[HN Gopher] In Argentina, inflation is a way of life
___________________________________________________________________
In Argentina, inflation is a way of life
Author : argentinian
Score : 124 points
Date : 2022-01-27 15:15 UTC (7 hours ago)
(HTM) web link (www.washingtonpost.com)
(TXT) w3m dump (www.washingtonpost.com)
| argentinian wrote:
| Fortunately, lately I don't see any new article from the USA
| praising MMT.
| uejfiweun wrote:
| Unfortunately, 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 wrote:
| MMT 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 wrote:
| Gotcha. 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 wrote:
| That 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 wrote:
| Yeah, 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 wrote:
| Seems 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 wrote:
| Then 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 wrote:
| I mean, that isn't a different goal.
| netcan wrote:
| _The 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.
| anm89 wrote:
| Not clear to me what is "goofy" here. You dislike the word
| acolytes?
|
| > Japan's exploded over a generation ago and
|
| And how did that go?
|
| > Most of western economies "exploded" 10-15 years ago.
|
| Sure and they had 15+ years worth of runway to lower rates.
| So seems about right that they didn't have an issue while
| their strategy was still viable.
|
| > That does not mean that their theory of inflation
| (national debt)
|
| What does this even mean? Debt to GDP is ~130%. Seems like
| what most of them have been consistently predicting for
| years.
| uejfiweun wrote:
| I think it's less that inflation is caused by the national
| debt, and more that it will be nearly impossible to _pay
| off_ the debt without massive inflation. Certainly the Fed
| is in a box with the debt, as it can 't raise interest
| rates without massively increasing US Government debt
| payments. The only solution seems to be to keep rates low,
| which results in inflating away the debt.
| mullingitover wrote:
| > ...it will be nearly impossible to pay off the debt
| without massive inflation
|
| Isn't it the opposite, that it's impossible to pay off
| the debt without massive _de_ flation? 'Paying off the
| debt' means reducing the money supply, which means money
| later is worth than money now. That never ends well.
| uejfiweun wrote:
| Well my understanding is "paying off" the national debt
| amounts to reducing the amount of value that is owed. You
| could do this in two ways.
|
| Way 1 is what you described, which is directly paying off
| the debt. This is the path of austerity, high taxes,
| spending cuts, etc. Agreed that this never ends well.
|
| Way 2 is that you reduce the value of the debt by
| reducing the value of the currency it is held in. This
| isn't really an option for most countries, but the US is
| unique in that it controls the world reserve currency and
| can directly print the debt away. This would be a far
| politically easier option as inflation is a complex
| phenomenon that can't simply be blamed on harsh austerity
| policies.
|
| It does strike me that they are going to go with option
| 2. The political conditions for this aren't quite there
| yet, but you can see it forming with articles like the
| OP.
| mullingitover wrote:
| > but the US is unique in that it controls the world
| reserve currency and can directly print the debt away
|
| This doesn't seem like a real option, though. The United
| States doesn't simply print money, we issue debt to
| increase the money supply. If we just started literally
| printing new, unbacked money we'd immediately lose our
| reserve currency status and it would likely be the end of
| US global hegemony. Maybe the end of the US, period.
|
| Meanwhile, using our standard practice of issuing debt to
| pay for it wouldn't work here because that would be
| exactly counter to the thing we're trying to do: reduce
| our debt.
| argentinian wrote:
| > Most of the world's monetary systems have been run under
| Monetarist theories for 40-ish years.
|
| Argentina's monetary system hasn't.
| wbsss4412 wrote:
| It hasn't been run under MMT either, given that it's an
| entirely new academic theory.
| netcan wrote:
| Both 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 wrote:
| Agreed 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 wrote:
| >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 wrote:
| > 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.
| Proven wrote:
| bravura wrote:
| I 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]
| dominotw wrote:
| Is your friend's FIL ceo of my company? This is my employers
| current strategy to increase profits.
| nate_meurer wrote:
| Is this likely to result in employees leaving the company?
| dominotw wrote:
| i put in my 3 week notice last week. I don't understand
| ceo's logic here, just counting on inertia?
| nate_meurer wrote:
| Ha! Well there you go.
|
| I worked for a large company that was perpetually being
| (and being prepared to be) sold. Three acquisitions in
| three years, each preceded by a company-wide dictate to
| increase the company's cash value by lowering costs.
|
| My director told me their most powerful cost-cutting
| lever by far was to lower headcount. So that's what they
| did. Then after the sale they'd be desperate to hire and
| train new engineers. The churn killed productivity for
| years afterward, due to the technical nature of the work.
| After a year there I still wasn't up to speed.
|
| Sometimes the folks in charge are just shortsighted and
| incompetent.
| l30n4da5 wrote:
| > Doing some digging, I found incontrovertible proof that my
| foreman of ten years---ten years!!!---had been stealing from
| me.
|
| > 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.
|
| Just to play devil's advocate here, and I'm not saying that
| stealing is wrong by any means, but this just makes me feel
| like the reason he was stealing to begin with was that his
| income was too low to live off of.
| DoctorDabadedoo wrote:
| Difficult to say without having background for such
| situations. As a latin american myself I think it's not far
| fetched to say that in LA there is an ominous sensation that
| there is always someone taking advantage of you: your boss,
| your employer, your government, your politicians, the police,
| etc., so taking advantage yourself, although immoral, is "par
| for the course". Theory of broken windows and a way to carry
| on.
| danlugo92 wrote:
| My family ate beef/chicken leftovers (from butchers and such)
| when they moved to my city.
|
| They never stole.
|
| Stealing is never OK.
| monsieurbanana wrote:
| We should all be clamoring that stealing is never OK. But
| NOT with examples of poor people scraping for food.
|
| Stealing is a deep problem in our society, and poor people
| have nothing to do with that.
| frgtpsswrdlame wrote:
| Stealing is okay in all sorts of situations. Many things in
| life are more important than the rule of property.
| mgh2 wrote:
| Scale up this mentality, you have South America
| frgtpsswrdlame wrote:
| But I didn't say all stealing was okay, I said some
| stealing definitely is okay. I still think that's true.
| Some things in life are more important than property.
| kortilla wrote:
| Like what? Having a nice watch? Some Nike shoes?
| nybble41 wrote:
| > Some things in life are more important than property.
|
| If the property isn't important, why are you stealing it?
|
| Personally I don't really care whether you think it's
| moral or not to steal, as long as you acknowledge that a
| victim of theft has an equally moral right to "steal"
| _back_ what was taken, and to use a similar justification
| to steal a proportional (additional) amount from
| perpetrator. "Turnabout is fair play" and all that.
| nate_meurer wrote:
| Out of curiosity, what are some things that are _not_
| more important than property rights in your opinion?
| QuercusMax wrote:
| Intellectual property rights?
| bananabreakfast wrote:
| Please specify some of these important things that you
| clearly feel would be okay having stolen from you
| personally.
