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)
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).
> […] 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.
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).
> 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.
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.
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.
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.
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.
I have a friend living in Argentina. His father-in-law is a businessman with a factory. Like many successful people in Argentina, he is a master at exploiting chaos for personal benefit. The father-in-law praised inflation, explaining it was a useful tool for people like him, and offered the following story:
I was walking down the street and found my wares being sold in a shop that doesn't retail for me. Doing some digging, I found incontrovertible proof that my foreman of ten years---ten years!!!---had been stealing from me.
Did I fire him? No. It is impossible to fire your employees, even for provable malfeasance.
Did I sue him? No. You lose 95% of these kinds of cases.
Did I tell the police? No. You can't get the police involved with anything important, like my business, they are too corrupt.
So what did I do? I simply told him I would never give him a raise again. And he understood that---due to radical inflation---his salaried buying power would keep dropping and dropping, until it was chiseled away to nothing. So he quit.
[edit: I am in no way suggesting that FIL was the moral actor in this story, I don't know if he was or wasn't screwing his foreman into poverty before the theft. What I found fascinating about this story was how things were systematically fucked in across so many possible dimensions, that individual instances of corruption and inefficiency and lack of faith are intertwined. i.e. there's a whole rat's nest of problems to untangle and a point intervention is unlikely to prompt broader change. Also see interesting discussion below about root causes of the inflation, which connect to some of the anecdote above: https://news.ycombinator.com/item?id=30101931]
> So what did I do? I simply told him I would never give him a raise again.
It is true that salary have been always losing purchasing power but don't forget also that employees have compulsory raises. This comes from two sources:
1. minimum wage raises
2. believe it or not, unions negotiate with the gov the raises, those are called here "paritarias".
Everything is broken here, laws favor the employees always and that's why no one wants to start a business. When you talk with small businesses this is their number one fear.
Half of the population is convinced that business and owners are the devil, and that they need to die in fire.
That seems unlikely. That foreman most probably belongs to a union. Unions in Argentina are very powerful and they negotiate at the National level. Whatever increase they negotiate, your friend's father-in-law will have to pay.
This is obviously false. First, employers can't just stop giving raises. Raises are governed by law and by collective agreements (although they are often below inflation). Second, no one just quits, especially a crook. Why? Because you can always force the employer to fire you. How? In general, nothing too obvious, you just stop working too hard. Until your employer offers you to leave and is forced to make an arrangement and pay you compensation.
> Did I fire him? No. It is impossible to fire your employees, even for proven misconduct.
> Did I sue him? No. You lose 95% of these types of cases.
> Doing some digging, I found incontrovertible proof that my foreman of ten years---ten years!!!---had been stealing from me.
> I simply told him I would never give him a raise again. And he understood that---due to radical inflation---his salaried buying power would keep dropping and dropping, until it was chiseled away to nothing. So he quit.
Just to play devil's advocate here, and I'm not saying that stealing is wrong by any means, but this just makes me feel like the reason he was stealing to begin with was that his income was too low to live off of.
This article paints a pretty picture of how Argentine people manage persistent inflation, but reality in the interior of the country (ie not Buenos Aires) is much less clever and functional than what is depicted. Not everyone can buy peanut butter on credit. Rather than seeking arbitrage opportunities and investing in nonperishable goods, many people are fatigued by inflation. Some live hand to mouth. Shopkeepers don't always move their prices when the currency moves. The national bank publishes currency bid/offer numbers that falsify the offer side of the market for pesos. Surrounding nations have seen an influx of projects from Argentine investors who seek to take money into more functional economies.
Meanwhile, people in Argentina have cultural characteristics that I found surprising. The more bohemian people have an anti-work culture yet they blamed Macri and other capitalists for not having promptly repaired the damage done by leftist predecessors. Some indigenous groups enjoy receiving free seeds and ignore other factors that may affect their prosperity. When the country brought Kirchner back, the foreign investment community recoiled as evidenced by the overnight devaluation of the currency. Many strategic subsidies exist, and some people don't realize that subsidies and handouts in a nation that can't afford its debt service are not a sharing of wealth, but rather a cause of inflation. Past lockdowns of foreign exchange under Kirchner spooked outside investors, so in some industries such as mining, foreign companies tapered off their projects in mid-2019 when it became clear that Alberto/Cristina would take power.
