Argentina's currency exchange black markets | Hacker News Reader

Argentina's currency exchange black markets

devonzuegel.com

99 pointsmrzool143 comments

Decades ago when the Rupee was much more tightly controlled, a black market flourished for currency exchange. Since I was mostly visiting family I didn't spend much. At one point I did some traveling on my own and had plenty of rupees in my pocket.

In a foreigners' hotel lobby I ran into a kid who was eager to do a currency exchange. He was really good at it too: he had a reflexive response for any objection ("I have enough rupees" "But the bank will only give you 20 for a dollar -- I can give you 50").

Finally he asked, "Don't you have a exchange market for dollars in your country?" I answered "In my country dollars are just money" "Yes, same here, so you don't need to go to a bank to change them for rupees".

I replied, "In my country I go to the shop to buy a drink and give dollars to the shopkeeper. He gives me my change in dollars. There is no exchange rate into any other currency"

Finally he didn't have an immediate response. He looked a bit shocked that there might be a place where people simply transacted business in dollars. And why shouldn't be be surprised? He didn't live in such a place and in his experience all foreigners seemed to use these "dollar" things to buy or sell rupees.

Anyway that pause gave me a way to jump out of the conversation and make my escape.

In 1982, I went to Czechoslovakia (this was before the divorce and before the fall of the Wall), and walking around the streets of Prague, people constantly whispered to me, a visibly foreign person, "Change money? Change money?" Dollars or German marks were what they wanted, and I could have gotten a much better exchange rate than the official one, if that was what I wanted.

Now? The author's comment that most people use a cueva to handle the crypto for them, rather than managing it themselves, is a real-world datapoint. It means that cuevas are vulnerable to surveillance and control.

> The way I explain this to myself, it seems that the key characteristic that draws Argentinians to these relatively centralized cryptocurrencies is that the government doesn't control them, rather than being completely decentralized in a way that no one controls them.

The government doesn't control them now. What do you bet there are armies of programmers working for the government, figuring out how they can?

So if I lived there, I'd probably be using crypto, too, but I'd always be afraid it's going to vanish someday. Not by the government devaluing the peso, which Argentines are used to, but by some unforeseen technical snafu.

So I'd probably spread my bets around, having some US $100's, some bricks, and some of other coins, making sure not to have all my eggs in one basket.

Ha! This brings memories. Growing up in Bulgaria, I was 6 years old in 1982, and I was begging my grandma's coworkers (he was their manager) to give me a dollar. Some of their husbands would drive trucks (T.I.R.) and would get ahold of foreign currency, but it was impossible to do so. In fact, the government has set up special shops called CORECOM - https://en.wikipedia.org/wiki/Corecom where you can "exchange" your "dirty" foreign currency for stuff not possible to buy anywhere else.

I wanted my $1 dollar to get a Kinder Surprise Egg (that, and empty cans out of coca cola, or pez were great for a kid to have).

Then regime fell, and in early 1990's all "corecom" eggs were now for sale everywhere... They were no longer that valueable :)

(From the wikipedia article, it looks like The Czechoslovakian's version was called Tuzex - https://en.wikipedia.org/wiki/Tuzex - lol - what names, someone should make a game with these names)

Poland also used to have this kind of shops - they were called Pewex https://en.m.wikipedia.org/wiki/Pewex

And they allowed purchases mostly in dollars. This shops were the only place where You could get high tech equipment that was produced by "rotten" west.

China had a more complex system into the mid 90s: They had special currency exchangeable for foreign currencies but de facto it was only for foreigners (who else had foreign exchange?). There were places that only took these Foreign Exchange Certificates: hotels for foreigners, tourist traps, some speciality shops etc. They were denominated in Yuan but these places that took them of course charged foreigner prices too -- like a pack of cigarettes cost about much more than you would pay in the street.

Some local people were quite eager to get FECs and would exchange them at better than 1:1 so they could buy something normally unavailable What people really liked was if you bought something with them (like cigarettes) -- you'd get change in regular renminbi.

There were other good techniques for soaking the foreigners. Two I particularly liked: Egypt used to require that visitors spend at least $75 (maybe $225 today) worth of Egyptian Lire per day. You had to buy that much local currency at the airport to enter the country (based on how many days you planned to visit). But the best part was when you left you had to show receipts for the things you'd paid for and if they didn't add up to enough they'd tax you the difference before you could leave!

The sneakiest system was in Sri Lanka: the currency was not convertible so you could only buy rupees when you were physically there. Then when you left of course you had some cash left, but when departing flights left the banks were closed. There was a huge transparent globe collecting money for a children's charity. Naturally it was full of rupees (and a tiny amount of foreign money).

I refused to do this and later sold my walletload of Sri Lankan Rupees to a coin collector shop in Singapore for some terrible exchange rate. Just out of principle.

> Now? The author's comment that most people use a cueva to handle the crypto for them, rather than managing it themselves, is a real-world datapoint. It means that cuevas are vulnerable to surveillance and control.

Cuevas are operated or are buddies with those in power.

Here's the thing: there is not a single rational actor in Argentinian politics who likes currency controls. It is a gigantic pain in the ass and a huge inconvenience for personal finances and so anyone who likes real money will use cuevas.

