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Comment by tuatoru | Hacker News Reader

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.

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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.

>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.

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

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

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

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