Argentina raises interest rate to 97% as it struggles to tackle inflation
cnn.com
cnn.com
What we see today already happened. Many times. Is the same old story repeating over and over again. It will repeat in the future, for sure. Argentina has 4 or 8 years governments but we have no state.
There's absolutely no coherent and/or constant consensus where to head the country from let say today to 20 or 30 years. It's always the patch for today and for tomorrow. Zero serious politics. Every politician wants to fill its own pockets. They laugh in our face despite the fact we're at the verge of an hyper-inflacionary process. They don't care. Never did. Never will.
I clearly remember: in 2000-2001 one dollar was around 1,45 pesos. Today? One US dollar 500 pesos and going up. Without limit. Even a child in elementary school knows that our currency doesn't exist. It is literally money that you need to burn today, right now.
We can't save money unless you find shelter in another currency, is fucking obvious! How do argentinian politicians suppose to convince people to trust in a currency that day after day loses its value? I know! Raising to 97% interest rate, right?
What do we have? Governments stepping in and out which if they don't like what has been done so far, will undo things, regardless whatsoever. They will satisfy their agenda, their pockets. Every single government does the same. One step forward two steps back. No economical plan at all. We have been with this inflation process forever.
On the other side it is a really sad story because we have beautiful country and we have everything to become a developed country. We just have these eternal scumbags that keep doing nothing more than harm to our country.
mmm, quite the opossite, there's is an obvious cabal of private and state actors pushing relentlessly for more inflation, more fiscal deficit, actually creating the cycles you mention.
This not cultural, this a plan, a method, for a clear benefit: cheap dollars financed by the BCRA, this entity - playing along with the Minister of Economy - pushed by the mentioned cabal of political and economic actors to continuously create and sustent the required measures to keep the inflation increasing till the cycles ends (hyperinflation),
and they cash out all the pesos and dollars they amazed during the cycle by buying very very cheap dollars first - this is ongoing, you can see it playing it right now in the argentine markets - but mostly by massive adquistion of cheap assets valued in pesos (giant holdings, thousands of otherwise valuable stock market stuff, sold by penies by investor trying to cut their loses having missed the chance to get out before the cycle's end), acquired in dollars cheaply gotten previously.
Then cycle restarts.
Most of the assets are kept for a while, till the economy jumps back from nothing to something, and those assets got revalued to a lot more of their adquistion prices because of the expected exponential grow of consumerism - and earnings - financed with a new wave of money printing by the BCRA and new dollars now available - through refinanced debts- in the same BCRA (this is the mentioned cycle restarting).
The only governments that has cheap (read official) and expensive (read real) are the peronist governments.
The problem is (besides corruption and not fit for the roles) that we keep giving money for "free" to anyone.
Just an example, we have to hire people to keep company of my dad. He is fine, but just forgets things, so he might just forget to turn off the oven.
One of the girls who has been with him the most time told me, "my sister has 3 kids, between the plans (money from the gov) that she has, the one that her husband has, they don't need to work. If they want to buy something more expensive, they work some days, and make the difference. The rest of the time they scratch their balls".
That is what populism gets you.
A bunch of private actors are closely entrenched with state actors who allows them to access massive amounts of cheap dollars easily, the currently named "dolár oficial".
There are several ways in which private actors get a premium over the "blue" dollar by accessing cheap dollars ("oficial")
- Granted massive imports by the BCRA (which are usually fraudulent, just actually importing a little of the declared goods, the Aduana has A LOT to do with this)
- A closed market which allows the private actors (in conjunction with government officials), to do not compite with cheaper imported goods, and also allows them to fully control the market, increasing the prices even more (because by all means, they are the only sellers, so if they reduce the offer, they increase the prices inside the country).
- The state actors are actually almost the 50% of the demand in most of the country for every given good at sell (because public employed people are close to 50% of the formally employed consumers in almost every state - "province" - in Argentina). So, many private actors are actually - not in front of the public opinion - playing along with state actors to keep the state salaries high or pushing for them to be raised to meet the inflation levels.
- The (probably worst) private actors cashing out from the state and the inflation cycles, are the direct providers for the state infrastructure ("obra pública"), which are an internationally known source of corruption (by overpricing work, good, whatever they provide to the state), illegal enrichment, an obvious way to wash money from every other illegal activity inside and outside the country.
There are probably more (clever) ways in which private actors enrich themselves greatly by pivoting over the inflation cycles (i.e. financial schemes everywhere).
The cycle of inflation in Argentina is just a too good source of money for everybody except the citizens, that its probability of going away are little to none.
Argentina has lots of money, because of soja and now minerals and oil, and the inflation gives some main private actor a way too clever way to confiscate money from the actual owners of those earnings (i.e. taxes and dollar to pesos automatic conversion for exported goods, which effectively legally steals money in several ways, from the real owners of the goods and the earnings).
But beside the exported goods regulations to extract money, there are lots of internal regulations at all levels, which pivot over inflation to keep the money flowing from workers and not-involved private actors (mostly PyMES), to the rober barons - private actors - and their partners, the state actors (politicians in executive positions mostly, but not exclusively).
