I don't see how shutting a central bank down is going to solve anything
It does exactly one thing:
It formalizes the currently informal situation which insulates private wealth from government policy. Argentinians already have zero faith in their currency. Argentinian private citizens already hold billions in US cash.
Shutting down the central bank collapses most of the monetary interference structure in the economy. This will likely collapse the inflation rate and allow the economy to begin repairing itself.
The first issue is obviously debt
The central bank was going to fuck Argentina's creditors over with inflation so that they could pay the debt with funny money. Dissolving the bank will basically force Argentina to pay what they owe. Also, they can't introduce stupid policies to not pay back bonds, so they just have to treat it like they would any creditor. Worst case scenario, the creditors can now actually negotiate to have their shit paid back on an individual level, and forgein investment can return, knowing that the Argentinians can't get out of forgein debt with inflation.
Fight against corruption
Dissolving the central bank is a keystone to defeating corruption, as it is the cause of most of the corruption of the economy at a high level, and within the financial sector, as it is in every country. Leftism exists to perpetuate corruption as an influence racket, so his war on Leftism will be a war on corruption simultaneously.
you become slave to whatever currency thus slave to the country that issues that currency.
The US allows it, but doesn't advise it, because even they know it's actually quite risky for the economy of the state that does it. Fundamentally, it's a desperate move to try and push the Argentinan economy out of the hyper-inflation that it's in without causing an instantaneous economic depression. The currency can now be inflated at (what is probably closer to 10% in reality), rather than the 145% it's sitting at now.
it won't make Argentina's bad debt magically go away
Of course it won't. But what it will do is free Argentinians from being burdened by the government's credit rating. Dollarize, and suddenly private citizens and businesses can borrow at more reasonable 8-10% while the government can't. This allows commercial life to carry on even while the government continues to be a tire fire. This is exactly what happened in Ecuador and El Salvador.
it's just going to make Argentina's debt more difficult to repay since denominated in dollars.
What it would be repaying it's debt with is worthless money, which is effectively robbing the creditors. If you tell the creditors that you're going to pay back the debt with money that's worth something, they'll be much more amicable to a re-negotiation of the terms of the debt servicing. Weimar Germany actually used it's hyper-inflation to force creditor nations into debt forgiveness because it was clear that there would be no chance of the Germans paying back the value of the debt. Argentina would be doing the opposite: guaranteeing a return of investment to the creditors, as opposed to having a 100% loss.
. The economy doesn't just "repair itself" in a country in such bad situation like Argentina.
Typically, these socialist conditions can be flipped overnight, as the market basically explodes with unregulated trade, especially at the smallest level. The economy actually does begin to recover as price discovery takes effect and regulatory interference is stopped.
The US FED is going to punish them with extreme prejudice.
I see no reason why the FED would have such a need. Fundamentally, the Fed and the IMF want their fucking money back at a certain point, and are ecstatic to keep pushing out USD. Argentina just said that "yes, you'll get paid with USD, and yes we want some dollars". Argentina is clearly not a rival in this scenario, so they're not going to be punished like the Eurozone is.
It does exactly one thing:
It formalizes the currently informal situation which insulates private wealth from government policy. Argentinians already have zero faith in their currency. Argentinian private citizens already hold billions in US cash.
ohhhhh muh holy debt
Shutting down the central bank collapses most of the monetary interference structure in the economy. This will likely collapse the inflation rate and allow the economy to begin repairing itself.
The central bank was going to fuck Argentina's creditors over with inflation so that they could pay the debt with funny money. Dissolving the bank will basically force Argentina to pay what they owe. Also, they can't introduce stupid policies to not pay back bonds, so they just have to treat it like they would any creditor. Worst case scenario, the creditors can now actually negotiate to have their shit paid back on an individual level, and forgein investment can return, knowing that the Argentinians can't get out of forgein debt with inflation.
Dissolving the central bank is a keystone to defeating corruption, as it is the cause of most of the corruption of the economy at a high level, and within the financial sector, as it is in every country. Leftism exists to perpetuate corruption as an influence racket, so his war on Leftism will be a war on corruption simultaneously.
The US allows it, but doesn't advise it, because even they know it's actually quite risky for the economy of the state that does it. Fundamentally, it's a desperate move to try and push the Argentinan economy out of the hyper-inflation that it's in without causing an instantaneous economic depression. The currency can now be inflated at (what is probably closer to 10% in reality), rather than the 145% it's sitting at now.
Last I heard their government had said 180%. And that's the official rate.
Of course it won't. But what it will do is free Argentinians from being burdened by the government's credit rating. Dollarize, and suddenly private citizens and businesses can borrow at more reasonable 8-10% while the government can't. This allows commercial life to carry on even while the government continues to be a tire fire. This is exactly what happened in Ecuador and El Salvador.
What it would be repaying it's debt with is worthless money, which is effectively robbing the creditors. If you tell the creditors that you're going to pay back the debt with money that's worth something, they'll be much more amicable to a re-negotiation of the terms of the debt servicing. Weimar Germany actually used it's hyper-inflation to force creditor nations into debt forgiveness because it was clear that there would be no chance of the Germans paying back the value of the debt. Argentina would be doing the opposite: guaranteeing a return of investment to the creditors, as opposed to having a 100% loss.
Typically, these socialist conditions can be flipped overnight, as the market basically explodes with unregulated trade, especially at the smallest level. The economy actually does begin to recover as price discovery takes effect and regulatory interference is stopped.
I see no reason why the FED would have such a need. Fundamentally, the Fed and the IMF want their fucking money back at a certain point, and are ecstatic to keep pushing out USD. Argentina just said that "yes, you'll get paid with USD, and yes we want some dollars". Argentina is clearly not a rival in this scenario, so they're not going to be punished like the Eurozone is.