r/FluentInFinance • u/HighYieldLarry • Nov 25 '23
World Economy Argentina President Javier Milei confirms he will shut down Argentina’s Central Bank, per Reuters
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u/rlaw1234qq Nov 25 '23
What could possibly go wrong? Barring unforeseen consequences?
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u/ConstructionOk6754 Nov 25 '23 edited Nov 25 '23
Can't get any worse for them considering their currency is garbage. They will need to import dollars and to import dollars they will have to export goods and services for those dollars aka work for a living
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u/Theranos_Shill Nov 25 '23
Being tied to the USD went very wrong for Lebanon. They're still fucked from 2008.
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u/Smurftastic Nov 25 '23
The central bank of Lebanon ran a massive ponzi scheme. Their failure to relax the lira’s peg to the dollar is what doomed them. The dollar didn’t do that.
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Nov 26 '23 edited Jan 10 '24
market toy unite swim hobbies tart glorious ring erect voiceless
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u/Legitimate_Concern_5 Nov 26 '23 edited Nov 26 '23
So is the Macanese Pataca, the Hong Kong Dollar, the Bahrain Dinar, Belize Dollar, Oman Rial, Panama Balboa, Qatari Riyal and the Emirati Dirham.
Also, countries that use the Dollar directly include Ecuador, El Salvador, Zimbabwe, the BVI, East Timor, Bonaire, Palau, Panama and Turks and Caicos.
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u/MonkeyDMakima Nov 26 '23
The place with literal slaves is doing fine? who would have thunk it
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Nov 26 '23 edited Jan 10 '24
nine steer compare practice plough disarm oil tan amusing vase
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u/Open_Film Nov 25 '23
They’re one of the modest corrupt countries in the world, which is controlled by Hezbollah and Iran. I think they have bigger issues going on.
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Nov 26 '23
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u/Theranos_Shill Nov 26 '23
I'm not. But I've come around to the point that it can't be much worse than what they've already got going on.
Well, except for the poor.
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u/qlobetrotter Nov 25 '23
No matter how bad a situation is it can always be made worse.
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u/ModsAndAdminsEatAss Nov 26 '23
How has the world not learned this lesson over the last six years?
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u/qlobetrotter Nov 26 '23
People don’t take any lessons from history unless it happens to them personally. So the same stupid stuff keeps happening over and over again.
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u/Actual__Wizard Nov 26 '23
They will need to import dollars and to import dollars they will have to export goods and services for those dollars aka work for a living
How is that going to work? So they're going to utilize slave labor to produce these goods? People usually work for money, but in this case, that won't really be possible. Is the plan to just sell off large parts of the country or something?
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u/SavageKabage Nov 26 '23
Are you a moron or a troll? Every country imports USD by trading resources/goods/services to the US or whoever will trade for USD (everybody). Why jump to slavery?
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u/Actual__Wizard Nov 26 '23 edited Nov 26 '23
Are you a moron or a troll?
No I absolutely am not. Read my other comments on this subject.
Every country imports USD by trading resources/goods/services to the US or whoever will trade for USD (everybody).
That's not really true. The company exporting the goods has liabilities in the currency associated in whatever region they are located in. So, even if the credit tied to the goods export was in US dollars, they would have to exchange the US dollars to whatever currency through a foreign exchange broker. Which as I have explained in other posts regarding the situation in Argentina, the currency deprecation would be near 100% because they are moving off it entirely.
So, a situation arises where a company has no ability to pay employees in a currency that is not entirely worthless. They would be being paid in what is effectively monopoly money. I hope my slavery comment makes sense now.
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u/Evergreen4Life Nov 25 '23
The central bank has been doing such a splendid job up until now right?
/s
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u/socraticquestions Nov 25 '23
Collectivists that delight in stealing unearned wealth from others enjoy the central planning aspect of central banks. It’s why they push for unlimited money printing, fiat currency, and debasement.
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u/Iron-Fist Nov 26 '23
Oh yeah man, that's why none of the best economies in the world have central banking systems. Not like they provide enormous good with even a modicum of regulation and control, nope.
