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It’s unlikely that he can actually do this. - he doesn’t have anything like a majority in the Argentine congress (in either house). I don’t know Argentine law
by huitzitziltzin 3y ago
It’s unlikely that he can actually do this.
- he doesn’t have anything like a majority in the Argentine congress (in either house). I don’t know Argentine law and would welcome comments from someone who actually does but it would surprise me if this is something the president can do unilaterally.
- as a practical matter, Argentina itself does not have enough dollars to make this happen. You need a ton (more than that…) literally of physical currency to make this work. I don’t think their reserves are sufficient to cover it. (You need many additional tons of coins to make it practical too…)
Separately this is generally not a great idea economically. You do kill inflation in Argentina (replaced with American inflation but that is extremely low and stable by Argentine standards). But you have no control over your monetary policy or your exchange rates. If your economy is export driven to (e.g.) China, you now have to worry about the dollar-yuan rate, which is not under your control.
Of course this is also Argentina which is a particular basket case economically so I won’t rule out the possibility that this could be better than what they have now (or would have had under the loser in this election). But my guess is this would be worse if implemented.
For a country which produces a large number of really outstanding economists (including great macroeconomists!) Argentina is surprising disaster.
- raincom 3y agoLots of counterfeit US dollars are in circulation in Argentina, though :)
- clamprecht 3y agoIs this from personal knowledge? If so, can you explain how you know this? I ask because I lived there for 5 years, and anytime I sold dollars for pesos, the cuevas (the place that does the exchange) were extremely picky as to which $100 bills they would take.
- raincom 3y agoI learned it from this documentary: https://www.youtube.com/watch?v=qQano9BaJxg https://www.youtube.com/watch?v=qQano9BaJxg
- ethbr1 3y ago> For a country which produces a large number of really outstanding economists (including great macroeconomists!) Argentina is surprising disaster. I'd assume that it's a disaster is why it produces a lot of outstanding economists.
- dyeje 3y agoFunny, I assumed it’s a disaster because all of the great economists.
- ploum 3y agoI would argue that producing influential economists is what lead to disaster. ;-) (remember that an economist is someone that, if you ask him to study horses, sit down and think really hard "what would I do if I was a horse?")
- deleted 3y ago[deleted]
- Arnt 3y agoPlease go on, do argue that. Don't just tell us that you would. I'm quite curious to what your actual arguments would be.
- stanford_labrat 3y agoWell clearly, the first thing to do is think very very hard about "what would I do if I were a world-renowned economist".
- Arnt 3y ago"Not have been born in Argentina?" perhaps? Or "Have been born in Argentina"?
- ploum 3y agoWell, a good example is given by Yanis Varoufakis (which is, ironically, an economist himself) in his book "adults in the room". In this book, Varoufakis, which was Greece Finance Ministry at the time, explains how he was tasked to negotiate with EU institutions and IMF to alleviate Greece debts. While he proposes restructuring plans after restructuring plans, nobody even try to argue with him on the plans. They all say that there should be a strong austerity, it is the way to go. At one point, he managed to get a glimpse of what is presented to him as a very complex economical model that he (phd in economy) could not understand and, by looking into the code, discover that it is utterly stupid: the whole agenda of austerity is based on the fallacy that you could raise taxes without affecting consumption. You could say that my example is only saying that there are good and bad economists and that things go wrong when politicians listen to bad economists. Well, it turns out that politicians only listen to bad economists (because that’s what they want to hear) which make any influential economist a bad one (because you can’t really make a career as a good one who say things like "give more money to the poor" or "tax the rich"). Varoufakis is an exception here but not so much: he was quickly removed from office once people understood that he would not agree to become a bad economists to stay in power.
- pastor_bob 3y ago- as a practical matter, Argentina itself does not have enough dollars to make this happen. You need a ton (more than that…) literally of physical currency to make this work. I don’t think their reserves are sufficient to cover it. (You need many additional tons of coins to make it practical too…) Why do they need reserves? Abolish all federal obligations. Let the exporters accept only USD for their goods and allow them to figure out how it gets distributed through the Argentinian economy.
- kazen44 3y ago> Why do they need reserves? Abolish all federal obligations this would result in the country having no money to pay for a proper functioning goverment. who is going to pay all govermental employees? the police, the army etc if the country has no reserve currency?
- johngladtj 3y agoOnce you cut of all the non essential expenses and handouts you'd be surprised at just how little money is needed to run a state
- neuromanser 3y agoSee the Mad Max trilogy for a study in cut-down government expenses.
- toyg 3y agoThis is how you end up with bands of military and police extracting "road tax" as they see fit. Iraq circa 2004 is not a good model.
- Daishiman 3y agoThe top 3 expenses of any modern contemporary state are: 1. Retirements funds 2. Health care 3. Education No program that seriously contemplates cost reductions can do without cutting back with these. Guess who the beneficiaries of these expenses are.