At the same time those people know that the alternative at the present moment is unlikely to be for the best; liberating the exchange rate just leads to people stashing money overseas, hyperinflationary spirals, even more difficulty servicing debt. More importantly, the various exchange rates allow for industrial protectionism where necessary (by benefitting imports of industrial inputs), populism for convenience (subsizing certain middle class consumer goods) and greater taxation of highly productive industries.

At this point the risk of walking all this back is too great for any single politican, side hustles would be lost, and the future would be even more uncertain. No one wants to pay the price.Now? The author's comment that most people use a cueva to handle the crypto for them, rather than managing it themselves, is a real-world datapoint. It means that cuevas are vulnerable to surveillance and control.

It's basically a really crappy local Nash Equilibrium.

> the various exchange rates allow for industrial protectionism where necessary (by benefitting imports of industrial inputs), populism for convenience (subsizing certain middle class consumer goods) and greater taxation of highly productive industries

How complex is the Argentinian tax code? (Every democracy needs complex economic arrangements to reflect the balance of power. In America, we tend to stuff that complexity into the tax code.)

It is easier to feed a lion wearing a bunny suit, bathed in blood.

Argentinian here, we have maybe 100 taxes, a little more..

Complex and terribly executed; certain classes of businesses cannot pay their tax burden while remaining profitable.

It is a nightmare.

Thanks, I don't pretend to know how all that works in Argentina.

So cuevas are buddies with those in power? Wouldn't that mean they get extorted to stay in business? And if they don't come up with the requested bribes, or otherwise run afoul of their "sponsors" then they get shut down and the customers are SOL?

Well if they shut down who else is gonna exchange your worthless pesos for hard currency?

I didn't mean all of them. Just the one you're unlucky enough to be with.

Hundreds of millions move through those, including importers and exporters from foreign markets with mafia connections. A figurative hornet's nest to disturb.

Yeah so there, and Brazil, there are for sure businesses that can handle the level of racket--but they're locals, and connected. Speaking the language is fairly critical. Being chill. Immigrants starting a business never get a toehold, the price doubles every time they pay it pretty much. Unless...unless you're magical or some shit, like unbelievable, next level. Oh you know who? Truecrypt author, Paul Le Roux, him.

The cuevas existed before crypto though, so all that's changed is some backend implementation details of how they operate, rather than anything else. Users put their trust in cuevas to handle their money as much as regular people in other countries put their trust in their local bank.

The lack of uptake in crypto by regular people in Argentina underlies how much the decentralized promised cryptocurrency future simply isn't that interesting (for whatever reason) by regular people, even in a country where you'd expect people to be aware of the issues of fiat currency. The underlying fact seems to be that cuevas have managed to put enough trust in Binance to use it as their centralized platform, and that the underlying technology is so esoteric that "17-year old with a smartphone and the binance app" is all the implementation detail that's necessary for them. Smart contracts (to them) are just some esoteric money trinket, like folding animals out of dollar bills.

>The government doesn't control them now. What do you bet there are armies of programmers working for the government, figuring out how they can?

Argentinean here. That probably won't happen... for many years, at last. Programmers from my country start working for foreigners for dollares/any other non-meme coin that is no the peso. Anyone with 3+ years experience stops working for locals if they have a good english level and stop considering job offers in pesos (100% anual inflation as of now). What I'm trying to say is, the government can try to do that but it'll have to manage with only mediocre devs or spend a lot of money which... they don't really have.

> It means that cuevas are vulnerable to surveillance and control.

Oh but the "change money" people were no less vulnerable to surveillance and control - the communist solution to this very communist problem that they posed was to use them as a source of intelligence.

> For example, crypto enthusiasts often imagine a world where individuals control their own wallets directly — storing the cryptographic code on their local computers or phones, not using a third party, like MetaMask.

MetaMask is a local self-managed wallet though, not a third party in the sense that the MetaMask service company manages your keys.

Exactly. I'm not sure where the author of this article has got the idea that MetaMask is a custodial crypto wallet provider, because it isn't.

It is however entirely reliant on infura.

That's a default rpc provider to get Blockchain requests out and data in. aAnd you can change that to any rpc provider in the settings.

And you can do without MetaMask with a few lines of Javascript.

Why does the author think they should be able to get USD out of an ATM in a non-US country? Does this happen in any country?

I can't think of any country I've been to other than the US which let me withdrawal USD from an ATM.

When telling friends about some of the benefits of Crypto, I often use Argentina as an example, but this one comment regarding ATM -> USD I think is hurting the credibility of this author.

Some Canadian banks have ATMs on Canadian soil in airports and border towns that will dispense USD.

I’d guess “dollarized” non-US countries definitely do too.

Yes, in Ecuador that happens, which is nice if you're a tourist from the US. When I was there, the local bank didn't even add a fee for using their ATM, though my US bank added their own charge. Still better than in the US where both banks would add a fee.

I don't think those ATM's carry the dollars for use within Canada, though. Rather, they're there so that travellers can bring some dollars to countries with a non-functioning financial system (for instance with currency controls).

In Uruguay, neighbor of Argentina, you can extract up to 500 USD daily from ATMs.

