The idea of abolishing the peso and replacing it with the US dollar has caused a lot of controversy and questions in the outside world. However, Millet stood his ground and pledged to work towards a solution to Argentina's currency problem. However, there are multiple obstacles to achieving this goal. This article will delve into the three major obstacles facing Argentina, including the issue of the dollar quota, congressional approval, and a backlash from domestic opposition. While Milley's plan may seem ideal, the reality is complex. Let's take a look at whether Milley can overcome these difficulties and the possible implications behind this plan.
In order for Argentina to abolish the peso and switch to the US dollar, the first thing that needs to be solved is to obtain a sufficient dollar quota. However, even if Milley's idol Trump becomes the United States, it will be difficult for Argentina to get enough support from the United States. Argentina has a large economy and needs a lot of dollars to keep it running. According to the analogy of our country, Argentina probably needs about 1$4 trillion to meet the needs of the economy. However, even if the United States were able to provide such large-scale funding, the Fed would certainly ask Argentina for guarantees. However, Argentina's current foreign exchange reserves are negative and facing the problem of bankruptcy, and how to provide adequate guarantees is a huge problem. It is worth noting that the countries in the world that use the dollar to circulate are mainly small island states, and if even the United States itself is unable to solve the crisis of US debt and the dollar, then how can they be expected to help Argentina manage the central bank?
In addition, to keep the economy functioning, monetary tightening is not feasible, instead, a certain amount of easing needs to be maintained. This also means that Argentina needs more dollars to cope with the needs of the economy. However, how the United States will provide such a large amount of financial help remains an unsolvable question.
To achieve the plan to abolish the peso and switch to the dollar, Milley needs to be approved by the Argentine Congress. However, Milley's party, the Liberal Progressive Party, won only a handful of seats in the parliamentary elections, and it will be a difficult task to win the support of Congress. Even if you can get some support, it will take a lot of effort and cost. It will be a protracted game process that will take a lot of time and effort.
The plan to abolish the peso and switch to the dollar involves many interests and will inevitably trigger a counterattack from the domestic opposition. Over the past few decades, Argentina has seen several military coups, which has led to fears of political instability. Milley's decision to abolish Argentina's central bank would not only touch the interests of many behind it, but could also trigger a new military coup. This is a dangerous game that could lead to further chaos in the domestic situation.
In addition, the abolition of the peso and the switch to the dollar will not fundamentally solve the problem of currency depreciation. Currency depreciation is a complex economic issue that is closely related to the US dollar's interest rate hike policy. Abolishing the peso is only a symptomatic but not a cure. Some experts believe that after Milley came to power, Argentina could enter a period of turmoil. Milley's extreme policies are likely to meet with opposition at home and abroad, leading to governance difficulties and popular frustration.
Although Milley's plan to abolish the peso and switch to the dollar was a certain success in the elections, it faced many difficulties and obstacles in its implementation. Problems with dollar quotas, the difficulty of congressional approval, and the backlash of domestic opposition have all made it difficult to make this plan a reality. Fundamentally, the abolition of the peso will not lead to Argentina's economic problems, but could lead to greater chaos and unrest. History tends to correct mistakes, and if this plan proves wrong, then Milley may face a short-lived fate when he comes to power. Argentina's future development needs to be considered holistically and with good economic policies in order to truly get out of the predicament. Argentina can only hope to prosper and develop with a stable political environment and effective economic measures.