Rather, to maintain a quarter-decent level of social spending *and* to keep taxes on the rich relatively low. It's the desire to have the free lunch and eat it too...
>Cavallo imposed his currency board as a magic bullet, and there's a
>boom for a while as capital flows in and the investing class feels
>happy - but there's no way Argentina can survive in export markets
>with a currency fixed to the dollar, given that its productivity
>growth can't match that of the U.S. So the country goes into a
>four-year depression. But the currency can't be devalued, and the
>system can't be renounced, because the investing classes wouldn't
>like that, and capital would flee. There's no way out of this box,
>is there?
Devalue, default, and dollarize is my favorite option. Dollarization helps you avoid the hyperinflation that is the likely consequence of a large devaluation. If you structure default in a way to preserve the principal while cutting back interest to U.S. Treasury levels, the New York banks won't be *that* unhappy. And devaluation is needed if you are to have any hope of generating an export boom.
Of course, time is wasting...
>
>The only countries that have closed some of the income gap with the
>First World were those in Asia...
?? Southern Europe as well. Plus China and India...