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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

#131

Post by kragen »

Armisael16 wrote: post #115
djbebs wrote: post #95

Earlier quoted context omitted.

(X) doubt Any evidence for that?

The US was on the gold standard from 1882 to 1933. Recessions from that time: * 1882-1885 recession (not totally fair; gold standard policies hadn’t had time to cause this) * 1887-1888 recession * 1890-1891 recession * Panic of 1893 * Panic of 1896 * 1899-1900 recession * 1902-1904 recession * Panic of 1907 * Panic of 1910-1911 * 1913-1914 recession * Post-WW1 recession (1918-1919) * Depression of 1920-1921 * 1923-19…

Just to clarify, the dollar was gold-backed from 01944 until the end of Bretton Woods in 01971; it wasn't a fiat currency.

Also I think saying that inflation was "lower on average" is really a dramatic understatement. From independence up to the advent of the "mixed system" in 01933 (really a switch to fiat currency until 01944) inflation was probably zero on average. The same was observed over the 1300 years of the commodity-backed pound sterling (usually gold, sometimes silver or bimetallic).

I think there are plausible arguments that fiat currencies are less prone to such crises, and even that they stimulate economic growth, but I don't think it's an open-and-shut case.

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

#132

Post by Retric »

kragen wrote: post #127
Retric wrote: post #119

Earlier quoted context omitted.

I am suggesting you compare 1776-1971 vs 1971+ which is the opposite of cherry-picking. Ignoring all US history prior to 1944 is going to give you a very distorted view of what’s normal. Especially as Brenton Woods was a mixed system. The degree to which these differences are a function of various monetary systems is debatable, but it’s very hard to argue that fiat is worse on those timescales.

I don't think it's very hard to argue that fiat is worse on those timescales; few if any fiat money systems have ever survived for a period of 195 years, like 01776–01971, without succumbing to at least one episode of hyperinflation. These are localized but generally worse than the Great Depression. We have numerous examples going back to the Yuan Dynasty, including four already this century: North Korea, Turkey, Ven…

The US monetary system didn’t survive for 195 years. We tried several different approaches because it kept failing spectacularly.

The Copper Panic of 1789 for example went spectacularly bad. New Jersey in 1787 declared currency from other states was no longer valid and New York banned copper coins entirely. “At the height of the debasement, there was a 430% inflation rate for copper and commerce ceased, forcing several businesses and manufacturers to close down.[1][2]”

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

#133

Post by kragen »

argentinian wrote: post #112
kragen wrote: post #105

Earlier quoted context omitted.

Why "must" the agricultural sector be forced to "liquidate" their dollars "in a reasonable time"? By "liquidate" you presumably mean "sell for pesos", and the answer is that pesos are an irresponsible speculative investment that nobody would invest in voluntarily. It only goes down, and it does so with enormous volatility. The only reasonable time to do this is less than one day before spending the pesos. So the answ…

Yes. The grains that somebody produces are their private property. Why does the government have to force the owners to sell their own property?

To quibble a bit, they're actually not being forced to sell the grains and oilseeds, which for the time being they are free to stockpile; but if they do sell them, they are being forced to sell the dollars they get in exchange, at a fraudulent exchange rate, in order to subsidize imports and the overseas travel of the Argentine upper class.

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

#134

Post by kragen »

Retric wrote: post #132
kragen wrote: post #127

Earlier quoted context omitted.

I don't think it's very hard to argue that fiat is worse on those timescales; few if any fiat money systems have ever survived for a period of 195 years, like 01776–01971, without succumbing to at least one episode of hyperinflation. These are localized but generally worse than the Great Depression. We have numerous examples going back to the Yuan Dynasty, including four already this century: North Korea, Turkey, Ven…

The US monetary system didn’t survive for 195 years. We tried several different approaches because it kept failing spectacularly. The Copper Panic of 1789 for example went spectacularly bad. New Jersey in 1787 declared currency from other states was no longer valid and New York banned copper coins entirely. “At the height of the debasement, there was a 430% inflation rate for copper and commerce ceased, forcing sever…

While there were certainly crises, people's dollars from before the Copper Panic were still worth the same amount after it. The exception was paper money during the Civil War (not just Confederate, as I said!), which became valueless after it. And of course banknotes issued by banks that failed.

There are lots of historical cases of debasement of coinage, yes.

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

#135

Post by likortera »

Magnusmaster wrote: post #128
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…

Taxes in Argentina are insane. If you have a 1000 USD monthly salary you will be taxed in the same way as a billionaire: you have to pay a third of your income and 3% of your total wealth (that is, everything you own) each year. And you can't even deduct most debts from the 3% tax. And you get nothing in exchange, because all the money goes to the politicians' pockets and a welfare state that literally hands out mone…

Yes, but it is a feedback loop into destruction. People don't pay taxes because of this, so the government increases taxes to collect more, so people pay less, so they need more. There is no way out of it.