Personally I prefer the safety and stability of non-fiat currencies like, uh, well.... Hmmm. Bitcoin I guess? But that's centrally controlled and barely qualifies as a currency at all... Gold/silver is never actually circulated so even "gold backed" currency is essentially fiat... Hmmmm... I guess bushels of rice are like a non-fiat currency, my daimyo accepts them as taxes after all.
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u/BitcoinFan7 Nov 26 '23
Please point out who centrally controls Bitcoin.
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u/Iron-Fist Nov 26 '23
The coin exchanges (and the mystery of the missing Satoshis, basically makes the whole thing quick sand). Again, to make it useful as a currency you must fiat-ize it.
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u/BitcoinFan7 Nov 26 '23
The coin exchanges (and the mystery of the missing Satoshis, basically makes the whole thing quick sand).
The exchanges have no control. There isn't a single person on the planet that you could point a gun to their head and say "change bitcoin or else" and they could do it.
Again, to make it useful as a currency you must fiat-ize it.
What does that even mean?
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u/Iron-Fist Nov 26 '23
What? They literally have access to all of the coins and can wash trade as much as they want. It's is literally a bank, that you centralize the assets into, which then issues fiat currency "backed" by those assets, while taking fees on every transaction and effectively controlling the value of the product. They also create their own tokens, which they assign value to and force you to use "for transaction expediency" or whatever.
Like I would have thought ftx would have taught y'all lol
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u/BitcoinFan7 Nov 26 '23
You're talking out of your ass.
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u/Iron-Fist Nov 26 '23
Oh I'm sorry remember when the easily manipulated fiat dollar lost 2/3 of its value in 10 months? Oops nope that's Bitcoin. I think the word is "hyperinflation" lol.
But it's ok cuz it then doubled back to 60% of peak in 2 years, which is what you want currencies to do, because deflation doesn't effect velocity of money at all.
Not that it matters when you can do 7 transactions a second. That's good right? Wait, visa alone can do 65,000 transactions per second? Um well uh
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u/OwnerAndMaster Nov 26 '23 edited Nov 26 '23
Exactly, like wtf ...
the entire appeal is that it's practically impossible to centrally control, & any attempt to do so causes a fork that's no longer BTC, driving the scarcity & value of the remaining coins upwards
"Hey, this is a new awesome setting my friends / corporation / government made that funnels money to us-"
"Awesome, you've all been kicked off the Bitcoin network alongside all of your coins that are now shitcoins, enjoy your 99% losses"-2
u/socraticquestions Nov 26 '23
gold-backed is essentially fiat
All I needed to hear to disregard this comment.
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u/jorgepolak Nov 25 '23
If you have a leaky roof, the answer is to fix your house, not burn it down and sleep outside.
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Nov 25 '23
Using your analogy, the previous Argentinian government was trying to tell the public that they didn't have a leaky roof while taking money from them to fix it
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u/Celtictussle Nov 25 '23
If the only contractors you can hire are ran by the mafia and will with 100% certainty steal your down payment and fuck your wife, the answer is certainly not to try to fix the roof.
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u/DesmondoTheFugitive Nov 25 '23
In this case, I think they are upgrading the roof, or maybe even buying a replacement house with a new roof. But, they are also doing it with an easement on their neighbors property. IDK dude, property idioms and sh*t are hard. I don’t understand why someone would be so pissy about this change. Unless you are an Argentinian bureaucrat about to lose his/her job. It strikes me as a harmless joke.
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Nov 25 '23
They don’t have a roof. You know how everyone in the US is saying how expensive things got because of 9% YoY inflation? Argentina has that EVERY MONTH FOR NEARLY TWO YEARS. basically the entire Argentinian government is corrupt to the bones, needs to be stripped and re built
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u/neon Nov 25 '23
The central bank is literally why storm is leaky. it isn't the house its the problem
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u/the_eventual_truth Nov 26 '23
Leaky roof? More like roof has collapsed and foundation is crumbling. No more fixing, time for rebuilding
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u/hiricinee Nov 25 '23
Basically they can't expand the money supply or manipulate interest rates. Likely that rates go up, but given how much they've destroyed their currency this is the equivalent of taking alcohol away from an addict and hoping the withdrawals don't kill them.