Here in Brazil, I've seen a couple of ATMs from a major bank which allow you to directly get USD out of them. I searched just now and found a list of these ATMs: https://www.bb.com.br/pbb/pagina-inicial/voce/produtos-e-ser... (other banks might have them too, but the ones I've personally seen are on this list).

> I can't think of any country I've been to other than the US which let me withdrawal USD from an ATM.

Have you been to Argentina or even anywhere in Latin America? You can't just visit a country like, say, Sweden and use Swedish Kronas or Korea and use Korean Wons and from there extrapolate that in $country you just use $local_country_currency and it's as simple as that.

In countries where the local currency is unstable, transacting in USD in some manner is just a fact of life. Eg People in Costa Rica who work for US corporations may just get paid partially in USD, as well as in Colóns.

More to the point is that the reason the expectation is there, is that Argentinians used to be able to visit the ATM and pull out USD until currency controls were enacted, and that the surprise is that even US citizens can't pull out USD.

> that even US citizens can't pull out USD

Did I miss some weird constitutional amendment that American citizens have super-duper special status at overseas ATMs?

The fact of US citizenship is entirely irrelevant to what notes come out of an ATM.

Are ATMs mysterious black boxes that dispenses random amounts of paper to random people, at random times? Of course not! The person standing in front of the ATM is entirely relevant to what comes out of the ATM. First check is that there's enough money in their bank account, but other bits of information, like their citizenship status are relevant to the transaction. American citizens typically have US bank accounts with US dollars in them, and the super-duper special status that they have; the privilege that US citizens enjoy, is that the US government has no currency trading control. As a US citizen you're allowed to trade away all of your USD for whatever other currency you want.

If you had the luck to be born in a country with a strong currency, like Sweden, you're also blessed with this privilege, but if you're from a different country, like say, Argentina, then you're only allowed to trade a certain amount before you're cut off, which the bank, and by extension the ATM will check. It's less about US citizens having some super-duper special status, but that they have rights that people that only have Argentinian citizenship don't have.

Of course, being a US citizen isn't going to magically turn the bills inside the ATM into USD, but prior to the currency controls, Argentinian ATMs had USD to dispense, to both Argentina and US citizens, as well as citizens of other countries.

The stated goals of Argentina's currency controls was to stop the out flow of Pesos to USD. An American tourist visiting Argentina is going to spend their money in Argentina while they are there, which, no matter how you denominate it, which would be an inflow of money to Argentina.

When the controls were announced, the banks went overboard implementing their blocking, which also prevented this inflow of money into the country. Which is why it's remarkable.

> but other bits of information, like their citizenship status are relevant to the transaction.

No, it's not. Your card issuer and the ATM owner participating in compatible interbank networks is what's relevant.

Seriously, "even a US citizen couldn't get USD out of an Argentine ATM" is a massive distraction to the point you're trying to make.

Your card issuer cares a lot about who you are. Your US citizenship status was asked about when you created an account with them. Some smaller banks won't even give non-citizens accounts because they can't handle that.

You need to travel more often then.

You can get USD out of Citibank ATMs in Hong Kong (and many many others too, I just happen to use Citi last week).

Not sure about ATMs, but in Singapore the banks are happy to transact in USD, including withdrawals in USD from SGD accounts (with a pretty decent conversion rate).

This is normal.

You could trivially cash out thousands of dollars in ATMs of many banks, both foreign and domestic, in a certain "world's enemy No.1" country before Feb 24.

I think you're talking about "world enemy No.2".

#1 has 10x the GDP compared to #2.

Off the top of my head ATMs in Cambodia, El Salvador, Ecuador, Panama all give out USD.

Ecuador is not surprising since it’s official currency is USD

El Salvador and Panamá too.

Even though for accounting reasons Panama calls it Balboa, its actually USD banknotes and Balboa coins at a 1=1 exchange rate.

Yes lots of countries have this around the world.

Most airports in Europe have ATMs that let you cash out EUR,GBP,USD.

Pretty common, not even counting countries like Lebanon where USD used interchangeably with the local currency.

Am I the only one puzzled by the 100% average inflation over the last century figure? That's 2^100, which would mean a single peso in 1922 had the purchasing power of 1.26 * 10^30 ARS today, or roughly a trillion times the total value of the world's assets.

Welcome to Turkish economy too.

Also Nigeria.

The peso was revalued several times, so divide by 10^13 (if you held a 1922 peso m$n through the revaluations, it would only get you 10^-13 pesos convertible today). 100% is still an exaggeration though.

I am so sick of this strange take on decentralization that, because some people happen to use an exchange to store their money, somehow that means decentralization is worthless. :/ E-mail is decentralized even if most people don't host their own e-mail servers and even if most people use the same third-party host, and it simply wouldn't be the same product or anywhere near as powerful or valuable to its users if it were fully centralized on exactly one provider.

The reality is that there are a number of exchanges--I don't even have access to Binance in the US! (I can use Binance.US, but that's an entirely separate product from a technically separate company)... I have been mostly using Kraken recently, but I used to use Coinbase--that are all able to cater to different markets under different regulatory schemes and yet can interoperate because of the decentralized blockchain protocol, and that's why the tokens stored on Binance have value in the first place.

