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Argentina is the poster child for what happens when a country's leaders insist on "a strong currency" above all else. In Argentina's case, by pegging to the US

Argentina is the poster child for what happens when a country's leaders insist on "a strong currency" above all else. In Argentina's case, by pegging to the US dollar. If the Argentinian peso had been floating for the last six decades, Argentina's trade deficit and inflation problems would be distant memories. The difficulty is that politically you can't get there from here any more. A sudden shock like floating the currency would seriously impoverish the politically connected elite, for a while.

martinald 4y ago
From 2015 to 2019 the Argentina peso was fully convertable - there wasn't any currency controls.
- brobinson 4y ago
  Yeah, this. They oscillate between currency controls and no currency controls. Left wing government -> currency controls Right wing government -> currency controls removed
  - frozenlettuce 4y ago
    It is worth mention that Macri's government had controlled prices - but still "right wing" for Argentina's standards. Combine that with a 55% workforce being employed by the government and a culture of printing money https://en.mercopress.com/2020/07/27/in-argentina-55-of-all-registered-workers-are-employed-by-government https://en.mercopress.com/2020/07/27/in-argentina-55-of-all-... As they say, the world has developed nations, developing nations, Japan and Argentina.
  - justbored123 4y ago
    [dead]
- initplus 4y ago
  But during that time period people (wisely) saw that currency controls were still on the table in the future, and acted as such. The fact that they the controls are expected to return has a chilling effect. When you remove currency controls you need to convince the public that in fact they controls are gone for good and never coming back. Such a thing was done in my home country in the mid 80s, and we have had a much more stable currency and economy since.
the_af 4y ago
More importantly, the sudden shock would impoverish the mid/lower classes, who would vote the government who takes this measure out of power.
mixmastamyk 4y ago
There’s a difference between a strong currency and a “strong” one held together by law rather than reality.
EdwardDiego 4y ago
I'd probably say Sri Lanka is a far more relevant poster child, given, you know, what's been going down.
TMWNN 4y ago
>Argentina is the poster child for what happens when a country's leaders insist on "a strong currency" above all else. In Argentina's case, by pegging to the US dollar. >If the Argentinian peso had been floating for the last six decades, Argentina's trade deficit and inflation problems would be distant memories. Nonsense. Argentina's currency was only pegged to the dollar for about a decade. What killed the currency and caused endless devaluations was and is poor fiscal and monetary policy before, during, and after the peg.

martinald 4y ago

From 2015 to 2019 the Argentina peso was fully convertable - there wasn't any currency controls.

brobinson 4y ago
Yeah, this. They oscillate between currency controls and no currency controls. Left wing government -> currency controls Right wing government -> currency controls removed
- frozenlettuce 4y ago
  It is worth mention that Macri's government had controlled prices - but still "right wing" for Argentina's standards. Combine that with a 55% workforce being employed by the government and a culture of printing money https://en.mercopress.com/2020/07/27/in-argentina-55-of-all-registered-workers-are-employed-by-government https://en.mercopress.com/2020/07/27/in-argentina-55-of-all-... As they say, the world has developed nations, developing nations, Japan and Argentina.
- justbored123 4y ago
  [dead]
initplus 4y ago
But during that time period people (wisely) saw that currency controls were still on the table in the future, and acted as such. The fact that they the controls are expected to return has a chilling effect. When you remove currency controls you need to convince the public that in fact they controls are gone for good and never coming back. Such a thing was done in my home country in the mid 80s, and we have had a much more stable currency and economy since.

the_af 4y ago

More importantly, the sudden shock would impoverish the mid/lower classes, who would vote the government who takes this measure out of power.

mixmastamyk 4y ago

There’s a difference between a strong currency and a “strong” one held together by law rather than reality.

EdwardDiego 4y ago

I'd probably say Sri Lanka is a far more relevant poster child, given, you know, what's been going down.

TMWNN 4y ago

>Argentina is the poster child for what happens when a country's leaders insist on "a strong currency" above all else. In Argentina's case, by pegging to the US dollar. >If the Argentinian peso had been floating for the last six decades, Argentina's trade deficit and inflation problems would be distant memories. Nonsense. Argentina's currency was only pegged to the dollar for about a decade. What killed the currency and caused endless devaluations was and is poor fiscal and monetary policy before, during, and after the peg.