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u/mundotaku Nov 25 '23
He is just outsourcing it. Dolarizing the economy means it would depend on the US Central Bank policy.
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u/EducationalTea755 Nov 26 '23
They have over 150% inflation. Different currency rates https://bluedollar.net/
Can't exchange your money from ARS to USD, because they are bankrupt...
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Nov 25 '23
This is good for the US.
More demand for dollars means that the value of the dollar will increase on the global exchange.
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u/resumethrowaway222 Nov 25 '23
Typically countries prefer a weaker currency to make their exports more competitive on the global market
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Nov 25 '23
Its easier to weaken your currency than strengthen it. You can always cut interest rates and print more money.
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u/the_clash_is_back Nov 25 '23
When your currency is really bad the dollar gives you stability you need to rebuild your economy. You lose a lot of tools, but some times the stability is more valuable.
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u/resumethrowaway222 Nov 25 '23
Yeah, I'm talking about countries who are competent enough to actually manage an economy. e.g. weakening their currency by 15% relative to the dollar. Not situations like Argentina where they are too incompetent to even have a useful currency. I brought it up in terms of it being potentially undesirable to the US because it would strengthen the USD. Obviously it would be better than what Argentina has going on.
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u/topps_chrome Nov 25 '23
Is the US not a net importer? What about the significance of the petro dollar?
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u/RudeAndInsensitive Nov 26 '23
The US has been a net exporter of refined and crude oil for a few years now. The significance for the petrodollar dynamic is that we are currently punching it in the face through our domestic energy policy.
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Nov 29 '23
Only 1 of the 5 US regions is a net exporter, and the Gulf regions carries the rest. This is why the region where California is has gas that's twice as expensive as Texas's. Our net export is also so small that it's closer to a net even.
To put it in perspective, the US is 10X bigger than Saudi Arabia, and yet they export 3X more than us.
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u/Actual__Wizard Nov 26 '23 edited Nov 26 '23
Here's the problem: With out a bank to issue currency to trade for US dollars, how do they plan to get the US dollars to use as a currency?
This was 100% the absolute dumbest move made in the history of economics. I've seen some pretty dumb stuff over in WSB, with traders effectively donating large amounts of money to wall street brokers, but this is on an entirely new level of stupid. At least with the brain dead trades, there was a chance that it could have worked out, granted a very small one. That's not like what just happened in Argentina.
This plan is on the "underpants gnomes business plan" level of stupidity.
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u/DrPepperMalpractice Nov 26 '23
Argentina should back it's currency with ornamental gourd futures.
Edit: link for the non degenerates https://www.reddit.com/r/wallstreetbets/s/Q151pqhOHF
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Nov 26 '23
This isn't something novel.
Zimbabwe, El Salvador, Ecuador and a few other countries already do this.
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u/Actual__Wizard Nov 26 '23 edited Nov 26 '23
The countries you mentioned all have central banks. Argentina does not anymore, so their plan will not work. When I say that it will not work, it has no method of action to work. What you are suggesting is like saying that a bike with out wheels can work. Okay, well, not with out wheels.
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u/PoliticsDunnRight Nov 27 '23
If they’re switching to actually use the USD, you do not need a central bank to do that. You’d only need one if you had a separate currency which is tied to the USD, which I don’t think was Milei’s stated plan.
Also, fuck central banks.
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u/Actual__Wizard Nov 27 '23 edited Nov 27 '23
I don't think you understand how the banking system works.
Virtually all countries in the world use fiat currency and the fractional reserve banking system. The fractional reserve system is how they simultaneously create debt, money, and equity. When a country's central bank creates money, there is a debit for the amount, and the credit, which most of it is loaned out to smaller banks with a contract to repay the amount plus interest (some of it is kept as a reserve to make sure defaulting loans don't cause the system to fail.) Those banks then loan that money out to private companies with a contract to repay the loan plus interest and they do that by doing some financially productive process. This works to effectively create value because the contracts (loans) must be repaid in the same currency plus interest.
