This month Argentina, South America's second largest country, will hold a general election. It is not clear who will win, but it is certain that the outcome will be possible: whether Argentina will be dollarised.
That idea is the monetary campaign of a candidate in Argentina who believes the country's economy will only be truly healthy if it fully embraces the dollar.
Now, since taking office in December 2019, prices in Argentina have risen by 847 percent, the fastest rise of any government. That translates to an annual inflation rate of 124%, the highest since 1991. Some economists estimate it could be closer to 200% by the end of the year.
In fact, Argentina has also played with dollarization - in the early 1990s, of course, the price problem was solved to a certain extent, and the economy improved.
However, the problem cannot be eliminated, because the money borrowed from the 1980s and the "chaebol" such as Wall Street and the IMF is still being repaid, which means that once the country runs into financial problems, it will immediately be a debt crisis.
There is a deep reason for this: Argentina's public spending is too big, and to put it bluntly, Argentina's elections have become the beginning of endless spending on votes.
For example, in the 2019 election, former President Mali of Argentina delivered a speech, saying that he would take measures such as reducing income tax, increasing subsidies for social and public administration sectors, raising the minimum wage and maintaining fuel prices unchanged for 90 days to help improve people's livelihood and reduce the economic burden of the people.
What if you don't have enough money? Print money, so if the peso depreciates because of the dollar, yes, but it's more of a slap in the face.
Today, the unofficial exchange rate for the peso has risen to a record 900 to the dollar, 260 percent of the official value, and has fallen nearly 13 percent in the past few days alone.
Say, this cycle does not break, Argentina will never be difficult to get out of the dilemma, say more about the current European developed countries also have this trend, the most typical is once the crisis of Greece and Italy, welfare is too good so that the EU everywhere subsidies, causing extreme dissatisfaction in northern Europe.
Continuing to talk about Argentina, in the hearts of the United States, Argentina has not been saved, of course, never thought about saving, the backyard in the eyes of the United States, has been a supporting role, and may pose a challenge role, so Latin America has been pressured by the United States for many years.
At the end of the last Fed rate hike in 2018, Argentina was on the verge of desperation, and the United States continued to use a series of schemes to let the IMF loan Argentina, of course, first let it default, which has been confirmed by the former head of the United States to the IMF.
In addition, according to the requirements of the IMF, borrow money in accordance with the rules, Argentina often cannot, but eventually can get money from the IMF, behind the orders of the United States, but the effect has been achieved - the dollar tied Argentina.
This has made many poor countries unhappy, because they can't get the money, such as Egypt and Pakistan, and the IMF for a long time, but also just got the money, for example, Pakistan wants to get the money, the United States set the condition - to give Ukraine weapons.
In short, Argentina's internal and external problems are huge, and there is no hope of getting out of them for the time being, unless there is a major social change. Talking about the dollarization mentioned at the beginning, although it may be implemented by the new president, the actual operation is very difficult, at least how to unify the two peso exchange rates on the market is not small, otherwise how will the central bank know how much dollars to use.
Moreover, Argentina's business community disagrees, arguing that the real value of the peso is between 650 and 1,000 pesos, well below the official controlled exchange rate of 350 pesos.
Any adjustment could have a big impact on trade. After all, Argentina gets almost all of its dollars from selling goods, especially since it relies on exports to sustain itself. If the exchange rate misaligns, the economy will be hit hard.