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In Argentina, inflation is a way of life
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- argentinian 5y agoFortunately, lately I don't see any new article from the USA praising MMT.
- Proven 5y ago
- uejfiweun 5y agoUnfortunately, it's because the acolytes of MMT already won. The national debt has completely exploded and there's no putting that genie back in the bottle without hyperinflation.
- wbsss4412 5y agoMMT is not, nor has it ever even the dominant ideology of those who are actually in control of monetary policy. I know it’s a popular boogeyman, but it’s pure fantasy.
- uejfiweun 5y agoGotcha. Well, whatever the name of the theory is that says it's OK to just rack up a ginormous national debt, that's what I am against.
- wbsss4412 5y agoThat theory is called “starve the beast” wherein tax hawks seem to believe shrinking the federal budget is simply a matter of cutting taxes and engaging in brinksmanship, despite the fact that their ultimate goal of cutting SS and Medicare has been a political non starter for decades.
- uejfiweun 5y agoYeah, I don't really get why you would pre-emptively cut taxes in anticipation of future spending cuts. If there's one thing we can bank on in history, it's that governments always get bigger. Spending cuts are just very unlikely to happen.
- wbsss4412 5y agoSeems to be good politics I suppose. The thing about MMT, is that it’s not about racking up gigantic debts per se, their thesis is that deficits and debt don’t matter in an absolute sense, but in relation to other monetary factors. Eg. once inflation picks up, then it becomes necessary to cut budget deficits.
- notch656a 5y agoThen a new goal is needed. Allow anyone to opt out of SS/Medicare for life, cutting themselves off from social aid in exchange for not providing it.
- wbsss4412 5y agoI mean, that isn’t a different goal.
- netcan 5y agoThe acolytes of MMT? Sheesh! How come anything touching on "what is money" gets goofy immediately? Most of the world's monetary systems have been run under Monetarist theories for 40-ish years. Theory is now entirely at odds with observed realities. New theories gain ground. National debts "exploded" a long time ago. Japan's exploded over a generation ago and most of western economies "exploded" 10-15 years ago. Except these explosions aren't explosions. Central banks continue to decree whatever interest rates they want, with no market pushbacks. The monetarists and goldbugs have been screaming "inflation" constantly for 25+ years. That does not mean that their theory of inflation (national debt) is true. It isn't.
- argentinian 5y ago> Most of the world's monetary systems have been run under Monetarist theories for 40-ish years. Argentina's monetary system hasn't.
- wbsss4412 5y agoIt hasn’t been run under MMT either, given that it’s an entirely new academic theory.
- netcan 5y agoBoth true. I'd even say that "theories," is probably the wrong term. More "school of thought." I would also point out that the USD/EUR/GPM/Yen/etc are "run under MMT" in the basic sense. They simply have different ideas about inflation. Broadly, MMT thinks same year spending is the main inflationary mover. Monetarism thinks cumulative national debt is what impacts inflation.
- wbsss4412 5y agoAgreed in the sense that MMT theorists assert that their theories describe what happens in practice. I disagree if the assertion is that policy makers have been consciously crafting policy under MMT this whole time.
- sleepingadmin 5y ago>Fortunately, lately I don't see any new article from the USA praising MMT. UBI certainly died as a subject as well. The "basic income" benefits wasn't even universal and exactly what everyone said would happen has happened. I still think a fiscal conservative with an army of accountants could figure out UBI and make it work. Effectively it would greatly punish anyone who works under the table.
- anm89 5y ago> I still think a fiscal conservative with an army of accountants could figure out UBI and make it work. This is totally lost on me. Why? I don't see how any of the issues with UBI are accounting based. We already can spend money we don't have in the short term so nothing prevents transfer payments of any size in a purely logistical sense. The issues with UBI are regressive redistribution, long term effects on the labor market, and long term effects on the currency. None of those are accounting issues.