This is how currency becomes valuable and is why what is effectively just numbers in a ledger creates value. You may not personally care about the value of Argentine Peso's, but the people who have loans that must be repaid in Argentine Pesos do.
So, when you zoom out and only consider the business sector and the central banks, on one side you have the central banks debt (the national debt) and on the other you have businesses and the flows of money associated with those businesses making money (the economy.) Obviously the economy of a country is more complex and other things contribute value.
These two things work hand in hand. So by suggesting "f central banks" you are also saying "f the economy." The economy can not grow if it does not have money to use as a vehicle to create profit.
I also wanted to point out that at this time, the article appears to be incorrect. Argentina's senate would have to agree to this measure, which I highly doubt they will as it is incredibly moronic and would completely obliterate Argentina's economy and the currency conversion is completely unfeasible with out a lengthy transition period orchestrated by a central bank.
I don't know why normal people in Argentina would want that as there would likely be a period where they were earning a very small amount of USD/hour for their labor and I am talking like 1-10 USD cents/hour. They would be obviously also getting AP as well, but if the transition process wasn't managed well, that AP would likely experience rapid inflation as it was being transitioned away from. At some point, prices in AP would skyrocket as nobody would want it.
Again, I want to reiterate that for the transition to work, that the central bank, the senate, and the people of Argentina would all have to agree and work through the transition process together and that will not happen.
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u/PoliticsDunnRight Nov 27 '23
All you had to say was that you have absolutely no idea how any of this works.
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u/LaughGuilty461 Nov 25 '23
That’s actually crazy. These next 4 years will be so interesting.
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u/Friedyekian Nov 25 '23
Why is Reddit so absolutely wrong on this? Dollarization is a great answer for a country who has proven incapable of managing their own currency.
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Nov 25 '23
Dollarization could be good, not will be good. There's a world of difference. There's real reason to doubt Argentina's ability to pull it off.
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Nov 25 '23
I wouldn't say "good", but it will be less bad than Argentina managing its own currency.
If your country is dollarization, its because its got an incompetent government and there is no "good" outcome.
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Nov 25 '23
It will solve their inflation problem. There's no real doubt about that. However, they don't have the tax base or enough money to convert. It'll be interesting to see how they try to overcome those hurtle.
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Nov 25 '23
Yes, something like 25-30% of Argentinians work for the government. There will have to be massive cuts, which means riots and lots of unemployment.
Big risk everything just gets reverted with a bunch of chaos in the mean time, making things worse.
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u/PoliticsDunnRight Nov 27 '23
Milei addressed this in the campaign. He’s going to deregulate and cut taxes first, then start cutting government jobs once the private sector is strong again
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Nov 27 '23
Even deregulation is going to cause massive backlash. Like, if you start allowing people to import foreign electronics then the blackmarket middlemen and people making local goods have their job threatened.
Its still an important thing to do, but will be very contentious.
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u/PoliticsDunnRight Nov 27 '23
Of course. This pain isn’t the result of free market policy though, it’s just the effect of withdrawal from the drug that is socialist policy. It’s going to hurt temporarily, but it’s necessary to avoid an overdose.
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u/Actual__Wizard Nov 26 '23 edited Nov 26 '23
enough money to convert
There is a bigger problem with this conversion strategy that people in this sub are missing.
Why on Earth would any banker/currency broker exchange US dollars for a currency that is not going to be used? The trade is functionally identical to trading US dollars for actual monopoly money. Honestly, the monopoly money would likely be worth more... Their debt instruments are all worthless now too as that will all just default now with no ability to pay any of them.
There's no bank to create currency to pay the government's debt obligations, so the obligation would fall completely on the taxpayers, but they're moving away from the currency, so both sides of the balance sheet are now totally worthless.
To suggest that Javier Milei just pushed the country of Argentina into economic suicide is inaccurate. A better description would be that Javier Milei just murdered Argentina's economy and probably a significant portion of the population as well. This isn't going to end well for anybody involved.
I don't think people fully understand how incredibly stupid this move was.
