The largest social experiment in history has begun, with 46 million Argentines experimented.
A new broom sweeps clean. As soon as the new ** came to power, he put three big moves in a row:
1.Nine of the 18 cabinet departments were cut, including the Ministry of Education, the Ministry of Culture, the Ministry of Civil Affairs, the Ministry of Agriculture, and the Ministry of Commerce.
2.Take the initiative to depreciate the exchange rate of the local currency against the US dollar by half, and the price is disguised by **100%.
3.Imports and exports are fully open, and all ** supervision is revoked.
In addition, Milley has repealed or drastically amended more than 30 laws in just a few days after taking office, and he dares to work better than Trump.
It's so crazy that those who were against him in the first place immediately couldn't sit still.
Currently, 11 of Argentina's 23 provinces have entered a state of economic emergency.
Many merchants don't even have to sleep, the goods are at a price for a while, and the label can't keep up with the speed of currency depreciation.
Unable to tolerate the deterioration in their quality of life, large numbers of people, especially leftist voters who were already opposed to Milley, took to the streets to demonstrate.
There were more and more marches, almost sweeping the whole country, and ** had to send troops to maintain social order.
As soon as Milley's new policy was implemented, it encountered a severe test.
Buenos Aires, Argentina, anti-New Deal demonstrations.
These scenes can only be said to be expected.
From the moment Argentina decided to try "shock **" again, today's situation must have been expected.
Many people immediately scoff at the mention of "shock**", and the ridicule is endless.
99% of all parties are also pessimistic, believing that Argentina is not only in shock, but also not far from death.
That being said, Argentina's reforms are indeed a dead end at the moment.
But if you don't reform, you will be dead and alive!
If it's not rotten, who wants to fix themselves?
Good medicine or poison?
Originally, it was just a debate about "who wrote the small essay", but it suddenly escalated to the question of "whether Dong Yuhui was mistreated".
The so-called "shock**" is a medical term.
Let's take an analogy. On the battlefield, a soldier was shot in the lower leg and the wound was about to become infected.
At this time, the doctor gives two ** plans:
First, conservative**.
Follow the rules, disinfect, bandage, take medicine, and recuperate, so that the wound heals slowly.
This process is not only lengthy, but also requires great care. If you are not careful, the wound will still become infected.
Second, shock**.
Simple and rude, directly sawed the calf and solved the problem from the source.
This method is fast, but the patient is very likely to be unable to stand the pain, faint, or even die of excessive blood loss.
In the 80s, the American economist Jeffrey Sachs first introduced this concept to the economic field.
In 1985, Bolivia's inflation soared to 24,000 percent,* with a budget deficit of 4859 trillion pesos, or a third of GDP.
Socio-economic collapse is on the verge of collapse.
Dead horses are treated as live horse doctors, and the authorities invite saxophones, willing to be the test subjects of the other side's new theories.
There are three main reforms:
First, let the dollar circulate freely and the exchange rate with the Bolivian local currency will become a floating exchange rate;
Second, the reduction and exemption of subsidies for state-owned enterprises and the relaxation of tariff restrictions will be transferred to private capital
Third, the IMF has eased pressure on Bolivia's foreign debt repayment time, and European and American countries have imported funds into Bolivia from time to time.
Although this law caused a large number of workers to lose their jobs and prices to go crazy in a short period of time, it quickly achieved incredible results.
In just a month or two, hyperinflation has been strongly curbed, and prices have stabilized from skyrocketing.
In the first year, 1986, Bolivia's GDP fell by 29%, but remained at 2 in subsequent yearsThe growth momentum is around 5%.
At the same time, thanks to effective measures, the debt problem has been significantly alleviated and Bolivia has finally been able to overcome its serious debt crisis.
The changes in Bolivia have been hailed as miracles by the world, and Sachs himself has been hailed as the "golden boy of international finance".
Shock** became world-famous.
At that time, the former Soviet Union had just collapsed, and Russia inherited most of the legacy.
Although the family business is large, there are many messes. Most of the country's enterprises are half-dead, and they still owe $120 billion in foreign debt and 1 trillion rubles in domestic debt.
Yeltsin, the first Russian leader, as a former opposition to the CPSU, was eager to quickly enter the market economy and decided to carry out drastic reforms.
Bolivia's success has given hope to the newborn Russia, which has not even carried out the "pilot test" and directly started to implement it nationwide.
Gaidar, who was only 35 years old and had interacted with Jeffrey, was appointed prime minister.
The first step is to liberalize prices.
Since January 2, 1992, Russia has painted a scoop according to the gourd90% of consumer goods** and 80% of means of production** have been liberalized, civil servants' salaries have been increased by 90%, and unemployment benefits and family subsidies have been greatly increased.
In the first three months, the results were remarkable, and the national dojo blossomed.