|
| Or did you mean it's okay to steal as long it's from
| _other_ people?
| Grimburger wrote:
| Stealing food to survive and not die of hunger while
| there's abundant waste all around is not "ok"?
|
| I'd imagine that strong allcaps viewpoint would change in
| certain circumstances.
| MomoXenosaga wrote:
| Yeah stealing food so that you can sell it on the black
| market lol.
|
| Most poor people are not thieves, they are decent
| hardworking people and don't want to be associated with
| crime thank you very much. Stop glamourising theft
| mgh2 wrote:
| Dumpster diving or getting "waste" to survive is not
| stealing, is being resourceful. It is like "hacking" vs.
| "cheating" the system, subtle difference.
|
| Nobody "owned" it since it was thrown away - unless you
| think racoons have rights...
| 8note wrote:
| It's still owned by the person while it's in their trash
| can, til the trash is collected.
|
| It's stealing; just not stealing the owner is likely to
| care about. Sometimes they do, and put locks in their
| dumpsters though
| tick_tock_tick wrote:
| No most countries consider trash abandoned property and
| free for anyone to grab.
| mgh2 wrote:
| Maybe they lock dumpsters because of liability
| https://www.avvo.com/legal-answers/if-i-give-a-homeless-
| pers...
| nate_meurer wrote:
| Around here, dumpsters are often locked to prevent
| dumping. The apartments across the street are plagued by
| dumpers who come at all hours and fill the dumpsters,
| mostly with construction debris it seems. Residents end
| up just piling shit on the ground around them.
| loceng wrote:
| You can't imagine any circumstance where it's okay?
| munk-a wrote:
| Lets say that the manager's incontrovertible proof proves
| to be incorrect and neither party has committed a moral
| fault. The system the manager has leveraged for enforcement
| is protected from any sort of rebuke (I assume you can't
| sue someone for failing to make CoL adjustments in
| Argentina) so freezing someone's salary essentially just
| comes down to a form of wage theft.
|
| Bear in mind that in America, I'm not certain about
| Argentina, wage theft is the most expensive crime (summed
| across all instances) worse than burglary, stealing office
| supplies, or even robbing your employer.
|
| I agree that stealing is generally not OK - but maybe lets
| start by addressing the most prevalent form of stealing -
| by the powerful against the powerless.
| maxilevi wrote:
| With that logic the one doing the wage theft is the
| goverment for causing the inflation in the first place
| and not allowing other currencies to be used.
| nate_meurer wrote:
| No, if CoL adjustments were not built into an employment
| agreement, then it's not wage theft in any sense.
| [deleted]
| exolymph wrote:
| Stealing is sometimes okay, but usually the kinds of people
| who try to justify it do so because they infantilize
| criminals, which is maddening.
| XIVMagnus wrote:
| This is a Hispanic country, so the traditional morals and
| ideologies of regular people are not the same. I come from a
| hispanic country and lived in Miami almost my whole life.
| (take a guess where I'm from lol).. Basically what I'm trying
| to convey is that hispanics are hustlers, almost by nature.
| Due to living in relatively poor countries and forced to
| figure out new ways to survive. Not saying that Argentina is
| so terrible that you need to be hustling this hard, but
| sometimes people want a bit more. For example, my friend
| which was born in Argentina recently went to visit and
| explained to me how prices for goods that come from the U.S.
| are extremely expensive but rent+food is extremely
| affordable. Just from that little bit of detail alone, I'm
| guessing anyone who is hustling for more money. Is doing it
| because they want to live a more 'luxurious' life style. Less
| humble maybe?
| chespinoza wrote:
| I think your comment is shamelessly racist and ignorant, to
| be honest, have you been to every hispanic country to treat
| hispanics like that? you'll see hustlers everywhere and in
| every culture and country, also Argentina is not the only
| Hispanic country so please try to make more educated
| comments, and if you feel the way you describe it as for
| Hispanic people, please talk about yourself and don't
| generalise.
| anthk wrote:
| I am from Spain. May I introduce you to the old
| "picaresca" from The Lazarillo of Tormes?
|
| We Hispanics gave the world great people, but we got lot
| of hustlery and bribery since the Roman Empire. Italy is
| like that too.
| RedBeetDeadpool wrote:
| This perspective of blaming the motive of the perpetrator
| instead of the perpetrator itself leads to blurred lines of
| judgement that makes establishing common rules impossible. If
| you have ever caught someone doing something evil, you would
| know just about any crime can be morally justified for a
| cause of some sort.
| kamarg wrote:
| There's plenty of well off people that steal because they
| want more. The fact someone is stealing doesn't lead to the
| conclusion that they don't have enough income to live off of.
| And if things in Argentina are really as bad as the business
| owner claims where you can't fire employees and you can't go
| to the police, theft is probably seen as an extremely low
| risk activity. For many people, increasing your income by a
| significant amount through actions that are highly unlikely
| to have a negative outcome wouldn't require much
| consideration.
| Izikiel43 wrote:
| > things in Argentina are really as bad as the business
| owner claims where you can't fire employees and you can't
| go to the police, theft is probably seen as an extremely
| low risk activity
|
| This we call Monday in Argentina
| edko wrote:
| That seems unlikely. That foreman most probably belongs to a
| union. Unions in Argentina are very powerful and they negotiate
| at the National level. Whatever increase they negotiate, your
| friend's father-in-law will have to pay.
| jsiaajdsdaa wrote:
| Time to sell the business and move to a better country.
| jfroma wrote:
| > So what did I do? I simply told him I would never give him a
| raise again.
|
| It is true that salary have been always losing purchasing power
| but don't forget also that employees have compulsory raises.
| This comes from two sources: 1. minimum wage raises 2. believe
| it or not, unions negotiate with the gov the raises, those are
| called here "paritarias".
|
| Everything is broken here, laws favor the employees always and
| that's why no one wants to start a business. When you talk with
| small businesses this is their number one fear.
|
| Half of the population is convinced that business and owners
| are the devil, and that they need to die in fire.
|
| And as for inflation, there is nothing to praise.
| FredPret wrote:
| I moved from a broken society to a first-world one. I'm
| supremely lucky in this.
|
| There are many interlinked systems that have to work for a
| society to progress. It's nearly impossible to line up all
| the required factors at the same time. Makes it rather
| frustrating when first-worlders shit on their own cultures.
| berns wrote:
| This is obviously false. First, employers can't just stop
| giving raises. Raises are governed by law and by collective
| agreements (although they are often below inflation). Second,
| no one just quits, especially a crook. Why? Because you can
| always force the employer to fire you. How? In general, nothing
| too obvious, you just stop working too hard. Until your
| employer offers you to leave and is forced to make an
| arrangement and pay you compensation.
|
| > Did I fire him? No. It is impossible to fire your employees,
| even for proven misconduct.
|
| > Did I sue him? No. You lose 95% of these types of cases.