Resigning yourself to weird survival tactics in a place where the economy doesn't function is not "a way of life." Argentina sustains itself because of its substantial domestic production (which insulates certain markets from exchange rates) and the fact that people depend on government handouts. Hoarding toothpaste may save a few bucks, but it's not paying the bills. The only other countries in the Americas with such a problematic currency situation are the ones facing economic sanctions.
I spent 9 months in South America in 2012-2013, 5 of which I lived in Palermo Hollywood, Buenos Aires, aka the hipster ex-pat neighborhood. I loved it -- for the most part. I recall a few salient aspects of everyday life related to money:
- sometimes when I'd buy something at the chino (corner store run by Chinese immigrants), I'd get candy instead of my change back, due to the coin shortage. No arguing with them about that.
- I would get empanadas down the street at a bakery almost every day, and the woman who owned it would complain and almost start crying if I brought a bill that was too big (like a 100-peso note). I would occasionally buy fewer items than I wanted because I had smaller bills. I think she was happier that way.
- the best exchange rate for American dollars was the downtown grey market on Avenida Florida, where tourists would frequent. I would just walk down and guys would notice me as a tourist, and say "cambio allá" and point me around a corner, where I could trade American dollars for whatever the rate in pesos was that week. There was an official unofficial exchange rate, better than the official exchange rate.
- across the river, Uruguay just straight up abandoned their own peso and used American dollars instead. Same with Ecuador as I later found.
- when I got tired of wine, I'd get beer at this brewery in Palermo -- Orion, I think it was called. I can't remember. But I do remember in October 2012, beers cost about 24 pesos and were about 36 pesos by spring 2013. Cheaper for me since my wallet was backed by USD, but that just meant I drank more beer. :)
> - across the river, Uruguay just straight up abandoned their own peso and used American dollars instead. Same with Ecuador as I later found.
Uruguay is actually extremely clever in that it long ago realized that Argentina just isn't capable of handling a sovereign currency. Having a monetarily unstable neighbour means that millions of Argentines are underserved by national banks, so Uruguay has an entire industry tailored towards financial services for Argentines.
You may have also noticed that almost all Argentinians of a certain economy class, have a USD account in Uruguay.
I'm in Palermo right now. As FAANG engineer I'm making so much more money than average Argentine. Life is good! Beer in a bar is $200 peso now. Still less than $1!
Brazil hyperinflation case is a great read, both on the instruments that appeared to take advantage of it (and ultimately put more gas on the fire) and also on how Brazil managed to tackle it (it was more a behavior science thing than economics).
Interesting things that I remember from that time:
- Hypermarkets made a boom, because people would make big monthly groceries purchases right when they got their salaries, and avoid small frequent purchases (as the money would lose value with time, very quickly)
- Price freezes were very frequent and very ineffective as companies would simply stop producing/selling, generating product shortages everywhere.
- A financial device called Overnight, were you would convert your brazilian currency (had many names) into USD at night and then convert it back to BR on the next day
- Government would try to control USD exchange rates and this simply created a black market that got so widespread that the black market (called "parallel market") had its rates published at newspaper and TV like a normal thing.
The value of the old currency approached zero, so we created a new one. This is a pretty standard solution really. This is the fate of all inflationary currencies. What's impressive is how they managed to manipulate the population into believing this time everything would be different. Inflation was not controlled, it continues to this day, only slower.
At least we don't have presidents stealing everyone's money anymore. That's the sort of insanity that cryptocurrency was invented to stop.
> A financial device called Overnight, were you would convert your brazilian currency (had many names) into USD at night and then convert it back to BR on the next day
Who eats the loss from the fluctuations in this case? Any idea how the providers used to hedge against the risk.
I've hired a lot of contract developers in Argentina over the years and most now ask to be paid in Bitcoin. If I wire them USD, between fees, loss from the "official" exchange rate, and inflation, they lose 15-30%.
I took my American girlfriend to my hometown this winter (summer there) and we both realized that what Argentina needs is a Nelson Mandela of sorts.