- neither_color 3y agoSeveral countries already use the dollar like El Salvador, Cambodia, Ecuador, Panama. Cambodia and Panama use local currency in sub $1 amounts only, and El Salvador and Ecuador were exclusively USD until E.S added BTC, but I know from locals there that it's rarely used and USD is still king. Argentina wouldn't be the first but it would be the biggest. My question is what happens when/if a country this big tries to dollarize? Will there be a huge demand affecting USD rates? Would we just ship them container loads of banknotes? Does the US even want this and can US officials just say no? Bonus question: Why not Euros?
- xxs 3y ago>Bonus question: Why not Euros? Euro is far, also Euro is far more left leaning (I guess) than the US (even democrats in the US would be considered right form the center in Europe). But the real issue would be the lack of currency reserves - least I'd think Argentina might have more Dollar notes than Euro ones.
- Dma54rhs 3y agoWhat on earth is a left leaning currency?
- dsr_ 3y agoClearly, a left-leaning currency is one supported by an economy based on facts, and a right-leaning currency is supported by an economy based on feelings. I don't know how this helps, though.
- cscurmudgeon 3y agoFact: Argentina's peso ("left-leaning fact-based" currency) went from worth 0.35 US dollars to now 0.0029 US dollars in less than 5 years.
- blipvert 3y agoThe Euro is woke, don’tcha know /s
- robomartin 3y ago> it would surprise me if this is something the president can do unilaterally. This is Latin America we are talking about. To be clear, I do generally agree with your comment. Just saying, don't be surprised. Argentina is a country with great natural and people resources that was utterly decimated by a legacy of mismanagement and corruption going back to the Spanish era. Not something that is easy to fix. On top of that, when over 40% of the population works, in some way, for the government the problem is much harder to fix. A huge percentage of these people are nothing less than parasites, in that they do nothing of value to anyone. How do you take a parasite whos skill set amounts to moving sheets of paper from one pile to the next and turn them into useful members of society? How do you do that when your industry has been decimated and you haven't fostered a more productive culture? It's nearly impossible.
- SystemOut 3y agoI've read from multiple sources that they don't have the assets but couldn't they sell off state industries to gather enough assets? I thought one of the new President's plans was to privatize everything there.
- dubcanada 3y ago> Separately this is generally not a great idea economically. You do kill inflation in Argentina (replaced with American inflation but that is extremely low and stable by Argentine standards). But you have no control over your monetary policy or your exchange rates. If your economy is export driven to (e.g.) China, you now have to worry about the dollar-yuan rate, which is not under your control. I am not a economics person by any sort, but why does that matter? If China is buying say minerals at $4 a ton or something, versus 1415.41 Pesos how does that change. If US is strong and the Yuan dips, it now costs X% more to convert to $ then before, that just means you decrease price of export by X %? If we are speaking entirely on a 1 to 1 partner. But on the plus side it also opens you up to buyers who trade in USD, they no longer need to trade to a bunch of Peso first. And since most export companies probably already accept USD for trades, I don't see what the negative is.
- mhardcastle 3y ago> Separately this is generally not a great idea economically. You do kill inflation in Argentina (replaced with American inflation but that is extremely low and stable by Argentine standards). But you have no control over your monetary policy or your exchange rates. If your economy is export driven to (e.g.) China, you now have to worry about the dollar-yuan rate, which is not under your control. "generally not a great idea economically" is true, but this specific case is one of the few where it could be a fantastic idea. Control over one's currency > pegging to or using USD >>>> historic Argentinian monetary policy. If (1) is impossible, then (2) would represent monumental improvement over the status quo.
- PrimeMcFly 3y ago> you now have to worry about the dollar-yuan rate, which is not under your control. How is it under America's control?
- isaacremuant 3y agoThe problem with people who don't have context on Argentina talking about Argentina is that it really shows when they just use general theory to the specific case without acknowledging context. Acknowledge the contact political printing and chaos, poverty and institutional collapse that being able to control the currency has, ans you'll come out with the conclusion that USD as the currency, which what has been used de facto and aggressively attempted to stop by the gov, would be the ideal solution if achievable. If you don't mention peronism in your analysis or inflation or debt or the transition to democracy it's very hard to see how you're qualified to speak and be at the top of HN about this. But I guess I have to thank that it's the typical "he's a crazy organ salesman!1!1!1"
- lr1970 3y agoI am not an Argentinian but I know that country reasonably well. USD is _already_ a de-facto second currency over there. Because of rampant inflation Argentinians keep their savings in USD. You cannot walk a couple of blocks in Buenos Aires without running past semi-official "dollar blue" exchange office. I think Argentina already has enough green bucks to cover circulation.