4 ms·

Please follow HN's guidelines and be respectful. I've no particular respect for the current government, and I did mention "it's not just the government", meani

• argentinian 4y ago
  Prices of commodities are expressed in dollars and are global. The agricultural sector thinks in dollars, not in pesos. It's not that the dollar goes higher: the peso goes down. The illegal dollar market is not small, and its prices change similarly to the legal dolar market (mep, ccl).
  • the_af 4y ago
    The illegal dollar market is not where major operations are done, and so, it doesn't affect anything to a great degree. It's small in the sense a few big whales can manipulate it. > It's not that the dollar goes higher: the peso goes down. Well, yes. If you are from Argentina, you know what I meant. If the agricultural sector only "thinks in dollars", then why do they regularly push for a peso devaluation, talk about "competitivity" of the peso vs the dollar, and must be forced to liquidate their dollars in a reasonable time? They obviously care about the relative value of the peso vs the dollar.
    • argentinian 4y ago
      The main actors pushing for the peso devaluation are the ones that finance deficit by printing money.
    • kragen 4y ago
      Why "must" the agricultural sector be forced to "liquidate" their dollars "in a reasonable time"? By "liquidate" you presumably mean "sell for pesos", and the answer is that pesos are an irresponsible speculative investment that nobody would invest in voluntarily. It only goes down, and it does so with enormous volatility. The only reasonable time to do this is less than one day before spending the pesos. So the answer is the same as if a mugger asks why you must be forced to give me all the money in your wallet, receiving nothing in return. The implied necessity is an invention of the speaker. I don't believe you have reliable information about the size of the illegal dollar market.
      • argentinian 4y ago
        Yes. The grains that somebody produces are their private property. Why does the government have to force the owners to sell their own property?
        • kragen 4y ago
          To quibble a bit, they're actually not being forced to sell the grains and oilseeds, which for the time being they are free to stockpile; but if they do sell them, they are being forced to sell the dollars they get in exchange, at a fraudulent exchange rate, in order to subsidize imports and the overseas travel of the Argentine upper class.
• kragen 4y ago
  Surely it is true that my own views are also influenced by partisan propaganda. :) However, I think a much stronger influence is that I understand elementary economics, have lived outside Argentina, have operated an Argentine corporation, and have traded forex futures in real markets. Certainly it is true that the agricultural sector is one of the most powerful in Argentina and that the real estate sector trades in dollars, but most of the rest of your comment is not even wrong, reflecting fundamental misunderstandings of a flat-earth level. The assertion that the agricultural sector in Argentina is "speculating on the dollar" is incoherent. Speculating on the dollar is an activity dominated by big international investment banks and hedge funds, which make enormous leveraged bets on whether the dollar, the yen, the euro, or other real currencies will go up or down by 0.05%. The agricultural sector in Argentina is not able to do this because of legal prohibitions, and at any rate does not have nearly enough money to engage in the activity profitably. When people in Argentina talk about the dollar "going higher" what they mean is that the fake Monopoly money we call the Argentine peso is losing value relative to the dollar, whose own changes in value are usually a rounding error by comparison, though not this year. Argentine pesos are an irresponsible speculative investment that are guaranteed to lose value; no prudent investor would hold them. Anybody who owes debts denominated in Argentine pesos—most notably, the government—has a vested interest in inflation, the devaluation of the peso ("the dollar going higher"). Conversely, anyone who is owed debts denominated in Argentine pesos has a vested interest in the peso appreciating, or, since that's not going to happen, in the peso losing value more slowly. However, overall, the rampant inflation of the peso is one of the factors that makes the Argentine economy unstable and unproductive, which is the bigger factor in play here. I suspect your reasoning is something along the lines of "the agricultural sector is a big exporter, so they get paid in dollars, so if those dollars are worth AR$600 instead of AR$300 then they make more money." But that is nonsense; if a dollar is "worth" AR$600 instead of AR$300, that's because the peso has lost half its value, so that AR$600 only buys you roughly the same amount of fertilizer, Monsanto seeds, farmhand labor, silage bags, etc., that you could have bought with the AR$300 without the additional inflation. Moreover when inflation is fast enough it becomes difficult to carry out any transactions at all. It's relevant to point out to other readers that the official dollar, the fake value the exporters of agricultural as well as other goods get paid, is AR$129.25 × AR$137.25 today. That means that for every dollar of soybeans you export legally, you get paid AR$129.25, which is "worth" US$0.41. That is, the central bank confiscates 59% of your revenues (not your profits!) in order to subsidize imports and rich people going abroad for vacations. Unfortunately, soybeans are too bulky to smuggle out of the country. Government confiscation of 59% of export revenues in order to subsidize Chinese imports goes a long way to explaining how we have ended up in such a terrible economic situation. Argentine makers trying to compete with Chinese imports have the central bank subsidizing 57% of the price of their foreign competition; Argentine consumers only pay 43% (137.25/316). So a hypothetical Argentine product of the same quality must be 57% cheaper than the Chinese product in order to compete. Government mandates of "Industria Argentina" result in companies importing fully manufactured products in kit form from China or Korea and paying unskilled workers a minimal amount to assemble the kits. Export-led industrialization was the key policy that replaced poverty with prosperity in Taiwan, Japan, PRC, Korea, Indonesia, Singapore, and Malaysia. The Argentine currency policy has been precisely the opposite since *spit* Menem, with brief exceptions under Kirchner and *spit* Macri. Even back to Perón we focused on import substitution rather than exports, although actively sabotaging exporters with monetary policy seems to have started with Menem. I don't have any idea how big the illegal dollar market is, and neither do you, but it evidently possesses significant liquidity. It has a high impact in people's minds because it's a reliable source of information about what the peso is actually worth; the government has not been a reliable source of that information since Kirchner coerced INDEC into falsifying the inflation numbers, a policy that has continued under Fernández de Kirchner, Macri, and Fernández and which was followed with the "cepo" policy of fake exchange rates that have gutted the Argentine economy over the past 11 years. Hopefully that answers all of the questions you asked adequately; please feel free to ask for clarification if you feel that any of my answers were incomplete.