There is SO MUCH to do. But everyone has just given up.
It’s a psychological and social problem more than an economical problem now.
I tried to generate business for people paying for things in dollars and the mistrust is so high that no one wants to do anything because they think you’re about to scam them. And they have reason to. But no one is starting a business there, why would you?
The entrepreneurial vibe of HN is absolutely nonexistent in Argentina. So much that when someone young opens a business that is mildly successful the news dedicate an article to them. “Look, Argentinians generating jobs!”
It’s sad and I bang my head everyday at how I can go back home while creating jobs and fighting the stupidity of the government
In Russia, a period of high inflation in 1990s and early to mid 2000s made people simply think in dollars. Whatever price or income you get, you just convert into dollars in your head and now you know what it's worth. Saving were only USD cash. Although inflation is long gone, people over 35-40 still think this way to this day
In Belarus, where there is no high inflation, but just periodic (once in 3-7 years) sudden devaluations of the local currency, people always think in dollars, and many employers set salaries in dollars too. Even government sets rent on government property and some taxes in dollars or euros just to avoid the hassle of recalculating it too often. After a while, people got used to it and it's not a problem at all - no one but government employees who get salaries in local currency, is even worried about the exchange rate (and those employees can't survive on salaries anyway - they are dependent on bribes as salaries are laughable - and bribes are in USD).
In ex-Yugoslavia, due to large numbers of people guest-working in Germany, we ended up de-facto pinned to Deutschmarks.
One of my favorite memories is watching the news where Ante Marković announced the denomination of the dinar, where they basically ran out of room on the bills for all the zeros and so just declared that henceforth they would print "new dinars" which are same as "old dinars" but without the trailing 4 zeros. Marković waved one of those bills in front of the parliament, started laughing with joy, and there was applause. [1]
Of course what I didn't understand at the time is that they also officially pegged the exchange rate to the German Mark, which made the currency convertible and stabilized the inflation rate. Now I see that deleting the zeros was mostly showmanship (though it helped lessen the confusion).
This is known as currency substitution or dollarization and can be done officially or unofficially. But what happens when the world's currency also inflates?
We had what we called "hiper-inflação" (hyper-inflation) in Brazil during the late 80's and early 90's. My father calculated the prices in gasoline liters.
Venezuela sounds exactly like Belarus, bribes are expected for common state procedures, even with those that the government already set in dollars like getting a passport.
> There’s a long tradition here of purchasing U.S. dollars as a hedge.
There's a 200 usd quota per month shared between products, services and currency exchange. If you buy something that exceeds your monthly quota it means that your quota for the next months will be affected.
It's a system designed so that no one who can save money can buy dollars. When poor people started selling their quotas the practice got quickly stopped with taxes that got its price above illegaly traded dollars.
So basically if you need to buy dollars here you are a criminal.
Odd how the author doesn't even touch on the causes of Argentina's persistent inflation. Rather, it's presented as though it came from nowhere, and the only real story is how people deal with it.
I'm Venezuelan and today argentina's inflations look like the venezuela's one in 2014~2016 and as you may already know that only got worse and worse, hopefully, that is not going to happen this time but looking at this trend I believe the best course of action would be to be prepared to leave the country before all collapse
I am in Argentina right now. in the two weeks that I've been here I exchanged dollars for 196, 206 and 210 Pesos in each few days. I can't believe the rate changes this quickly.
Tip: if you're planning to visit Argentina make sure you're bringing cash. Using your credit card would mean paying double the amount due to the difference between official and "blue dollar" exchange rates.
Millennials now nothing BUT inflation now. It's not a way of life, it's an agonizing, debilitating continuous death by a trillion cuts.
There is currently a mass exodus of professionals from the country due to it - massive, and I mean massive talent is spreading all over the world instead of helping at home. People have either given up or drank the Kool Aid, as there is absolutely no expectation of even a possibility of change.
