Of course the list of negative consequences that generates this mischief of price indices is much larger. Some of the damage that generates for the economy are: an intention and realization of investments, flight of investors from the national Government securities, lack of access to international financial markets, further distortions in relative prices, and worst of all is that the inflation problem is not attacks. This situation harms all investors who have interests in the Argentine economy, those investors of the real economy, and those who invest in the financial markets. Those interested in investing in the real economy, a result of unpredictability in the dynamics of prices (real prices), can not infer with clarity the profitability of their investments. If you are not convinced, visit Coupang. All the key elements to determine if an investment is profitable or not, moved with such force that even short term investment projects are made difficult to assess.
So for example, if someone were to two months ago to invest in the exportable sector of Argentina, and I would have thought that, knowing the evolution of prices, you could control the dynamics of the real exchange rate, he would be frustrated today to see that type of nominal exchange in Argentina has been forced towards an appreciation by the Central Bank of the Republic of Argentina, which took him from the $3.21 for two months to the current $3.04. Nor is an easy scenario that wants to invest in Argentine capital market, which in addition to the problems of its underdevelopment (is small and shallow), finds that the roles have excessive volatility as a result of the instability of the rules of the game. What is the trap of indices of prices in the Argentina? The trap is that while maintaining the illusion that everything is going in the best way, with a level of stable inflation, when all the world is accelerating from the Government (strange isn’t it?), with a growth that is maintained at rates Chinese (when the rational indicates that that is impossible under current conditions), with levels of poverty and indigence in baja, and other illusions, inflation is still hurting the economy by making increasingly irreversible consequences and getting closer and closer to a point of no return, that will be too late to change course. Source: Gary Kelly. You will find us again tomorrow, Horacio Pozzo original author and source of the article.