| tester756 wrote:
| >This is obviously false. First, employers can't just stop
| giving raises. Raises are governed by law and by collective
| agreements (although they are often below inflation).
|
| You mean minimal wage?
| distances wrote:
| I don't know about Argentina specifically, but in many
| countries unions negotiate salary raise percentages for the
| whole sector. If the country follows universal collective
| bargaining, this may also be a binding minimum raise for
| non-unionized employees in the same sector, even in
| companies that aren't members of the trade union that
| bargained the deal.
| wslh wrote:
| No, for example in IT they are connected to the "commerce
| union" but it doesn't include an agreement to adjust by
| inflation. Obviously IT has strong market forces in favor of
| the employee but this is an example.
|
| Also many unions lost against inflation.
| maxilevi wrote:
| > No, for example in IT they are connected to the "commerce
| union" but it doesn't include an agreement to adjust by
| inflation.
|
| Most factory jobs do have those agreements though.
| [deleted]
| irfwashere wrote:
| It'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 wrote:
| Why 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.
| achow wrote:
| https://archive.fo/nRK7O
| mercy_dude wrote:
| Not 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.
| empalms wrote:
| It's been a while, but I vaguely remember an economics
| professor of mine stating that it's not inflation which is the
| core issue for people, firms, and economies, but an increased
| price volatility which positively correlates with high
| inflationary rates. The take-away was that when people can
| reasonably predict what inflation might be MoM, or QoQ,
| businesses and individuals are able to price transactions and
| required rates of return accordingly.
|
| So yeah, by that understanding, inflation can be normal in a
| healthy functioning economy. It is uncontrolled/unpredictable
| inflation that's problematic.*
|
| *Grain of salt, I'm not an economist and it's been some time
| since I've seriously studied the subject matter. Commenting to
| join the discussion
| collegeburner wrote:
| No, prices and wages are stickier and often don't move as
| fast as you think, even with digital communication. Menu and
| shoeleather costs remain serious harms of inflation even if
| you have some system where it is predictable. Anyway, it is
| not, look at how many macro people say for months "inflation
| is transitory" but no.
| remarkEon wrote:
| Wages are "sticky", and do not adjust as fast as prices for
| goods and services, and certainly don't change much MoM/QoQ
| outside maybe a few niche industries.
|
| That's the problem with high or relatively high inflation.
|
| The professor is correct, though, that consistent and
| predictable inflation is at least less bad than inconsistent
| and unpredictable inflation.
| bko wrote:
| There are huge inefficiencies with high inflation, even if
| predictable.
|
| For instance, if you know your dollar is worth considerably
| less every day, you're more likely to go spend it on things
| that you may not need as long as they retain value. Barter is
| inefficient as well. You'll be willing to wait on line as
| soon as you receive your paycheck. You'll fill up your tank
| more often. There's expenses with adjusting people's pay to
| account for inflation and keeping track of what a
| "reasonable" price should be or whether you're getting
| fleeced. I agree uncertainty is a huge problem, but even high
| anticipated inflation is a huge pain in the ass.
|
| That's not even considering the capital controls that are
| often put into place that prevent you from holding stable
| assets. So you're stuck holding this depreciating asset or
| you're bending over backwards to buy as much stuff as
| possible to retain you wealth.
| jayski wrote:
| My 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 wrote:
| The 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"?
| dang wrote:
| Please don't take HN threads into political or ideological
| flamewar. It makes discussion repetitive, tedious, and nasty.
| We're trying to avoid that here.
|
| https://news.ycombinator.com/newsguidelines.html
| chespinoza wrote:
| this is nothing, a lot of comments I've seen are already
| flamewar and even racist, nasty generalizations, suddenly
| everyone is an expert in hispanics countries as if they would
| be all the same or as if they would share the same currency
| or economical situation, a lot of ignorance.
| [deleted]
| totalZero wrote:
| WaPo 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-d...
| kobalsky wrote:
| > 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.
| noduerme wrote:
| Ah but I heard if you worked for the government during
| Cristina's presidency when the official price of pesos was
| artificially kept low, you could get paid 20% of your salary in
| USD at the government rate!
| [deleted]
| mgh2 wrote:
| "Criminal" is strong word here, there is no "rule of law" in
| Argentina, it is not one of the country's values.
|
| Crime is the norm, not the exception, starting with the
| government and trickling down to the people.
|
| It is the wrong culture: "If higher ups cheat to get ahead and
| get away with it, why shouldn't I?".
|
| Result: scaled up crime - corruption, tax evasion, robbing,
| slacking, etc.
| piva00 wrote:
| The same in Brazil, mi hermano...
|
| It's incredible how similar Latin American corruption is
| across countries, I feel that every time I met another Latin
| American here in Europe/Sweden there's this instantaneous
| bond on how fucked up our governments (and everyday
| corruption) are.
|
| I decided to leave and believe it's been the best thing I've
| ever done for my life, I miss the people I love but I don't
| miss life back there.
| everybodyknows wrote:
| Uruguay is said to be better -- true? Not true?
| user-one1 wrote:
| Yes, corruption in Uruguay is way lower and the country
| is more stable. But also it's a very small country, so
| not many opportunities around for most people.
| f00zz wrote:
| Yes. Low corruption, low taxes (zero corporate tax for
| income received from outside the country), and you can
| even open bank accounts in foreign currencies.
| iqanq wrote:
| >It's incredible how similar Latin American corruption is
| across countries, I feel that every time I met another
| Latin American here in Europe/Sweden there's this
| instantaneous bond on how fucked up our governments (and
| everyday corruption) are.
|
| Catholic vs. protestant culture.
| cpursley wrote:
| Yep, same reasons Orthodox Christian countries are way
| behind. It's an uncomfortable topic, but Protestant
| dominant cultures are generally more equitable and less
| corrupt.
| mgh2 wrote:
| Exactly: https://trendguardian.medium.com/in-data-we-
| trust-2978dacc8c...
|
| _"Culture is religion externalized."_ - Douglas Phillips
| brnt wrote:
| The main thing to understand about protestant culture is
| that it can afford a beter PR machine. Think 1984 vs
| Brave New World.
| wslh wrote:
| > Crime is the norm, not the exception, starting with the
| government and trickling down to the people.
|
| I agree with the starting with the government but I am lost
| when you blame the people (except for obvious crimes):
| literally there is not law in Argentina, tax evasion is not a
| crime because it is impossible to have a business without
| evading taxes (a friend told me) because the system is a trap
| where everyone could be attacked by the force of law based on
| ambiguous arguments.
|
| And in Argentina is easy to bribe judges and move the "law"
| to the direction you want, more if you are powerful.
| f00zz wrote:
| When I was in Argentina a few years ago there were money
| changers peddling dollars on every corner in downtown Buenos
| Aires, at a time this was illegal (Cristina was president).
| maxilevi wrote:
| Funnily enough they are called "arbolitos" (small trees).