So, no: I assure you that these people value "decentralization" even if they are using a custodial wallet of some kind, in the same way that I hope we can all agree that the people who use e-mail or telephone numbers or domain names all value decentralization even if almost no one runs their own fully vertical stacks of servers, carriers, and registrars, because without that decentralization you would be trapped into a walled garden and forced to deal with a single jurisdiction: that you even can use Binance and interoperate with Coinbase is decentralization at work.

Article says “$40 billion in net shipments of U.S. currency”[0] total over many years (mostly $100 notes from article) yet Argentina only imports $5B[1] to $6B[2] billion of goods from the USA per year!

That is one very very sweet deal for the USA. Especially considering the USA dollar inflation depreciates the value of the physical bills over time.

[0] 1993 https://www.federalreserve.gov/pubs/ifdp/1993/460/ifdp460.pd...

[1] https://oec.world/en/profile/country/arg

[2] https://wits.worldbank.org/CountryProfile/en/Country/ARG/Yea...

Edit: $5B looks like hex and makes me double double the B billion making the text unreadable, however I am guessing too many readers here don’t like the metric 5G$, which I would otherwise prefer to use. I guess I could write the billion in full, but then this footnote would be pointless.

The benefit to the United States from the dollar serving as the world's reserve currency is enormous, and poorly understood. Congress has been foolishly pursuing fiscal policies that put it at risk.

What sort of fiscal policies are you referring to? If you're referring to things like FINCEN and FATCA, I would argue these only strengthen the reliability and dependence on the USD abroad.

Fiscal policy usually is a euphemism for deficit spending in this context (contrasted or complementary to monetary policy- primarily the setting of interest rates)

This essay was previously published elsewhere on 8/13: https://www.freethink.com/technology/crypto-argentina-black-...

I know some US startups that hire Argentinians (Scale AI, etc) and pay them in USD-T or USD-C. Not sure if they pay any taxes in the US, but they certainly don't pay the income tax or take the currency conversion haircut in Argentina. Pretty good deal.

Still, these people want USD, not really a crypto. I figure some lost their shirts in UST.

How is Argentina supposed to pay for public services, teachers, doctors, education, roads, etc if the conception is that a "Pretty good deal" means the country does not get any tax money through competent, employed individuals who are supposed to be the one supporting those costs ?

All those things can be acquired privately. It is possible to buy things without using tax money.

You can only say this if you don't know Argentina.

Over here, free (nonprivate) public education is a point of pride. It's political suicide to dismantle the public [1] education system. People will rightfully take to the streets if someone attempts this. Same with many hospitals.

To understand what I mean, think of whatever is held dearest in US culture. Is it free speech, freedom of assembly, something like that? Now imagine if a US government told you, "we've determined freedom of speech is not fiscally feasible anymore, so we're taking it away". That's what it would feel like for us.

[1] do note in Argentina, "public" doesn't mean the same as in the US.

The fact that it is a point of pride has literally nothing to do with the fact it is possible to buy health care or education privately.

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>It also means you are not familiar with Argentina's culture or politics.

I'm familiar with the fact Argentina taxes profit at 106% [0]. That is it is illegal to make a profit in Argentina. Perhaps the failures of your government officials is part of the problem in your nation. Perhaps it is possible the individual citizens of your own country know better how to manage their own money than your politicians, and what you see as prideful 'public services' have become ways to rob you and fill the pockets of those connected to your politicians. I hope you are able to find a way forward without getting robbed blind in taxes by politicians who pretend to be acting on your behalf. I certainly don't begrudge your countrymen who have taken matters in their own hands.

>Also, most people here would be screwed under a privatized system.

Your people seem to be screwed under the current system and things aren't exactly looking up. By some accounts I've heard from your countrymen, only 'most' instead of 'practically everyone' being screwed would actually be a step up.

------------------

>Living in Argentina is not hell, or anywhere close to hell. It's quite a nice country

But I never said it was hell and this is a vapid attempt to make me look like someone who hates Argentina and painting it as hell. Surely I would probably even enjoy living there, but I'm sorry to say there are ways in which your people are 'screwed' and the currency issue is one of them. I don't appreciate your attempt to try and make this _Me the man of culture of Argentina who KNOWS the culture vs the outsider who thinks Argentina is hell_, which of course is utter bullshit designed as a back door ad hominem attack.

>and whoever told you so is lying to you.

You are literally the first Argentinian I've spoken to who claimed they weren't screwed by the political/currency situation, and I've spoken to a lot of them. I'd suggest you stop interpreting my comments as some attack on Argentina, rather interpret them as thought on how to deal with a system where your politicians fuck you with policies like making it illegal to make a profit, which is something that 'screws' everyone.

The sooner you realize your precious public institutions of 'pride' are really the way in which your politicians bluff you into lining their own pockets and getting robbed blind by their policies, the better.

[0] https://www.doingbusiness.org/content/dam/doingBusiness/coun...

It has everything to do because it speaks to feasibility.

Also, most people here would be screwed under a privatized system.

It also means you are not familiar with Argentina's culture or politics.

> fact that it is a point of pride has literally nothing to do with the fact it is possible to buy health care or education privately

It does mean that if identified, the system is incentivized to make a brutal example out of you.

> Your people seem to be screwed under the current system and things aren't exactly looking up. By some accounts I've heard from your countrymen, only 'most' instead of 'practically everyone' being screwed would actually be a step up.

