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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

#141

Post by kragen »

RC_ITR wrote: post #137
kragen wrote: post #120

Earlier quoted context omitted.

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 thinki…

It's good if we no longer have a deficit, but I have no illusions that that situation will last; Argentina's perverse anti-protectionist foreign exchange policies that protect foreign companies from Argentine competition are still in place and show no sign of easing.

I don't understand why you would call the renationalization of YPF "protectionist". Did it somehow lower YPF's cost of oil drilling, subsidizing Argentina's oil exports, or at least reducing Argentina's oil imports (we are now a net importer)? I would think rather the contrary: by increasing the risk to investors and lenders, it will raise YPF's effective interest rate for the necessary capex, increasing the cost of Argentina's oil exports. What's your reasoning?

For reference, "protectionism" refers to government policies that have the effect of increasing the profits of domestic producers by "protecting" them from foreign competition, or political advocacy of such policies.

I don't understand what you're saying about "destructive real economy policies" vs. "money printing" and 20% interest rates. Can you elaborate? I would say the Argentine government's policy of printing lots of money is a destructive real-economy policy that has caused interest rates to be very high, because interest rates have to be higher than the rate of inflation in order for lending to be profitable.

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

#142

Post by likortera »

Finicky4482 wrote: post #126
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 are an Argentinian developer working for a US company and want to do things the right way, you have to agree to a 55-70+% deduction from your gross income (adding taxes, fees from converting USD->ARS->USD which you can still do but who knows for how long, and so on)[0]. You could stay with ARS but with a projected annual inflation of 70% that doesn't sound too clever, plus you would automatically lose around 5…

I agree with everything you said. The system forbids doings things right. And I don't see any way out of it. The only realistic solution is to leave the country, which is what most that have the opportunity end up doing.

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

#143

Post by the_af »

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...

Maybe he could have worded it better, but what he's saying rings true to me, an Argentinian living in Argentina.

Note I mostly disagree on politics with 99% of all other Argies posting here (let's say the kind of Argies who post on HN are self-selecting for the kind of politics I disagree with), but this bit is true: we are, at least in Buenos Aires, a selfish, cheating people. Nobody ever in Argentina thinks the rules and laws apply to us, we want to take every advantage we want, pull whatever lever from friends in useful positions, but we always, ALWAYS, complain when somebody else bends or breaks the rules.

"The politicians are all corrupt!" -- but never me.

"That guy drives terribly and jumped a red light!" -- but never me.

"He's cheating me on the price of this!" -- but I never do this myself.

"My employer is exploiting me!" -- but I, of course, always legally employ cleaning ladies for my own house.

This defines our national identity and it needs to be said.

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

#144

Post by the_af »

ggambetta wrote: post #83
tptacek wrote: post #43

Earlier quoted context omitted.

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...

I get where you're coming from. But I wonder how familiar you are with Argentina, though. I was born and raised in Uruguay, a smaller neighboring country that shares a lot of traits with Argentina. I'd bet a lot of people from either country will not only agree with OP's characterization, but embrace it. This kind of behavior even has a name that carries positive connotations: "viveza criolla", loosely translated as…

Exactly, "viveza criolla". Well said.

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

#145

Post by notch656a »

Retric wrote: post #138
kragen wrote: post #134

Earlier quoted context omitted.

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%

I see we're allowed to pick arbitrary timescales for measuring inflation. Lets measure a few 50 year periods instead of annual periods:

1970-2020 : ~560%

1920-1970 : ~ 94%

1870-1920 : ~ 53%

1820-1870 : ~ 12%

If memory serves, we went completely fiat in ~1974, or roughly the beginning of the 1970-2020 period.

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

#146

Post by SilasX »

FabHK wrote: post #121
SilasX wrote: post #92

Earlier quoted context omitted.

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

Powell raised rates 4 times in 2018. Then, in 2019, the Fed became more dovish, but that was arguably justified by economics (inverted yield curve in spring of 2019). More details than you ever wanted, from Bernanke's 21st Century Monetary Policy : > At his swearing-in ceremony on February 5, 2018, Powell noted the importance of Fed independence—its “long-standing, nonpartisan tradition to make decisions objectively,…

That entire thing needed to be quoted in full?

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

#147

Post by notch656a »

Retric wrote: post #139
kragen wrote: post #131

Earlier quoted context omitted.