| Because they are stationary and have green leaves (dollars)
| [deleted]
| technofiend wrote:
| I can still hear them chanting "Cambio, cambio, cambio" and
| it's been a few years. ATMs give hardly anything and charge
| a large fee per transaction as well, so it's no surprise
| people go to arbolitos.
| bradstewart wrote:
| You'd also get a better exchange rate from the arbolitos
| vs the ATMs.
|
| If I remember correctly, it was referred to as the "black
| rate". If you paid a vendor in USD directly, you got the
| "blue rate". Both of which were much better rates than
| the ATM.
| maxilevi wrote:
| In reality most people don't use "arbolitos" because
| their rate has a big spread.
|
| Instead people who need to exchange regularly go to
| "cuevas" (caves) which are just hidden and illegal
| currency exchanges that have much more volume.
| [deleted]
| xtracto wrote:
| This is crazy, no wonder a lot of people in there are turning
| to cryptocurrencies, particularly stablecoins.
| mgh2 wrote:
| Crime begets crime
| maxilevi wrote:
| Buying stablecoins is not illegal though.
| retrac wrote:
| It probably is in countries with capital controls, if you
| use it as a means to circumvent those capital controls.
| bally0241 wrote:
| as if capital controls are not a crime in of
| themselves...
| mgh2 wrote:
| "crime" here means that crypto incentivizes crime itself,
| not that it is "illegal" in the country: pump and dump,
| scams, cybercrime, tax evasion, etc.
| MrPatan wrote:
| Why, 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 wrote:
| Making 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 wrote:
| It 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-
| 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.
| fuoqi wrote:
| >The USA could probably use a decade of double digit
| inflation
|
| It's a very thin ice to walk on. High inflation threatens
| USD's global reserve currency status and it's in addition to
| using financial control for political pressure of opponents
| (e.g. threats to ban countries from SWIFT). When (not if)
| this status will be lost you will get serious additional
| inflationary pressure from foreign governments and private
| investors dumping USD-denominated assets. In the best case
| scenario it will be a prolonged multi-decade process as with
| GBP, but in the worst case scenario unwinding can be quite
| fast, especially considering China's reserves (i.e. it can
| start selling USD-denominated assets as a form of financial
| attack).
| lamontcg wrote:
| I think the depression we hit due to austerity could also
| severely threaten the global reserve currency status.
|
| Although that's another good argument as to why
| policymakers are going to panic over inflation.
| otikik wrote:
| I think you might enjoy this video from Tom Nicholas, "The Myth
| of a Free Press: Media Bias Explained"
|
| https://www.youtube.com/watch?v=v-8t0EfLzQo
| 101008 wrote:
| Argentinian 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)
| caeril wrote:
| > In fact, anyone who would do that wouldn't be smart at all,
| would be pretty stupid
|
| Can you expound on why this would be "stupid"?
|
| Holding dollars to exchange for later incurs a 7% (current
| dollar purchasing power loss rate) loss on top of exchange
| fees. The can of tuna retains its food value exactly as-is for
| years, with no currency exchange costs. Seems to me that the
| tuna beats holding dollars handily.
| lottin wrote:
| Currencies don't have inflation rates. Countries do.
| legutierr wrote:
| Do two countries that share the same currency have
| different inflation rates? Are El Salvador and Ecuador
| experiencing different inflation rates than the United
| States?
| noselasd wrote:
| Yes they have different inflation rates.
| lottin wrote:
| Inflation rates even vary among different regions within
| the same country.
| yazantapuz wrote:
| Argentinian here, 37 years old, middle-class. I known a lot of
| people who bought all the non-perishable food they can like
| tuna, and others good because the rampant inflation. Myself
| included.
| anikuni wrote:
| Is the Argentinian inflation being "fought" by any government
| program? I've studied a lot of Brazil's hyper-inflationary
| period, and boy was it difficult to overcome it. Basically,
| once the industrial growth went below the inflation-rate
| everything went (slowly) belly up. It happened at two distinct
| times: one at Kubitschek's presidency, and the other during the
| military junta. Trouble is that our economy became "indexed"
| everywhere, so people would mark-up their prices at
| inflation+x%, then the _actual_ inflation would be the
| forecast+x%, which is an exponential process. After two decades
| of failed attempts, the solution was found via a financial
| reform, done all throughout the 90s, and then a modern copy of
| Germany's anti-hyper-inflation Rentenmark program, which
| created the Real. The solution (or so the mainstream history
| says) was to create a price "anchor" for everyone, which was
| pegged to the dollar (one of the main culprits were the large
| devaluations vis-a-vis the USD, a vicious cycle of
| inflate->devalue->inflate->...), and at the same time
| attracting foreign investment via a large real interest rate
| (far above the remaining inflation). What we are going through
| now in Brazil is a slow reversal of that, inflation is picking
| up again, and the central bank's actions are seemingly slowing
| down the economy and not being able to control inflation (so
| long, Phillips Curve).
| tigershark wrote:
| I'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 wrote:
| Everything 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 wrote:
| Variable 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.
| JumpCrisscross wrote:
| > _Doesn't really make sense that it's even offered._
|
| Nobody serious is betting inflation will remain at 7%.
| That was an annualised rate from a single reading.
| dragonwriter wrote:
| > 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%.
|
| A variable 2.75% with inflation at an unusually high 7%
| would be weirder than a fixed; a variable rate loan has a
| rate based on current conditions, a fixed rate loan has
| rated based on expectations over the lifetime of the loan
| (both in terms of value of money and risk of loss.)
|
| Now, it may seem weird that you can get a 30-year fixed
| loan _at all_ , but once you accept that, having the rate
| below current inflation when inflation has been at a
| unusually high level for a shirt period of time isn't
| particularly odd.
| tute666 wrote:
| Argentinian here.
|
| Personal credit lines are almost nonexistent or have rates
| which supercede inflation, (inflation+10% is not out of the
| ordinary). Credit card yearly interest rate for 2 years ago
| was >= 70%
|
| There are preeexisting credit lines for property, but they
| are government subsidied mortgages with very a specific
| target audience. ie: salaried mid income families looking to
| buy their first property.
| Izikiel43 wrote:
| > how would it work for mortgages
|
| That's Argentina's secret, there are no mortgages, properties
| are bought in cash.
| NikolaNovak wrote:
| Before civil war in my old country a quarter a century ago,
| people were doing the same thing: buy something big and
| expensive in installments. First couple would suck. Last few
| were negligible.
|
| Another story that seems surreal to me now (having lived in
| Canada 25 years): My grandma and virtually everyone her age was
| habitually 3 order of magnitude off when it came to money.
| She'd give me a 2 million dinar note and say "here's 2
| thousand".
|
| Every now and then there was a reset - basically you'd print
| new money and lop of some digits.
|
| I was <12 years old through this so only have vague memories
| but man, what a crazy way to live -- and yet it was fairly...
| "normal". Is what it is. Human brain adjusts to anything
| (including to a certain degree the civil war that followed).