This is simply not true. You've been listening to one-sided propaganda.

Note I'm not saying things are well. But it's not as extreme as you put it. Living in Argentina is not hell, or anywhere close to hell. It's quite a nice country. Us in the middle class love to complain a lot, but many of us are doing quite fine.

Yes, the situation is uncertain, inflation very high, and it's all politically volatile. But it's not anywhere close to a nightmare (your "practically everyone is screwed"), and whoever told you so is lying to you.

People making those incomes just make up an income stream and pay taxes with that.

Unless you want to pay 75% of your income in taxes.

Good news! Mendoza province now accepts crypto for taxes:

https://cointelegraph.com/news/argentina-s-mendoza-province-...

> Good news! Mendoza province now accepts crypto for taxes

This is irrelevant. The problem wasn't the mechanics of paying taxes. It was the willingness. Getting USD-T is just an easier (albeit more traceable) alternative to envelopes of cash in a suitcase.

And why should those competent, employed individuals pay the cost of having an incompetent government who's willing to steal around 75% of their salary through unfair taxes? You receive, for example, 2000 USD and are forced, by law, to convert them to pesos in 5 days but to their fantasy exchange value of around 147 pesos per dollar. Fantasy exchange value because try to get someone to sell you a dollar at that price, it's impossible, the real value of the dollar here is the one most people can access which is around 280. And also, besides that you have to pay all the ridiculous taxes from just exporting your services and invoicing.

No thanks.

If your choice is "pay no taxes", and it's a frequent choice, then take a wild guess why the government is taxing 75% of income it knows about.

Not my fault pal, they started this shit many decades ago, I was born in the 90s, I'm not gonna take the burden of fixing this country. Also, if you'd live outside of the first world bubble you'd know how our corrupt governments spend taxes

Good question that should have been considered before destroying the currency.

For a government to be considered legitimate it must be trustworthy.

Honestly, just tax land.

From why I understand they are required to exchange their foreign USD into Argentinan Pesos with a very unfavorable exchange rate.

In Myanmar it’s best to change currency at the airport and not at any currency exchange place.

When in the country currency exchange places will exchange based on the quality of the notes you give them.

If your note has a little crease, fold, discolouration. Expect it to be devalued. A lot.

This is quite common in countries that have regulated exchange rates. From some I've visited, Angola and Iran even had websites with the black market rate, while in Turkmenistan I had to rely on public wisdom.

Indeed. It's actually happening in Vietnam right now. The official exchange rate is ~23,000 VND per USD, but you can get up to 24,000 VND per USD on the unofficial market.

It's interesting, because Vietnam does have currency controls, but has so much USD flowing in through exports (and remittence) that it has the foreign currency reserves to keep the VND in a very narrow band (similar to what Singapore does).

It hasn't always done a great job in the past, but for the past decade or so it's keep it's currency pegged quite closely to the USD.

But over the past few months with the USD strengthening considerably, you start to see a much bigger gap in the official vs. unofficial exchange rates.

Not 'right now', it has been this way since I first moved over there in 2016 and probably even longer before that. This is also why the US keeps labelling Vietnam as a currency manipulator [1].

If you get quoted in USD there (which isn't legal, but happens anyway), the conversion rate is often ~25k.

Your best bet is to find a local viet kieu to do conversions... they tend to give much better rates than the banks. Second to that are the gold dealers, but be careful as people often wait outside to follow and later rob you.

Vietnam is a strangely rich country. It appears from the outside like people are super poor (and they are!), but the amount of stored wealth there is absolutely insane. It is as if they don't know how to spend it.

Don't forget, if you see a supercar there, which you do all the time in the larger cities, it is actually a 300% import duty, plus whatever you had to pay on top of that for coffee money.

[1] https://thediplomat.com/2021/07/vietnam-us-reach-accord-on-a...

> Argentinians have also learned to not trust banks, even with accounts denominated in other currencies. In 2001-2002, the government enacted something called "el corralito", shutting Argentinians' access to their bank accounts for almost a year. When they could finally extract money again, they found that (a) their USD deposits had to be exchanged for pesos and (b) pesos had lost 2/3 of their value.

That couldn't possibly happen in the West. Its only those silly Argentinians that have to worry about this sort of stuff... right?

If you look at inflation numbers between 1968 and 1981, it did happen in the US -- just not by 2/3.

Those sorts of massive bank controls, though... no, not yet, in the US anyway. Let's not talk about Canada.

No, don't mention Canada that freezes people's bank accounts by edict. Don't mention Greece or Cyprus either.

I always considered Argentina part of "the west" - it's in the western hemisphere and the common language is Spanish, along with other cultural connections to Spain. What definition are you using?

Argentina is part of the West. Unless someone narrows down that definition to mean English speaking West, in order to exclude us.

It's a bit arbitrary but everyone I've met uses "the West" to roughly mean anything west of mainland Russia, east of the international date line, and north of the Tropic of Cancer.

In Australia we refer to ourselves as part of the “western world” - despite the geography being nonsensical!

Unfortunately, Latin America is not considered the west by US and a lot of Europe. It shouldn't be hard to guess why.

Latin America is too brown to be from the west?

Argentina isn't very "brown".

Most of America doesn't know that. They equate Spanish with Mexico.

