The Italian-American Carlo Ponzi gave his name at the beginning of the last century to the famous "Ponzi scheme" by which pyramid schemes are known.
More recently, Bernard Madoff was the most reputable financial guru on highly sophisticated turn-of-the-century Wall Street, until a succession of unfortunate events led to the exposure of his trick: he had set up a classic "pyramid scheme" propped up in an impressive personal marketing operation.
In a “Ponzi scheme”, the mechanism
works as long as everyone believes it will continue to work
.
If no one withdraws their capital, everyone will continue to earn stratospheric interest, living the "high life" thanks to the arrival of unsuspecting investors.
For this reason, in macroeconomic theory, the case of a government that continually postpones the payment of principal and interest on its debt by issuing new debt, paying interest on interest, is called a “Ponzi game”.
The Argentine economy navigates in a balance of stagnation and inflation based on this logic.
The fiscal gap, the domestic debt and the BCRA are only sustained if it assumes the sine die continuity of the current rules of the game.
Kirchnerism's economic policy works like a kind of pyramid scheme
where "everything keeps working" as long as "everyone decides" to continue with the parody.
The reasoning is simple.
The economy lives with a record exchange rate gap that was only recorded in our history in the days before a maxi-devaluation.
However, the scheme here has been sustained for years thanks to sophisticated financial and commercial repression engineering so that exporters resign themselves to liquidating their dollars at an artificially low exchange rate for the benefit of importers, who bid by all means -some unspeakable- to acquire dollars at the official exchange rate and sell their products at the "market" dollar.
This macroeconomic monstrosity is sustained because the exporters, who provide the dollars, do not anticipate an imminent change in the rules of the game.
The same goes for household debt.
Some $17 trillion, equivalent to 10% of the product, matures in 2023.
Thats not all.
Domestic debt increases exponentially by paying "interest on interest"
as in the "Ponzi game" to finance a treasury whose external debt yields 1,900 risk points.
During the government of
Alberto Fernández
, the public debt had a record increase: it grew by the equivalent of 83,000 million dollars in 3 years.
As expected, this “bond festival” led to a crisis with its epicenter in June 2022. Since then, the BCRA has been forced to buy public debt for the equivalent of 2 trillion pesos (2.3% of GDP). circumventing the financing limits to the Treasury set by its Organic Charter.
Despite this bleak outlook, the local debt has been "renewed" through successive exchanges of titles carried out by the Treasury.
Because most of the players hope that the scheme of "financial repression" (the exchange stocks) will be sustained.
If that happens,
"nobody has anywhere to go" with the pesos and therefore "nobody will take their feet off the plate"
.
It is a fiscal solvency tied with the same wires that strangle the economy, plunging it into a mega stagflation.
The Central Bank's debt is another example.
The stock amounts to 10.5 trillion pesos, about 55 billion dollars at the official exchange rate.
To gain dimension, the pesos issued by the Central Bank to pay its interest double the monetary base every 6 months.
In practice, the BCRA debt supports and remunerates the fixed terms of the banking system, some 10.2 trillion pesos applied in bills from the Central Bank.
It is not a problem of the banks, which are tight and liquid, but of monetary policy and also of depositors, subject to the risk of inflationary liquefaction.
But few expect that the BCRA will have to monetize its debt in the short term if the current rules are maintained, which are the "exchange stocks" and a Central Bank willing to continue accumulating debt "paying interest on interest" as in the "Ponzi game".
The economic team understands better than anyone how the mechanism works.
That is why it is obliged to "buy time" with measures of high media impact and little economic support.
His maximum aspiration is not to solve the problems, but rather that the scheme supports a few more months
.
Preferably on a path of reducing inflation, with a double objective: to improve electoral performance and hand over power under the social belief that the economic course "was the right one" and that the cause of the crisis that is brewing is not to blame. of the economic model of Kirchnerism but of those who dare to challenge it.
A trap that forces the next government to maintain the same rules for a reasonable time so that the Fernández government and its political partners cannot be blamed for the disasters they have caused.
That is why what will really be at stake in the election year
is the end or the continuity of the current model
.
Today that debate is not settled, neither within the opposition nor within the business community.
And this is what keeps alive a perverse scheme that subsists as long as its rules have a chance of continuity.
Because continuity is the cornerstone of the house of cards on which Kirchner's macroeconomics is based.
The government takes advantage of the confusion with the hope of reaching the goal without anyone being encouraged to say the fateful phrase: "the king is naked."
Because if this happens and the rules start to be questioned, the scheme would fall under its own weight.
Breaking the Argentine decadence is possible.
We just need to encourage ourselves to get out of the cage.
Economist and national deputy (Together for Change)
look too
Luciano Laspina: "If we keep quiet, we would be complicit in the economic crisis that will be inherited"