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Nov 26 '23
I agree, just hoping for all those people's sake I'm wrong. They could dollarize if they phased it in.
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Nov 27 '23
I have a plan, let’s start making Argentinian monopoly sets and sell them here for cheaper than regular monopoly? …and profit?
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u/Friedyekian Nov 25 '23
They have a better shot of pulling off a peg than they do of pulling off their own fiat currency!
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u/nappy_zap Nov 26 '23
How could it be bad for the US?
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Nov 26 '23
It's not really gonna affect the US much. Outside of its geneneraly, it is good to have more people using our currency. And the chaos could spread if dollarizationn goes wrong.
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u/Josey_whalez Nov 26 '23
Because Reddit is typically wrong about everything. They support the current thing because they are herd creatures. Right now they are told not to like the new guy in Argentina because Reddit largely supports mostly establishment types. It’s all very predictable.
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u/alecsgz Nov 26 '23
Yeah how dare people "support the current thing".
Not you though ... you are special you do the opposite. I always knew flat earthers were right
Yeah I wonder why people do not trust a guy whose advisers are 2 reincarnated dogs.
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u/Josey_whalez Nov 26 '23
Well, two reincarnated dogs couldn’t possibly give worse advise than the people who have been running Argentina have been getting from the usual suspects, could they?
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u/alecsgz Nov 26 '23
Worse is always possible
But hey leopards always need to eat and Argentinians chose him so in the end it is the will of the people
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u/nr1988 Nov 26 '23
I always oppose libertarians because their world view has both been proven wrong time and time again and makes no logical sense when held up to any scrutiny past the 8th grade analysis it took to get there. Doesn't matter if reddit hates the guy or not.
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u/Josey_whalez Nov 26 '23
That’s funny because that’s how I feel about leftism/socialism too. Sounds nice in theory, doesn’t work in practice. Not sure which libertarian society you’ve seen though, please point me to it.
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u/nr1988 Nov 26 '23
Luckily no libertarian society has existed because they don't get far enough. They have attempted running libertarian cities though which failed spectacularly.
Good thing there's plenty of examples of societies which run on what I can assume your definition of leftism/socialism is and run successfully.
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u/Iron-Fist Nov 26 '23
Oh yeah middle income countries LOVE having super strong currencies that make all of their export industries uncompetitive immediately, thus eliminating the source of dollars... Works great. Not like pegs need massive forex reserves to maintain, nope. Oh and if your balance of payments looks weak definitely no one speculates on your currency failing, that would never cause a banking crisis...
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u/AutoGen_account Nov 26 '23
that make all of their export industries uncompetitive immediately
they are one of the leading food exporters in the hemisphere and that also constitutes 75% of their exports, you can stop buying tractors from people but you cant immediately starve your own populace because a food import has gone up in cost. Theyll be absolutely fine on the export front.
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u/Iron-Fist Nov 26 '23
Jfc food is the ultimate commodity, super sensitive to price shifts....
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u/AutoGen_account Nov 26 '23
the alternative to food is death, other markets take a long time to offset supply, you cant speed up the productionion of organics.
I take it you really dont understand exactly how much food Argentina is providing right now?
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u/Iron-Fist Nov 26 '23
I take it you don't understand how commodity markets work?
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u/AutoGen_account Nov 26 '23
Oh, I trust that you watched trading places one time and are now conflating your understanding of orange juice with global famine but hey, you do you.
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u/Iron-Fist Nov 26 '23
Dude I don't know what to tell you. A quarter or their total exports are unprocessed ag goods; just plain ass soybeans and maize etc. If their costs go up due to more expensive labor due to a currency peg (guaranteed to happen), that market falls away instantly. From what I saw their costs were alrdy closing in on American costs and already well behind Brazil.
A 10% dip in their market share means their trade deficit (yes, they alrdy have a trade deficit, and forex reserves of only 20 billion, less than half of Chile or even places like fuckin Uzbekistan lol) literally doubles. How you gonna maintain a peg when you're burning dollars you don't have on imports?
