Javier Milei

A fall in money demand, that leads to a leap in the exchange rate, and that leads to an increase in the price of tradables, then in wholesale prices, then retail prices, and then wages, of course.

If you have spent almost 90 years with that sort of dynamic, it's quite likely that people will think that if the exchange rate goes up, then the prices will go up too.

angry because of the way people form their expectations because, I mean, they've been proven right for 90 years.

volatility in the exchange rate can translate into price volatility.

Let's suppose you have a change in relative prices and tradables become more expensive.

Or perhaps there is a deterioration in the terms of trade and the exchange rate goes up.

So you will see a mismatch between the price level and the money amount.

We understand the problem of volatility.

So the exchange rate within the band is free.

Within the band, it is free.

only serve the purpose of showing to the people that the exchange rate will not be just any exchange rate.

So then they learn how to float and they lose the fear.

Well, from my point of view, that will be when we finally cleaned up the money overhang.

We have had this money overhang because of the hangover of previous monetary policy, also due to the capital controls that were put in place in the past.

and also as a result of the price control.

Since we have set and fixed the money amount and we only now print against new demand, at one point local inflation will converge towards international levels, which means that at that point you have

managed to clean up the money overhang and will be in a position to let the peso float freely without any sort of trouble because along the way, the agents will have learned.

And if there's exchange rate volatility and they want to translate that into the domestic prices, they will have to face Menger's worst face.

They will have no demand and will have to deal with it.

Well, strictly speaking, all we should need would just be to roll over as a general framework because Argentina has zero deficit.