Speaker unverified: evaluation

Transcript context

…Say we knew that either he would be reelected or someone similar would be reelected, would then simple crude monetarism solve the inflation problem, if backed by enough will, or is there still some other thing that makes it hard to bring down the inflation? There is inertia in this process. The good news is that inflation expectations have been trending down in Argentina, so that’s great. It was at very high levels. Argentina’s inflation was completely deanchored at the time when he took over. Any news of the possibility of the exchange depreciating even by 1 percent or 2 percent would immediately show up in prices. This was an example of a case where just simply doing a nominal depreciation is not enough. There were previous governments who were doing nominal depreciations, and in three months, the real exchange rate was basically back up to where it was before. Nothing changed because it just got priced into goods. That takes time. Anchoring inflation expectations is part science but also part art. Sticking the course and just showing you’re committed to keeping fiscal deficits low and having the central bank be independent, which is another step he’s taking right now, which is having central bank independence so that there is no monetization of deficits. Argentina will also have to build up foreign exchange reserves, even though the goal is obviously to have floating exchange rates. We know that every country, pretty much, with the rare exceptions, can have disorderly market conditions. Given Argentina’s history with the currency, it will need to build up reserves much faster than it’s doing on foreign exchange reserves and what it’s doing right now. Also keeping in mind the elections that are coming around next year. In some recent times, it’s been quite expensive to fly down to Buenos Aires and buy a good steak because the real exchange rate was kept high. Now that may be a signal of credibility, but many economists criticize that decision that simply trying to peg exchange rates high has a pretty bad record historically. Was that the correct decision, and has reality vindicated it? That semi-peg hasn’t really been broken. Bessent backed it. At the time I thought that was a big American mistake. That too seems to have worked out okay. What’s your view on all of that?…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.