How Colombia was spared from high inflation
Colombia was the only major South American economy that did not experience very high or extreme inflation rates. Since records began, Colombia has never had an annual inflation rate over 50 percent. However, the value of the Colombian peso had continued falling relative to stable currencies during that time. At the start of 1985, one U.S. dollar could buy 116 Colombian pesos. By the end of 1992, the U.S. dollar exchange rate had reached 738 pesos. This represents a devaluation of 84 percent relative to the greenback in eight years. The main cause of relatively low inflation compared to other major economies in South America remains unclear, and it was unusual for Colombia to experience such low inflation rates during the Latin American debt crisis. In contrast, Argentina, Bolivia, Brazil, and Peru experienced annual inflation rates of over 1000 percent, probably because of printing money to pay off debts, which is moronic to do because it just aggravates inflation. Maybe Colombia never...