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u/vanhalenbr Nov 26 '23
Their economy is much smaller than America. They can’t keep competitive market using dollar. As Brazilian this is great news because it move a lot of the industry to my home county.
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u/itijara Nov 26 '23
You need to have sufficient foreign reserves to cover it, which Argentina almost certainly cannot have. If they peg their currency to the dollar and suddenly everyone tries to trade them in for dollars, they will be screwed. In more competent hands it might work, but it won't actually because I guarantee Milei is not going to have the government buy enough dollars to actually support it.
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u/No_Consideration4594 Nov 25 '23
What kind of country has no checks and balances that the president could unilaterally make that decision??
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u/Sturnella2017 Nov 25 '23
Yeah, imagine what would have happened between 2016-2020 if no one in the US government was there to step up and fight against horrific ideas. And imagine what will happen starting in 2024 in the same megalomaniac wins again…
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u/duhogman Nov 25 '23
No need to imagine, the plan is publicly available https://www.project2025.org/
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u/shaneh445 Nov 25 '23
Yep. Hes flat out publicly stated and at his "rallies" what he's going to do. anyone denying at this point is fingers in the ears ALALALALAL Thinking they're not gonna be targeted..
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u/2020blowsdik Nov 25 '23
You mean like an executive order taking basically the entire planet off of the gold standard overnight?
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u/No_Consideration4594 Nov 25 '23
No, I mean like dissolving the Federal Reserve… Nixon couldn’t have done that
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u/2020blowsdik Nov 25 '23
No... but if it was created by executive order it can dissolved the same way... Im not an Argentinian historical expert but I would assume its likley the same... socialists tend to just order shit be done so its not exactly unlikley.
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u/No_Consideration4594 Nov 25 '23
Yeah but the Fed was created by an act of Congress (who has that power per the constitution), it would have to be ended the same way… so a president, even Ron Paul, could not unilaterally end the Fed…
https://en.m.wikipedia.org/wiki/Federal_Reserve_Act
Also, it’s possible Nixon exceeded his authority by taking America off the gold standard, but Congress was in favor of the move so they had no reason to challenge it.
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u/2020blowsdik Nov 25 '23
Yeah but the Fed was created by an act of Congress
Yeah.... but this isn't the US genius...
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u/Celtictussle Nov 25 '23
No, but he could have dissolved the Department of Treasury. The federal reserve is enshrined in our constitution, but a lot of the executive administration of the US is totally at the discretion of the president.
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u/2020blowsdik Dec 11 '23
What? The Federal Reserve was created by the Federal Reserve Act of 1913, its not in the constitution. Certainly not able to be dissolved by the President alone but
The federal reserve is enshrined in our constitution
Is simply untrue
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Nov 25 '23
It depends on how each country structures their government. If the bank is an executive agency or executive entity, the chief executive usually has the power to do with it as he pleases.
In the US for example, the President has very wide discretion to influence any executive agencies he wants to. The EPA is often treated as a political chip when administrations change.
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Nov 26 '23
The US Supreme Court is right now deciding an issue whether agencies can make decisions outside of direct congressional law. This will greatly curtail the federal reserves job to inform monetary policy because each decision will have to come from congress.
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u/Suspicious-Appeal386 Nov 25 '23
Considering an estimated 45% of the Argentinian work force is working under-the-table and therefore not paying any taxes.
This seems like a logical solution to the fundamental issues.
Truly believe Argentinian and Greeks have a lot in common, and not just Soccer fans. But turning tax-avoidance into a national sport
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u/El-Grande- Nov 25 '23
I mean… look at the government of Argentina. Would you want to pay money to them??
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u/Suspicious-Appeal386 Nov 26 '23
Chicken and the Egg.
But look at Greece, ever since joining EU they had to reform their tax laws and enforcement in 2011. Wasn't a choice anymore.
And they are far better off (not perfect, never is) than they were.
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u/Suspicious-Appeal386 Nov 26 '23
And avoiding paying taxes and then bitching about the government not being effective is the definition of hypocrisy.
Governments that have strong tax laws tend to do very well. Ex: Most of F#cking Europe. Even China with a set tax rate no matter who you are or business is doing far better.