I mean most of Latin American is populated by descendent Spanish, and they have no issues with Spain being the “west” so I don’t think it’s race at all.

Most of the time when people talk about western countries/civilization, they're not talking about Latin America, but rather about USA+western Europe, at least in my experience. Geographically it makes sense, and linguistically too. But culturally (debatable), alliances and wealth-wise not as much.

Linguistically? How so? Most of Western Europe doesn't speak a unified language. Many countries in Western Europe speak romance languages, one of them Spanish!

Geographically it's also dodgy. Is Australia not part of the West?

I wasn't insulting Argentina, at least not intentionally.

But, by your definition are not Mexico or Brazil 'the west' too? Is Argentina not more like these countries that your typical European country? Isn't there a valid distinction there?

For me - and this is a subjective but common understanding - 'the west' is all Anglo speaking countries (inc Australia and New Zealand) and western Europe (France, Germany, Spain, etc). This unit, seems to move in the same way financially, culturally, politically.

If you western union yourself you get the street rate.

Argentina is the poster child for what happens when a country's leaders insist on "a strong currency" above all else. In Argentina's case, by pegging to the US dollar.

If the Argentinian peso had been floating for the last six decades, Argentina's trade deficit and inflation problems would be distant memories.

The difficulty is that politically you can't get there from here any more. A sudden shock like floating the currency would seriously impoverish the politically connected elite, for a while.

From 2015 to 2019 the Argentina peso was fully convertable - there wasn't any currency controls.

Yeah, this. They oscillate between currency controls and no currency controls.

Left wing government -> currency controls

Right wing government -> currency controls removed

It is worth mention that Macri's government had controlled prices - but still "right wing" for Argentina's standards. Combine that with a 55% workforce being employed by the government and a culture of printing money https://en.mercopress.com/2020/07/27/in-argentina-55-of-all-...

As they say, the world has developed nations, developing nations, Japan and Argentina.

But during that time period people (wisely) saw that currency controls were still on the table in the future, and acted as such. The fact that they the controls are expected to return has a chilling effect.

When you remove currency controls you need to convince the public that in fact they controls are gone for good and never coming back. Such a thing was done in my home country in the mid 80s, and we have had a much more stable currency and economy since.

More importantly, the sudden shock would impoverish the mid/lower classes, who would vote the government who takes this measure out of power.

There’s a difference between a strong currency and a “strong” one held together by law rather than reality.

I'd probably say Sri Lanka is a far more relevant poster child, given, you know, what's been going down.

>Argentina is the poster child for what happens when a country's leaders insist on "a strong currency" above all else. In Argentina's case, by pegging to the US dollar.

>If the Argentinian peso had been floating for the last six decades, Argentina's trade deficit and inflation problems would be distant memories.

Nonsense. Argentina's currency was only pegged to the dollar for about a decade. What killed the currency and caused endless devaluations was and is poor fiscal and monetary policy before, during, and after the peg.

How to understand central banking and the fiat currency system:

All money is a coin created by a national government. USD is America Coin, Sterling is UK coin, Yen is Japan coin, etc.

Within the boundaries of the nation, everyone uses the national coin.

All goods and services are produced somewhere. If produced and consumed in the same nation, the same coin is used.

Things get interesting with international trade. All countries cannot produce every single last thing they want. So they have to purchase from other countries. And the other countries require the use of their own coin when buying their goods and services.

Exporters get paid in their nation’s coin, which becomes an important source of foreign currency for the central bank / government. More exports = more conversion into the nation’s coin = more forex. If a car exporter sells cars, the central bank will facilitate payment to them in local coin, but the central bank will take and store the forex.

Things get very interesting (and corrupt) with imports. In any given nation, there is only so much forex. If you try to acquire more forex (like USD) by printing more local coin and then trading it for USD, you will get inflation. So countries with well managed central banks try and avoid this. So who can use the limited USD to import what they want becomes subject to political will. Often politically favored firms get access to the USD to buy the goods and materials they need, which they then sell locally. If there simply isn’t any more USD to buy stuff, competitors can’t enter to be an importer.

As the most important good in the entire world - oil - is traded almost exclusively in USD, every country has an everlasting and unquenching thirst for USD. This gives the US enormous power, as it can print more money with way less risk of inflation than other countries can. It also lets the US get ever cheaper goods and services from abroad with such demand for a good that takes a mouse click to produce (USD).

Bitcoin (and other cryptos if they can be successful) is extremely dangerous to this model because it is not controlled by any government. It is exactly like the old gold system, except way better because you don’t need to protect the gold with soldiers and vaults, move it with huge ships, and so on. It’s gold on the internet.

If goods start being priced in Bitcoin directly, it will be akin to the old global system of everything being priced in gold.

But in general, think of fiat money like coins and central banks as a single centralized validator node that has sole authority to mint new coins.

> the most important good in the entire world - oil - is traded almost exclusively in USD

This isn’t true and hasn’t been for decades. Oil is just a special case of the far larger American import wallet, the real underpinning—together with its capital markets’ strength [1]—of U.S. dollar hegemony.

[1] https://www.bloomberg.com/opinion/articles/2022-03-16/saudi-...