| selimthegrim wrote:
| When the civil war started (presuming this is ex-YU) did rate
| of inflation really go up that much compared to before? My
| understanding is it was bad in the late 80s, very bad 89,
| stabilized in 90 thanks to Markovic, and then resumed going
| up once the war kicked off.
| sasawpg wrote:
| Inflation stabilized very briefly, but the situation was
| unsustainable and it quickly resumed. I was pretty young at
| the time, but I remember that many people went for
| weeks/months without getting paid. Some government
| positions fared better than others, but overall the economy
| struggled.
|
| Then the war kicked off in 1991 and everything fell apart.
| selimthegrim wrote:
| Someone commented elsewhere on the thread with a video
| clip of Markovic talking to the Federal Assembly.
| kingofpandora wrote:
| Turkey did a 1,000,000:1 conversion a while back. Before that
| you could almost say that the local currency was millions.
|
| - "How much is this book?"
|
| - "9 million"
|
| - "Here's 10 million"
|
| - "And one million in change, sir"
|
| OK, so that only worked up to a certain value. No one would
| say their rent was "1,000 million". In that case, the
| currency was billions!
| travisjungroth wrote:
| Mexico did a 1000-1 reverse split in the 90s. You still see
| the old bills sometimes. You just treat a 20,000 pesos bill
| as a 20.
| edko wrote:
| Since Argentina started having its own currency, it had to
| reset it 5 times, dropping a total of 13 zeroes. I have
| memories of two of those resets and, similar to what you say
| about your grandma, I remember older people translating to
| the older currency for a while, until they fully adapted to
| the new one.
| sasawpg wrote:
| Unfortunately there were plenty individuals/businesses that
| exploited inflation (among other things) during the war (and
| leading up to it) for massive gain. They'd borrow heavily,
| buy up as much staple as possible then quickly sell at a
| discount. By the time original debt was paid back, high
| inflation ate away at the original value of debt. So despite
| originally selling at a loss, it was still a profitable
| business.
|
| That of course is assuming they even bothered to pay anything
| back. Often enough it was a game of survival
| (business/personal). Nothing to pay back if the person is
| dead or business gone.
| aeyes wrote:
| Let's hope for you guys that some government genius doesn't
| come up with the system Chile has: Inflation adjusted loan and
| contract payments, obviously excluding salaries.
|
| https://en.wikipedia.org/wiki/Unidad_de_Fomento
| 627467 wrote:
| There has been such thing[0] and it unlocked affordable
| mortgages in a country where in the past years (decades?) it
| was basically impossible to get (and thus, climb the housing
| ladder).
|
| [0] https://www.marval.com/publicacion/creditos-en-uva-como-
| alte...
| [deleted]
| [deleted]
| kerneloftruth wrote:
| Odd 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.
| uejfiweun wrote:
| The Washington Post is no longer concerned with giving readers
| interesting and useful information. Instead, the entire
| newspaper is devoted to fearmongering, spin, and propaganda. A
| quick Google search for "Argentina Inflation Cause" yields the
| following result: "the price increase in Argentina was fueled
| by rapid expansion of the money supply". The WaPo very
| explicitly wants to rapidly expand the money supply in order to
| redistribute wealth and achieve "equity" or whatever the
| buzzword is today. I'd guess that this is likely the reason why
| they don't touch on this in the article - they want to distract
| you from what's currently happening, and instead are
| conditioning you to accept the outcome.
| gruez wrote:
| >The WaPo very explicitly wants to rapidly expand the money
| supply in order to redistribute wealth and achieve "equity"
| or whatever the buzzword is today.
|
| Considering that they're owned by jeff bezos, why would bezos
| want this?
| caeril wrote:
| > why would bezos want this?
|
| Easy answer: The Cantillon Effect [ https://en.wikipedia.or
| g/wiki/Richard_Cantillon#Monetary_the... ]
|
| Whenever Central Banks print money, they don't load up
| helicopters and distribute the funds evenly among the
| populace. They work through close relationships with
| Primary Dealers. The money enters the system through asset
| purchases. But when banks' assets are replaced on their
| books with cash, they have to _do_ something with that
| cash. What do they usually do? Buy _other_ assets. Like
| corporate debt. Like stocks. Money is fungible, and unless
| there are specific regulations preventing it, the first
| place freshly printed money goes is to the banks. The
| second place it goes is whatever those banks buy. Think
| index funds. Think AMZN.
|
| Even in open-market operations, the money still finds its
| way to AMZN. Example: The Fed pins the 2y-7y maturities
| down by buying in OMO. SOMEONE is selling. Usually, it's
| some sort of institutional fund with variable capital
| controls. With the TSY prices too high for their desk, they
| look for somewhere else to park their cash, like AMZN, or
| the SPY.
|
| The first at the trough always wins. The second at the
| trough wins really big as well. Hacker News readers with
| their FAANG incomes, RSUs, and 401ks, are pretty big
| beneficiaries, too. The guy that raises your pastured free-
| range eggs, though? By the time he's buying coop materials
| and fencing, most of the purchasing power has already been
| sucked dry from Bezos and you.
| tomp wrote:
| Because he has real wealth (Amazon stock) that isn't
| affected by inflation (stocks rise as money loses value).
| thebean11 wrote:
| So who is wealth being redistributed from?
| otikik wrote:
| It's not the middleclass.
|
| It's _everyone that isn't rich enough_.
| MrPatan wrote:
| You
| thebean11 wrote:
| Unless I happen to have a mortgage, or other dollar
| denominated debt..
| jaywalk wrote:
| The middle class.
| option_greek wrote:
| Its not a distribution. Its a dilution. The rich gets
| richer as they have most of their savings and capital in
| form that is not taxable and also set to rise with
| markets and real estate. The poor and middle class have
| much smaller percentage of income working for them and
| not usually have access to high growth opportunities.
| uejfiweun wrote:
| It's always the middle class that gets screwed, dude.
| Happened with the income tax, happening now with
| inflation, and will happen again once well-intentioned
| but naive people pass a wealth tax.
| itsumoiru wrote:
| Whoever has the most USD cash. (In proportion to their
| total wealth) most certainly not the "rich".
| tomp wrote:
| People with cash savings.
|
| Employees with salary.
|
| Owners of fixed income securities (government & corporate
| bonds, mortgages).
|
| Even owners of capital that sell stock (inflation causes
| imaginary "capital gains" and the corresponding taxes).
| beiller wrote:
| Seems like it could be the bread and butter for Amazon's
| new fintech startup - BNPL loans which is perfect for
| hyperinflation based economies! Coming soon to a country
| near you!
| [deleted]
| kgin wrote:
| That's a lot of big claims about a very specific agenda. What
| are you basing this on?
| everybodyknows wrote:
| > fearmongering, spin, and propaganda
|
| You're missing the biggest one, the first commandment of 21st
| century journalism:
|
| Thou shalt not criticize the culture of another people,
| howsomever much all evidence of a trouble's causes may point
| in that direction.
