The economic analyst assesses the performance of the US currency and the leading cryptoasset since October 2017, the year in which the “hornero” was launched
The American aphorist Mason Cooley said that “excuses don’t change a thing, but they make everyone feel better“.
Flooding the street with pesos seems to be the government’s new strategy, given the different imbalances that are happening in the economy. Not only puts pressure on the different economic variables such as the official dollar, country risk, fiscal deficit among others: “printing pesos” always triggers inflation faster than earlier.
In this sense, the ticket $1.000, the largest denomination in the country, today represents only 15% of what it meant at the end of 2017, when it was released. The IAccumulated inflation since December of that year until now is 321%.
Not even the dollar, the refuge of value par excellence of Argentines for several decades, is a good option against cryptocurrencies, especially the Bitcoin that, despite its ups and downs, has managed to show its strength against any sovereign currency.
In the following video, journalist and economic analyst Damián Di Pace details what would have been the return on savings with a $ 1,000 bill was wagered in October 2017 (year of its launch) in dollars or Bitcoins:
Next, the evolution of the dollar and Bitcoin in the last five years also shows that the Leading currency could have offered 50 times a dollar income on the invested capital, against the 10 times in pesos that the greenback offered according to the bank prices.
This erosion of purchasing power is seen in the little monkey: in a supermarket today they buy just four or five products, no more than that. It is a bill that was quickly devalued.
In the graph below we can see the aforementioned in time: in November 2011, when the Legislative Elections were held, you could buy yeast flour of 2 kilos at $ 4.98 pesos, and then six months later $ 5.67 pesos .
If we put it in terms of a ticket, with For $ 1,000, 201 units of flour of 2 kg could be obtained, while 6 months later only 17 could be bought. The same occurs with other items such as drinks, cleaning or personal care, as seen below:
The field of electronics deserves a special mention, where for example a 52 “Smart LED TV in 2013 was obtained at $ 19,479, and then 6 months later at $ 24,445. Thus, in 2013 they would have needed 19 bills of 1,000 pesos to get this TV, while in 2014 they needed 24 bills.
If we analyze the tables seen above, it can be inferred that the costs of living with a currency as devalued as the peso and in addition to not having a salary that accompanies the inflationary level, achieves that a person pays more and more for the same product, generating what in Economics is called Loss of Purchasing Power.
But the situation does not only affect election periods: so if we take a brief historical overview, the inflationary level had a direct relationship with economic policy measures because, at the end of each presidential term, inflation soared.
This had a common denominator: the use of restrictions to lessen the consequences of inflation, but not clearly attacking the causes. One of them was the price freeze (a favorite tool of the policy makers of those years), resulting in a higher inflation rate.
In this way, the “hornero” not only lost the race against the dollar in these years, but also against the highest denomination banknotes in the region, namely:
- Peru: 200 soles is equivalent to US $ 48.50
- Uruguay: 2,000 Uruguayans can buy US $ 46.8
- Colombia: the 100,000 Colombian peso bill is equivalent to US $ 26
- Chile: with 20,000 Chilean pesos you can buy $ 25
- Brazil: 200 reais is equivalent to US $ 36.80
- Paraguay: with 100,000 guaranies it is possible to buy u $ s14.54
Neither pesos, nor dollars, nor other sovereign currencies. The best investment in the last four years was Bitcoin.