Being able to print money easily is an essential feature of a successful national currency. It gives the power to central banks/government to react to event by adapting the supply of money to the economy. Bitcoin takes that away.

If we take the COVID example, most countries significantly supported their economy by printing truckloads of money to allow companies to pay their employees despite their activities basically disappearing overnight. Some even gave that money directly to the population (eg: stimulus checks). This was only possible because money is a mouse click away, all we needed to decide is how much we wanted to print, since printing money has consequences. The only question was the balance, not the capacity.

Remove that ability altogether, and COVID would have been an absolute bloodbath. Without any help from government/central banks, unemployment rate would have skyrocketed. More people on welfare and limited supply of money would also have meant that the benefits would have had to be lowered/dropped. A dire perspective compared to the relative "calm" we had if you consider that the economy almost stopped for two years straight.

It's easy to bash on central banks and governments, but they serve an essential purposed in piloting the economy, slowing things down when they turn crazy, and supporting them in times of need. They aren't perfect - of course - but the alternative of having no one the driver seat is absolutely terrifying and will lead to catastrophic situations that were the default few decades ago.

> if you consider that the economy almost stopped for two years straight

It wasn’t Covid that did this. It was government mandates in response to Covid. Printing money let everyone who supported these government actions ignore all of the tradeoffs involved and obfuscate what, under hard money, would be a direct comparison.

What you are arguing for is a kind of financial authoritarianism. You are using words like “driver’s seat” and “pilot” to describe an intense amount of power in the hands of unelected persons. Financial authoritarianism can be used to pay for other kinds of authoritarianism like lockdowns, concentration camps, or a war spanning multiple decades and the entire globe. The First World War would have ended much sooner if the belligerents were unable to steal the wealth of their populace by printing money. The arguments you are making, that recessions need money printing - those arguments were going to be made by government-funded academics who obviously have an incentive to argue that governments should not be constrained in their budgets.

Hard money makes the cost of government action immediate and legible. Hard money puts constraints on what the government can do without taking money directly from people who feel the cost immediately. This is why authoritarians really don’t want hard money.

> First World War would have ended much sooner if the belligerents were unable to steal the wealth of their populace by printing money

Historically, warring kings just took the money. Our ancestors used hard money. This didn't keep them from being brutal. Pretending hard money saps authoritarians of power or war-making ability is a good pitch, but it's hollow.

Kings were limited by the nobility. The English monarch was an extremely weak king. Not all monarchies were despots like in North Korea.

The kings who stole money from their nobles soon found themselves surrounded by nobles who were all suddenly impoverished, and bordered by newly wealthy neighboring countries whose banking sectors and suddenly and inexplicably took off. See, for example, the fail of Spain and subsequent rise of the Dutch.

> kings who stole money from their nobles soon found themselves surrounded by nobles who were all suddenly impoverished

The historical record is littered with banking panics from over-leveraged crowns. The crown didn’t go bankrupt. They just busted their bankers. (If the king asks for a loan, you give it.)

> the fail of Spain and subsequent rise of the Dutch

Spain lost the Netherlands due to internecine warfare [1].

[1] https://en.m.wikipedia.org/wiki/War_of_the_Spanish_Successio...

you probably meant to link https://en.wikipedia.org/wiki/Eighty_Years%27_War

The Netherlands were the richest region in Europe since the late middle ages (at least). They were also the richest province of the Spanish empire during it’s height. So yes if California or NY declared independence and left the US would become economically weaker.

Also Spain didn’t exactly steal money from their nobles (generally tax burden in the Netherlands was considerably higher than in most other places) they just flooded Europe with silver from the Americas which over time resulted in massive inflation.

Hard money made the Romans very interested in conquering gold and silver bearing territory.

The Great Depression and (almost every financial crisis in the 19th century) would have also ended much sooner and been much less painful if governments had full control of their monetary policies. Hard currency/gold standard is usually only preferable to extremely corrupt and/or incompetent governments however in that case you’re fucked anyway.

Hard money combined with non static (i.e. expanding) economies results in permanent boom and bust cycles, massive inflation followed by massive deflation every few years. This creates an unpredictable environment which stymies growth and investment.

Lol yeah, if there had been no lockdowns, then the economy would've carried on just fine, despite rampant illness, despite fear leading to people isolating themselves anyway.

> First World War would have ended much sooner if the belligerents were unable to steal the wealth of their populace by printing money.

[Citation really needed]

It appears you didn't read the article. Argentinians literally don't care about Bitcoin or Ethereum or any other cryptocurrency of the week. They only care about USD and that means they hold USDT or TRON and they often hold them on Binance.

Bitcoin is as much of a danger as gold, in other words not much.

Read this article https://dankradfeist.de/ethereum/2021/09/27/store-of-value-f...

Gold is easily outperformed by the S&P 500 in both volatility and returns. Is it a threat to the USD? No, people investing in stocks is good for the US. But people don't get crazy ideas like pricing everything with in S&P shares.

Do they still accept Reichsmark ?

Argentina has trade deficit problems. Black markets and cryptocurrencies don’t fix these problems just push the burdens of them onto other people who can’t as easily get around the legal currency framework.

Don't know about their trade deficit, but I talked to a few people living there and they said, crypto is the only way for them.

Their own currency is unusable, and the government limits how much dollar they buy.