- sleepingadmin 5y ago>This is totally lost on me. Why? I don't see how any of the issues with UBI are accounting based. So lets go back to what happens. Places like Switzerland or Germany have a labour participation rate of ~80%. So if you implemented UBI there. The 20% of people who were earning nothing or at most were on government services, now get a pay cheque. This will be by definition inflationary; but with such high labour rates and removal of those other services. The actual inflationary factor will be manageable. The probability of social movement increases obviously. So their participation rate near the beginning will drop. The USA on the otherhand has about 60% participation rate and their government services are poor compared to the rest of the world. They in turn have made their military their welfare system. So if UBI implemented. Nearly have the country would be paying the other half of the country to sit at home. What happened with covid? Less than 10% of people got cheques and we got >40% inflation eventually in the USA. So we can do the math. For a year or 2 of UBI at around 50% is more than 5x worse. So the USA would be looking at >200% inflation. The army of accountants would be needed to make that 100x less. >We already can spend money we don't have in the short term so nothing prevents transfer payments of any size in a purely logistical sense. It's abundantly clear that isn't true. Hence the out of control every market and sky high inflation. That debt ceiling sure is hitting lots of heads lately for the USA. >The issues with UBI are regressive redistribution, long term effects on the labor market, and long term effects on the currency. None of those are accounting issues. Oh I completely agree those are concerns as well. The approach I have in mind is that if you manage it from the economic point of view, these longer term issues will be addressable at a later time. The entire welfare system would have to die. illegal immigration becomes far less of a problem. UBI would be only for citizens. The tax system could no longer be progressive. UBI appears on face impractical or impossible. However, with said 'army of accountants' you could likely design something that works and possibly even beneficial. bviously a ton of work needed here.
- anovikov 5y agoIn 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).
- gabythenerd 5y agoVenezuela 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.
- deadalus 5y agoVenezuala ranks 177th out of 180 in the latest Corruption Perceptions Index (CPI) : https://www.transparency.org/en/cpi/2021 https://www.transparency.org/en/cpi/2021
- foobarian 5y agoIn 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] [1] https://youtu.be/G3dSOfoQiaY 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).
- achow 5y agohttps://archive.fo/nRK7O https://archive.fo/nRK7O
- kerneloftruth 5y agoOdd 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.
- harpiaharpyja 5y agoIt's pretty bizarre.
- steelstraw 5y agoThat is curious. What are the causes?
- pmcollins 5y agogov’t insiders printing money
- mgh2 5y agoThey have a history of defaults, but mainly gov. corruption Crypto fans like to compare to the US, but there is a key diff: the work ethic. Money printing + no production = stealing + inflation + defaults The US has the production and work ethic to compensate so far
- ajot 5y agoIANAE, but I'll say it's mostly seigniorage to fill up for the fiscal deficit. And if you try to cut the money printer (without taking some.huge debt), you have to squash the deficit, which is mostly subsidies to electricity, gas and public transport, and non-contributive retirements. You can't, politically speaking (and maybe legally too), cut the retirements, so you have to cut the subsidies, which will increase the measured inflation, at least for a few months.
- Izikiel43 5y ago> You can't, politically speaking (and maybe legally too), cut the retirements Funny enough, that's what the current government did. They removed a law from the previous government which ensured that pensioners would be paid inflation + x% so that their real income won't decrease, and now the government decides on a whim what the pension raise would be (the pensions have been increased by very little very sparsely), effectively cutting retirements, as inflation eats through them. They can't cut subsidies because most of their voters are poor, and if they touch that, shit hits the fan, whereas they don't give a shit about old people, since they lose them money and don't vote for them. I'm so happy to have moved to the us and have a 401k and ira accounts the government can't touch.
- ajot 5y agoAs 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.
- victorcharlie 5y agoCash = USD.
- mercy_dude 5y agoNot surprised to see the good old liberal outlets like WaPo changing the narratives and trying to tell us how inflation is all normal and to suck it up. Guess what serfs, Argentina has it way worse. I guess after 5yrs of covering Trump and spreading wokeness, WaPo forgot what struggle really feels like for people here.
- totalZero 5y agoWaPo always seems to support leftist political forces in South America, even where there is no parallel domestic narrative in the US. For example, they supported Evo Morales in his bid for a fourth consecutive presidential term despite the Bolivian constitution limiting presidents to two consecutive terms. https://www.washingtonpost.com/politics/2020/02/26/bolivia-dismissed-its-october-elections-fraudulent-our-research-found-no-reason-suspect-fraud/ https://www.washingtonpost.com/politics/2020/02/26/bolivia-d...
