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On 11 August, Argentina’s central bank added 9.5 percentage points to its key Leliq interest rate, moving it up to 69.5 percent in the largest single rate hike in almost three years.
The bank had raised the rate by eight percentage points just two weeks earlier.
The bank has jacked up the Leliq eight times this year in a so-far losing battle with inflation, which clocked 71 percent in July, the worst in 30 years.
Boosting interest rates close to inflation’s pace is part of the government’s plan to encourage residents to stay with pesos instead of switching to dollars, which would devalue the country’s domestic currency.
Pegging the Leliq to inflation is also part of Argentina’s $44-billion rescue agreement with the International Monetary Fund.
TREND FORECAST: The Argentine peso crashed in mid-2018 after the country entered a recession in the year’s second quarter. The peso lost more than half its value that year and fell more than 35 percent in 2019.
Before the COVID War began, Argentina’s economy contracted at a rate of 3.1 percent in 2019. Inflation ran to 52.9 percent in December, when it was estimated that 42 percent of the country’s 44 million people live in poverty.
Although no current data exist, it is possible that a majority now live below the poverty line.
According to the IMF, it “is not economically nor politically feasible” for Argentina to fully repay its more than $100 billion foreign debt.
And as we had forecast, when “stimulus” money dries up, interest rates rise, equity markets crash, and the world descends into the “Greatest Depression,” social unrest will escalate in Argentina and nations across the globe.
The wars between the people and politicians will become common battle cries as the rich continue to get richer and the masses sink lower into economic despair.
As the global economy slows, Argentinian economic conditions, as with many nations across the globe, will continue to deteriorate and social unrest will sharply escalate. It’s the “New World Disorder,” one of our 2020 Top Trends.