> Their own currency is unusable

I'm an Argentinian, and this is an exaggeration. There is certainly very high inflation and we are all worried about it, but the peso is not useless (yet), and the majority of people go about their lives without any access to dollars or crypto. If the peso was useless, these people wouldn't be able to eat. This must also be stressed: outside a minority within the middle class, most working people don't even know what crypto is.

> the government limits how much dollar they buy

Some nuance here: this is not done out of a whim, but to preserve dollar reserves, needed for international trade. People who buy dollars (myself included) tend to hoard them as savings outside the banking system (making them unavailable) or spend them in gadgets, luxury goods or travel.

Note I don't condemn the individual behavior, I just note this creates a collective problem for the country.

> this is not done out of a whim, but to preserve dollar reserves

This situation happens because the USD price is artificially low. Use the market price and you no longer have this issue.

You mean also taking away all restrictions? I'm no expert but I imagine this would simply leave the middle class out of the loop and simply move all of the dollar buying/hiding in offshore accounts to the big players. I'm not sure Argentina as a country would benefit.

It's at a point now where the instability of the local currency is ingrained in a whole generation of Argentinians. Unwinding that psychology is not easy, regardless of monetary policy.

Every more "developed" country went through real hardship attempting to control their exchange rates, always there were strong short term reasons to keep the controls in place. But it's just not viable in the long run. Controls create an artificial situation where the politically well connected benefit. They gain personal access to favorable rates, or their businesses enjoy unfair protection through the manipulated rates.

> Note I don't condemn the individual behavior, I just note this creates a collective problem for the country.

This a sympton. The root of the problem is elsewhere: the government. How it is possible that our neighbours do not have our chronical shortage of dollars?

Our history is different. Since our government is made of us, and not an alien body of rulers, they are also not THE root problem.

Unfortunately I don't think there is a single, tidy reason like "the government", or "public spending", "printing money", etc. Those who sell those simple solutions have vested interests in that narrative.

I do not share this view. It's like there is an "argentinian negative exceptionalism". Chile, Brazil, Uruguay, Bolivia, Paraguay, Peru... we share a great deal of history and culture with them, but only our economy is sinking since decades ago.

Well, I don't think it's negative exceptionalism because I don't think our economy has been sinking since decades ago. I also don't think those other countries should be held as successes either. There are also historical events (impacting the economy and social climate) that make all those countries different.

Props to you for acknowledging Bolivia's success though! (Anti-props for thinking Chile is a success. An economic "boom" based on inequality and bloodshed).

As an Argentinian this is 100% true. Thanks to crypto I can live a comfortable life.

This article is pro-cryptocurrency but they fail to see that in some spans of time (recently) Bitcoin or other cryptocurrencies lost more value than Argentine Peso.

Again, cryptocurrencies are not solving anything.

DAI and USDC are pretty stable, especially if in the face of the recent crashes that took BTC and ETH down.

DAI is imminently dead by .gov pulling a Tornado Cash on all the underlying centralized collateral locked up in DAI.

> by .gov pulling a Tornado Cash on all the underlying centralized collateral locked up in DAI

I doubt the U.S. would simply blow up stablecoins. (Unless e.g. the Kremlin is buying Iranian munitions with it and nobody does anything to stop it.) That said, coming regulation will likely require elements of KYC. That could result in enforcement actions or users in back-of-mind countries getting locked out.

All of which sidesteps dollar stablecoins relying on the dollar for their stability, not anything crypto.

What's the value proposition of DAI with KYC?

There are plenty of folks who are comfortable with KYC but also want to use dollars as cryptocurrency.

Cornerstones of Dai is decentralization and peer-to-peer wallet transfers. How do you think KYC/AML is implemented under that paradigm, and do you foresee dai surviving it?

I can send DAI to my friends in Europe cheaper than an international wire.

My real name is connected to my wallet publicly, I have no issues with KYC for my own wallets.

I still find stable coins useful.

how does a decentralized coin implement KYC for a wallet-to-wallet transfer like you mention?

the KYC comes during off ramps back to the fiat system.

the exchange i use has already KYC'ed me intensively and they know which wallets i use.

>>how does a decentralized coin implement KYC for a wallet-to-wallet transfer like you mention?

>the KYC comes during off ramps back to the fiat system

And here we have your answer. It doesn't. In fact using your own logic, I could argue Tornado Cash is KYC'd 'because at offramp' which of course is absurd.

Now that you've made it crystal clear your use case does not include dai implementing KYC, I return to my thesis: DAI is imminently dead by .gov pulling a Tornado Cash on all the underlying centralized collateral locked up in DAI.

time will tell

i wonder if there is a /remind me in 5 years feature on hackernews

I hope you're right, but we seem to be sliding further into the dystopia, not out of it. Notice as time marches on the shrinking number of 'blacklist' FATF countries and the end of non-KYC/AML finance world-wide. IMO dai will go the way of bearer bonds and shares. The fact that all that underlying capital is in real-world bonds/paper/notes means cooperative financial task forces have these stablecoins by the balls and soon they will start squeezing.

Tell me you know nothing about how I live without telling me you know nothing.

A point would be more helpful than a meme. Nobody here knows you.

How did USDC lose more value than the Argentine Peso?

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