I'm Argentinian. And I agree with you, and that's why I left to live somewhere else ten years ago.
But. When I've said this in the past the answer is, why would we want to be that? People don't care.
It is the classic joke of Luis Landriscina: Para qué?
This is bad because Argentina loses monetary control to a foreign state, but that's a much better solution than using toilet paper.
The thing I find odd, is that even greedy capitalists know that, and powerful greedy self serving capitalists (I'm being overly cynical here to make a point) will want a 'stable currency' because these shenanigans do not benefit anyone.
The only people that can survive money printing are a very, very small number of politicians, how is there not a revolution backed by all sorts of groups? I find this odd.
This already happened across the decades by different groups inside and outside the law, but the cabal of private and state actors that thrives on inflation cycles controls the outcome of those movements and takes back the ownership of the government eventually (even few months after some groups got "decisive success" influencing the change of pro-inflation policies).
Social control make the rest of the work. Most of the citizens are just used to live in poverty - likewise some Africa countries in the 70s,80s - and have no will to organize themselves, nor to embrace any kind of overthrowing of the cabal.
Some even got to the government, like Macri, but didn't get much farther, eventually becoming just another puppet of the cabal, effectively sustaining - albeit conceived from the general population by extensive use of propaganda and disinformation campaigns- the policies and measures required to continue and/or make the cycle of inflation continue towards the hyperinflation goal (the "cash out moment" for many of the cabal's long term "investors" and/or members).
It's not that complicated. The government needs to balance its budget. Continually borrowing money -- from the central bank when nobody else wants to lend any -- is inevitably going to inflate the currency.
Unfortunately, while this is the only economically feasible solution, it's not a politically feasible solution.
A state needs money in circulation to operate (which comes from debt usually), and, it needs money to pay for stuff while it's in distress.
'Balanced Books' is like asking a cancer patient to leave the hospital and 'get a job!'.
Something needs to be done for 'full restoration of confidence' - and while 'balanced books' will do that, it will kill the economy in the meantime.
Probably getting rid of corruption, then getting rid of obvious waste, then having maybe a period of 'dollar pegging' and outside observance of the Central Bank and maybe some economic oversight as well from Europe and USA ... might help.
Sort of like a giant 'drug rehab program' with observers and transparency etc.
I suggest a lot of the system is broken and a lot of pieces within it need to be fixed. It's very hard to pull a drug addict off of a drug, the entire body is addicted down to the cellular level.
You mean in terms of winning the next re-election? Or because other politicians will not approve new laws to control that?
If the people have to starve for X years, I doubt it's a good solution but I don't know if that's what you mean by politically.
You want a solution? Free market (even a simple notebook, nothing fancy, costs a fortune), control nothing, destroy all the stupid fucking taxes we have that once were "temporary" and here we are still having to pay them, let people improve their businesses (as of today, if you want to import machinery you have to pay an absurd amount, which leads to small businesses stuck).
Desgraciadamente Argentina, un país hermoso, con gente maravillosa, ha estado en manos de poderosas fuerzas políticas que han destrozado el país a través de décadas de afanar, subyugar y controlar. Lo único que les importa a esos reverendos HDP's es mantener el poder. Y ahora le están vendiendo el país a China. Genial la idea. No?
Interesting that there's a thread about problems in Argentina. I posted something about this on another conversation earlier today. It was violently and mercilessly downvoted and flagged, which is normal for HN. Why? Because leftists in the US don't want to hear the truth about the garbage they have come to believe through indoctrination.
Not sure you can still read it, here's the link:
https://news.ycombinator.com/item?id=35951446
People in the US are so ignorant about history of other countries, and, in particular, Latin America, that they are solidly marching in a direction to make all the mistakes history has proven to destructive to societies.
Schools, universities, in the US are teaching hatred of free market concepts. They are indoctrinating kids into actually believing things that have been proven, time and time again, to be destructive to society. These are the kinds of things have have been happening in places like Argentina, Chile, Mexico, Ecuador, Colombia and nearly every country in Latin America for decades.
In fact, I tell my friends that places like Argentina are like a time machine for the US. If you study what happened there at various times it is impossible not to draw parallels to what has been happening here for a decade or two.
As I mentioned in my the post linked above (flagged, so I don't know if anyone can read it), my parents had business in Argentina and so I lived there a number of years when I was a teenager. I saw the transition into the military regime and everything that went with it.
I also say in that post that if you actually ask people who have lived in such countries how they feel, the last thing they are going to say is that big government control of everything, high taxes and all the crap being pushed here in the US are things they enjoyed. What you will typically hear is exactly what you said: Free market is the best thing for any society.
Also, worth noting that all succesfully countries spend more than they take in. US, Canada, UK, France, especially Japan. They just structure it differently.
Put another way, in Japan, they don't print money to debauch the currency, they just borrow from retirees under weird terms that don't make sense.
Ultimately, the net quality of life will wash out the accounting, but the difference is if investments are made rationally be actors - and - the system 'believes' that it works and upholds it. Especially outside parties who continue to value the currency on some level.