| harpiaharpyja wrote:
| It's pretty bizarre.
| steelstraw wrote:
| That is curious. What are the causes?
| pmcollins wrote:
| gov't insiders printing money
| hogrider wrote:
| We print money like there's no tomorrow lol.
| betwixthewires wrote:
| Examining your statement literally is also very
| illuminating. They literally treat the money like tomorrow
| does not exist.
| missedthecue wrote:
| They are printing so much money that they had to outsource to
| foreign printing presses -- their domestic facilities are
| already running 24/7 at full capacity.
|
| http://mriguide.com/argentina-plans-to-outsource-currency-
| pr...
| oneoff786 wrote:
| Why wouldn't you just print larger denominations
| notch656a wrote:
| Because that would be admitting there is a problem. Do
| you want to be the politician that authorizes change in
| denomination while simultaneously explaining why you
| haven't addressed why that is required. I'm guessing the
| politicians don't want to touch inflation with a 10 foot
| pole, because solving inflation is painful in the
| beginning so it tends to be very bad for anyone elected
| on any timespan less than a decade.
|
| Milton Friedman called inflation like alcoholism, great
| at the start but quitting is long and painful and most of
| the rewards of stopping are delayed with only pain up
| front.
| edko wrote:
| I would add to your excellent answer an anecdote about
| the tricks of a previous government (with mostly the same
| people as the current one) to hide inflation: the
| Secretary of Interior Commerce (a complete thug) forced
| McDonalds to freeze the price of the BigMac, so that
| Argentina would look good on the BigMac Index. The prices
| of all other burgers were more or less free to increase.
| edko wrote:
| Fiscal deficit. The public sector grows and grows by hiring
| friends, family, and party members. In addition to that,
| every government contract is overpriced for kickbacks, and
| the government meddles in everything seeking opportunities
| for corrupt personal profit. All of this spending and
| corruption is financed by very high taxes that oppress the
| private sector, and by debt. When you cannot increase taxes
| anymore (in some cases, Argentina taxes are over 100%) and
| when nobody lends you money anymore, the only solution is to
| print money. But everybody knows that money is not worth
| anything, thus creating very high inflation.
| ajot wrote:
| IANAE, 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 wrote:
| > 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.
| sleepingadmin wrote:
| I don't know the answer, I never invest in south america so I
| haven't really checked. So let's look together.
|
| Inflation seems to have been a problem since around 2002.
| From 2006 to 2015 it was kind of stable but bad. The currency
| then dropped out.
|
| GDP across that entire period seems collapsed. They
| constantly are dipping into recessions. Their manufacturing
| industry seems to be in decline since ~2012. Agriculture is
| suspiciously flat. Mining is in decline for that entire
| period. Seems to be whole economy collapse to me.
|
| Labour participation rate is steady around 45% suggesting not
| much tinkering with employment numbers. Which looks also
| steady about 42%. Unemployment is pretty steady from about
| 2006 to present around 6-8%. So their productivity is poor.
| They'll very likely always be a second world country. What a
| sad outlook.
|
| Central bank balance sheets are all the rave, they only go
| back to 2012. It looks as bad as any other country as of
| late.
|
| Money supply is sky high. They probably have ~300-600%
| inflation locked in here. Holy.
|
| Interest rates are in the 40-80% ranges? But real yields are
| negative for sure. You cant save a dime in this environment.
|
| Balance of trade is good since 2019 or so, but that probably
| lines up well with collapse of their economy. Probably means
| poverty on the rise bigtime? Otherwise has been bad for years
| and has been in decline in scope.
|
| Tourism died long before covid. Roughly in 2016 something
| happened to kill their tourism industry.
|
| Government credit rating is trash. Yet government debt is
| rising.
|
| Argentina's military spending had been bad since the 1990s.
|
| No surprise to see their economic competitiveness is nearly
| lowest ranked in the world.
|
| household debt to gdp? Argentina has no household debt? You
| cant get a mortgage at 40%+ interest rates. Therefore you
| cant have debt. Their people have no debt and they are sitll
| in collapse?
|
| Corporate tax rate is recently down from an outrageous 35% to
| a slightly less outrageous 25%. Personal tax is 35%, Sales
| tax at 21%. So a total tax burden of easily well over 80%.
| Argentinian people work for the government at least 80% of
| the year. Does the government provide 80% back in services
| and goods? I highly doubt that very much.
|
| Since the problem has been ongoing so long. Politically it
| can't be solved. I must admit I know nothing about their
| politicians but if I were to shoot from the hip, their
| current leadership is not ideologically aligned with fixing
| it.
|
| So easy prediction without crystal ball? They have at least 3
| more years of absolute collapse. We're talking probably 20%
| of people will enter poverty before this ends. It's going to
| be very bad for the argentinian folks.
| valcron1000 wrote:
| As an argentine this is a spot on summary. We are in a
| shitty situation and things are just gonna wet worse
| notch656a wrote:
| Given that large businesses are taxed and impeded to hell
| and employees are taxed to the bone, is there any leg up
| for those running a single man sole proprietorship
| running business informally? As a total outsider I feel
| like there's a special niche area left for 1 man run-his-
| own-business opportunities to make a living here by
| exploiting the structural problems that weaken the
| marketability of larger business.
| Izikiel43 wrote:
| > From 2006 to 2015 it was kind of stable but bad.
|
| Just an FYI, the government at that time (which is the
| current government) fudged the official inflation numbers
| to pay less interest and to say there was no inflation, so
| if your inflation numbers are from official sources for
| that period, they are not true, inflation increased every
| year since 2002.
| mgh2 wrote:
| They 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
| victorcharlie wrote:
| It's a combination of factors but, basically: Populism and
| its mania with expending more money than what it generates in
| stupid ways.
|
| An obsession from a big part of the society to sustain
| obsolete and uncompetitive industries with state money just
| to avoid "losing jobs".
|
| Draconian taxation for productive and competitive industries
| (Ag mostly, IT affected too). Slow, confusing and corrupt
| bureaucracy requiered for starting a new bussines.
|
| A hecktonne of social assistance that barely keeps the
| persons from starving but don't provide real social
| ascension.
|
| Obscene subsidies to electricity and natural gas (think about
| rich people warming their pools during winter).
|
| Sorry that I don't provide raw numbers, I'm in my lunch break
| and really don't want to sour it.
| culopatin wrote:
| I 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
| [deleted]
| nate_meurer wrote:
| What would you want Argentinian Nelson Mandela do to try to
| turn things around?
| culopatin wrote:
| People 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.
| cjbgkagh wrote:
| South Africa is on my watch list for a failing state. Not
| sure if Argentinians situation could be improved by
| emulating it. This is what happens 'when money dies'. I
| worry that there is now a false nostalgia,a simulacrum, for
| communism without an understanding of the damage it does.