Russians, who are accustomed to waiting for supplies with tickets**, queues, etc., have really seen the benefits of the reform.
This prosperity, built on decades of wealth accumulation in the former Soviet Union, is tantamount to overdrawing the future.
Seeing that the wealth in the treasury was decreasing day by day, Yeltsin did not feel distressed.
He trusts Shock** and thinks he'll get better soon.
But by the fourth month, the situation had taken a turn for the worse: inflation had soared, and consumer goods were 65 times higher than they had been at the beginning of the year.
Seeing that the situation seemed to be out of control, ** immediately wanted to stabilize prices through state-run stores.
The superior underestimated the sinister human heart.
Oligarchs, black market businessmen, and joint store clerks snapped up all the best materials, and then resold them for huge profits, and the market order was completely eroded.
This kind of behavior of tying up and harming the public and private interests has completely bankrupted the desire to control prices.
The people could only afford unreasonably expensive goods, living standards fell sharply, and consumption was even lower than before the reforms.
At the same time, industrial wholesale **also**14 times, enterprises can not produce normally, and they are closed down in batches or swallowed up by oligarchs.
Both the supply and demand sides of the market have entered a dead end.
However, Yeltsin** did not give up, they believed that the first year of Bolivia was also difficult, and they themselves and others had to persevere.
Shock** The second step continues:Fiscal and monetary austerity.
The fiscal austerity is mainly due to the reduction of expenditure, the abolition of all tax incentives, the payment of 28% value-added tax on all goods, and the introduction of consumption tax.
Taxes, while stringent, are not a major concern.
The problem was that Yeltsin** wanted to gain the political support of the oligarchs by allowing them not to pay taxes under the new rules.
This kind of double-standard behavior makes everyone complain.
Because of excessive taxation, it is more difficult for small and medium-sized enterprises to produce, the unemployment rate has soared, and they have to increase relief subsidies, and the fiscal deficit has risen instead of falling.
Enterprises defaulted on each other's arrears and were forced to loosen monetary measures, issuing an additional 18 trillion rubles in 1992, 20 times that of the previous year.
Amid the roar of the money printing press, the monetary tightening program was declared bankrupt.
All of the above makes the third step of shock** - large-scale privatization, also end in a hitch.
Initially, it was intended to take a third of the state-owned property - worth about 15 trillion rubles, with an average share of 1500 million people, everyone has a share.
Each Russian led a privatization of 10,000 rubles**, which was free to purchase shares with certificates.
Who would have thought that only 9 months later, 10,000 rubles could only buy a pair of leather shoes at most, and the coupons issued by ** directly became waste paper.
In December 1992, less than a year later, Gerda was removed from office, and Shock** ended in a farce.
Shock** has had great consequences for Russia, with a direct reduction of 50%-70% per capita GDP.
To make matters worse, the wealth of society is further concentrated in the hands of oligarchs, and the economic structure is becoming more and more top-heavy.
With the exception of heavy industry, almost all other industries collapsed and were directly reduced to second-rate countries. became a large Saudi Arabia and lived by selling resources.
The whole world is full of ridicule about this.
It is lazy and stupid for a big country to ignore its own national conditions and copy the experience of a small country.
If the skin does not exist, the hair will be attached
Why can't you paint a tiger according to a cat?
Why does shock ** work in Bolivia and not in Russia?
There are many reasons for this, but two are the most important.
First of all, from an economic point of view, none of the "shock" measures implemented by Russia are in line with Russia's national conditions.
Again, for example, the soldier who was shot in the lower leg above.
If he just scratched the skin and the bullet didn't go deep into the flesh, would it be necessary to cut off the leg?
Bolivia itself has a well-established market economy, while Russia has been playing with a planned economy for the past few decades.
At the same time, before the implementation of shock**, Bolivia's market economy had collapsed, with inflation of 24,000% and no stability**.
There is no other way. In Russia, inflation was only 16% in 1991, up from 19% in 1990, far from a collapse.
The so-called speed is not reached, and the extremes of things must be opposed. Market liberalization and liberalization is a long-term process.
Yeltsin's original intention was to carry out large-scale privatization.
However, under a series of operations, privatization is privatization, wealth is sharply concentrated in the hands of oligarchs, a large number of enterprises are sold cheaply, and even oil and natural gas, which control the lifeblood of the country, are privatized, kidnapping the Russian economy.
This makes the social liquidity more and more scarce, and the normal market contradictions.
Moreover, from a political point of view, the international environment in which Russia and Bolivia live is also different.
The so-called shock** is like a soldier healing his wounds.
If you are in shock, a doctor must rescue you when you faint, otherwise you will die.
Without the support of others, the so-called shock** is suicide.
