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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 mu

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.

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.
- marcosdumay 5y ago
  Being cut from international credit isn't something that creates inflation anyway. The situation is actually that Argentina is cut because of the same bad administration that got you the inflation. Getting access to international credit also will not stop the inflation. It can help a competent administration to survive the change into low inflation, but credit by itself is not something good (it's actually a bit bad), it's only helpful when invested competently.
  - wbsss4412 5y ago
    Without access to credit, the only way to run a budget deficit is to print money. It is false to assert that having access to reasonably priced credit would have no effect on inflation.
    - totalZero 5y ago
      Corruption is one major problem with foreign loans to Latin American nations. In theory, money that is borrowed gets put to use for programs that generate revenue. That revenue may result in taxes or may support the treasury directly in some cases, but either way the notion is that the loan generates a return that pays the debt service (or bridges the borrower over to a future cashflow that can pay the debt service of the new loan). That return can't be generated if the money is not put to good use. As a result, loans that come due are often either refunded further out, or forgiven/restructured with certain concessions. By "concessions" I mean the country makes domestic and foreign policy changes that benefit the lender in some way. Argentina tapped IMF funds during Macri's presidency despite the 2014 default. I see the 2020 default as a negotiation tactic. It's a little unreasonable to assert that a country that owes hundreds of billions of dollars lacks access to credit -- and if indeed we describe them as lacking access to credit, it's only because they have over-accessed credit in the recent past. Lending a country more money under such circumstances often compromises their ability to support self-beneficial foreign policy, and kicks the debt can further down the road. It trades a big problem today for a bigger problem tomorrow.
      - 5y ago
aunty_helen 5y ago
>The only other countries in the Americas with such a problematic currency situation are the ones facing economic sanctions. Chile has economic sanctions? Colombia? Mexico? Inflation is just a fact of life here to the point that in Colombia there's an inflation adjustment applied to prices on a lot of things as the new year ticks over. If you look at the USD / Latin American currency pair you'll find none of them are stable but each is at a different stage in the 0-Bolivaries journey. If you want an anecdote, friends bought a car last year. They can now sell it for a higher price used than what they bought it for. Isn't that great!? They think so.
- travisjungroth 5y ago
  None of those countries are anywhere close to the inflation of Argentina. And the car story isn’t just about inflation but a global shortage on cars.
  - aunty_helen 5y ago
    >you'll find none of them are stable but each is at a different stage in the 0-Bolivaries journey. 2 years ago Argentina had similar inflation to what other South American countries are now. They had just had an election and change of govt and that's when currency controls kicked back in, the blue rate started again etc. Colombia has an election this year and one of the favourites often gets compared to that guy in the neighbouring country. I would also expect locally produced and sold cars to be somewhat less impacted by this. Literally can't sell these cars in first world markets due to them being stripped out of saftey features, etc.
    - travisjungroth 5y ago
      How would you define “stable” so that no Latin American currency matches? MXN has been 3-7% inflation for 20 years. CLP had a big swing with the global financial crises and more recently but is otherwise around 5%. COP has been under 10% for 20 years, mostly around 5%. I think what you’re saying just doesn’t fit the facts. The claim that they’re all at different stages on a 0-Bolívares journey is unfalsifiable. You can always say it’s going to happen later. The car market is global. Colombia imports about half of its cars. A rise in import prices is going to increase domestic demand and prices as well. And the cause of the shortage is the global computer chip shortage, and Colombia imports those. None of your anecdotes about inflation are unique to Latan America or Colombia. Everywhere has seen car prices spike and everywhere people update prices every year. And just look at the charts if you want some data. The point you dismissed about only sanctioned countries have worse inflation seems correct.
MomoXenosaga 5y ago
IMF handouts. I suppose the rest of the world can't let Argentina turn into a failed state so they'll be bailed out. I wonder if Argentinians feel shame or humility?
- tute666 5y ago
  Just a scorching hate for our politicians.
  - CountSessine 5y ago
    ...and yet you voted for those politicians?
    - tute666 5y ago
      a majority of people voted for this govt in particular, yes. Thats how democracy works. Its the same system that voted for bolsonaro, trump, etc...
      - CountSessine 5y ago
        So clearly some people didn't hate them? In fact, maybe the majority?
        hutzlibu 5y ago
        Ah well, in our modern democracies I would say, it is very much possible, that the majority of people hates the elected politicians. How is that possible? Well, first of, not everyone has voting rights. Second, many do not vote because they hate all politicians. Third, even people who do vote, can hate the person they vote, but they see them as the smaller evil to the OTHER guy they even hate more. Forth, during the vote the voter believed the promises and was disappointed to have them broken again, after election, which is when the hate returns. So all in all, plenty of possibilities to have hated leaders voted in. Having said that - hating is easy. But transforming a corrupt, but nationalist society is hard.

