Well, in the last posting a bit concerned to explain the issue of institutional and make a little history to remember who is who in this conflict. Now follow the second part of the economy.
As I said before the BCRA is the entity responsible for monetary policy. Is the entity that protects the dollars and issues pesos (eye does not believe in the Central building is a safe with all the dollars, they are stored out there and participate in various international organizations). In Argentina's economy every dollar has to have a backup in dollars, this is the exchange rate, each $ 3.84 (more or less) must have $ 1 in the central reservation. But this does not mean that every dollar that is in the central must have $ 3.84 in the street.
The amount of dollars circulating in the economy is called the monetary base, an exaggerated increase in the monetary base (as it wants the opposition) would imply a possible hyperinflation and that all would go to $ prices. People have more to spend and therefore trainers produce increasing prices, but it appears that prices react faster than their pockets, this means that prices rise before people have that money. Having no money in the pockets of people can not buy everything, as you can not buy everything producers have excess production, have excess production as they have to reduce production of the next period, when lowering the production are lost, have lost have to adjust, they have to adjust, in accordance with layoffs, people become unemployed, if no work no income, no income and can not buy, do not buy the producers are left with merchandise and the vicious circle continues. This is how the economy where there is government intervention in monetary policy, in any developed country in the world happens (in the U.S. did something similar and so began the latest global crisis.)
To avoid this, the BCRA does something called "sterilize the currency," is that every time they enter dollars into the country only a part of them is offset by the increase in the monetary base (only the necessary), the rest by issuing bonds (a bond is a future action that contains interest, this means that if you give me $ 1 today when the bond copper going to have the dollar + interest). With sterilization remains the expected value of the currency. A TCRCE (exchange rate stable and competitive real) as it keeps this country is part of the package that holds the macroeconomic management (the TCRCE makes exporters earn more by selling dollars, and causes a reduction making imports more expensive and thus favoring the domestic industry has to produce go than previously imported).
This monetary policy can be carried out having enough dollars in the Central control the value of the currency . Argentina now has a surplus of around 18 billion dollars over a stockpile of nearly 48 billion. This means that many more foreign currency is the monetary base and it can also keep TCRCE. These currencies were achieved due to the set of macroeconomic measures by name, not the grace of Mr. Redrado only. This means that if the government wants to pay the debt with the excess of reserves or free reserves, that will not adversely affect the economy. There will be an increase in the monetary base is not going to generate inflation, nor the TCREC is going to be affected are all lies that the opposition media advertising. Moreover a similar policy was adopted by the U.S. to save banks after of the crisis, and had no negative impact on this measure, was caused more damage to people who say that in Argentina there are "legal uncertainty."
The Central Bank is obliged to sell dollars if anyone requires it, no matter whether the state or private, that is one of its functions. Media reports say that Kristina wants to "silver slapping" the central, like take out the dollars and not have consideration on the books of Central. This is also a lie. Those dollars to acquire what Executive does is to issue a bond or a promissory note to Central, you have to do this is to sterilize the currency (which is the reverse of what we explain earlier, as are dollars that come out in time to issue bonds as you have to do is not remove pesos from circulation) to not generate the above problems. Once issued the promissory note will be paid over time in pesos (dollars are bought in dollars) with the proceeds to the National Treasury, do not forget that there are trade and fiscal surpluses (exports is more than what is imported, and collected more than what is spent, this means that if you can replace what was borrowed. What happens now Redrado is not to drop the dollars, and supported by the opposition says a rant , is illegal, violating the autonomy and bla bla bla. The president of the Central violates the Charter by disobeying a decree weighing Act (the CO said that the President can not deny the laws), and it is failing in his duties by refusing to sell dollars. So it is more than justified the waiver request and subsequent dismissal in this case those that are destroying the institutions is the "people" of the opposition.
Back something I wanted to short turned into a report of 3 posts, but good is better and I prefer to explain everything well and did not walk repeating what the media says fascists out there. In this posting I explained a little about the economy, the least you need to know. In the next I'll talk a little about history and refute other arguments that people use the opposition to violate the institutions of the National Executive.
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