| In Eastern Europe I unexpectedly bore witness to the scars
| left on the human psyche from those who lived it. Even long
| removed from it they are still very damaged by it. There is
| no analog in the west so it is hard to explain, it's like
| chunks of their soul were removed. Their specter has
| haunted me ever since. What's happening in Argentina was
| entirely predictable and unfortunate.
| nate_meurer wrote:
| Is there any hope? That is, are there any people currently
| in Argentinian politics who might be credible agents of
| change?
| Izikiel43 wrote:
| Not really. There are new libertarian congressmen making
| waves (Javier Milei and Jose Luis Espert), by demanding
| taxes be lowered and public spending reduced as people
| can't afford to live anymore (Argentina spends waaaay
| more than it makes, hence inflation and debt), but they
| are still small parties in the national scale.
|
| The big ones (Peronismo, which is a national socialist
| fascist leftist communist party (yes, it's weird, but
| it's that), and Cambiemos, which is Peronismo light
| mostly) are more or less in accordance to keep the status
| quo as politicians and public employees like how life is.
| mistermann wrote:
| This describe much of the western world at this snapshot in
| time, if to differing degrees.
|
| In Canada for example, it seems many people are treating
| real estate like the lady in the story treats cans of tuna:
| buy as much as you can afford. And, our government seems
| similarly disinterested in the problem.
|
| It's very tempting to conclude that this is all by design
| (this sentiment is picking up a lot of steam in Canada, and
| I wouldn't be surprised if it is partially true), but I
| think what's more realistic is that this is simply
| emergence in action: a system such as the one we live in
| (Earth, humanity, etc) combined with particular forms of
| governance (representative democracy) eventually produces
| the phenomenon we are now seeing more or less globally:
| concentration of wealth and power, at a constantly
| increasing rate.
|
| I think it's possible for leadership to change this, but I
| do not personally believe that representative democracy is
| necessarily capable of discovering such a leader and
| allowing them to advance through the ranks. Perhaps in
| anomalous situations someone could slip through, but my
| intuition is that anyone with righteous populist goals
| (maximizing well being for all people) would make it
| through the many sophisticated filters that exist, one of
| the main ones being the media.
| Atlas667 wrote:
| You seem to have a pretty idealist notion of societal
| development. Did you ever think that maybe your business did
| not inspire confidence?
|
| What you see in your country is true of any nation in distress
| and has nothing to do with the individuals moral or mental
| capacity. It has more to do with the economic policies and
| conditions of the nation. Industry lackey politicians from
| every side and the IMF have more to do with this than the
| people's lack of entrepreneurial spirit, I'm surprised the
| article didn't even mention them.
|
| "Men make their own history, but they do not make it as they
| please; they do not make it under self-selected circumstances,
| but under circumstances existing already, given and transmitted
| from the past."
|
| "...the final causes of all social changes and political
| revolutions are to be sought, not in men's brains, not in men's
| better insights into eternal truth and justice, but in changes
| in the modes of production and exchange."
| CountSessine wrote:
| It sounds like what Argentina needs is Paul Volcker, not Nelson
| Mandela. What would Nelson Mandela do?
| ABraidotti wrote:
| I 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 alla" 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 wrote:
| I'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!
| dakial1 wrote:
| Brazil 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-...
|
| 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.
| matheusmoreira wrote:
| The 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.
| bosie wrote:
| How does a cryptocurrency prevent a president from stealing
| money from the population? Public records of all currency
| transactions?
| matheusmoreira wrote:
| They depend on the banks to enforce policy. If you get rid
| of the banks, there's very little they can do. That's what
| cryptocurrency was supposed to be all about. In practice we
| ended up with pseudobanks called exchanges running this
| space.
|
| There were people who saw it coming and withdrew their
| funds before the president ordered accounts frozen.
| Everyone thought they were insane because interest rates
| were sky high. They became richer overnight.
| option_greek wrote:
| > 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.
| The_rationalist wrote:
| msoad wrote:
| I 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.
| anovikov wrote:
| In 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).
| marcodiego wrote:
| We had what we called "hiper-inflacao" (hyper-inflation) in
| Brazil during the late 80's and early 90's. My father
| calculated the prices in gasoline liters.
| throwaway22032 wrote:
| > Although inflation is long gone
|
| Well, you say this, but then there was that time in 2014 when
| the ruble went from about 40 RUB/USD to 60-70RUB/USD...
| anovikov wrote:
| That's true, but there wasn't any super major inflation
| spike. Everything just became cheaper in dollars.
| foobarian wrote:
| In 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
| Markovic 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. Markovic waved one of those bills in front of the
| parliament, started laughing with joy, and there was applause.
| [1]
|
| [1] 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).
| keiferski wrote:
| Bosnia still has the mark. It's an interesting link to the
| past.
|
| _Initially the mark was pegged to the German mark at par.
| Since the replacement of the German mark by the euro in 2002,
| the Bosnian convertible mark uses the same fixed exchange
| rate to euro that the German mark had (that is, 1 EUR =
| 1.95583 BAM)._
|
| https://en.m.wikipedia.org/wiki/Bosnia_and_Herzegovina_conve.
| ..
| foobarian wrote:
| That is amazing. Straight out of an episode of Top Lista
| Nadrealista.
| sasawpg wrote:
| Don't think I ever expected to see that reference here!!
| selimthegrim wrote:
| Well, that clears things up.
| spuz wrote:
| This is known as currency substitution or dollarization and can
| be done officially or unofficially. But what happens when the
| world's currency also inflates?
|
| https://en.m.wikipedia.org/wiki/Currency_substitution
| adventured wrote:
| > But what happens when the world's currency also inflates?
|
| It's a relative premise of course. The USD Index [1][2]
| (currently over 97 and rising) indicates the USD isn't being
| debased at a faster rate than the other major currencies. The
| EU, China and Japan have debt & spending problems every bit
| as bad as the US (with the EU and Japan having far worse
| growth problems), choking at their economic and political
| systems persistently and requiring forever interest rate
| games. So if, this decade, Argentina's currency debases at
| 20% per year and the USD debases at 5% per year, and there
| are no superior alternatives in the currency realm (eg the
| other major currencies are doing something similar), you'll
| largely mentally disregard the USD inflation, as all the
| major boats are getting the same tide, and your USD choice is
| still the right one vs the local currency. And if you can,
| you may properly choose to diversify whenever possible into
| inflation hedging assets with surplus cash, trying to balance
| holding enough transactional USD vs inflation hedges to limit
| some of the USD damage.
|
| [1] https://finviz.com/futures_charts.ashx?p=d1&t=DX
|
| [2] https://www.investopedia.com/terms/u/usdx.asp
| gabythenerd wrote:
| Venezuela 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 wrote:
| Venezuala ranks 177th out of 180 in the latest Corruption
| Perceptions Index (CPI) :
| https://www.transparency.org/en/cpi/2021
| totalZero wrote:
| 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.