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

#136

Post by notch656a »

Magnusmaster wrote: post #128
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…

Taxes in Argentina are insane. If you have a 1000 USD monthly salary you will be taxed in the same way as a billionaire: you have to pay a third of your income and 3% of your total wealth (that is, everything you own) each year. And you can't even deduct most debts from the 3% tax. And you get nothing in exchange, because all the money goes to the politicians' pockets and a welfare state that literally hands out mone…

Doing Business* puts Argentina's tax on profit at 106%. That is, it is illegal to make a profit in Argentina. Legally every business must shrink until destruction.

https://www.doingbusiness.org/content/dam/doingBusiness/coun...

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

#137

Post by RC_ITR »

kragen wrote: post #120
RC_ITR wrote: post #39

Earlier quoted context omitted.

Sure, this random guy who works at a foundation who’s mission is “to explain to Argentinians that deficits are bad” [0] is the most qualified person to talk about global monetary policy. [0] https://www.google.com/amp/s/www.infocampo.com.ar/gustavo-vi... Carlos Schilling, el ex presidente de FADA, señaló que “es común que hoy en día nos preguntemos ¿qué estamos haciendo para mejorar nuestropaís? Desde FADA hacemos, y…

You sound like you're being sarcastic, but certainly it sounds like the things he was trying to divulge are some of the most important and fundamental aspects of global economics, and they are aspects that are poorly understood by the Argentine public: producing more is good for everyone, it is bad if the country is in a [trade] deficit, and if we export more it helps us all. (That's my translation of the Spanish.) I…

> it is bad if the country is in a [trade] deficit

Argentina has been a net exporter since 2019, largely due to dramatically falling imports that are associated with a lower quality of life for its people.

Many of Argentina’s problems can be traced directly back to protectionism that is intended to “keep Argentina’s wealth in Argentina” (a great recent example re-nationalizing their oil company by force). This thinking has left the economy extremely dependent on volatile commodities and all but eliminated the vibrant start-up ecosystem that once existed there (Mercado Libre is still the largest public internet company in Latin America).

Suffice to say, inflation in Argentina has much more to do with destructive real economy policies than it does with “money printing,” especially when you consider their interest rate has been above 20% since 2016!

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

#138

Post by Retric »

kragen wrote: post #134
Retric wrote: post #132

Earlier quoted context omitted.

The US monetary system didn’t survive for 195 years. We tried several different approaches because it kept failing spectacularly. The Copper Panic of 1789 for example went spectacularly bad. New Jersey in 1787 declared currency from other states was no longer valid and New York banned copper coins entirely. “At the height of the debasement, there was a 430% inflation rate for copper and commerce ceased, forcing sever…

While there were certainly crises, people's dollars from before the Copper Panic were still worth the same amount after it. The exception was paper money during the Civil War (not just Confederate, as I said!), which became valueless after it. And of course banknotes issued by banks that failed. There are lots of historical cases of debasement of coinage, yes.

First dollars where worth too much for day to day commerce back then, the copper panic was a big deal.

Also, the top 10 highest US annual inflation rates all occurred before fiat.

1813: 20.3% 1862: 14.8% 1863: 24.7% 1864: 24.6% 1917: 17.4% 1918: 18% 1919: 14.6% 1920: 15.6% 1947: 14.4%

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

#139

Post by Retric »

kragen wrote: post #131
Armisael16 wrote: post #115

Earlier quoted context omitted.

The US was on the gold standard from 1882 to 1933. Recessions from that time: * 1882-1885 recession (not totally fair; gold standard policies hadn’t had time to cause this) * 1887-1888 recession * 1890-1891 recession * Panic of 1893 * Panic of 1896 * 1899-1900 recession * 1902-1904 recession * Panic of 1907 * Panic of 1910-1911 * 1913-1914 recession * Post-WW1 recession (1918-1919) * Depression of 1920-1921 * 1923-19…

Just to clarify, the dollar was gold-backed from 01944 until the end of Bretton Woods in 01971; it wasn't a fiat currency. Also I think saying that inflation was "lower on average" is really a dramatic understatement. From independence up to the advent of the "mixed system" in 01933 (really a switch to fiat currency until 01944) inflation was probably zero on average. The same was observed over the 1300 years of the…

Average inflation rates over multiple lifetimes largely irrelevant. 24+% inflation for 2 years in 1863 was a huge issue. Short term deflation is often much worse than inflation. Averaging both to zero is wildly misleading.

The vast devaluation of silver after the discovery of the new world was a massive issue in Europe even if it averages out to nothing over time.

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

#140

Post by the_af »

xkcd1963 wrote: post #75
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.

I was given to understand that the owners of the Argentinian agriculture industry are the most corrupt part of Argentinian politics

You understand correctly. They aren't the only ones, but they have a big sway because they are the richest in Argentina.
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