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Argentinian here, 30 years old, middle-class. Yes, we have a big inflation problem and what the article says is correct, except I don't know anyone who buy tuna or pasta or whatever to store because of inflation. In fact, anyone who would do that wouldn't be smart at all, would be pretty stupid. A few ways to fight inflation is buying dollars and selling them later: our inflation index goes hand to hand with our USD:ARS, even even below that (intuitevly it may be a problem). So it makes no sense to buy things to store later. What we do is buy stuff such as electronics in isntallments payments, even if the interest rate is high. Quick example: If I buy a computer in cash, its price is 100. If I have to pay 12 installments, each installment is 20 (240 in total). However, in one year, due to inflation, 20 may be nothing compared to what i earn (salaries are also raised to try to keep up with inflation), so big payments we usually do that. But almost no one get groceries in installments, etc (also: your credit card / bank imposes you a limit on installments payment, so it doesn't make sense to waste them in daily things and you try to save it for when you need it, such as electronics or emergencies)

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Before civil war in my old country a quarter a century ago, people were doing the same thing: buy something big and expensive in installments. First couple would suck. Last few were negligible.

Another story that seems surreal to me now (having lived in Canada 25 years): My grandma and virtually everyone her age was habitually 3 order of magnitude off when it came to money. She'd give me a 2 million dinar note and say "here's 2 thousand".

Every now and then there was a reset - basically you'd print new money and lop of some digits.

I was <12 years old through this so only have vague memories but man, what a crazy way to live -- and yet it was fairly... "normal". Is what it is. Human brain adjusts to anything (including to a certain degree the civil war that followed).

Mexico did a 1000-1 reverse split in the 90s. You still see the old bills sometimes. You just treat a 20,000 pesos bill as a 20.

That was during a pretty inflationary time - and even after the Nuevo Peso stabilized people still preferred dollars.

Wow it’s down to 20 nuevos per dollar, I remember when it was 3.

Russia did as well, in the early 90s.

Since Argentina started having its own currency, it had to reset it 5 times, dropping a total of 13 zeroes. I have memories of two of those resets and, similar to what you say about your grandma, I remember older people translating to the older currency for a while, until they fully adapted to the new one.

Have been in Argentina for the past year and honestly the amount of paper cash I need to carry with me for most basic of use is ridiculous, so they're soon going to have to create bigger bills or reset again.

Lol those bills you carry are the new ones. I left in 2017 and we only had up to 100. Which had been the same since the 90s.

Damn, yeah, biggest is 1000 now I think, and even that is worth only around 4 USD (unofficial rate). That'll buy you milk, bread and butter or ~4 beers.

My first purchase as a kid with my own money was for bubble gum. The bill I handed them had 3 zeros on it..

I don't get it. As a pibe chorro, you should have just taken it and ran away.

When the civil war started (presuming this is ex-YU) did rate of inflation really go up that much compared to before? My understanding is it was bad in the late 80s, very bad 89, stabilized in 90 thanks to Markovic, and then resumed going up once the war kicked off.

Inflation stabilized very briefly, but the situation was unsustainable and it quickly resumed. I was pretty young at the time, but I remember that many people went for weeks/months without getting paid. Some government positions fared better than others, but overall the economy struggled.

Then the war kicked off in 1991 and everything fell apart.

Someone commented elsewhere on the thread with a video clip of Markovic talking to the Federal Assembly.

Unfortunately there were plenty individuals/businesses that exploited inflation (among other things) during the war (and leading up to it) for massive gain. They'd borrow heavily, buy up as much staple as possible then quickly sell at a discount. By the time original debt was paid back, high inflation ate away at the original value of debt. So despite originally selling at a loss, it was still a profitable business.

That of course is assuming they even bothered to pay anything back. Often enough it was a game of survival (business/personal). Nothing to pay back if the person is dead or business gone.

