Milei’s Ex-Chief vs. Caputo: Broadcast Clash
- Recent statements by economist Miguel Ángel Broda reveal a continued expansion of Argentina's monetary base under President Javier Milei, despite his campaign promises to halt peso issuance and...
- President Javier Milei campaigned heavily on a platform of fiscal austerity and a commitment to eliminate peso issuance as a key strategy to combat Argentina's chronic inflation.
- The revelation has drawn criticism from within the government and among economists who previously supported Milei's approach.
milei Government Faces criticism Over Monetary Base Expansion
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Recent statements by economist Miguel Ángel Broda reveal a continued expansion of Argentina’s monetary base under President Javier Milei, despite his campaign promises to halt peso issuance and curb inflation. This development has sparked debate and criticism, even from economists previously aligned with Milei’s policies.
Contradiction of Campaign Promises
President Javier Milei campaigned heavily on a platform of fiscal austerity and a commitment to eliminate peso issuance as a key strategy to combat Argentina’s chronic inflation. Though, economist Miguel Ángel Broda reported this week that teh monetary base has continued to expand during Milei’s governance. Broda, who previously worked under Milei as a consultant, noted that the entire increase in the monetary base was attributable to a rise in unpaid lefi (pesos that do not enter circulation).
Government Response and Internal Disagreements
The revelation has drawn criticism from within the government and among economists who previously supported Milei’s approach. Clarín reports that this is not the first instance of disagreement between Milei’s administration and economists. Carlos Melconian and domingo Cavallo – whom Milei once lauded as “the best Minister of Economy in History” before the influence of Economy Minister Luis Caputo and advisors from Córdoba began to shift his views – have also publicly disagreed with the government on monetary and exchange rate policies.
Understanding the Lefi and its implications
The term “lefi” refers to pesos that are issued but remain within the financial system, not circulating in the broader economy. While not promptly inflationary in the traditional sense, an increase in lefi can still contribute to inflationary pressures over time. this is because it represents an increase in the overall money supply, even if it isn’t directly impacting consumer prices immediately. The reasons for the increase in lefi are not fully detailed in the initial reports, but could include government financing of various programs or interventions in the financial markets.