It really is depressing, as even mild complaints are usually met with long winded explanations or insults about how things aren't actually bad and they could be so much worse you should actually be thankful and maintain the status quo. The democratic voting system inevitably gravitates to a two-party rotation with more in common than they allow traditional media and paid coordinated social media to admit - with the only ultimate goal of keeping a class of elites in power and as many people as possible depending on the state to survive, whether it's via subsidies, handouts, or straight up state employment so keeping things as they are becomes a matter of survival for them even more.
At least it's amusing seeing newspapers pretend such a thing is cute and quirky. This is very much a preview of the future road for an incredibly large number of economies all over the world, so read some of the comments here very carefully.
And never, ever, ever save all of your life's accumulated value in just one form. Be it currencies, stock, real estate, crypto, food, metal, whatever it is, never forget that any basket can break when it's holding all of your eggs.
> Worried about inflation? In Argentina, it’s a way of life.
The article implies the same will come to your own country soon, so do not be surprised, learn from Argentina.
The consent for coming inflation is being built.
Looking at the global fiscal recklessness, there is a clear lack of intent to pay back the amassed debt.
Now nobody is impressed by a trillion anymore.
Eventually (soon) a quadrillion will be a commonly used word. 100 trillion is just a 0.1 quadrillion; Japan's debt has already reached 1.2 quadrillion JPY.
So inflation or country bankruptcy is the only way out.
As I read on Twitter the other day: this is the country where you buy home appliances in 24 monthly payments (without interests) but you buy a house in one payment, cash only.
What causes inflation is obvious. But I am continually disappointed by the government and the mass media, including the Wall Street Journal, routinely being mystified by it.
For example, inflation in the 1970s was blamed on OPEC oil prices, today it is blamed on "supply chain disruption".
The refutation is straightforward. If the 1970s inflation was caused by OPEC price increases, when gas prices later went down, there should have been corresponding deflation. But there was no deflation, not a penny. Today, when the supply chain disruption is past, is there going to be deflation? Nope.
What actually causes inflation is the supply of money increasing faster than the goods and services it represents. What causes the supply of money to increase faster?
The government money printing press.
The US government has been creating money at a fantastic rate. That's why we have 7% inflation today, and it ain't turning into deflation.
Why does the government persist in misinforming us as to the cause of inflation? Because inflation is how the government spends money it does not have. The purpose of the Federal Reserve System, created in 1914, was purportedly to create "stability". That is propaganda. The true purpose was to inflate the money so the government can spend it without raising taxes. It's called a fiat money system, and shortly afterwards every country with their own currency adopted it.
And every single one of those countries blames inflation on some sort of unknown voodoo, wage price spiral, cost-push, greedy businesses, profiteers, and reckless speculators.
I used to work with team members in Argentina. They received in local currency, so they had salary raises every now and then. It sometimes didn't match inflation, though, and the moment the members started talking about missing eating premium meat or going to restaurants, I knew the company was running late to one of those raises.
[+] [-] achow|4 years ago|reply
[+] [-] 101008|4 years ago|reply
[+] [-] NikolaNovak|4 years ago|reply
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).
[+] [-] runeks|4 years ago|reply
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
[+] [-] yazantapuz|4 years ago|reply
[+] [-] anikuni|4 years ago|reply
[+] [-] caeril|4 years ago|reply
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.
[+] [-] rafaelm|4 years ago|reply
[+] [-] is_true|4 years ago|reply
[+] [-] aeyes|4 years ago|reply
https://en.wikipedia.org/wiki/Unidad_de_Fomento
[+] [-] pibechorro|4 years ago|reply
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.
[+] [-] 4lb0|4 years ago|reply
[+] [-] tigershark|4 years ago|reply
[+] [-] ttty|4 years ago|reply
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.
[+] [-] mandernt|4 years ago|reply
[deleted]
[+] [-] bravura|4 years ago|reply
I was walking down the street and found my wares being sold in a shop that doesn't retail for me. Doing some digging, I found incontrovertible proof that my foreman of ten years---ten years!!!---had been stealing from me.
Did I fire him? No. It is impossible to fire your employees, even for provable malfeasance.
Did I sue him? No. You lose 95% of these kinds of cases.
Did I tell the police? No. You can't get the police involved with anything important, like my business, they are too corrupt.