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.

These kind of fluctuations that average out make the money useful on an immediate or long-term timeline, with the cost of medium-term fluctuations (think hold under a few months or over 5 years). Fiat as currently found in places like the US makes the money useful in the immediate or medium term timeline (think under 5 years).

I think which you prefer depends on your station in life and your spending choices. Personally when fiat hits my bank account I want to shit-can it as soon as possible, eithre for equities or commodities. If I were paid in the kind of unstable but averaging out dollar of the 1800s I would very much prefer that, rather than losing money to middle men converting to some commodity like that (such as a commodities index, silver, whatever) and then converting back whenever I need to spend.

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

#148

Post by FabHK »

notch656a wrote: post #145
Retric wrote: post #138

Earlier quoted context omitted.

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%

I see we're allowed to pick arbitrary timescales for measuring inflation. Lets measure a few 50 year periods instead of annual periods: 1970-2020 : ~560% 1920-1970 : ~ 94% 1870-1920 : ~ 53% 1820-1870 : ~ 12% If memory serves, we went completely fiat in ~1974, or roughly the beginning of the 1970-2020 period.

Inflation over half a lifetime is not really relevant. For investors, large savings should be in productive assets (debt or equity), and real rates (on bonds) or real returns (on shares) have been positive. For non-investors, real wages are much more important.

But even including the high inflation in the 1970s and early 1980s (which Paul Volcker famously vanquished), that period from 1970 to 2020 averages less than 4% inflation a year. The four decades from 1982 to now have been pretty good on the inflation front.

Which is much preferable to +20% one year, and deflation another year, as in decades prior.

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

#149

Post by GabrielBen »

vkou wrote: post #93
GabrielBen wrote: post #55

Earlier quoted context omitted.

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.

Argentina is way more socialist as measured in a controlled economy than europeans - some taxes are higher than 80% of net income and often exceeding gross income as well.

It is also way more capitalist than the US by having a large part of the population paying less than 5% income taxes.

The country is hard enough to explain without the constraints of a browser textbox.

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

#150

Post by kragen »

Retric wrote: post #138
kragen wrote: post #134

Earlier quoted context omitted.

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%

The thing that may be hard to understand if you've grown up in a fiat-currency world is that prices moved in both directions, not just one. The periods of high inflation you name are real, but they were generally compensated by subsequent periods of deflation, except for the case of 01947.

Fiat currencies are often stabler than commodity money, but they very rarely deflate. Bitcoin so far seems to be acting a lot like commodity money in this sense; in the sense of prices rather than the money supply, it has currently inflated about 230% from its peak in value earlier this year.

The Warren–Pearson wholesale price index is the one usually used for measurements of pre-WWI inflation in the US, at least by people who don't simply use the price of gold; it is plotted on https://newworldeconomics.com/the-warren-pearson-index/ and appears to be about 80 in 01776 and about 80 in 01891, where they've suspiciously cut off the price data.

Warren and Pearson's book is apparently in the public domain in India and is available at https://dspace.gipe.ac.in/xmlui/handle/10973/22256. They did a plot from 01797 to 01932 on p.6 which looks pretty similar: it's about 100 in 01797 and also 100 in 01932. It is indeed 79–85 in 01891. At the end of 01776 in their data table (p. 7) it was 86; at the end of the data table in 01932 (p. 10) it was 95.

So we could say that the average inflation rate from 01776 to 01932 was 0.06% yearly ((95/86)*(1/(1932-1776))). But this is probably overstating the secular inflation rate and is better understood as random noise; at the end of 01920 it was 226 (13% higher than the 202 at the end of 01919, close enough to the 15.6% you quote) and in 01894 it was 70. The same calculation thus gives us an average inflation rate of -0.17% yearly from 01776 to 01894 (that is, 0.17% deflation) or +0.7% from 01776 to 01920.

Warren and Pearson also include H. M. Stoker's data for the colonial period, even though the title is "Wholesale Prices in the United States, 1797 to 1932". It starts at 58 in January 01720 and rises somewhat steadily until 01776, at the beginning of which it is 75 before reaching 86 at the end of the year. Stoker's suggestion is that prices were lower worldwide during this period "due to the changes in the value of precious metal," presumably due to the Spanish flooding the world with cheap American gold and silver from Potosí and their other colonies.

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