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Makes sense, if stuff is subsidized, the government has to pay for it. If the government doesn't have money to pay for it, they'll just print it out of thin air, devaluing the currency (and thus taxing the working class).
There's gonna be a lot of pain for Argentinians in the months and years to come, hopefully it'll all be worth it...
That is not the idea that he had in mind when devaluing the currency. Instead of respecting the international money market exchange rates for USD to the Peso, he has unilaterally declared a new value which is about half of what it was before. The idea is to make Argentinian goods and labor competitive on the international market so the country can vacuum up huge sums of money from greedy investors.
That idea is dumb though because investors tend to want some kind of political stability. They will not just say "Oh I can build my widget for 30% cheaper in Argentina because of this money woo" - they will say "Oh, Argentina will probably seize my assets if we invest there because they're being run by a nutjob dictator."
The black market rate was around 1000 pesos per dollar and the official was 400. They devalued it to bring it closer to the black market one.
If the official rate meant anything, the black market one wouldn't be so drastically different.
Instead of respecting the international money market exchange rates for USD to the Peso
You're completely ignoring the black market Peso : USD conversion rate, which is even lower than what Millei has shifted things to at about 1000 pesos per dollar. The aim is to try to get the rate to actually reflect reality.
This is the best summary I could come up with:
Mr. Galli has been trying to cut back without making life worse for his two daughters, who are 6 years and 18 months old, including switching to a cheaper brand of diapers and racing to spend his Argentine pesos before their value disintegrates even further.
“I prefer to tell you the uncomfortable truth rather than a comfortable lie,” he said in his inaugural address, adding this past week that he wanted to end the country’s “model of decline.”
The economic turmoil paved the way to the presidency for Mr. Milei, a political outsider who had spent years as an economist and television pundit railing against what he called corrupt politicians who destroyed the economy, often for personal gain.
The previous leftist government had used complicated currency controls, consumer subsidies and other measures to inflate the peso’s official value and keep several key prices artificially low, including for gas, transportation and electricity.
With the chronic high inflation, labor unions often negotiate large raises to try to keep up, yet those wage increases are quickly eaten up by sharp price hikes.
“I always say that we are at university, and every day we sit for a difficult exam, every five minutes,” said Roberto Nicolás Ormeño, an owner of El Gauchito, a small empanada shop in downtown Buenos Aires.
The original article contains 1,384 words, the summary contains 216 words. Saved 84%. I'm a bot and I'm open source!
He has been in office for 2 weeks I can't imagine this is a result of his policies yet.
Those actually sound like good things, but not because this guy is good
Diaper fetishists in shambles.
It os the same with the demagogues populists.
looks like someone needs to take econ 101