But why buy staples with the money to sell at a discount? Would you mind explaining this a little more, I'm curious and don't understand how that would be profitable. Buying staples and selling them later for inflation adjusted prices then using that to pay back the loan would make sense but not quickly selling at a discount.

Debt inflates away.

Presumably they'd buy with an installment plan or debt financed over time.

I.e., you buy $3000 worth of goods, but pay $200/mo for 30 months ($6k total). You sell for $2000 cash (not on installment). So far, you've paid $200 and gotten $2000, up $1800.

If you paid back $200/mo in real terms, this would be a terrible deal! But every month your payment real value drops 10%, so you only really are only paying 200 + 180 + 162 + ... and over 30 months you only pay $1915 in original-value terms.

But the $2000 you got from the sale also devalues...

Not necessarily true. It devalues if you hold onto the money in local currency. It does not devalue if you exchange (usually gray/black market) to another currency. In ex-Yu, this would have usually meant Deutschmark.

It also does not devalue (in the same manner) if you use it to purchase real estate which you hold onto for a long time. Much of this money was used to purchase apartments, houses, buildings, businesses, etc.

Or you don’t care and are just looking for an increase in cash flow.

No, because you get it up front, you can convert it into something that doesn't devalue. A rapidly inflating currency is a medium of exchange, not a store of value.

> you can convert it into something that doesn't devalue

Such as staples? But then, why sell them quickly at a discount? That was the question. Or, if something else, why not convert the loaned money into something that doesn't devalue directly?

Do you have a crystal ball that you can predict what the inflation is going to be in two weeks? Can you protect all these goods in meantime if there is a war going on?

Right, maybe you buy some car batteries like https://articulo.mercadolibre.com.ar/MLA-695014148-bateria-d... on installments. Those cost AR$11890.99, about US$58, if you pay up front or 12 installments of AR$990.92 "without interest", but I think https://articulo.mercadolibre.com.ar/MLA-911991344-bateria-p... is the same battery for AR$9100 with no installment option. But car batteries, though they can start cars, have certain disadvantages: they take up a lot of space, they're too heavy to take on vacation with you, if mistreated they may leak sulfuric acid all over your boss's desk downstairs (this got Thomas Edison fired once), it's difficult to sell half of one, and even just left quietly in a corner they may become worthless in a few years.

So you might sell them immediately and convert the results into dollars or something. Dollars are actually less divisible than car batteries, since the US$20 bill trades at a heavy discount, but more so than, say, motorcycles.

This is not a strategy I've ever used, but it does kind of make sense.

So if I'm understanding correctly in this case the buying and selling of the staple goods is totally incidental and the only goal is to take a loan and purchase a non-inflating currency to hold. Is that correct?

I can understand that logic, but feel like surely this would be priced in somehow. I think most likely, nobody would ever give you a loan that wasn't pegged to another currency or to the inflation rate. In general I find that businesses don't like to make incredibly stupid loans that they know full well won't be paid back or will be paid back in worthless currency as the OP states. Maybe I'm wrong though and should move to Argentina

Yup, that's right.

We're not in hyperinflation. The currency isn't worthless. It's just not worth as much as it was a year ago. Or two weeks ago: I found out today that AR$11890.99 is no longer about US$58 as it was two weeks ago, but more like US$55 now. The annual inflation rate is about 50%, which is about 3.4% per month. If it's 50% per year over the next 12 months, the total value of those 12 monthly installments will be about US$46, which you'll notice is still more than the US$42 offered by the other seller without an installment option. So unless inflation goes higher in the next year, or the buyer defaults on the loan, the installment vendor is still making a pretty decent profit on the battery. They may not be "charging interest" but offering "interest-free" installments enables them to charge a sufficiently higher price that it's a profitable thing to do.

They are taking the risk that inflation suddenly explodes three months from now and 9 of their 12 installments are much smaller than they had planned on. And the buyer is taking the risk that inflation suddenly stops six months from now, which would make their final installments are just as onerous as the first few.