So what did I do? I simply told him I would never give him a raise again. And he understood that---due to radical inflation---his salaried buying power would keep dropping and dropping, until it was chiseled away to nothing. So he quit.
[edit: I am in no way suggesting that FIL was the moral actor in this story, I don't know if he was or wasn't screwing his foreman into poverty before the theft. What I found fascinating about this story was how things were systematically fucked in across so many possible dimensions, that individual instances of corruption and inefficiency and lack of faith are intertwined. i.e. there's a whole rat's nest of problems to untangle and a point intervention is unlikely to prompt broader change. Also see interesting discussion below about root causes of the inflation, which connect to some of the anecdote above: https://news.ycombinator.com/item?id=30101931]
[+] [-] jfroma|4 years ago|reply
It is true that salary have been always losing purchasing power but don't forget also that employees have compulsory raises. This comes from two sources: 1. minimum wage raises 2. believe it or not, unions negotiate with the gov the raises, those are called here "paritarias".
Everything is broken here, laws favor the employees always and that's why no one wants to start a business. When you talk with small businesses this is their number one fear.
Half of the population is convinced that business and owners are the devil, and that they need to die in fire.
And as for inflation, there is nothing to praise.
[+] [-] edko|4 years ago|reply
[+] [-] berns|4 years ago|reply
> Did I fire him? No. It is impossible to fire your employees, even for proven misconduct.
> Did I sue him? No. You lose 95% of these types of cases.
[+] [-] dominotw|4 years ago|reply
[+] [-] l30n4da5|4 years ago|reply
> I simply told him I would never give him a raise again. And he understood that---due to radical inflation---his salaried buying power would keep dropping and dropping, until it was chiseled away to nothing. So he quit.
Just to play devil's advocate here, and I'm not saying that stealing is wrong by any means, but this just makes me feel like the reason he was stealing to begin with was that his income was too low to live off of.
[+] [-] totalZero|4 years ago|reply
Meanwhile, people in Argentina have cultural characteristics that I found surprising. The more bohemian people have an anti-work culture yet they blamed Macri and other capitalists for not having promptly repaired the damage done by leftist predecessors. Some indigenous groups enjoy receiving free seeds and ignore other factors that may affect their prosperity. When the country brought Kirchner back, the foreign investment community recoiled as evidenced by the overnight devaluation of the currency. Many strategic subsidies exist, and some people don't realize that subsidies and handouts in a nation that can't afford its debt service are not a sharing of wealth, but rather a cause of inflation. Past lockdowns of foreign exchange under Kirchner spooked outside investors, so in some industries such as mining, foreign companies tapered off their projects in mid-2019 when it became clear that Alberto/Cristina would take power.
Resigning yourself to weird survival tactics in a place where the economy doesn't function is not "a way of life." Argentina sustains itself because of its substantial domestic production (which insulates certain markets from exchange rates) and the fact that people depend on government handouts. Hoarding toothpaste may save a few bucks, but it's not paying the bills. The only other countries in the Americas with such a problematic currency situation are the ones facing economic sanctions.
[+] [-] ABraidotti|4 years ago|reply
- sometimes when I'd buy something at the chino (corner store run by Chinese immigrants), I'd get candy instead of my change back, due to the coin shortage. No arguing with them about that.
- I would get empanadas down the street at a bakery almost every day, and the woman who owned it would complain and almost start crying if I brought a bill that was too big (like a 100-peso note). I would occasionally buy fewer items than I wanted because I had smaller bills. I think she was happier that way.
- the best exchange rate for American dollars was the downtown grey market on Avenida Florida, where tourists would frequent. I would just walk down and guys would notice me as a tourist, and say "cambio allá" and point me around a corner, where I could trade American dollars for whatever the rate in pesos was that week. There was an official unofficial exchange rate, better than the official exchange rate.
- across the river, Uruguay just straight up abandoned their own peso and used American dollars instead. Same with Ecuador as I later found.
- when I got tired of wine, I'd get beer at this brewery in Palermo -- Orion, I think it was called. I can't remember. But I do remember in October 2012, beers cost about 24 pesos and were about 36 pesos by spring 2013. Cheaper for me since my wallet was backed by USD, but that just meant I drank more beer. :)
I really miss BA sometimes.