- jayski 5y agoMy take away from the article wasnt that inflation is normal and suck it up, it was: inflation sucks we cant allow it to keep increasing
- throwaway0a5e 5y agoThe really infuriating part is that these same damn people were just screeching insistently about how "pulling yourself up by your bootstraps" is unrealistic. The kind of savvy it takes to not slip backwards in a high inflation environment is exactly the same kind of savvy it takes to pull one's self up by your bootstraps. Regardless of how realistically achievable you think the latter is does not change the fact that the cognitive dissonance is apparent. This will come back to haunt them. People don't like economic uncertainty but they can't do much about it so they just deal. People really, really don't like spineless shysters that change their opinions to whatever is convenient that minute and they can marginalize said shysters in response. Where is the captain of this ship? Why isn't there someone with a longer than next week timeline saying "hey let's stop lighting our credibility on fire like this"?
- empalms 5y ago
- kobalsky 5y ago> 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.
- xtracto 5y agoThis is crazy, no wonder a lot of people in there are turning to cryptocurrencies, particularly stablecoins.
- totalZero 5y agoThis 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.
- pvarangot 5y ago> The only other countries in the Americas with such a problematic currency situation are the ones facing economic sanctions. Argentina is not receiving economic sanctions but it's pretty much cut out from international credit. Last time the country had access to good credit mostly from other Latin American countries it was not doing that bad. That stopped when Venezuela and Brazil crashed. Maybe the huge interest rates and being cut out makes sense because "we don't pay", maybe it doesn't because some of that credit was taken by a dictatorship or by wildly unpopular and corrupt governments, but it does work pretty much as an economic sanction. Honestly I used to think this was unfair in the later 90s early 2000 when most of that debt came from lending by a US backed dictatorship or from a corrupt government that was basically in the pocket of big corporations. But it's true that as Argentinians there was not much we did against the former dictators, who most got pardoned or only saw consequences in the last years of their lives. Oh and the president from the corrupt government died a senator and only saw some years of house arrest from selling weapons to Ecuador when they were sanctioned. It's not clear for me if "the Argentinian people" are really ok with that or not anymore.
- deleted 5y ago[deleted]
- mgh2 5y agoVideo: https://m.youtube.com/watch?v=sWr-Ht1S_4U https://m.youtube.com/watch?v=sWr-Ht1S_4U
- thesausageking 5y agoI'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%.
- gabythenerd 5y agoI currently live in Argentina, the loss rate is much higher, between fees and the official exchange rate you lose about 65% of any income you perceive. Aside from crypto, Payoneer is also popular (you go outside the country regularly to get cash).
- Izikiel43 5y ago> 15-30% What a weird way to write 60-70% (you are forgetting taxes)
- wbsss4412 5y agoDo taxes only exist in Argentina? Are you advocating tax evasion here?
- Izikiel43 5y agoIn Argentina, tax evasion is a way of living, everyone there, young or old, rich or poor, looks for a way to avoid taxes, since taxes coupled with inflation make life very expensive, no matter your income ¯\_(ツ)_/¯ . The best way to live in Argentina is to be a ghost. No bank accounts, nothing declared, everything you own should be on someone else's name, earning usd in a foreign account and you should live on cash (converting usd to pesos as needed).
- wbsss4412 5y agoTax evasion is likely what’s causing the inflation. Not saying I don’t get why an individual does it, but without the ability to reliably collect taxes, there’s no way to stop rampant fiscal deficits.
- bravura 5y agoI 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 https://news.ycombinator.com/item?id=30101931]
- dominotw 5y agoIs your friend's FIL ceo of my company? This is my employers current strategy to increase profits.
- nate_meurer 5y agoIs this likely to result in employees leaving the company?
- dominotw 5y agoi put in my 3 week notice last week. I don't understand ceo's logic here, just counting on inertia?
- gtirloni 5y agoI don't understand why Argentina doesn't just do like Brazil did [0] to fix its inflation. 0 - https://en.wikipedia.org/wiki/Unidade_real_de_valor https://en.wikipedia.org/wiki/Unidade_real_de_valor
- diego 5y agoStudy Argentine history. They have tried everything imaginable, and managed to control inflation for a while. Look at the 1-1 peg between the peso and the dollar that lasted 9 years. It's much more complicated than you think.
