Myths and Lessons of the Argentine “Currency Crisis” – Joseph T. Salerno – Mises Daily

First, the sharp decline in the value of the peso does not represent the onset of a so-called “currency crisis” but rather the very means of resolving a crisis already long underway. For the “devaluation” of the peso by the Argentine monetary authorities refers to nothing more than the removal of price controls that have maintained the price of the U.S. dollar in terms of the peso below the market equilibrium price and thereby generated a permanent excess demand for dollars in Argentina. In other words, the devaluation is simply the admission that the peso had already been robbed of a significant part of its value by inflation.

via Myths and Lessons of the Argentine “Currency Crisis” – Joseph T. Salerno – Mises Daily.

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