[+] [-] tenpies|4 years ago|reply
Uruguay is actually extremely clever in that it long ago realized that Argentina just isn't capable of handling a sovereign currency. Having a monetarily unstable neighbour means that millions of Argentines are underserved by national banks, so Uruguay has an entire industry tailored towards financial services for Argentines.
You may have also noticed that almost all Argentinians of a certain economy class, have a USD account in Uruguay.
The downside is that occasionally, Argentinians do something unexpected, and it can blow up the Uruguayan banking sector: happened in 2002 (https://en.wikipedia.org/wiki/2002_Uruguay_banking_crisis).
[+] [-] msoad|4 years ago|reply
[+] [-] solids|4 years ago|reply
[+] [-] forinti|4 years ago|reply
You can use dollars and expensive things (cars, houses) usually are priced in dollars, but salaries are in pesos and so are everyday goods.
Inflation in Uruguay is less than 10% yearly.
[+] [-] dakial1|4 years ago|reply
https://www.npr.org/sections/money/2010/10/04/130329523/how-...
Interesting things that I remember from that time:
- Hypermarkets made a boom, because people would make big monthly groceries purchases right when they got their salaries, and avoid small frequent purchases (as the money would lose value with time, very quickly)
- Price freezes were very frequent and very ineffective as companies would simply stop producing/selling, generating product shortages everywhere.
- A financial device called Overnight, were you would convert your brazilian currency (had many names) into USD at night and then convert it back to BR on the next day
- Government would try to control USD exchange rates and this simply created a black market that got so widespread that the black market (called "parallel market") had its rates published at newspaper and TV like a normal thing.
[+] [-] matheusmoreira|4 years ago|reply
At least we don't have presidents stealing everyone's money anymore. That's the sort of insanity that cryptocurrency was invented to stop.
[+] [-] option_greek|4 years ago|reply
Who eats the loss from the fluctuations in this case? Any idea how the providers used to hedge against the risk.
[+] [-] forinti|4 years ago|reply
Prices had regular revisions and salaries had "triggers" and would automatically go up when inflation hit a certain value.
So it was guaranteed to just keep going.
[+] [-] thesausageking|4 years ago|reply
[+] [-] culopatin|4 years ago|reply
There is SO MUCH to do. But everyone has just given up.
It’s a psychological and social problem more than an economical problem now.
I tried to generate business for people paying for things in dollars and the mistrust is so high that no one wants to do anything because they think you’re about to scam them. And they have reason to. But no one is starting a business there, why would you?
The entrepreneurial vibe of HN is absolutely nonexistent in Argentina. So much that when someone young opens a business that is mildly successful the news dedicate an article to them. “Look, Argentinians generating jobs!”
It’s sad and I bang my head everyday at how I can go back home while creating jobs and fighting the stupidity of the government
[+] [-] anovikov|4 years ago|reply
In Belarus, where there is no high inflation, but just periodic (once in 3-7 years) sudden devaluations of the local currency, people always think in dollars, and many employers set salaries in dollars too. Even government sets rent on government property and some taxes in dollars or euros just to avoid the hassle of recalculating it too often. After a while, people got used to it and it's not a problem at all - no one but government employees who get salaries in local currency, is even worried about the exchange rate (and those employees can't survive on salaries anyway - they are dependent on bribes as salaries are laughable - and bribes are in USD).
[+] [-] foobarian|4 years ago|reply
One of my favorite memories is watching the news where Ante Marković announced the denomination of the dinar, where they basically ran out of room on the bills for all the zeros and so just declared that henceforth they would print "new dinars" which are same as "old dinars" but without the trailing 4 zeros. Marković waved one of those bills in front of the parliament, started laughing with joy, and there was applause. [1]
[1] https://youtu.be/G3dSOfoQiaY
Of course what I didn't understand at the time is that they also officially pegged the exchange rate to the German Mark, which made the currency convertible and stabilized the inflation rate. Now I see that deleting the zeros was mostly showmanship (though it helped lessen the confusion).