There have been a lot of loans pegged to the inflation rate in the past, as well as things like pensions. Unfortunately, since the government was the creditor for most of these, and also the government publishes the official inflation rate, they solved the problem in the early 02000s by faking the inflation rate statistics. Some economic consultancies published statistics showing the real inflation rate so the government prosecuted them for "commercial disloyalty". Retirees rioted in the streets and got tear-gassed by the police until the government agreed to raise their pensions faster than the fake inflation rate. Bondholders weren't so fortunate.

Thank you very much, I appreciate this detailed explanation and thats very informative. It would seem more or less that this is "priced in". That makes total sense

Maybe not always! Rapid inflation offers innumerable opportunities for ruinous errors.

They didn’t sell them later, they sold them immediately.

Roughly: - borrow $1mln - buy $1mln of coffee, regular price $10/kg - sell immediately at $8/kg (lower price helps move the goods quickly) - pay back $1mln loan

By the time you paid the loan back, $1mln no longer has the same value. And so the $1mln you paid back is really only worth way $500k.

Add to this lack of stability due to war and you may not even pay it back … perhaps you refused to pay, company went out of business, you borrowed from someone who is no longer around (alive, fled the country, etc), or any other number of related reasons. In that case it ends up being pure profit for you. Not so easy to enforce or later track down.

Where are these people that make these types of loans? This is so far out of my experience, I truly just cannot imagine these situations actually occurring. From a business perspective you would just be setting money on fire every time you made a loan, and you would know it.

That's roughly how governments work too. Reduce spending, raise taxes, or devalue the currency to make debts less costly.

Oh the war was a whole another story I'm not getting into. Suffice to say we have seen unfathomable depths to which some people will sink, and unbelievable heights to which others will rise. We got hugely helped and massively hurt by the least likely of sources at times.

I'm in Canada now :)

Yeah, it’s a depressing/upsetting series of thoughts.

Also in Canada now :)

Turkey did a 1,000,000:1 conversion a while back. Before that you could almost say that the local currency was millions.

- "How much is this book?"

- "9 million"

- "Here's 10 million"

- "And one million in change, sir"

OK, so that only worked up to a certain value. No one would say their rent was "1,000 million". In that case, the currency was billions!

In Vietnam, the largest bill is 500,000 vnd, about $20 USD.

Everything there is in the millions as well.

I've got a 100 trillion dollar bill from Zimbabwe, I think it was worth about 30c at the time of issue

> […] our inflation index goes hand to hand with our USD:ARS, even even below that (intuitevly it may be a problem).

The solution seems so simple to me: drop the ARS and use USD as the national currency. Your inflation is just trying to pay for goods and services using an eternally depreciating asset (the Argentinian peso).

The reason this doesn’t happen is because it would mean that the Central Bank of Argentina (CBA) would no longer be able to, at will, monetize the debt of the Argentinian government and favored corporations. Ie. the CBA would lose its ability to purchase a government bond in exchange for crediting the government’s account with the face value of the bond — convert debt into money.

At the end of the day it’s a conflict of interest: the people want a stable medium of exchange and the government wants to finance its activities without balancing its budget.

The economist Melchior Palyi explained this phenomenon in his 1962 book “An Inflation Primer” following the high US inflation of the 1940s: https://cdn.mises.org/An%20Inflation%20Primer_2.pdf

> The solution seems so simple to me: drop the ARS and use USD as the national currency

Actually, once the US hits hyperinflation, the US may want to consider using ARS as its national currency

The US is at no serious risk of hyperinflation in the foreseeable future, barring unknowable events / disasters.

You can see the future, impressive

Because doubling the amount of dollars in the past year or so is not at all worrying for "transitory" inflation. Dont be naive, it's coming. The politicians have kicked the can down the road for decades and had they not bailed out the bigs in 2008 and during this past 2 years we would be bankrupt. Its a house of cards. They are going to push us into a war to escape the inevitable.