- maxilevi 5y agoExcept reducing the fiscal deficit, seems like no goverment wants to try spending less than what they have.
- marcosdumay 5y agoThey never tried a program like the Real. Currency pegs are one of those things that known to fail every time, by the way. Anyway, the answer to the GP is that the government will need to severely cut their spending. That's the same reason on every country with high inflation.
- diego 5y agoExactly. The reason inflation happens is that the government overspends, then prints money because it can. There are no magic tricks to stop inflation if you're constantly devaluing your currency.
- fuoqi 5y agoThe peg was one of the main reasons why Argentina got into this mess in the first place.
- diego 5y agoThat is an opinion. The 2001 crash caused a crisis, then a recovery, then two decades went by with many ups and downs. The entire peg might have never happened and Argentina might still be where it is today. Are you old enough to remember the hyperinflation of the late Alfonsin period? I lived through it. No peg preceded it.
- wolfgang000 5y agoI'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
- gabythenerd 5y agoIt's interesting that Argentina is in the same decline Venezuela was in (and still is), just with some years of latency. Both countries are in the same economic region, one would think someone would learn from having a hyperinflation near them. A lot of Venezuelans immigrated to Argentina years ago, and are now leaving Argentina and immigrating to other countries. Some are even going back to Venezuela now that everything there is in dollars and the situation seems to be stabilizing. A somewhat popular opinion is that the country is very corrupt but you can live with it if you earn in dollars.
- betwixthewires 5y agoWell what is there to be done about it really? You stop printing money and servicing debt and you wind up in default, now unable to import goods, which you rely heavily on because you wouldn't be in this situation in the first place is your domestic production was strong. So you get... prices going sky high on imported goods. Either way you dice it, they're fucked. It's an entire country stuck in a debt trap. The only outcome is economic collapse, and all the government can really do is fudge the numbers to slow it down.
- notch656a 5y agoIt's my understanding Argentina actually isn't heavily dependent on imports. Not only are taxes high on imports, they have a net trade surplus. Argentina also is extremely lucky like US they have extremely diverse environment including excellent farm ground, natural resource, and coastal access. Defaulting on debt might be a good option.
- 101008 5y agoArgentinian 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)
- tigershark 5y agoI’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.
- marcosdumay 5y agoEverything is linked to the inflation rate. Fixed interest lending does not exist at all. Even then long term lending can easily go both ways, and become too cheap or too expensive very quickly. (I lived my childhood with hyperinflation, not in Argentina, but that doesn't actually change from one place to another.)
- ed25519FUUU 5y agoVariable rate loans make a lot of sense. It’s still strange to me that in the USA I can get a 30 year FIXED mortgage at 2.75% when inflation was 7%. Makes “inflated” housing look cheap. Doesn’t really make sense that it’s even offered.
- dakial1 5y agoBrazil 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). https://www.npr.org/sections/money/2010/10/04/130329523/how-fake-money-saved-brazil 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.
- option_greek 5y ago> 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.
- gjvnq 5y agoThe overnight he is talking about is basically an overnight loan banks took in order to balance their books at the end of the day. This reminds me of the repo load system used in the USA but in the overnight system regular people could loan to banks.
- matheusmoreira 5y agoThe 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.
- irfwashere 5y agoIt's going to be really interesting to see how Jack Mallers' app Strike now entering Argentina is going to change things in the country.
- tute666 5y agoWhy would anything change? There is a dozen apps/bank analogues and fintechs that deal with crypto. They are all subject by and large to argentine banking law.
- irfwashere 5y agoI don't know the app landscape there but assume it's sparse and probably not as easy to use
- tute666 5y agoIncredibly easy. Binance is even sponsoring the argentine football team https://www.coindesk.com/business/2022/01/25/binance-to-sponsor-argentinas-national-soccer-team-professional-league/ https://www.coindesk.com/business/2022/01/25/binance-to-spon...
- The_rationalist 5y ago
- culopatin 5y agoI 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
- nate_meurer 5y agoWhat would you want Argentinian Nelson Mandela do to try to turn things around?
