government could purchase Argentina’s
entire basic money supply.
Critics scof that such a move won’t
work. Ater all, Argentina already spent
nearly $8 billion in exchange operations
without stopping the slide. But these
skeptics are missing a rather blatant error
Argentina made: he central bank bought
pesos, thereby reducing the supply, which
was a good thing, but then it turned right
around and increased supply by buy-
ing bonds. hat’s the equivalent of using
a bucket to scoop out water at one end of a pool and then
pouring it back in at the other end.
Macri should send his central bankers a simple memo:
Cease such nonsense immediately, and reduce the monetary
base until the peso/dollar rate goes from 25-1 to 15-1.
When the crisis passes, which it quickly would, he should
consider something truly radical: Make the dollar Argenti-
na’s oicial currency. People would gladly turn in their pesos
for dollars at a 15-1 rate. Given their country’s sorry history
of monetary mismanagement, Argentines know it’s only a
matter of time before the peso is vaporized again.
Ecuador, Panama and El Salvador already use the green-
back. Even though Ecuador was recently ruled by an anti-
American letist, he quickly gave up the notion of trying to
reintroduce a local currency—the people wouldn’t stand for it.ARGENTINA IS IN economic trouble—
again. But the country has an opportunity
to turn the economic world upside down.
Its conservative president, Mauricio
Macri, is seeking a deal with the IMF for a
$30 billion credit facility. Since his surprise
win in 2015, Macri has been lackadaisical
about tackling runaway spending, massive
borrowing and rampant cronyism. Now
the peso is under assault, as the govern-
ment has been pressuring the central bank
to buy more bonds with money created
out of thin air—a sureire way to stoke inlation. Argentina
has wrecked its currency time and again and seems on its
way to doing so once more, the peso having lost 20% of its
value this year.
Macri is holding the rotten hand dealt by his two cor-
rupt, tyrannical predecessors, Cristina Kirchner and
Néstor Kirchner. But Macri won’t ind salvation with the
IMF. Argentines loathe that agency, because during its last
round of austerity measures, which were imposed 18 years
ago, unemployment rose to 20%.
here’s a simple way for the beleaguered president to
stop the currency rot immediately: Buy pesos in the ex-
change markets with the government’s foreign reserves—
about $50 billion at last count—until the peso recovers
all the ground it has lost. In fact, with that war chest, theJUNE 2018 FORBES ASIA | 11CRY FOR ARGENTINA
THE IMF IS COMING
BY STEVE FORBES, EDITOR-IN-CHIEF“With all thy getting, get understanding”FACT & COMMENT
William Howard Taft
Jefrey Rosen (Times Books)Talk about a lack of respect! he 27th U.S.
president is remembered, if at all, as the portli-
est occupant of the Oval Oice. Not helping his
physical image is a walrus mustache that screams
“out-of-touch/outdated.” More substantively, Tat’s
one-term tenure was a severe letdown ater the hy-
perenergetic and innovative administration of his
always exciting predecessor, heodore Roosevelt.
he dazzling achiever versus the do-little dullard!
here’s no question that Tat was ill-suited
to the presidency, being remarkably tone-deaf
when it came to practicing politics. But this slim,
well-researched and well-written biography
substantially beefs up Tat’s reputation. Tat was a
remarkable man who scored major achievements
during his lifetime—even during his unhappy
stint in the White House.
Tat’s lifelong desire was to serve on, if not lead,
the Supreme Court. He clearly had the brains and the
temperament to do so. (His ambitious wife wanted