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Seventeen years ago Argentina suffered the worst economic and social crisis in the country’s history, with a recession that ended in looting, deaths and the complete fall of the Government. With five presidents in a week and a growing debt of almost 100 billion dollars.The question I’m going to study in this paper is, how did currency overvaluation and inappropriate fiscal policy cause the Argentine great depression.Inflation is defined as an economic process caused by the imbalance between production and demand, that causes a steady rise in the prices of most products and services, and a loss of the value of money in order to acquire or make use of them, When an inflation phenomenon occurs, the inhabitants of a country can no longer buy the same things as before, while the prices of what we consume increase, the money we receive remains the same. To meet the demand for foreign exchange, central banks use international reserves. A part of which is composed of foreign currency. But if an external imbalance occurs, for example, if the price of oil falls, this causes less foreign exchange to enter through exports. And, as a result, the supply of dollars to the market will decrease. Then, the price of the currency will rise, causing the local currency to depreciate, and this is what happened to Argentina in 1989.       The crisis started all the way back to that date, when Carlos Menem assumed the presidency (1989), Argentina suffered a serious inflationary process. The President Carlos Menem put Domingo Cavallo in charge of the Ministry of Economy which had serious repercussions on the Argentine economy, he was the one who promoted a measure to lower inflation by grabbing a more stable currency, the dollar. This is better known as the law of convertibility of Domingo Cavallo, These measures effectively promoted the dollarization of the economy. With the fixed exchange rate, any price would increase the domestic products, but it could lead to a loss of market for imported competitors. In addition, the US dollar itself was accepted as currency in the country, in parallel and with the same value of the peso  1 dollar = 10,000 australis. Since then Argentina has increased its debt to maintain the peso-dollar parity this causing the worst economic depression Argentia has been in.Because of the criticism of Carlos Menem’s corruption and the inability to combat the inflation, a political force emerged, the “Alliance for Labor, Justice, and Education”, better known as the “Alliance”. At front of it was Fernando de la Rua which was the winner of the presidential election held on October 24, 1999, He was the president that held the presidency during the worst time in the Argentine economy. During his government, Fernando de la Rua decided to take to the extreme the neoliberal policies of the 1990s that derived the worst economic, political and social crisis of Argentina in the twentieth century. But the real issue started in 2001 when Argentina put an end to the convertibility, December 3, 2001, when Argentina faced a ‘corralito’.The ‘corralito’ was an economic measure taken by the Argentine Government of De la Rúa which consisted in that each citizen could not take more than 250 pesos a week from the bank, people who had savings lost their money and did not have the possibility of accessing to it. Some of the banks closed the doors to the protests of the savers who claimed their money. this situation caused the beginning of the famous “caceroladas” a form of protest that consists of going out with pots, pans, ladles or any kitchen utensil that serves to make noise. These elements are struck like a drum, using the lids of the pots as saucers, which were made in the doors of the banks that closed the doors, by then there was no doubt the Great depression was at its worst and the people found no other way to beg for help.In conclusion, The State uses monetary and fiscal policies to solve specific conflicts that may arise during a country’s economic cycle. For this reason, the State intervenes in the economy through these policies. When the State decides to act on the country’s economy, its main objective is to maintain a stable growth rate in the long term. But in this case, the bad management of them cased the total opposite effect. Policies like the law of convertibility of Domingo and el corralito were short-term solutions that had long-term repercussions this causing what we know today as the worst Argentina crises of all history,

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