No no no! You see velocity of money has decreased and productive output has increased. People don't like to spend the new money. Therefore inflation is low, do not be fooled by the Austrian tricksters suggesting otherwise.

You mean the monetarist tricksters. They assume the velocity is constant.

Governments go to war to stop deflation, not inflation.

As you lower the interest rate below liquidity preference people will simply hold onto their money because they are speculating on higher interest rates.

If hyperinflation is a knowable event, you'll already be in it. People would instantly spend their money if they knew hyperinflation was coming, making it a self fulfilling prophecy. It's really meaningless to make such statement about any currency that isn't already in hyperinflation.

Isn't that kind of what Brazil did in 1994 with URV?

From Wikipedia: "URVs were quoted in cruzeiros reais and its intrinsic value was pegged to three price indices and had a fixed parity of 1-to-1 to the daily U.S. dollar exchange rate."

You would like to listen to / read this planet money episode: https://www.npr.org/sections/money/2010/10/04/130329523/how-...

It was the 1991 Cavallo Plan in Argentina that tied the local currency to the U.S. dollar:

https://en.wikipedia.org/wiki/Convertibility_plan

The Real Plan in Brazil created a three month period with a combination of the old currency (Cruzeiros Novos) and a new virtual one (URV - Unidade Real de Valor) with an official daily exchange rate between them. This rate was selected to keep the URV at almost exactly 1 U.S. dollar but when both were replaced by a new actual currency (the Real), that was officially allowed to float relative to the dollar.

The real did initially get slightly valued relative to the dollar (an exchange rate of 1 R$ = 0.85 US$, for example) but floated slightly up and down until the end of 1998 when it suddenly jumped to 2 R$ = 1 US$ in order to block a huge wave of speculative money that was destroying economies around the world (having previously hit Russia, then the Asian Tigers).

>t the end of the day it’s a conflict of interest: the people want a stable medium of exchange and the government wants to finance its activities without balancing its budget.

This still holds for USD

If you're willing to put it in basically "god's hands" (hope America keeps it stable), why not pick something like a commodity money (metals or basket of commodities for instance) that at least somewhat mitigates this conflict of interest. Using _someone else's fiat_ seem like you're keeping all the downsides of fiat but only some of the upsides.

This is not a solution. What you need is a negative interest rate on cash to abolish inflation and currency speculation. Once that is done the central bank can control the money supply directly and the government can pay off its debts.

Argentinian here, 37 years old, middle-class. I known a lot of people who bought all the non-perishable food they can like tuna, and others good because the rampant inflation. Myself included.

Is the Argentinian inflation being "fought" by any government program? I've studied a lot of Brazil's hyper-inflationary period, and boy was it difficult to overcome it. Basically, once the industrial growth went below the inflation-rate everything went (slowly) belly up. It happened at two distinct times: one at Kubitschek's presidency, and the other during the military junta. Trouble is that our economy became "indexed" everywhere, so people would mark-up their prices at inflation+x%, then the _actual_ inflation would be the forecast+x%, which is an exponential process. After two decades of failed attempts, the solution was found via a financial reform, done all throughout the 90s, and then a modern copy of Germany's anti-hyper-inflation Rentenmark program, which created the Real. The solution (or so the mainstream history says) was to create a price "anchor" for everyone, which was pegged to the dollar (one of the main culprits were the large devaluations vis-a-vis the USD, a vicious cycle of inflate->devalue->inflate->...), and at the same time attracting foreign investment via a large real interest rate (far above the remaining inflation). What we are going through now in Brazil is a slow reversal of that, inflation is picking up again, and the central bank's actions are seemingly slowing down the economy and not being able to control inflation (so long, Phillips Curve).

> Is the Argentinian inflation being "fought" by any government program?

Nope, the government loves inflation, as it reduces its debts and they can print all the money they want to pay for that. Politicians live in a different world than the average person, inflation is not an issue for them.

This is only the case if the bonds get issued in the country‘s currency. Argentina doesn’t have that luxury[0].

