Is it more important to control inflation in Colombia or to keep the value of the Peso down?

Which of the two would help the Colombian economy more in these unstable times? I would focus on controling inflation.

By jonas on Apr 15, 2008, 07:55 in Friendly Talkzone.

jonas says on Apr 15, 2008, 08:27:

bump

What I have, I do not want to lose, but Where I am I do not want to stay, but those I love, I do not want to leave, but those I know I no longer want to see, but Where I die, I do not want to go;I want to stay where I have never been

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Ctg Bound says on Apr 15, 2008, 13:21:

jonas,

Inflation is presently under control.

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jonas says on Apr 15, 2008, 13:34:

well, raising interest was done to control inflation but the side effect is that it strengthens the COP.
Same problem as everywhere, but different views on what is more important.

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Ctg Bound says on Apr 15, 2008, 13:46:

Rubito,

There is still credit in Colombia, although not like US levels, I agree with the past raising of interest rates.

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Carlotica says on Apr 15, 2008, 19:15:

This two work interchangeably. In my opinion, I would not want Colombian's currency to devalue and in order to avoid that inflation has to remain manageable.

Salsera!!!... de por vida =>

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jonas says on Apr 15, 2008, 19:50:

that is what the question is about: you can either have higher inflation or an inflated currency. Which one do you think is better for the local economy.

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Carlotica says on Apr 15, 2008, 20:14:

Well, with Economics everything is relative - there are many variables that come into play - u can't just choose one or the other w/o taking all the variables into consideration. Therefore, in order to give a hypothetical answer to your hypothetical question; I would say that for the local economy to survive the current crisis they have to try hard to maintain the level of both - once again - manageable.

Salsera!!!... de por vida =>

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poco says on Apr 15, 2008, 21:19:

Quote: Is it more important to control inflation in Colombia or to keep the value of the Peso down?

I'd guess 90% of the Colombians DO NOT and COULD NOT CARE less about the exchange rate value of the peso. To them,, the exchange value is simply a number that appears on the nightly news.

Inflation,, now that's different and will have a HUGE effect on the average Colombian.

Debtors are a beneficiary of inflation,, I remember it well in the U.S. Before and during Jimmy Carter. a person made a KILLING if he purchased rental property with credit. Ha,, $2,000 down on a $20,000 home that sold 8 years later for $80,000.. Not bad,, turning $2,000 into $60,000.

Inflation really hurts the lower,, what? 60% who live month to month. A person earning minimum wage (that's a GOOD wage in Colombia) breaks even when his wages rise,, 20% and inflation is 20% over the same period.

Actually, many who need a job won't be hired for minimum wage,, why,,, because the employeer pays what,, 20% MORE in benefits over the 20% wage increase,, and can't pass on the increase. So,, he lays off,, doesn't hire,, goes under the table or contract, they get LESS money and pay more for goods.

We're not talking durable goods,, the inflation has been FOOD.

Colombia had a chance to reduce their food prices with the FTA. Oh, well,, next year.

Coming soon to you TV screen,, food riots,, maybe not Colombia,,yet,, but it looks like Egypt is having a problem.

Africans don't have enough food to get the energy to riot.

"Violence is the first refuge of the incompetent" - Isaac Asimov

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