Argentina - November 1, 2022

Inflation in Argentina: imperialist looting and large profits of the capitalists

Inflation is one of workers’ biggest concern. No salary can keep up this high cost of life. But, what causes the 100% uncontrolled inflation per year in Argentina? The working class have to discuss and recognize the causes of inflation, in order to respond from their organizations to this calamity.

On October 14, 2022, in an interview published by La Izquierda Diario, PTS leader Christian Castillo stated that in the government “they say they want to cut down inflation, but they seek to comply with one of the elements of the IMF, which is to dilute the fiscal deficit through inflation”. What is Castillo suggesting? That the government policy is the engine of inflation in Argentina, since it uses it as a mechanism to reduce public spending on health, education, pensions, salaries, etc., by increasing budget below the inflation rate.
Castillo starts from a real fact - State expenses are being cut down through inflation- to suggest an absolutely fallacious explanation of the causes of inflation, which only serves to hide the true causes of this phenomenon.

Inflation in Argentina is structural. Its root causes are due to the looting of the IMF, the imperialist banks and the large- profits that the capitalists withdraw from the country in dollars, while leaving billions of pesos here without being backed in material wealth.
Indeed, in Argentina, the currency that really expresses the value of goods created by human labor is the dollar. A huge mass of surplus value -the monetary form of unpaid work by the bosses- that is extracted from the Argentine working class is withdrawn in dollars, via foreign debt payment and capital flight.

But this situation is not new, nor did it start with Fernández. Between 1976 and 1983, the military dictatorship and the capitalists indebted the country up to almost US$ 47 billion. Of that amount, US$ 27 billion were from the private debt of the big bourgeoisie -Macri, Fortabat, Pérez Companc, Rocca, IBM, Ford, Fiat, Citibank, etc.- nationalized by Cavallo in 1982.
These parasites pocketed that wealth and left the nation with a huge unpayable dollar debt. The peso suffered a huge devaluation and the State -which continued borrowing from the banks- had to issue more pesos to maintain its current expenses. For the banks this was a huge business, based on loans in pesos to the National Treasury and the provinces with a very high interest rate.
The so-called quasi-fiscal deficit of the State with the banks in Argentina and the monetary issue of pesos without backing for State expenses -due to the flight of dollars abroad- made the debt unpayable. That is the cause of structural inflation in Argentina and it was what broke out in 1989 with the “hunger uprisings” and the hasty departure of Alfonsín from office.
The dollar became the most precious commodity to pay debt and acquire goods from abroad and for transnationals to withdraw their profits, patents and dividends year after year, which in 1989 reached US$ 4 billion.
Thieves from the ruling elites continued to steal under state protection. They under-invoice imports (declare less value) to pay 30 or 40% of their value and over-invoice their exports to send 40% more dollars abroad with inflated invoices, which justify their capital flight. US$ 6 billion per year are stolen by the capitalists through the country’s ports and customs.
With this infamous mechanism of robbery in Argentina, more than US$ 400 billion have escaped abroad in all these years, the equivalent of a GDP escaped and stored in off-shore accounts!

So... if the big capitalists left pesos to take the dollars from the dictatorship’s debt; if the usurious financing of the foreign debt requires collecting billions of dollars a year; if transnationals and banks withdraw profits in dollars and plunder the nation... the value of the domestic economy will be established according to the dollar, which becomes the most precious and scarce commodity!
The dollar increases its value and the peso is worth less and less. The currency is devalued and more and more pesos are issued. The salary in pesos falls. The bourgeoisie, on the contrary, increases the price of its merchandise to keep its profits and capital equal to the dollar, to reinvest (if it considers it necessary) or, as we see today, to flee dollars abroad. Labor power depreciates and its dollar value plummets, while the rate of surplus value increases exponentially!
Contrary to what the charlatan professor Castillo claims, inflation in Argentina is caused by the looting of the nation at the hands of a handful of Wall Street superbanks and their local partners.

That is the Argentina of the last 40 years. Kirchner says that Argentina is a bi-monetary country. Of course, but not as that miserable bourgeois says. Argentina is bi-monetary because capitalists’ gigantic profits –which we workers create with our sweat– are tied to the dollar and the workers are left with salaries in worthless pesos

The exception to this cycle was the ‘90s Menemat. Menem and Cavallo, the man from the Morgan bank, said “1 peso is worth 1 dollar”. This was not a magic trick, but a guaranteed loot.
The Argentine State valued the peso against the dollar because it put US$ 300 billion on the table as a safeguard from state companies (at auction prices) to pay foreign debt: YPF, Entel, the steel mills, State Gas, electricity, Obras Sanitarias, the railway, the ports and a very long etc.
And when they finished stealing those profits, the support ran out and in 2000 the bankrupt Argentina exploded into a thousand pieces, beginning with the peso that returned to its value of $4.80 per dollar.
The story that follows is well known: the renegotiation and doubling of the interest on the debt at the hands of the Kirchners, Argentina “maquila” of cheap workers and then Macri and his carousel of US$ 44 billion that entered the country, changed to pesos at 90% interest rates and were converted back into dollars to go abroad with earnings of 40% in dollars... a unique utility in the world!
Today the indebtedness in pesos of the Central Bank and the Treasury with the banks (mostly Santander, BBVA, Galicia, Macro, Credicoop, Citi, HSBC, Patagonia, Supervielle, ICBC) reaches $8.5 trillion (US$57 billion at the official exchange rate) that accrues effective annual interest of... 107%, just for lending money to the BCRA! A phenomenal loot.
Talking about inflation as if it were just a government policy -as Castillo does- means showing a “healthy” capitalism and hiding the pus of a bankrupt and rotten system, where a handful of parasites of the imperialist powers live of the work and exploitation of millions of slaves in the colonial and semi-colonial world. Inflation in Argentina, with its currency destroyed by the looting of Wall Street, is just a sample of this.

Inflation cannot be ended without attacking its root causes: the looting of transnational corporations and banks. We must disown the external debt and break with the IMF and imperialism. The flight of foreign currency and the scam of under and over-invoicing of exports and imports can be fully ended by establishing the state monopoly of foreign trade and the nationalization of banks without compensation and under workers’ control.

Against the incessant raise of prices by capitalists, workers must demand the opening of the accounting books, to show the whole of society the large-profits of the big companies at the expense of the misery and hunger of the people.
To put an end to the parasitic retailers that speculate on prices, Carrefour, Coto, Disco, Jumbo and all the large commercialization and distribution chains must be nationalized without compensation and under the control of their workers.

Without delay, labor organizations, unions and the unemployed worker movements have to set up consumer committees to monitor prices in the large supermarket chains.
The working class needs an anti-imperialist program. The fight against inflation is the fight against Wall Street and the big capitalists of the “Group of 6”.
The middle classes, who today consume cheaply in the domestic market, must not forget 2001. As soon as the the Central Bank runs out of dollars and the issuance of pesos makes it impossible to maintain a debt with the banks, their savings will remain in the hands of bankrupt banks.
The Argentina of the consumption bubble will burst sooner rather than later. Someone will pay this debt and it won’t just be the labor movement. When that happens, the pickets in the banks will undoubtedly return. The working class must show the middle classes a way out to lead the majority of the nation against imperialism and its servants of the PJ and the PRO-UCR.
The solution of the sufferings of the exploited masses of Argentina leads to break with Wall Street and expropriate the lands of the oligarchy. Without this, Argentina is destined for bankruptcy and endless ruin.