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

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

#91

Post by xkcd1963 »

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.

There is the official rate, the black dollar rate, and also the Western Union rate, which is much higher than the official, but usually not as good as the black rate

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

#92

Post by SilasX »

FabHK wrote: post #85
canadiantim wrote: post #80

Earlier quoted context omitted.

It's not that it's impossible to manage fiat money sensibly. It's that the incentives are perverse such that politicians have every incentive to keep the gravy train going and little to no incentive to be disciplined about spending. The end result is a system that necessarily has a greater likelihood to evolve into an inability to manage fiat money sensibly. So it's not about impossibilities, so much as it is about i…

You are right, those are the bad incentives. And that is why there are legal and institutional and customary mechanisms in place to insulate central banks from political pressure, and by and large they seem to work well (maybe not in Argentina...) Even Trump didn't manage to sway Powell.

What? Trump got Powell not to raise rates in 2018 and 2019 when that would have been the perfect opportunity to.

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

#93

Post by vkou »

GabrielBen wrote: post #55
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…

This is a common argentinian conception, and it is a big misconception. Gov corruption is a lot worse in the united states. It's just that corruption is not a 1-1 correlation with the success of an economy. Argentina has a poor economy because it is a half-capitalist half-socialist country.

Many of the European social democracies are also half-cap, half-soc countries, and they have far fewer economic problems.

They have a very different monetary system, though, and some of them are successful because the Euro lets them export their economic problems to their poorer neighbours.

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

#94

Post by neuralRiot »

kragen wrote: post #18
azinman2 wrote: post #4

Earlier quoted context omitted.

But this isn’t the first time. You’d think they’d learn their lessons. So something is amiss— perhaps they don’t have a choice? And if so, why?

With the exception of a few of the mass murderers of the 01970s, the people who have caused our currency to be so volatile over the last 50 years have all retired to enjoy their wealth. Some of them died at a ripe old age. The people currently running the government definitely did learn a lesson from that: they learned that they, too, will retire to enjoy their wealth, even if they impoverish the country in the proce…

Ahh the old “the previous generation fucked us”, i think i’ve heard that before.

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

#95

Post by djbebs »

Retric wrote: post #81
canadiantim wrote: post #80

Earlier quoted context omitted.

It's not that it's impossible to manage fiat money sensibly. It's that the incentives are perverse such that politicians have every incentive to keep the gravy train going and little to no incentive to be disciplined about spending. The end result is a system that necessarily has a greater likelihood to evolve into an inability to manage fiat money sensibly. So it's not about impossibilities, so much as it is about i…

Incentives don’t need to be perfect to work out. US has had a much more stable economy post fiat money than before fiat money. https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit...

(X) doubt

Any evidence for that?

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

#97

Post by pa7x1 »

azinman2 wrote: post #2

Why does Argentina always have such a volatile currency?

The country is incapable of taxing fairly and efficiently as there is rampant corruption and tax avoidance. This creates a very negative feedback loop, nobody wants to pay taxes as nobody else does so you would put yourself at a disadvantage and the tax money doesn't get put to good use anyway due to corruption, so why do it.

The above means that the government has to run permanent fiscal deficits and get indebted. At some point they are unable to pay the debt and the first temptation is to debase the currency. Rinse and repeat in an infinite loop of mistrust, tax avoidance and default.

It's a very hard problem to solve, unfortunately, as it's at this point deeply integrated into argentinian culture.

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

#98

Post by TMWNN »

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?

Let me supplement the other replies to your question.

The unofficial rate that outworlder mentioned is the dólar azul (blue dollar). As FabHK and jtsummers said, Argentina imposes capital controls, so you can't buy too many US dollars at the (artificially strong) official rate.

The capital controls mean that an Argentinean that buys something from or while abroad must purchase US dollars at the blue dollar rate. Blue dollar is unofficial but so widespread that websites track it.

Russia is an interesting contrast to Argentina. The gap between the official and unofficial exchange rates between ruble and US dollar is much smaller than between the Argentinean peso and US dollar. This is because right now it is almost impossible for a Russian to travel or purchase things from abroad, which depresses the demand for dollars. Argentineans are free to travel and purchase things from abroad, so the demand for US dollars is much stronger.

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

#99

Post by kragen »

neuralRiot wrote: post #94
kragen wrote: post #18

Earlier quoted context omitted.

With the exception of a few of the mass murderers of the 01970s, the people who have caused our currency to be so volatile over the last 50 years have all retired to enjoy their wealth. Some of them died at a ripe old age. The people currently running the government definitely did learn a lesson from that: they learned that they, too, will retire to enjoy their wealth, even if they impoverish the country in the proce…

Ahh the old “the previous generation fucked us”, i think i’ve heard that before.

That would be nice if it were the case, because it would mean that things are going to start improving soon. But no, the current generation is at least as bad, which was a main point of my comment that seems to have been less obvious than I thought.

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

#100

Post by martincmartin »

FabHK wrote: post #53
_plg_ wrote: post #25

Earlier quoted context omitted.

"As of 2022, the Japanese public debt is estimated to be approximately US$12.20 trillion US Dollars (1.4 quadrillion yen), or 266% of GDP, and is the highest of any developed nation." https://en.wikipedia.org/wiki/National_debt_of_Japan

More: * Huge asset bubble in the 1980's. * The Nikkei 225 stock market indicator reached a high of about 40k in 1989, but dropped to a quarter with the collapse of that asset bubble, and has not recovered that yet (it just recently hit 30k). This period was known as the "lost decade" [1] * Japan has had very low (near zero) rates for nearly three decades, more than twice as long as the rest of the world. * Demographi…

I believe Nikkei total return, i.e. with dividends reinvested, is higher than in 1989. So even money invested in 1989, if not touched, eventually outperformed cash. But it took a while.
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