Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Argentina’s black-market USD rate climbs 24% in two weeks

argentinareports.com

Post reply on HN
Print view View original

61–70 of 196 posts

Re: Argentina’s black-market USD rate climbs 24% in two weeks

#61

Post by swores »

paraph1n wrote: post #20
gringoDan wrote: post #16

Reminds me of the old line that there are 4 types of economies: 1. Developed 2. Underdeveloped 3. Japan 4. Argentina

What's unique about Japan's economy?

Another example to my sibling comment's one of debt is the stock market. While most of the world that has advanced technology and industry etc. has seen huge gains over the past decades, Japan is still not quite back at the highs they saw in the late 80s - for various demographic and economic reasons that I'm not remotely knowledgable enough to explain.

But see for example the charts (click on "max" to see as far back as possible) on Yahoo Finance for famous indexes of top X companies in each country:

Japan (Nikkei 225): Up 118% today since 1985, but down 29% from 1989's peak https://finance.yahoo.com/quote/%5EN225/

USA (S&P500): Up ~2000% since 1985, technically down ~12% since December but anyone who invested 15+ months ago is still up it's not like a crazy crash https://finance.yahoo.com/quote/%5EGSPC/

UK (FTSE250): Up ~1000% since 1986 https://uk.finance.yahoo.com/quote/%5EFTMC/

Obviously these are limited to the few hundred biggest companies but offer a good snapshot, and it's a similar story if you look at other European countries etc., and a significant problem for Japan (as well as being a metric/indicator caused by significant problems) that their growth has been so far behind.

Re: Argentina’s black-market USD rate climbs 24% in two weeks

#62

Post by drexlspivey »

randyrand wrote: post #46

How does the "official" exchange rate work? The gov says the peso is worth way more than it really is, so can't you exploit that to get really cheap dollars? Do they only allow "one way" official exchanges, from dollars to pesos?

Yes the official rate is one-way. The other way is locked down via capital controls, hence the black market.

Re: Argentina’s black-market USD rate climbs 24% in two weeks

#63

Post by yuan43 »

> Although Argentines are used to high inflation, during the first semester of 2022, inflation hit over 36,2%, and in the last 12 months it registered a 64% increase.

Wikipedia notes:

> In 1956, Phillip Cagan wrote The Monetary Dynamics of Hyperinflation, the book often regarded as the first serious study of hyperinflation and its effects ... . In his book, Cagan defined a hyperinflationary episode as starting in the month that the monthly inflation rate exceeds 50%, and as ending when the monthly inflation rate drops below 50% and stays that way for at least a year. Economists usually follow Cagan's description that hyperinflation occurs when the monthly inflation rate exceeds 50% (this is equivalent to a yearly rate of 12874.63%).

https://en.wikipedia.org/wiki/Hyperinflation

So the current rate is far away from hyperinflation. On the other hand, it appears to be accelerating. And then there's this from a different article:

> Official CPI inflation figures released monthly by INDEC have been a subject of political controversy since 2007 through 2015. Official inflation data are disregarded by leading union leaders, even in the people sector, when negotiating pay rises. Some private-sector estimates put inflation for 2010 at around 25%, much higher than the official 10.9% rate for 2010. Inflation estimates from Argentina's provinces are also higher than the government's figures. The government backed up the validity of its data, but has called in the International Monetary Fund to help it design a new nationwide index to replace the current one.

https://en.wikipedia.org/wiki/Economy_of_Argentina

Re: Argentina’s black-market USD rate climbs 24% in two weeks

#64

Post by the_af »

wbsss4412 wrote: post #47
the_af wrote: post #11

Earlier quoted context omitted.

It's not just the government. There's a broader problem, including unpayable loans from the IMF, lack of dollars leading to restrictions, some things are traded in dollars since our last dictatorship (e.g. real estate) and this is difficult to change, and widespread speculation of our agricultural sector (one of the most powerful groups in Argentina). Also: the black market of dollars is relatively small and also eas…

How can you verify the actual size of the black market dollar?

You can infer it.

The most important thing is that major operations are not done in this market, obviously.

Also, bizarrely enough the location of all "cuevas" (which is what we call the physical places where the illegal market operates) are well known by the authorities and could be shut down if they so wished. So there is definitely that in favor of the "the government is corrupt" argument.

Re: Argentina’s black-market USD rate climbs 24% in two weeks

#65

Post by conanbatt »

mastax wrote: post #40
azinman2 wrote: post #2

Why does Argentina always have such a volatile currency?

I'm no expert, but my understanding is that: 1. Low value of exports leads to a trade imbalance and long term decline in foreign currency reserves. 2. The government prints money to spend not on productive investments to solve 1. but on vanity projects or more-or-less bribes for their constituents to stay elected, leading to inflation. 3. Many historical periods of high ARS inflation leads to a lack of confidence in…

There is more nuance to some of these steps but roughly right.

