and the economy, and with the possibility of generate hyperinflation and currency and bank runs.

Among the businessmen and CEOs present were Eduardo Elsztain (IRSA Group), Marcos Galperin (Free market), Marcos Bulgheroni (Pan American Energy Group), Martin Migoya (globe), Facundo Gomez Minujin (JP Morgan), Javier Goni (Ledesma), Agustin Otero Monsegur (San Miguel), carlos miguens (Patagonia Gold) y Veronica Andreani (Andreani).

Contrary to what common sense associates when talking about “dollarization”, which is the possibility of stabilizing the currency and “having dollars” in hand, if it were applied it would be a real dynamite to wages. Some estimates indicate that the dollar could soar to $2,600, $5,000 and even $10,000, meaning wages would melt to just under $40 a month.

The risk of a “self-fulfilling prophesy”

After his defense of dollarization before businessmen from the Rural Society Last week, Javier Milei continued his tour at the Llao Llao Forum. The mainstream media sympathetic to the concentrated interests of the economy began to reject this idea more fervently, in line with the analysis of different market consultants, which indicate the risks of implementing a measure of this type. They showed the disagreement of the businessmen and the doubts of “how” it would be implemented and its consequences.

It is that for the bourgeoisie, dollarization is not a viable plan today because would imply economic disorder and chaos that can open up uncontrollable social and political scenarios. This not only jeopardizes the “social order” they need to continue doing their business, but the economic collapse would also open the door to a total devaluation of shares of the main companies operating in the country.

In other words: not only would the plan lead to a possible default of public debt, but to the auction of private assets. Despite the appeal of demolishing wages and lowering their labor costs, this result no longer pleases the business class.

This does not mean that the very ones who gave air to Milei and encouraged his political growth are giving up their goal of advancing with regressive reforms for workers and a way out of the inflationary and economic crisis that falls on their backs (greater adjustment of social spending, a possible devaluation, more labor flexibility and another pension reform, among other measures).

The candidacy of the deputy of Libertad Avanza and the ideas that it promotes are functional to a shift of the agenda to the right. The question is whether the dissemination of his economic plan could not accelerate the rhythms of the crisiseven before a new government takes office, due to expectations of a devaluation that his own plan represents if Milei proves competitive in the primary elections.

In economics it is called “self-fulfilling prophecy“: the price of the dollar ends up rising because everyone acts expecting it to rise in the face of an eventual devaluation to dollarize, which increases the demand for the greenback and thus its price, and which pushes savers to get rid of their holdings and deposits in pesos In the current conditions of scarce net reserves in the Central Bank (estimated in the order of US$ 2,000 million to US$ 3,000 million), and with the exchange rate tension that already represents the current political and economic uncertaintythere is not much room to respond to major instabilities or market shocks carried out by financial groups.

Dollarize without dollars?

At Llao Llao, Milei sought to calm business concerns about a messy way out of the crisis, ensuring that “there will be no social cost” and made a historical reference to the application of shock programs in Argentina, stating that they were beneficial each time they were implemented. Among them, he assured that the most effective experience was the convertibilityomitting the catastrophic results achieved: one of the biggest crises in Argentine history, economic recession, half the population in poverty, 25% unemployment and 35 deaths at the hands of the repressive forces after the days of December 19 and 20, 2001, with De La Rúa escaping through the back door of the Casa Rosada by helicopter.

A report from the consultant 1816, of important arrival in the financial world, released last week rejected the feasibility of the measure. Milei maintains that the Central Bank’s liabilities (debt) have support, which would be the Treasury bonds that the BCRA itself has in its portfolio. But this look is untenable. By 1816, such a level of confidence of the entire world in the dollarization plan is impossible, and a “inflationary shock (that allows to liquefy the stocks of pesos) and/or a restructuring of Leliq” to reduce BCRA liabilities. The consultant estimates that with the current level of reserves (U$S 1,800 million) the exchange rate to initiate a dollarization could reach almost $10,000.

Faced with almost massive negative responses from economists of different stripes, Milei began to change the tone for the “red circle.” And when she recoils, despite maintaining her gesticulation and shouting, she begins to tell the businessmen that intends to be the fit candidate: that he will no longer go so far with his idea, he will not ignore the institutions of capitalist democracy (“if the Chamber of Deputies does not endorse it, I will call a popular consultation), and that he will apply anyway, if he cannot dollarize, a ferocious adjustment of spending to “solve” inflation.

Dollarization as a “magic solution” for the rostrum, a ferocious adjustment plan to satisfy the interests of its true representatives, the rich and owners of the country. His plan to dollarize is a true “Trojan horse” against the working class.


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