Bolivia's so-called success, the biggest help, is the entire European and American camp to transfuse blood for it:
The World Bank provides 35$700 million loan;The Netherlands provided the largest amount of funding to invest in the establishment of the Ministry of Race, Generation and Gender Affairs;Americans provide assistance for judicial reform;The Germans have contributed ...... to decentralization reforms
On the other hand, Russia was the common enemy of the Western camp, and the eastern powers at that time were not as strong as they are now
What is the situation in Argentina now?
High inflation, high deficit, high debt.
It's not as bad as Bolivia, but it's much worse than Russia.
It's such a mess, and it's not easy to change anyone.
Although many people say that Milley is a madman, there is one thing that must be admitted:At least he dared to go up.
He was much more radical than Yeltsin.
As soon as he took the stage, the controversial new ** sacrificed three machetes:
One cuts the ** institutions, the second cuts the welfare of the people, and the third cuts the national currency.
Milley believed in the Austrian School, or pure liberalism, which argued:Demand automatically creates supply.
This is also the theoretical basis for shock**.
Now, Argentina has completely liberalized exchange rate and price controls, allowing the local currency to depreciate freely and prices across the board.
The premise of this logic is that:Society already has a lot of excess capacity.
And the current situation in Argentina is:Resources are in the hands of foreign capital and domestic oligarchs, and supplies are seriously insufficient.
This situation is more similar to Russia, after the full liberalization, it will inevitably fall into hyperinflation, social resources will rush to the elite class faster, and the people at the bottom will cry hunger and cold.
Rich people don't care, they have a lot of physical resources at their disposal, and land, factories, ** will only get richer and richer.
The monetized water in the hands of ordinary people, coupled with the cancellation of **welfare, will not even be able to eat immediately.
The next stage is bound to be mass unemployment and hunger.
This is actually a necessary stage of hunger.
Next, the key to whether or not we can recover after shock lies in establishing a normal market economic system and ensuring the liquidity of funds.
How to set up?First of all, it is necessary to expand exports and replenish foreign exchange.
Argentina has no shortage of resources, wheat, soybeans, beef and even various minerals are world-renowned, the question is how to sell them?
Currency depreciation, this is the simplest and crudest method.
The cheaper the local currency, the cheaper the goods in Argentina, the more foreigners like to buy them.
The more you sell, the more dollars you get. As long as there are enough dollars, Argentina will be able to dollarize the whole country and abandon its own currency.
So Milley depreciated the dollar against the peso from 400 to 800 in one fell swoop.
It is foreseeable that Argentina's ** difference next year is likely to be reversed.
The second and most important link is that it must rely on Europe, the United States or China for blood transfusion.
The so-called shock **, what is important is to be fast and accurate, slow to rely on ** transformation, and it will inevitably not survive.
Therefore, as soon as Milley took office, he immediately showed goodwill to the United States, claiming that he wanted to decouple from the big countries in the East, but people ignored him.
Then, in the past few days, the attitude has made a 180-degree turn to ask for China's support, and accelerate the promotion of currency swaps between the two countries to continue to expand the agreement.
It's unflattering at both ends.
Milley may be naïve, China and the United States inject capital into Argentina, although they can get benefits such as physical resources, but everything pays attention to timing
Isn't there never the best time to do it in Argentina?That's not for the Argentines to decide.
Milley pinned the country's hopes on finding a big man, which certainly worked, but unfortunately the Argentines couldn't afford to wait.
Back then, Yeltsin went into shock, relying on decades of accumulation in the Soviet Union, and finally raised the wages of the people, and the Russians were happy for a few months.
Is there an accumulation in Argentina?
There was no increase in wages, and the purchasing power of the money in the hands of the people was suddenly halved, and life immediately fell into difficulties.
This kind of gap is unacceptable to anyone.
Epilogue
At the end of the day, any economy that tries to shock itself is out of its own hands.
It all depends on the person's face.
The good result is that the capital of the big countries will soon go to Argentina, and the shock ** is done.
But even if it did, the result was not very good......
Try to look at Bolivia today, the country's resources are controlled by foreign capital, and the local people no longer have the right to speak.
Of course, it's better than starving.
The bad result is that international capital waits for a price to sell, delaying for a long time to "save" the Argentines, or even not at all.
If so, we can only observe a moment of silence for the Argentine civilians.
Milley advocates freedom of guns, drug use, and organ trafficking, and by that time, the second largest country in South America will completely lose its civilized social order.
When someone really starves to death, **kills, and society enters**, Milley himself is not expected to have a good time.
Argentines demonstrate near the government, Reuters.
At that time, Yeltsin's successor Putin had the skill and luck, and after mastering the intelligence department, he took the power of the Chechen war to nationalize the resources owned by the oligarchs, and just caught up with the international oil price**, which stopped Russia's fall.
What does Milley have?
An elected political amateur has already offended the military, police and other interest groups, and if even the voters don't support you, it's really hard to say what will happen to you.
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