It's very important to understand that this is a very important weakness of the monetary system in every country, and only countries with little political power are forced to austerity by larger powers (Greece, Argentina and the IMF, etc). Argentina is just a chronic abuser of foreign debt and money printing.

Re: Argentina’s black-market USD rate climbs 24% in two weeks

#66

Post by FabHK »

rmbyrro wrote: post #19

For those on the "it's-fine-to-print-money-at-will" bandwagon, please meditate on at least this part: > “everything starts with a large fiscal imbalance, which becomes a monetary imbalance due to printing [money] to finance the deficit.” Says the chief economist of the Agricultural Foundation for the Development of Argentina. A.k.a. someone in one of the best places in the world today to really know this stuff.

Look, nobody disputes that extremely bad policy can lead to hyperinflation - there are obvious cases of that.

But that doesn't mean that it is impossible to manage fiat money sensibly, or do QE responsibly without subsequent inflation. It is not fine to print money at will, but it is fine to run expansive monetary policy when warranted.

Re: Argentina’s black-market USD rate climbs 24% in two weeks

#67

Post by wbsss4412 »

the_af wrote: post #64
wbsss4412 wrote: post #47

Earlier quoted context omitted.

How can you verify the actual size of the black market dollar?

You can infer it. The most important thing is that major operations are not done in this market, obviously . Also, bizarrely enough the location of all "cuevas" (which is what we call the physical places where the illegal market operates) are well known by the authorities and could be shut down if they so wished. So there is definitely that in favor of the "the government is corrupt" argument.

Crypto advocates on this forum frequently list Argentina as a specific use case ( ie getting around foreign currency rules/restrictions ), that would imply that the market doesn’t just happen in “Cuevas”

Re: Argentina’s black-market USD rate climbs 24% in two weeks

#68

Post by the_af »

argentinian wrote: post #58
the_af wrote: post #37

Earlier quoted context omitted.

> But it is, just the government. I really don't think it is just the government, nor is it the lack of cutting down deficit spending, nor the tax system. I try to take a more historically grounded view. I don't think there are easy answers though. I believe the view that "there's the government, and there's this bunch of innocent businessmen at the mercy of big bad government" is not very compelling, for various rea…

The dictatorship is 'some businessmen' to you? That's an strange interpretation. And Macri's business become big thanks to its links to government (you can check the story of 'grupo macri' in wikipedia).

> The dictatorship is 'some businessmen' to you?

Yes. The actual men in green uniforms were just the visible face of the dictatorship. There were actual businessmen behind their economic policies. Not for nothing the dictatorship is called the civic-military dictatorship, as you well know if you are from Argentina.

> And Macri's business become big thanks to its links to government

I'm well aware of Macri's corruption and its links to the government. It's ironic, really -- those who benefited the most from government ties are so quick to decry "government corruption". Such is the history of corruption, too: one foot in the government, one foot outside of it. Both parts are important. I think, historically, the government is the weaker part in Argentina, at the beck and call of those actually calling the shots.

Re: Argentina’s black-market USD rate climbs 24% in two weeks

#69

Post by G3rn0ti »

likortera wrote: post #22
azinman2 wrote: post #2

Why does Argentina always have such a volatile currency?

I lived for 20 years there. In my opinion the root of all problems there is that it is embedded in the culture to be as egoist as possible and to steal as much as you can from everyone else in the most ruthless and shameless possible way. People usually complain about the government being corrupt and stealing to the people. But most people are the same, at their own level. They will try to steal as much as they can a…

Free markets usually direct selfish interests of people to create overall benefits for the society as a whole (with the occasional exceptions of course). Immoral behavior and excessive egoism usually are the result of bad economic policies that act to hamper individual freedom. The behavior you observed in Argentina is most likely the outcome of generations of short-sighted government policies that empower a small clique but deprive a majority of their economic well-being. Tax evasion, corruption and social inequality are the direct result.

Bad monetary policy makes bad acting individuals: https://mises.org/library/ethics-money-production

Re: Argentina’s black-market USD rate climbs 24% in two weeks

#70

Post by chitowneats »

tptacek wrote: post #43
likortera wrote: post #22

Earlier quoted context omitted.

I lived for 20 years there. In my opinion the root of all problems there is that it is embedded in the culture to be as egoist as possible and to steal as much as you can from everyone else in the most ruthless and shameless possible way. People usually complain about the government being corrupt and stealing to the people. But most people are the same, at their own level. They will try to steal as much as they can a…

If you want to make whatever point you're trying to make here, you have to write it a lot more carefully than this. Imputing negative traits to entire nations or cultures is explicitly not OK on HN: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...

This site is full of harsh criticisms of the USA. Not just of the government but of the citizens themselves.

You're correct about what the policy says, but enforcement doesn't seem to back it up in many cases.

Personally I don't see an issue with critiquing the dominant culture in any nation. GP made plenty of caveats about "not everyone" and the like.

I find such caveats to be nauseating, but they tend to be quite effective at preemptively disarming the type of insinuations of national or racial chauvinism that are exemplified by your comment.

Post reply on HN