- culopatin 5y agoPeople need to believe that they can change the situation they are in. They need to think of what they are capable of working on and feel like other people will join them to do good, not to fuck with them. Things as simple as not dumping trash outside of where you live. Or getting together with your neighbors to clean up your block to make it look nice. Helping each other is no longer a thing in Argentina from what I can see. Everyone is so used to having to protect everything they have that they have isolated themselves in their pockets and everyone else can go fuck themselves. You can’t get up and go work like that. I think Argentina needs a social leader that will make them think this way.
- nate_meurer 5y agoIs there any hope? That is, are there any people currently in Argentinian politics who might be credible agents of change?
- MrPatan 5y agoWhy, when presented with an article like this, do we discuss the content of it, but seldom why does it exist in the first place? 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?
- lamontcg 5y agoMaking everyone very, very concerned about inflation and starting to talk about it. The USA could probably use a decade of double digit inflation (with coupled wage-inflation so a nice wage-price-spiral) to adjust asset values and wealth disparity back down to more reasonable levels. It would come with economic stagnation but that will be better than the alternative. What all the talk about inflation is doing is getting people very worried about any uptick in inflation and prepared for austerity measures to prevent it, which will probably lead to a depressive spiral and lancing the long-term bubble that we're in. If the "Great Resignation" trend of workers having power over wages continues, then I suspect you're going to see a large degree of inflation panic pushing for austerity. I don't think it'll land this year, though, this is just the warm up act. The Fed policy changes this year will likely be insufficient and its more likely that this time next year it really starts to ratchet up (and I don't know what'll happen in the midterms exactly other than the Republicans will make gains which makes austerity even more likely). Things will likely be getting exciting again in 2024. Sooner or later we're likely to have a post-pandemic party for a bit, then I think policymakers will start to seriously panic about inflation and workers demanding raises and drive the economy into a depression. I could be off in the timeframe, but after 2-3 years of workers having negotiating power I think policymakers will start to think that it is intolerable. The inflation messages, though, are clearly the manufacturing of consent for what is likely to come.
- nate_meurer 5y agoIt all depends on how the pandemic goes. As Bill McBride says over and over, the course of the economy is dependent on the course of the pandemic. https://www.calculatedriskblog.com/2021/10/early-q4-gdp-forecasts-around-5-to-6.html https://www.calculatedriskblog.com/2021/10/early-q4-gdp-fore... I'm particularly interested to see how long supply disruptions in China persist, as effected as they are by China's zero-COVID strategy.
- deleted 5y ago[deleted]
- ABraidotti 5y agoI 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. :) I really miss BA sometimes.
- msoad 5y agoI'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!
- cmusfan 5y agoIs this better or worse than Bitcoin? Not an an economist, or Bitcoin invester, just curious.
- RedBeetDeadpool 5y agoInflation as a way of life is living with a mercurial definition of a measuring stick for the promise of economic stability provided by someone else. Personally I'd say its a lot worse.
- cardosof 5y agoI 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.
- Jtsummers 5y agoThe raises are often negotiated months to a year in advance based on predicted inflation (and other factors). This means they can easily fall short. When inflation rises enough faster than expected, there may be additional raises put in to compensate, but it isn't guaranteed.
- alexpotato 5y agoThis reminds me of the "fake money" story NPR did a while back about why the Brazilian currency is called the "real" (pronounced "reh-al" but literally "the real"). It's a fascinating story on how to approach inflation using a combination of classical and behavioral economics https://www.npr.org/sections/money/2010/10/04/130329523/how-fake-money-saved-brazil https://www.npr.org/sections/money/2010/10/04/130329523/how-...
- msoad 5y agoI 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.
- idiocrat 5y ago> 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.
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- WalterBright 5y agoWhat 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.
- pvarangot 5y agoYou will hear a US President say "the government has a monopoly on violence" before you hear one say "printing money causes inflation". If there's one thing higher ranking officers in the federal government think is more holy and sacrosanct than their right to jail and kill a lot of people is their right to get below market rate interest loans from the Fed.
- valcron1000 5y agoAmen.
