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

151–160 of 196 posts

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

#151

Post by kragen »

TMWNN wrote: post #98
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…

It's not the dólar azul, it's the dólar blue. Also, people who travel abroad are allowed to purchase some more dollars at the official rate. Otherwise your comment is correct.

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

#152

Post by kragen »

SilasX wrote: post #146
FabHK wrote: post #121

Earlier quoted context omitted.

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?

The alternative would be for us to all buy the book, so yes, I would say FabHK's comment was extremely valuable. Generally I find that comment length has a strong positive correlation with comment quality and a strong negative correlation with comment score.

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

#153

Post by Retric »

kragen wrote: post #150
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%

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 lik…

Deflation is just as bad as inflation so the average inflation rate is meaningless.

It’s less obvious, but the point of currency isn’t simply to have more value stored as currency which changes nothing. It’s to facilitate the exchange of goods over time. During inflation sellers are reluctant and during deflation buyers are reluctant, both of which are problems.

And while it’s easy to think of yourself as a buyer or a seller every transition requires both in exactly equal amounts.

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

#154

Post by FabHK »

SilasX wrote: post #146
FabHK wrote: post #121

Earlier quoted context omitted.

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?

I quoted a small selection of relevant paragraphs from chapter 9 of the book, which covers precisely this topic, as can be deduced from its title Powell and Trump.

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

#155

Post by Retric »

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.

Averaging inflation over 50 years is dressing for the average annual temperature rather than how hot it actually is today.

The best measurement of stability is to take the absolute magnitude (1) value of inflation or deflation and average that. 20% deflation does horrific things to the economy and alternating randomly between 25% inflation or 20% deflation would insanely destructive.

(1) 20% increase and 20% decrease don’t cancel each other out you want the inverse for negatives.

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

#156

Post by rmbyrro »

RC_ITR wrote: post #39
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.

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…

Do you disagree with what he said?

I don't see how the quote diminishes his qualifications to talk about macroeconomics.

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

#157

Post by kragen »

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.

Both short-term and long-term inflation are relevant for different purposes.

It matters a lot whether the expected average inflation rate in the future is ±½%, 4%, or 25% when you get a 30-year mortgage on a house, sign a 99-year lease, save money for retirement 45 years in the future, buy a life insurance policy that probably won't pay off for 50 years, or rent an apartment to someone under rent-control laws that can hold the rent fixed until they die (perhaps 60 years from now).

±½% compounded over 30, 45, 50, 60, or 99 years is -14%–+16%, -21%–+25%, -23%–+29%, -16%–+35%, or -39–+64%.

4% compounded over 30, 45, 50, 60, or 99 years is -71%, -84%, -87%, -91%, and -98%. So in an environment where inflation averages 4% per year, like the current US environment, such contracts are unviable even if the inflation is fairly predictable. Rent control becomes politically impossible because renting an apartment amounts to selling it. Saving for retirement requires gambling on the stock market and subsidizing the Fortune 500 with your savings.

25% annual inflation is the average we've experienced during the time I've lived in Argentina, most of my adult life. At 25% annual inflation even renting an apartment to live in becomes a major problem. The US had 24+% inflation with commodity money for two years during the Civil War; Argentina has been averaging 25% for decades now, thanks to fiat money.

The vast devaluation of silver was a quite manageable problem by comparison, except perhaps for Spain.

But it's true that volatility is a real problem for a currency.

The bigger problem often ascribed to commodity money in a growing economy is the incentive to hoard: if the economy grows 3% per year, but gold or silver (or Bitcoin) is mined at a much smaller rate, maybe the price of gold will rise in tandem with the economy. And then you can earn a 3% return just by buying gold jewelry, so maybe you won't be tempted to take the risk of investing in productive ventures (or lending to them) by buying stock and hoping for a 5% return.

My review of the Warren–Pearson index data in https://news.ycombinator.com/item?id=32258172 makes me wonder if this problem in fact exists, because it seems like gold did not appreciate significantly over the period 01776–01932, compared to their changing basket of goods. But maybe it existed in other places (maybe the US is atypical) or maybe its apparent nonexistence is an artifact of Warren and Pearson's methodology?

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

#158

Post by Retric »

notch656a wrote: post #147
Retric wrote: post #139

Earlier quoted context omitted.

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. Persona…

Being able to store value as currency for long periods is a bug not a feature as it does bad things to the economy.

Lets’s say you want to store gold in your basement for bad times like a famine. Great you and everyone else has 1+ oz of gold when a famine hits, but society didn’t actually get any more food so everyone having gold is not just pointless but wasteful both to mine the stuff and to keep it protected from thieves.

Alternatively, society can try and store value as productive assets like stocks. On a day to day basis it looks similar but rather than building ever larger vaults and digging ever deeper it’s a quest to create even the smallest income stream. You still hit diminishing returns but it’s stuck with diminishing positive returns.

PS: > losing money to middle men converting to some commodity

You end up losing even more money when the government is trying to get and store enough gold to keep a gold backed currency, it’s just less obvious. Great Britten sent many ships to Canada during WWII to keep it’s gold safe. They had much much useful things to do with those ships and men.

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

#159

Post by kragen »

Retric wrote: post #155
notch656a wrote: post #145

Earlier quoted context omitted.

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.

Averaging inflation over 50 years is dressing for the average annual temperature rather than how hot it actually is today. The best measurement of stability is to take the absolute magnitude (1) value of inflation or deflation and average that. 20% deflation does horrific things to the economy and alternating randomly between 25% inflation or 20% deflation would insanely destructive. (1) 20% increase and 20% decrease…

Surely we can all agree that fiat currencies are often less volatile than commodity currencies but have higher average (signed!) inflation, but looking at the development of the US economy during the 01776–01932 period we're talking about, I wonder what you are thinking of when you say "does horrific things to the economy ... would [be] insanely destructive".

You may or may not be aware that during that time period the US went from being a set of mostly agrarian colonies under the thumb of Great Britain to being the world's most prosperous economy, the world leader in industrialization, and the most popular destination for economic migrants, where supposedly "the streets were paved with gold" (a phrase originally used to ironically condemn London).

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

#160

Post by the_af »

199X wrote: post #101
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…

Im Argentinian and lived here almost my whole life (30y) except a for 5 years in the Netherlands. I Agree with your comment, it is embedded in the culture. But I disagree that people are the same at their own level, on the contrary. The problem is that this is not a new issue, we have the same goverment for the last 20 years and inflation and corruption is always getting worst. During the 90s we had 1USD == 1Peso. No…

We haven't had the same government for the last 20 years, and furthermore, we've had corruption and economic problems for far longer than the past two decades (where, in fact, we experienced a limited recovery).
Post reply on HN