In the long run, if a government devalues its currency too much, investors lose trust, and the country cannot borrow money in its currency. Not necessarily a problem for current politicians since they will be out of office by the time the trust is lost.

0: https://www.reuters.com/article/idUSKBN26S07N

Macroeconomics is very far from perfect but we do know how to stop, or manage inflation. You can stop it by keeping the money supply stable (don’t print any more money than necessary to account for notes and coins wearing out it being lost). You can have constant low inflation by targeting the growth rate of the money supply (like the EU’s near but not at 2% target).

That’s it. Plenty of countries don’t do that but it’s a matter of political will/popular support for ending inflation, not a technically difficult problem. At worst you can just adopt another country’s currency like Kosovo has the Euro or Costa Rica has the dollar.

Sure, that's an usual explanation. Quantity Theory of Money, which goes back to Copernicus.

One could point out to different ones as well, such as Nitzan and Bichler's "differential accumulation", in which, having technological/growth difficulties, the ones who benefit most from stagnation are the ones who can jack up prices the most (entities who control most of the supply, with most mark-up power). Read: inflation.

There are many other views as well, I just pointed out one which I like.

Mainstream economists don't know how to stop inflation.

Keeping the money supply stable does not stop inflation. Inflation is ehat happens when you have a currency where a portion of it is not circulating in the economy and then suddenly becomes active and turns into demand for products and services. Even a gold standard will have inflation.

> Is the Argentinian inflation being "fought" by any government program?

Another Argentinian here :)

Yes, the current and past governments took different actions to reduce inflation. But, they weren't successful.

It's a complex topic. I'm not an economist, but from my limited knowledge:

- People don't trust ARS because they fear devaluation (like in 2001) or hyper-inflation (like in 1989). It means that many prices are tied to the ARS/USD exchange rate. When the dollar goes up, merchants that depend on imported goods raise prices to cover their stock in the future. (and it generates a domino effect)

- The food production chain is not so dependent on imported goods, but it's one of the main products for export. When international prices go up, domestic prices rise as well.

- Printing money is also a way to finance your economy when you have tons of debt (Ray Dalio has some easy-to-understand videos about it): Argentina has tons of debt.

The current government did a lot of price control of certain products (mainly food and services). But, it's not working. I guess they cannot avoid printing money without causing other issues.

>The current government did a lot of price control of certain products (mainly food and services).

Unfortunately, this seems to me like a populist/demagogic measure. We have tried it (a lot) in Brazil, and whilst it made some people seem better off (such as richer regions, like the SE) whilst others lost a great deal of purchasing power, it also caused massive shortages and the rise of a black market for common goods, with pretty hefty mark-ups and waiting times.

> The food production chain is not so dependent on imported goods, but it's one of the main products for export. When international prices go up, domestic prices rise as well.

Good point! It was (and still is) a major issue here. For example, today our domestic prices for fuel (gas and ethanol) and all commodities that we export (sugar, soybeans, iron ore, etc) are very correlated to the international prices.

> Argentina has tons of debt

So did we during our inflationary years, and both private loans as well as loans for public expenditure of all spheres, which were made so as to not raise taxes, and even to pay salaries (not even to make investments). Looking back this sounds absolutely bonkers.

Today our debt is rising fast, but it's mostly internal (BRL-denominated bonds). I wonder how much more of it (and combined with what else) would kick off the inflationary process again.

Part of the problem is that the government can’t reasonably borrow money because Argentine bonds are along standing punchline. Argentina has defaulted nine times in just over 200 years.

I don’t know how to restore credibility on that. Secure debt doesn’t really work against a sovereign so reputation is a big part of the debt market.

>>>> how to restore credibility...

Balance budget? Cut government down to size? Open up the country to investment by rule of law?

Its not difficult. Its just the ruling class has captured the levers of govt and the people dont know any better.

Sweden was able to do this. Argentina is only special insofar that the people leading it are the wrong ones to be in power

When did Sweden default on its debt? I don’t remember that.

