Argentina to Apply “Iron Fist” to Those Who Raise Prices

Posted by Mike "Mish" Shedlock: Global Economic Analysis

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Argentina Central Bank Bans Imports Due to Lack of Dollars; Argentina to Apply “Iron Fist” to Those Who Raise Prices

Screen Shot 2014-02-02 at 11.39.22 AMAs reserves run dry, demand for dollars soars in emerging market countries, prompting inane economic actions. 

Via google translation from Libre Mercardo, please consider Argentina Cerntral Bank Bans Imports Due to Lack of Dollars

 The fourth day of falling reserves has the Argentine central reeling. This Wednesday reserves fell by 180 million and this month reserves declined by $2 billion. Due to demand and the low level of foreign exchange reserves, the central bank has stopped payment of imports, according to Argentine newspaper La Nacion.

“Almost all the customers who went to the bank did so to hoard dollars,” claimed the cashier of a national bank to the southern newspaper.

“Today almost no imports were approved import” confided the head of the table of a major bank in the nation.

Argentina to Apply “Iron Fist” to Those Who Raise Prices

Via translation from El Economista, please consider Argentina Threatens to “Get Tough” on Businesses that Raise Prices

 Economic war has moved to Argentina. The Argentine government said it will apply an “iron fist” against the shops and businesses that raise prices following the sharp devaluation of the local currency last week, hoping to avoid tripping high inflation in the country.

Argentina has one of the highest inflation rates in the world, which in 2013 was around 25% according to private estimates.

Prices of products with imported components such as appliances and vehicles rose immediately after the devaluation. Moody’s expects a devaluation of the Argentine peso 50% in 2014.

Before the devaluation, the Government launched a plan to fix maximum prices on about a hundred products sold in supermarkets. But the incentive is limited and includes products that are hard to find on the shelves.

Simple Rules

Fix prices too low and there will be no supply. Stores will not sell at a loss. Set prices too high and sellers will come out of the woodwork.

For an example of the latter, please see China Abandons Disastrous Cotton Stockpiling Program; Lessons Not Learned; What About Stockpiling Money?

Mike “Mish” Shedlock

Related: Barcelona to Fine Owners of Empty Homes 100,000 Euros