Is the solution to the domestic economy in Argentina, to dollarize?
In addition to the OAS, there are multiple regional organizations such as Mercosur and NAFTA in the Americas. Why should we Americans from Alaska to Tierra del Fuego limit ourselves to them? We must and we can move towards a new model to overcome: The American United Nations.
DOLLARIZE IN ARGENTINA
Internal system requirements:
1.- Adaptation of the economic and fiscal system of Argentina.
2.- Formal agreement with the United States to be able to dollarize the local economy.
3.- Conversion mechanism between the Argentine peso and the dollar.
Advantages:
1.- Greater stability of the local economy and confidence in the currency.
2.- Attracting more investors to Argentina.
3.- Reduction of inflation.
4.- Credibility in the currency.
Disadvantages:
1.- Loss of Argentina to control its monetary and fiscal policy.
2.- Less responsiveness to internal economic and social needs.
3.- Total dependence on the economic cycles of the United States.
4.- Exposure to external economic shocks due to the fluctuations of the dollar.
IS A RETURN TO CONVERTIBILITY POSSIBLE?
Requirements:
1.- Prior political consensus.
2.- Constancy in the application of a responsible and sustainable fiscal and monetary policy.
3.- Application of financial regulation and supervision systems.
4.- Transparency and fiscal responsibility (eliminate the internal deficit).
5.- Diversify the economy and make it resistant to external economic shocks.
COMMON CURRENCY BETWEEN ARGENTINA AND BRAZIL
Advantages:
1.- Promotion of economic and commercial integration between both countries.
2.- Greater competitiveness and efficiency of internal costs in the intra-zone and extra-zone region.
3.- Reduction of economic uncertainty.
4.- Greater stability of the coin.
5.- Greater investment and economic growth.
Disadvantages:
1.- Cultural, political and economic asymmetries between both countries.
2.- Interdependence between both economies.
3.- Do not include all of Mercosur.
FACTORS THAT MAKE THE DOLLAR RISE IN ARGENTINA
1.- Uncontrolled inflation.
2.- Internal distrust in the Argentine peso due to the turbulence of local economic uncertainties.
3.- Very high fiscal deficit.
4.- Current account deficit, when importing more goods and services than the country exports.
5.- The combination of these variables puts pressure together to raise the price of the dollar and depreciate the monetary value of the peso.
SOLUTION COUNTERMEASURES:
1.- Create macroeconomic stability.
2.- Apply structural reforms that improve the competitiveness of the internal economy.
3.- Apply constant transparency and political stability, with the commitment to respect democracy and the rule of law.
4.- Promote economic growth by favoring the creation of new industries and multiplying the level of employment.
IS CREATING A NEW CURRENCY THE SOLUTION?
Disadvantages:
1.- It does not guarantee domestic monetary stability against the dollar.
2.- It does not substantially improve confidence in the national currency itself.
3.- It continues to depend on internal economic policies and inflation factors.
4.- It creates more confusion between investors and consumers.
5.- Negative economic effects may occur in the short term.
AIM FOR A HIGHER AMBITION
In addition to the OAS, there are multiple regional organizations such as Mercosur and NAFTA in the Americas. Why should we Americans from Alaska to Tierra del Fuego limit ourselves to them? We must and we can move towards a new model to overcome: The American United Nations.
This supranational unit, without borders, with a single integrating constitution, would have a president, a single army, a capital, one and the same economy and a single currency. This is the true dream of all bona fide Americans.