One check on the cost of sovereign debt is that its denominated in the currency issued by your own central bank. If your economy tanks at least your debts are denominated in the same increasingly shitty currency. You also lose any levers you might be able to push to manipulate the situation to your own advantage and become vulnerable to the monetary policy of another nation which you hope is still an ally.
This my economics 101 level interpretation. Is this not completely crazy?
From what I’ve read, his dollarization scheme is pretty out there and is complicated in that the treasury is already light on dollars and no one wants to lend the country money to buy more. In addition, citizens would dump their pesos en masse; it would be an economic suicide of sorts.
Milei has little pull in the chambers of power, but that said, he has scored allies during the campaign. Argentina also has a history of civil unrest against neophyte governments and so there’s that bugbear also.
One check on the cost of sovereign debt is that its denominated in the currency issued by your own central bank. If your economy tanks at least your debts are denominated in the same increasingly shitty currency. You also lose any levers you might be able to push to manipulate the situation to your own advantage and become vulnerable to the monetary policy of another nation which you hope is still an ally.
This my economics 101 level interpretation. Is this not completely crazy?
From what I’ve read, his dollarization scheme is pretty out there and is complicated in that the treasury is already light on dollars and no one wants to lend the country money to buy more. In addition, citizens would dump their pesos en masse; it would be an economic suicide of sorts.
Milei has little pull in the chambers of power, but that said, he has scored allies during the campaign. Argentina also has a history of civil unrest against neophyte governments and so there’s that bugbear also.