Politics
Out of context: Reply #33716
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- neverscared1
... my immediate reaction when I first heard about Milei’s inflation plan was, “This sounds a lot like the Argentine tablita 2.0.” What? In the late 1970s both Argentina and Chile tried to control inflation with what economists call a “tablita”: an exchange-rate-based stabilization plan that slows the rate at which a currency is depreciating in the hope that this will reduce domestic inflation. In both cases the reduced rate of depreciation temporarily reduced inflation and interest rates, because investors became more willing to hold peso-denominated assets, which in turn caused an economic boom. But these booms were short-lived, because while inflation did, in fact, slow, it didn’t slow enough to avoid serious problems. With prices in these nations rising faster than their currencies were falling against their trading partners, both countries found their “real exchange rates”