Simply by 'losing the faith' of outside parties, everything can go downhill and break in ways that even our own economies would break if that happened - so sometimes it's hard to tell what's really happening.
For this reason, countries like Russia have to hoard gold, run surpluses, keep a fat current account, so that when the 'system loses trust' in a huge way aka 'sanctions' - they can stay alive without the need for international credit.
So this simplistic 'balance the books' approach isn't really it.
It's more like: 'everyone has to act responsibly and rationally and especially not be corrupt' - in the state, private sector, everywhere - including voters. This is a nuanced argument though. Not very populist.
I don't know enough to know the problem but I suspect the problem is related to lack of independence of the central bank to protect the Argentinian peso. It's easier, at the moment, to issue more currency rather than to deal with whatever economic problem pops up. A central bank that's not independent will always do what's politically desired which always leads to currency issuing, therefore inflation.
It's sad. The country has so much potential that they can not take advantage of due to the never ending economic problems.
Continuously inflating the money supply kills an economy and slowly destroys its society.
Isn't it exactly what FED and ECB have been doing post 2008 till 2022? The infamous QE? The reason you can't afford a home anymore?
The earliest online citation I can find is from 2011 in "Argentina: Economic Recovery and Tax Improvement after a Decade of Double Crisis" by Miguel Asensio, https://www.jstor.org/stable/23617724?seq=3 Asensio's citation is to himself, 1988. I can't find the 1988 work, but from the 2011 footnote it seems the quote is hearsay from a peer of Kuznets, Paul Samuelson, and might have been intended as a tongue-in-cheek gloss on Kuznets broader body of work, much of which analyzed the relationships between industrialization, social change, and wealth. In any event, one way or another the meaning is clearly to suggest in dry academic humor that Argentina and Japan defy rigorous theory or description. (One more recent citation I found from a Google Books snippet claims that the original context implied that Japan is an example of a country that developed economically without losing its undeveloped-economy social institutions, while Argentina is a developed country with developed-country social institutions that become undeveloped in fact.)
Bitcoin hits all-time high against Argentinian peso
https://coinmarketcap.com/alexandria/article/5bae64b6-9398-4...
On why Argentina can’t fix their economy:
https://foreignpolicy.com/2022/08/15/argentina-imf-debt-mass...
Argentina was the 5th richest country in the world in early 20th century.
You know what else also hit an all-time high against the Argentinian peso? Cans of tomatoes, airline tickets, Bosch dishwashers... basically everything because that's how inflation works
I have friends in Argentina. You know how they are protecting against inflation? Good old US dollars.
Yes, the government is making that harder every day but there are (very time consuming) ways around that.
Yeah, go pay for bread at the store with Bitcoin in Argentina. How much is the transaction fee again? /s
I'm also smiling when the crypto bros are still shilling Bitcoin for the millionth time as an anti-inflation snake oil (which I was hoping not to see on HN anymore, but this is why we can't have nice things), when the USD was used back in the '90s in Eastern Europe for this, and is still used in Russia for the same scope today.
Hard stable currencies in cash are so much better, safer and easier to exchange for needed goods, than any shitcoin.
Buying dollars outside the pittance allowed by the government is illegal, so that's not what we are using to buy bread either.
The people selling bread don't know what crypto is so yeah, you will use fiat for "last mile" payments most of the time.
However, crypto is being broadly used here, I know people who have been receving 100% of their salaries in crypto for years now.
Most of the people doing freelance work will resort to some type of cryptocurrency, otherwise when you get paid you automatically lose 50% of your money. The banks, on behalf of the government, will take your USD and give you ARS at half the real exchange rate.
Authoritarian governments stealing your foreign currency out of your bank accounts are orthogonal issues to USD being a good anti-inflation currency.
Growing up in post-Communist Eastern Europe, everyone was using USD but the banks or governments wasn't touching them. People exchanged USD on the black/gray market and storing them at home in safes or various hidden ways. No government and no banks. It worked quite well while it lasted.
Then the Euro came and our own currency got pegged to that so it's less common today except for expensive items like fancy cars or real estate.
And since we're off-topic anyway, there is no global fixed inflation for everyone but each currency has seen a completely different value of inflation, and USD inflation is far lower than most other currencies that saw proper inflation.
You're far far better off having your savings in USD than Turkish lira or Argentinian pesos or Russians rubles or even Hungarian Forints. USD inflation is a joke in comparison.
https://www.cliffsnotes.com/study-guides/economics/money-and...
But that’s not really the point though, is it?
As the earlier poster from Argentina said, pesos are used for the “last mile”. Whoever you’re trading sats for pesos with are likely to be familiar with Lightning and willing to do the trade with it because it’s fast and cheap.
As for the issue of broader adoption, that’s just a matter of education, trust, time, and the right incentives to make the switch in a hyperinflationary environment…
The same thing is true for the US Dollar, it’s also at an ATH vs the Argentine Peso. It’s also substantially less volatile than BTC.