They didn't default on their debt, precisely because they got their house back in order. But this came at great price, with major suffering by the populace during a 4-year economic crisis. [1] Despite all the suffering and poverty caused, the government took the opportunity to reform healthcare, which was a disaster [2] and bring costs under control.

Sweden has had a brighter future since.

[1] https://en.wikipedia.org/wiki/Sweden_financial_crisis_1990-1...

[2] p44 https://www.fraserinstitute.org/sites/default/files/SwedishH...

Some ridiculous number of the population, like 90%, depend on gov paychecks. The politicians grow and grow the dependency, make promises to get elected, increase the debt, inflate the money, get caught stealing garbage bags worth of it while in office and it goes on and on until it collapses and the same bs recets. Each time more and more smart honest people flee, brain drain, and the ones left behind become poorer, more entrapped, more dependent.

Argentines are seeking refuge in the blackmarket dollar, but that will eventually be a risk as well.

> In fact, anyone who would do that wouldn't be smart at all, would be pretty stupid

Can you expound on why this would be "stupid"?

Holding dollars to exchange for later incurs a 7% (current dollar purchasing power loss rate) loss on top of exchange fees. The can of tuna retains its food value exactly as-is for years, with no currency exchange costs. Seems to me that the tuna beats holding dollars handily.

Currencies don't have inflation rates. Countries do.

Do two countries that share the same currency have different inflation rates? Are El Salvador and Ecuador experiencing different inflation rates than the United States?

Yes they have different inflation rates.

Inflation rates even vary among different regions within the same country.

nice graphs for eurozone countries https://www.euro-area-statistics.org/inflation-rates?cr=eur&...

When you need some pesos to go to the dermatologist, pay someone to fix the air conditioner, or take an Uber across town, tuna is harder to resell than dollars. But the optimal level of tuna in your portfolio is nonzero, in part because sometimes the supermarket runs out, or goes on vacation, or gets shut down by the police for a week, or closes because of the rioting, and having some food in the house is a good idea.

Venezuelan here: I have personally bought tuna and flour by the case as a way of hedging against inflation and scarcity. Of course, this last factor was the most important.

Don't forget salt. You can survive a week or more without food but try to do the same without salt and you will be throwing out your (inedible) food in no time.

Argentinian here. I buy coffee, canned tuna, cleaning products, etc in installments without interest whenever I can.

Zero interest is a lie. The interest is already on the price

The problem is you pay the same price if you pay in cash

Let's hope for you guys that some government genius doesn't come up with the system Chile has: Inflation adjusted loan and contract payments, obviously excluding salaries.

https://en.wikipedia.org/wiki/Unidad_de_Fomento

There has been such thing[0] and it unlocked affordable mortgages in a country where in the past years (decades?) it was basically impossible to get (and thus, climb the housing ladder).

[0] https://www.marval.com/publicacion/creditos-en-uva-como-alte...

Inflation adjusted salaries would have had the same effect in terms of enabling the housing ladder climb. If you only lock interest rates to inflation what you get is a population of insolvents, and richer banks.

Not really, in Argentina salaries get adjusted by inflation all the time, however house prices are in USD (because the peso is worthless), and we are talking over 60K usd for an old 1bed in a not really nice part of buenos aires city, and buying property for locals is impossible. You have to also consider that, last time I checked was late 2019, now it's probably worst, ~90% of argentinians earn less than 300 usd a month, and since there is no credit, buying something is almost impossible without the aid of your parents.

A lot of people my age (31) +/- 10 years, middle class, professionals, are leaving the country in droves to Europe, Canada, USA and other LATAM countries as we realize there is no hope things will get better, as it's the same story our parents and grandparents went through.

I was referring to Chile, as mentioned 2 comments up, not Argentina

This system doesn't exist to make consumers "climb the housing ladder", it exists to give foreign investors a higher guarantee in a high or highly variable inflation environment.