| aunty_helen wrote:
| >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 wrote:
| 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 wrote:
| >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 wrote:
| 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-Bolivares 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.
| aunty_helen wrote:
| >The car market is global. Colombia imports about half of
| its cars. A rise in import prices is going to increase
| domestic domains and prices as well. And the cause of the
| shortage is the global computer chip shortage, and
| Colombia imports those.
|
| This is becoming very arm chair critic. Cars that are
| produced locally are shitty Renaults, Nissans Chevolets
| etc. These cars as I mentioned, can't be sold into
| markets with normal safety standards, so aren't competing
| for export sales.
|
| Colombia imports things like Mercedes / BMWs and other
| brands that a different class of people buy. It's very
| common here to have a market split between cheap local
| and expensive, highly taxed imports. Cheese would be
| another thing example of this. Perhaps that wasn't well
| represented on your chart.
|
| As for the other points, inflation over 20 years. If you
| have 12 'good' years and then the most recent 8 have been
| spiraling out of control does that make the 20 year
| figure a good representation? You can smooth the recent
| high inflation out over 20 years just like icing on the
| cake?
|
| If you want, I'd like to take a long bet with you. You
| win, I'll pay you in COP, I win you pay me in USD.
| pvarangot wrote:
| > 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 wrote:
| 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 wrote:
| 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 wrote:
| 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.
| MomoXenosaga wrote:
| 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 wrote:
| Just a scorching hate for our politicians.
| CountSessine wrote:
| ...and yet you voted for those politicians?
| tute666 wrote:
| 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 wrote:
| So clearly some people _didn 't_ hate them? In fact,
| maybe the majority?
| ajot wrote:
| As 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 wrote:
| Cash = USD.
| alexpotato wrote:
| This 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-...
| [deleted]
| gtirloni wrote:
| I 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
| diego wrote:
| Study 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.
| Izikiel43 wrote:
| I mean, they tried everything, except the measures that
| actually work, i.e., reducing public spending, raising
| interest, stop printing money for a few years.
|
| Every country that did that got inflation under control, the
| problem is Argentina doesn't want to spend less, so they
| print like there is no tomorrow.
| fuoqi wrote:
| The peg was one of the main reasons why Argentina got into
| this mess in the first place.
| diego wrote:
| That 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.
| maxilevi wrote:
| Except reducing the fiscal deficit, seems like no goverment
| wants to try spending less than what they have.
| marcosdumay wrote:
| They 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 wrote:
| Exactly. 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.
| [deleted]
| tute666 wrote:
| This resolves the psychological inertia component of inflation.
| Its not a solution on its own. It also requires political
| compromise, reduction of govt expenditure and ,at the very
| minimum, curtailing expansion of the monetary base.
| cmusfan wrote:
| Is this better or worse than Bitcoin? Not an an economist, or
| Bitcoin invester, just curious.
| RedBeetDeadpool wrote:
| Inflation 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.
| thesausageking wrote:
| I'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%.
| pera wrote:
| It's actually much more than 15-30% if you go with the
| official/legal way: I would say you likely lose ~70% at the
| moment. Most people doing contract jobs in Argentina have a
| bank account in Uruguay, the US or Europe, and use
| cryptocurrencies or travel to bring cash.
| anm89 wrote:
| That's pretty astounding. Would you be willing to breakdown
| how 70% gets lost on a transfer?
| edko wrote:
| You will be compelled to exchange your dollars at the
| "official" exchange rate (which is about 1/2 of the real
| market value), so you lose ~50% there. On top of that, you
| have to pay taxes.
| emi420 wrote:
| When a company sends USD to a bank account in Argentina,
| the bank must to convert that amount to "pesos argentinos"
| (ARS), using the "official rate". You can't get USD
| transferred to your account from other people than yourself
| (or a company owned by you).
|
| Right now the "official rate" is 110,5 ARS for each USD,
| but if you sell your USD (using crypto or in the "dark
| market") and get ARS, you'll get 222,5 ARS for each USD.
|
| And that's before the taxes.
| yazantapuz wrote:
| And you can't bought more than 200 USD per month at the
| official rate, so the need to bought the USD through an
| exchange or in a "cueva".
| gabythenerd wrote:
| I 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 wrote:
| > 15-30%
|
| What a weird way to write 60-70% (you are forgetting taxes)
| wbsss4412 wrote:
| Do taxes only exist in Argentina? Are you advocating tax
| evasion here?
| Izikiel43 wrote:
| In 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 -\\_(tsu)_/- .
|
| 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 wrote:
| Tax 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.
| berns wrote:
| But don't forget that no matter the amount of taxes
| collected, politicians will find a way to spend more, so
| there will always be a deficit and more money will always
| have to be printed and whoever wants to reduce the
| deficit will be accused of "tightening" (ajustar) the
| Argentine people.
|
| Argentina leads a ranking of world tax pressure:
|
| https://www.ambito.com/economia/impuestos/la-argentina-
| lider...
| maxilevi wrote:
| Not really. Tax collection from the Argentine goverment
| grows higher than the inflation rate year by year.
|
| The problem is over spending.
| Izikiel43 wrote:
| No, spending more than you earn like there is no tomorrow
| for 20 years has caused inflation
| 627467 wrote:
| Is tax evasion worst than trading on unofficial channels? I
| guess it depends on the jurisdiction doesn't it?
| sbierwagen wrote:
| It's a failed state. The taxes don't go to schoolteachers
| or whatever, they go into the offshore account of the local
| boss.
| mgh2 wrote:
| Video: https://m.youtube.com/watch?v=sWr-Ht1S_4U
| cardosof wrote:
| I 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 wrote:
| The 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.
| wolfgang000 wrote:
| I'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
| tute666 wrote:
| Whilst similar, you need to take into account that there is a
| diversity in argentine economic activity that never existed in
| venezuela. If there is some redeeming quality that can be
| gleaned from argentine history is that it rebounds rather
| quickly.
| asabjorn wrote:
| And it's the same kind of ideology that ruins both countries in
| spite of both being extremely rich in natural resources.
|
| My impression is that the various offshoots of Marxism, e.g.
| Chavismo in Venezuela or wokism in the US, is a means for a
| coalition of mostly upper middle class people to replace the
| current ruling coalition with something that is effectively
| feudalism with themselves on top. These people seem to feel
| like they have the right to occupy the most powerful roles,
| either due to the excellence of their ancestors or envy of
| those that are perceived as their superiors, but doesn't
| because they are mostly mediocre and often have wealth as well
| as position through inheritance. That's why prosperity
| typically fall after their takeover, as these are primarily
| motivated position and not by an obsession about what the job
| entails.
|
| Has this been your experience with the Venezuelan ruling class?
| mrjangles wrote:
| If you read history, you quickly realize that this is what
| socialism always was, even back in the mid 1800's: A counter
| revolution against the capitalist emancipation of the world.
| gabythenerd wrote:
| It'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 wrote:
| Well 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 wrote:
| It'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.
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