This is the Kator Daily Podcast for Tuesday, August 8th, 2023.

I'm Caleb Brown.

Argentina's long struggle with inflation demands a more radical approach,

and dollarization is looking more like the right policy choice.

Heaters David Raisbeck discusses the upside of taking away monetary discretion from the government of Argentina and why that will pay dividends

for the people who just want to live their lives.

We spoke last week.

All right, before we get into the meat of the subject matter, we should understand two things. One, what has been

Argentina's experience with inflation and what has driven it? And the other, of course, is what is dollarization.

So if you don't mind start with the Argentine experience with respect to inflation.

Right. Well in the last 30 years, they had over 100% inflation levels in the late 80s and early 90s.

And under an incoming government,

then they had something similar to dollar station, which is called a convertibility system

So they basically pegged the currency to the dollar at a certain exchange rate

And that's similar because it basically doesn't

doesn't allow for for a monetary policy and that worked in terms of

bringing down inflation from over a thousand percent to basically

two percent or one percent.

So it was successful in that sense, but it wasn't dollarization yeah and you can understand just

initially how even that process of allowing convertibility disciplines a central bank because anybody with

if inflation is rearing its ugly head every everybody in Argentina would immediately try to convert to dollars as quickly as possible

and that would serve as some kind of discipline on the central bank. Is that fair?

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