The issue is relying on a foreign currency, one which the official exchange rate is like 50% marked up from its real black market value, which is how the economy reaaaally works there. I worry for Argentines (I am one), because the usd is having the same problems the peso has every 7 years, its being printed into inflation oblivion.

I would be buying that canned tuna, and also using bitcoin, etc like the surging numbers of people are, because escaping one fiat submarine for another fiat sinking ship is not something I could sleep well with. Besides, the politicians down there are nuts and could easily make holding dollars totally illegal, infact they already do with strict capital controls, withdrawal limits, etc. Its a cash economy.

Argentinian here, 34 years old middle-class with a family of 3 children. I buy lots of pasta and canned food among others goods in wholesalers.

I’m trying to understand how would it work for mortgages. I guess that you have no fixed interest mortgages and they are all tied to the inflation rate + some spread, otherwise I don’t see how the banks would want to lend you money for a house.

Everything is linked to the inflation rate. Fixed interest lending does not exist at all.

Even then long term lending can easily go both ways, and become too cheap or too expensive very quickly.

(I lived my childhood with hyperinflation, not in Argentina, but that doesn't actually change from one place to another.)

Variable rate loans make a lot of sense. It’s still strange to me that in the USA I can get a 30 year FIXED mortgage at 2.75% when inflation was 7%.

Makes “inflated” housing look cheap. Doesn’t really make sense that it’s even offered.

> It’s still strange to me that in the USA I can get a 30 year FIXED mortgage at 2.75% when inflation was 7%.

A variable 2.75% with inflation at an unusually high 7% would be weirder than a fixed; a variable rate loan has a rate based on current conditions, a fixed rate loan has rated based on expectations over the lifetime of the loan (both in terms of value of money and risk of loss.)

Now, it may seem weird that you can get a 30-year fixed loan at all, but once you accept that, having the rate below current inflation when inflation has been at a unusually high level for a shirt period of time isn't particularly odd.

I think you can usually refinance a fixed rate mortgage to an adjustable rate one at any point. Or refinance to a different fixed rate one with lower rates if the opportunity arises.

> ... a fixed rate loan has rated based on expectations over the lifetime of the loan (both in terms of value of money and risk of loss.)

Is that accurate to say? Because I don't think so.

It seems more accurate to say mortgage rates for fixed loans are set by the cost of money at purchase / loan-initiation time.

Which makes sense, as that's when funds are actually changing hands (from purchaser's lender to seller).

And ultimately, that's banks' cost of money, which means then-current Fed rate + spread, no?

> Doesn’t really make sense that it’s even offered.

Nobody serious is betting inflation will remain at 7%. That was an annualised rate from a single reading.

You can get these low interest rates because the government subsidises them. If it were a "free market" so to speak you would not be able to get such a rate, and possibly would not be able to get a fixed-rate mortgage at all.

Argentinian here.

Personal credit lines are almost nonexistent or have rates which supercede inflation, (inflation+10% is not out of the ordinary). Credit card yearly interest rate for 2 years ago was >= 70%

There are preeexisting credit lines for property, but they are government subsidied mortgages with very a specific target audience. ie: salaried mid income families looking to buy their first property.

> how would it work for mortgages

That's Argentina's secret, there are no mortgages, properties are bought in cash.

Argentinian here, I built my house about 10 years ago with a fixed rate mortgage subsidized by the government. It was subsidized only for people that didn't own a house already. It was a 16 years mortgage. First year I paid about the same as someone renting a house. Past year I was paying about only 10 dollars per month, so I cancelled it :)

But yeah, as far as I know, at the moment there are no fixed rate mortgages.

mostly they don't

Most properties are bought cash. That's dollar bills, no bank transfer, no pesos.

Hi! I'm really curious about the wages. What are the average wages now with inflation? In USD terms per hour.

I had some people trying to hire they're, but most people request 15usd/hour for basic va skills. I'm impressed how high.

So I'm not sure what's the problem and I'm wondering if you could provide some insight.

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