If there was something missing these days among so much talk of dollarization, it was the word of the father of convertibility, Domingo Cavallo. The former economy minister raised the issue and praised Javier Milei, who once again put the debate on the plan back on the table.
For the economist, Milei “predicts that the policies of the Frente de Todos and those proposed by the rest of the political forces, will inexorably lead to hyperinflation because eventually people will completely reject the peso”.
“The first thing to note in understanding Milei’s proposal is that he, as a presidential candidate in 2023, obsessed with the impact of his style of communication, wants make it absolutely clear that your first priority will be to eradicate inflationsomething that by all polls is the biggest popular demand right now,” Cavallo said of the Libertad Avanza MP and his political future.
According to the former minister of the Menem era, this is how “the economists of Ensemble pour lechange realized that from the communication point of view the candidate for the libertarian presidency He preceded them as a herald of the fight against inflation. And he did it in a way that people understand, taking into account the experience of the Convertibility Plan and the dollarization of the 90s.”
The economist again wrote on his personal blog. The title of his last post published on Thursday is: “The agreement with the IMF and the discussion on dollarization reveal dangerous ideological conflicts. For him, the presentation of the deputy of the UCR Evolución, Alejandro Cacace, on dollarization worked “as a starting point for a change of economic paradigm”.
Between praising Milei and criticizing the ruling party, Cavallo devoted a paragraph to another economist, Carlos Melconian: “The most intelligent answer to the discussion on the proposal for full dollarization, was that of Carlos Melconian. Your criticism is relevant and constructive to Cacase’s proposalbut that does not invalidate Milei’s proposal.”
“Melconian argued that full dollarization is not possible because there are virtually no reserves. He used the metaphor that, to dollarize before, David Copperfield would have to show sufficient reserves in the balance of the central bank. He preferred to resort to the image of a magician rather than the darker image of hyperinflation,” he said.
In short, for the economist, “the interest of this discussion on dollarization is that it forces political leaders to think seriously about the need to stabilize and at the same time to revive the growth of the economy”.
In the tour he gave of his text, before tackling the question of dollarization, the former minister mentioned the internal conflicts of the Front pour tous. Cavallo noted that Vice President Cristina Fernandez de Kirchner “She was unwilling to allow ideas and strategies different from hers to prevail.” and Alberto Fernandez Alone “has resigned himself to signing the very unambitious agreement with the IMF“.
“The virulence of the confrontation makes it difficult to predict that the government will implement the measures envisaged in the agreement without serious social conflicts,” he said. And he added: “It is unimaginable that the Christian sector of the Frente de Todos would make common cause with Albertism in an attempt to neutralize and control these outbursts.
In the midst of all the internal conflicts that the ruling party is experiencing, Cavallo also spoke about the position of the always mediator Sergio Massa. According to the former head of economy, the president of the Chamber of Deputies could stop trying to find a balance between Alberto and Cristina and “attempting an alliance with the radicalism of Gerardo Morales” what to assemble “a space far removed from both Kirchnerism and Macrism”.
“The television appearances of Martin Redrado and of Jose Ignacio de Mendigurentalking about how to deal with economic problems, are part of this third strategy of what is still today part of the Frente de Todos,” he said.
Finally, Cavallo also spoke about the internship between the president of the UCR, Gerard Moralesand leaders led by Martin Lousteau; only by the skills internal to the PRO. “This confrontation within radicalism is very worrying because it reproduces to some extent that which existed within this same force between Alfonsinism and Delaruism which contributed to the failure of the Alliance government in 2001.”