[+] [-] spuz|4 years ago|reply
https://en.m.wikipedia.org/wiki/Currency_substitution
[+] [-] marcodiego|4 years ago|reply
[+] [-] throwaway22032|4 years ago|reply
Well, you say this, but then there was that time in 2014 when the ruble went from about 40 RUB/USD to 60-70RUB/USD...
[+] [-] gabythenerd|4 years ago|reply
[+] [-] kobalsky|4 years ago|reply
There's a 200 usd quota per month shared between products, services and currency exchange. If you buy something that exceeds your monthly quota it means that your quota for the next months will be affected.
It's a system designed so that no one who can save money can buy dollars. When poor people started selling their quotas the practice got quickly stopped with taxes that got its price above illegaly traded dollars.
So basically if you need to buy dollars here you are a criminal.
[+] [-] kerneloftruth|4 years ago|reply
[+] [-] wolfgang000|4 years ago|reply
[+] [-] msoad|4 years ago|reply
Tip: if you're planning to visit Argentina make sure you're bringing cash. Using your credit card would mean paying double the amount due to the difference between official and "blue dollar" exchange rates.
[+] [-] phreack|4 years ago|reply
There is currently a mass exodus of professionals from the country due to it - massive, and I mean massive talent is spreading all over the world instead of helping at home. People have either given up or drank the Kool Aid, as there is absolutely no expectation of even a possibility of change.
It really is depressing, as even mild complaints are usually met with long winded explanations or insults about how things aren't actually bad and they could be so much worse you should actually be thankful and maintain the status quo. The democratic voting system inevitably gravitates to a two-party rotation with more in common than they allow traditional media and paid coordinated social media to admit - with the only ultimate goal of keeping a class of elites in power and as many people as possible depending on the state to survive, whether it's via subsidies, handouts, or straight up state employment so keeping things as they are becomes a matter of survival for them even more.
At least it's amusing seeing newspapers pretend such a thing is cute and quirky. This is very much a preview of the future road for an incredibly large number of economies all over the world, so read some of the comments here very carefully.
And never, ever, ever save all of your life's accumulated value in just one form. Be it currencies, stock, real estate, crypto, food, metal, whatever it is, never forget that any basket can break when it's holding all of your eggs.
[+] [-] idiocrat|4 years ago|reply
The article implies the same will come to your own country soon, so do not be surprised, learn from Argentina.
The consent for coming inflation is being built.
Looking at the global fiscal recklessness, there is a clear lack of intent to pay back the amassed debt.
Now nobody is impressed by a trillion anymore.
Eventually (soon) a quadrillion will be a commonly used word. 100 trillion is just a 0.1 quadrillion; Japan's debt has already reached 1.2 quadrillion JPY.
So inflation or country bankruptcy is the only way out.
[+] [-] ajot|4 years ago|reply
[+] [-] MrPatan|4 years ago|reply
Why would this newspaper want to say these things precisely now?
What prompted the editor to pick this story and this angle?
Nobody finds that question interesting?
[+] [-] WalterBright|4 years ago|reply
For example, inflation in the 1970s was blamed on OPEC oil prices, today it is blamed on "supply chain disruption".
The refutation is straightforward. If the 1970s inflation was caused by OPEC price increases, when gas prices later went down, there should have been corresponding deflation. But there was no deflation, not a penny. Today, when the supply chain disruption is past, is there going to be deflation? Nope.
What actually causes inflation is the supply of money increasing faster than the goods and services it represents. What causes the supply of money to increase faster?
The government money printing press.
The US government has been creating money at a fantastic rate. That's why we have 7% inflation today, and it ain't turning into deflation.
Why does the government persist in misinforming us as to the cause of inflation? Because inflation is how the government spends money it does not have. The purpose of the Federal Reserve System, created in 1914, was purportedly to create "stability". That is propaganda. The true purpose was to inflate the money so the government can spend it without raising taxes. It's called a fiat money system, and shortly afterwards every country with their own currency adopted it.
And every single one of those countries blames inflation on some sort of unknown voodoo, wage price spiral, cost-push, greedy businesses, profiteers, and reckless speculators.
[+] [-] cardosof|4 years ago|reply
[+] [-] irfwashere|4 years ago|reply