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.

marcosdumay 5y ago
Being cut from international credit isn't something that creates inflation anyway. The situation is actually that Argentina is cut because of the same bad administration that got you the inflation. Getting access to international credit also will not stop the inflation. It can help a competent administration to survive the change into low inflation, but credit by itself is not something good (it's actually a bit bad), it's only helpful when invested competently.
- wbsss4412 5y ago
  Without access to credit, the only way to run a budget deficit is to print money. It is false to assert that having access to reasonably priced credit would have no effect on inflation.
  - totalZero 5y ago
    Corruption is one major problem with foreign loans to Latin American nations. In theory, money that is borrowed gets put to use for programs that generate revenue. That revenue may result in taxes or may support the treasury directly in some cases, but either way the notion is that the loan generates a return that pays the debt service (or bridges the borrower over to a future cashflow that can pay the debt service of the new loan). That return can't be generated if the money is not put to good use. As a result, loans that come due are often either refunded further out, or forgiven/restructured with certain concessions. By "concessions" I mean the country makes domestic and foreign policy changes that benefit the lender in some way. Argentina tapped IMF funds during Macri's presidency despite the 2014 default. I see the 2020 default as a negotiation tactic. It's a little unreasonable to assert that a country that owes hundreds of billions of dollars lacks access to credit -- and if indeed we describe them as lacking access to credit, it's only because they have over-accessed credit in the recent past. Lending a country more money under such circumstances often compromises their ability to support self-beneficial foreign policy, and kicks the debt can further down the road. It trades a big problem today for a bigger problem tomorrow.
    - 5y ago

aunty_helen 5y ago

>The only other countries in the Americas with such a problematic currency situation are the ones facing economic sanctions. Chile has economic sanctions? Colombia? Mexico? Inflation is just a fact of life here to the point that in Colombia there's an inflation adjustment applied to prices on a lot of things as the new year ticks over. If you look at the USD / Latin American currency pair you'll find none of them are stable but each is at a different stage in the 0-Bolivaries journey. If you want an anecdote, friends bought a car last year. They can now sell it for a higher price used than what they bought it for. Isn't that great!? They think so.

travisjungroth 5y ago
None of those countries are anywhere close to the inflation of Argentina. And the car story isn’t just about inflation but a global shortage on cars.
- aunty_helen 5y ago
  >you'll find none of them are stable but each is at a different stage in the 0-Bolivaries journey. 2 years ago Argentina had similar inflation to what other South American countries are now. They had just had an election and change of govt and that's when currency controls kicked back in, the blue rate started again etc. Colombia has an election this year and one of the favourites often gets compared to that guy in the neighbouring country. I would also expect locally produced and sold cars to be somewhat less impacted by this. Literally can't sell these cars in first world markets due to them being stripped out of saftey features, etc.
  - travisjungroth 5y ago
    How would you define “stable” so that no Latin American currency matches? MXN has been 3-7% inflation for 20 years. CLP had a big swing with the global financial crises and more recently but is otherwise around 5%. COP has been under 10% for 20 years, mostly around 5%. I think what you’re saying just doesn’t fit the facts. The claim that they’re all at different stages on a 0-Bolívares journey is unfalsifiable. You can always say it’s going to happen later. The car market is global. Colombia imports about half of its cars. A rise in import prices is going to increase domestic demand and prices as well. And the cause of the shortage is the global computer chip shortage, and Colombia imports those. None of your anecdotes about inflation are unique to Latan America or Colombia. Everywhere has seen car prices spike and everywhere people update prices every year. And just look at the charts if you want some data. The point you dismissed about only sanctioned countries have worse inflation seems correct.

MomoXenosaga 5y ago

IMF handouts. I suppose the rest of the world can't let Argentina turn into a failed state so they'll be bailed out. I wonder if Argentinians feel shame or humility?

tute666 5y ago
Just a scorching hate for our politicians.
- CountSessine 5y ago
  ...and yet you voted for those politicians?
  - tute666 5y ago
    a majority of people voted for this govt in particular, yes. Thats how democracy works. Its the same system that voted for bolsonaro, trump, etc...
    - CountSessine 5y ago
      So clearly some people didn't hate them? In fact, maybe the majority?
      - hutzlibu 5y ago
        Ah well, in our modern democracies I would say, it is very much possible, that the majority of people hates the elected politicians. How is that possible? Well, first of, not everyone has voting rights. Second, many do not vote because they hate all politicians. Third, even people who do vote, can hate the person they vote, but they see them as the smaller evil to the OTHER guy they even hate more. Forth, during the vote the voter believed the promises and was disappointed to have them broken again, after election, which is when the hate returns. So all in all, plenty of possibilities to have hated leaders voted in. Having said that - hating is easy. But transforming a corrupt, but nationalist society is hard.