- ericol 5y agoFirst and foremost, a pro-tip: If you are planning a trip to Argentina in the near future, do some research about how to make the most of your money, because using a debit or credit card is worst than shooting yourself on the foot. There are both legal and "illegal" ways to do this, and there are also grey areas in the middle (Like, crypto) --- This is an interesting article, but I haven't seen this happening much (yet). First and foremost you have to recognize that Argentina is a very large country, with very different local economies, so there isn't a "one size fits all" experience. All this brings back memories from my childhood (I'm in my late 40s) when there was a period of hyper inflation in the country; my parents used to tell the stories about those times when they went to the market right after getting their salaries and would pick stuff from the shelves before the person that was up marking the prices (This happened sometimes twice a day) got to the stuff they were picking. But I wouldn't agree that this note is that accurate. You have to understand that, except for the past 5 or so years where we had inflation rise almost from a single digit [1] to where we are now, we had a period of around 10 years with inflation below 11% (and some times as low 5%, as per the graph) a few years of turmoil (2001 - 2003) and then around 10 years (If I recall correctly), the last decade of the 20th century, of the dystopian "1 peso - 1 dólar". So, basically, out of the past 30 years, the very first 25 were very easy for us compared to the previous decades. What is stated in the article might apply to people +40 that might remember what the 80s were, and are frightened for what the future looms. But for a lot of middle class Argentinians this is new territory, up to the point where a lot of people that has money to expend (again, middle class) struggle with the prices - in a very first world problems way - because prices vary so rapidly that it's impossible to know if something is expensive or not. I wouldn't go (much ;) ) on the economics of it at length because that's not what this article is about; my position is that the peronists failed to seize the opportunity they had in the first decade of this century, and then failed miserably trying to hide their failures. And the next government (Macri's) literally did a pull rug of the country's reserves with the 50+ bill credit lent by the IMF. Besides that, as stated in other comments in this thread there are a lot of "funny" things happening like the mess of regulations that you have to go through when working for a company in a foreign country when you loose aprox. 60% of your buying power if you do enter the money illegally (While, at the same time, tourists are allowed to get legally a close to black-market rate for their money), or the fact that the tax brackets for freelancers do not keep up with inflation at all, thus actually inviting evasion. [1] https://www.statista.com/statistics/316750/inflation-rate-in-argentina/ https://www.statista.com/statistics/316750/inflation-rate-in...
- asow92 5y agoIs this article trying to gaslight us into believing that the current fiscal crisis is fine and that we should just get used to it?
- phreack 5y agoMillennials 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.
- 29athrowaway 5y agoArgentina has bartering clubs that operate with their own internal currency.
- londgine 5y agowhat I've always wondered in situations like this is why the locals don't just move over to dollars? I assume every local store would accept the dollar equivalent for a purchase since it is more stable. every exporter can sell their goods in dollars and just use them. when it comes time to paying taxes just exchange the dollars for local currency at the better-due-to-inflation rate. government employees who earn local currency would be at a disadvantage, but so would anyone using the local currency.
- seanmcdirmid 5y agoThey sometimes do, Ecuador is an examples that is fully dollarized, but how are you going to dollars as a local? Your job can’t provide them to you as your salary. The dollar is quasi legal tender in Cambodia, but only locals in tourism can earn them easily. Argentina will auto convert dollars when they are transferred to banks via official channels, so unless you go for a suitcase, it is really hard to even have dollars given to you.
- londgine 5y ago> Your job can’t provide them to you as your salary Why not? I don't know macro-economics that well, but isn't money a more or less closed circuit? I want milk so I give dollars to the grocery store owner who gives it to the employees and suppliers who then want a haircut from my barber. The currency is just an easy way of trading, but I could get milk directly for a haircut if we both agreed. The issue of banking is a problem. If there is no service to store dollars in Argentina (due to laws, for example) then I could at least rent a secure box for my dollars. It will a least protect against inflation.
- seanmcdirmid 5y ago> Why not? This is something you need to take up with the governments themselves. In rare cases, an expat can get paid in another currency in some countries via a swiss bank account or something, but it is extremely rare, and the laws are really narrow in most places on what you can be paid in. > then I could at least rent a secure box for my dollars. It will a least protect against inflation. Many people do that. And it isn't simple to set up, and it definitely isn't legal. If you don't mind taking the risk of going to jail, or rule of law isn't really a thing, then no problem.
- sireat 5y agoFor a look at hyperinflation in 1920s Germany https://en.wikipedia.org/wiki/The_Black_Obelisk https://en.wikipedia.org/wiki/The_Black_Obelisk is highly recommended.