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Those are pretty bonkers levels of inequality, but I think it sort of drives from the opposite direction given the polls showing 60% of people opposing dollarization. The elites could weather a major change well enough, but they probably won’t dollarize precisely because the cash-strapped public doesn’t want their pensions going up in smoke
I also wouldn’t rule out reforms from the top, though they probably won’t be that dramatic. The previous Administration did some pretty wide ranging (if poorly implemented) reforms and I’d guess they’re going to win this election too.
What do you mean by this?
I tried to access the Bloomberg link that mentions the poll (with 12ft.io too) but no luck.
I'd guess only a small percentage of the population would oppose the dollarization due to fear whilst saving money in that currency.
Interestingly, the article you linked about sterilization is written by Cachanosky one of the authors of the now main plan of dollarization for Milei to implement, if elected.
The rosiest perspective on dollarization is Millei’s and he thinks it would take 100% of reserves to buy up all the pesos in circulation. Everyone else seems to think Argentina’s reserves are less than the monetary base which if they can't secure a huge loan could force a pretty severe devaluation and wipe out savings.
Additionally, Argentina pays for their deficits by printing money and would lose the ability to do that after dollarization, so they'd assuredly have to cut public spending. The current Minister of Economy promised to stop doing this over a year ago but certainly has not. Social Security expenditures are close to half of their spending (including pensions and unemployment insurance) and is supposed to be funded by the Sustainability Guarantee Fund, but in 2008 the government nationalized the fund and started using it as a patronage vehicle: "President Cristina Fernandez’s government has used ANSES [State Pension Agency] to fund everything from laptops for schoolchildren to the Treasury itself after she nationalized the pension system....By relying on the ANSES, the government has been able to keep spending on politically popular but costly programs."
After a decade and a half of diverting funds to low-return government securities and subsidized infrastructure projects the SGF is now thoroughly depleted and ranked 3rd from the bottom of 44 countries in the Mercer CFA Institute Global Pension Index, leaving pension funding leaning heavily on monetary financing and likely first on the chopping block if they lose this ability. Long term it's assuredly better to restrain monetary financing but short term it would be pretty painful.
The article is mostly about dollarization itself, there isn’t a ton more detail about the polling beyond the headline:
Zuban Córdoba y Asociados say the results are a preview from a national household survey, so no clue about the methods or anything.
Good catch
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Argentina has insane dollar savings rates. Half the middle class has $100k+ in cash sitting around somewhere. That makes the case for dollarization perhaps uniquely interesting vs other attempts to do it in Cambodia, Zimbabwe etc.
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