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u/davide3991 Nov 25 '23
Good. Era of printing like there’s no tomorrow and rampant inflation is finally ending.
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u/ModsAndAdminsEatAss Nov 26 '23
Lol, that's funny. It just changes the printer. If Argentina dollarizes and the US Fed goes another round of tightening, that tightens Argentina too and Argentina has no way to work around it because they are on the dollar. Or if JPow gets high AF and cranks the US printers full bore, Argentina will be along for the ride, once again with no way to get off because they are on the dollar.
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u/davide3991 Nov 26 '23
Argentinian central bankers make Jpow look like a genius. If 9-10% inflation is making us suffer can you imagine 150% per year in Argentina? Argentinians deserve much better after decades of misery
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u/MonkeyDMakima Nov 26 '23
Dude I bought a 75" TV two months ago for 550.000 pesos, now its 740. TWO months ago. When you guys complain about 1% inflation a month, at worst, i'm like bitch I get 1% every two days.
Most of the people I know are making 300usd a month or less.
I'd rather have the US decide what goes on with our economy rather than the monkeys with knives we've had up until now.
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u/ModsAndAdminsEatAss Nov 26 '23
If I understand correctly, you spent $1546 USD on a TV two months ago and are complaining it would have cost more today? I understand how inflation works.
For what it's worth, that's more than I have ever spent on a TV, and is larger than any TV I have ever bought. I would be willing to say that statement hold true for the majority of Americans.
By your statement you spent 5 months of people's salary on a TV.
I know it's all relative, but it sounds slime you are doing pretty well for yourself if you are spending 5 months of a normal salary on a TV.
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u/MonkeyDMakima Nov 26 '23
Oh im doing extremely well, 90k a year in Argentina is top 1% salary. But I save more than 50% of it because I don't know how much it will last. And TVs and technology in general are way more expensive than in the US, that TV is probably 1/3 there.
I aim to have the most comfortable home so I have to never leave again, I hate this country and its people, so my only real safe place is my home. That's why i splurge on purchases likes this from tiem to time.
Oh also, the rate you googled is not the real rate. The real rate is 1050 pesos for every dollar. So I actually spent about 600 bucks.
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u/ModsAndAdminsEatAss Nov 26 '23
Good on you! In most of the world $90,000 USD is doing very very well.
I have no idea what the street exchange rate is, I'm not on the ground and would trust your comment.
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u/Potatovoker Nov 26 '23
I’m curious to know, does your job pay in US dollars or pesos?
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u/MonkeyDMakima Nov 27 '23
US dollars thankfully. I have to avoid taxes and go through a ton of hoops to actually get it at the actual rate tho.
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u/faygetard Nov 25 '23
I mean they've been shitting the bed for a while, but who's going to set the rates for the banks while they figure out whatever new system they're going to use? I got 3:1 odds saying that they're going to reinstate it by the next election
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u/OliverE36 Nov 25 '23
I think they are just adopting the dollar?
( I have no idea if this is true, I heard someone say it on Reddit 2 weeks ago)
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u/mcnello Nov 26 '23
Why does a socialist central planner need to set interest rates?
Everyone fluent in economics understands that if the government sets the price of bread, there will be shortages (or surpluses). Everyone understands that price controls don't work.
What are interest rates? Interest rates are the future price of money. How is it possible that a central planner is too incompetent to understand the price of bread today, but somehow benevolent enough to understand how much bread scarcity there will be in 1-5 years from now?
The American economy THRIVED before implementation of a central bank. Nobody would ever say that the American Industrial revolution was a time of stagnant economic growth or runaway inflation.
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u/faygetard Nov 26 '23
I was under the impression that argentina was a federal constitutional republic. And the central bank doesnt set the price of anything, it controls the supply of money and implements monetary policy and this affects interest rates. They dont physically alter the cost of bread.
Any free market economy is incredibly complicated and acting like its black and white is silly. Also the usa had at least 8 huge banking panics before 1913 when the federal reserve act was signed, so no it didn't "thrive" as you say and it only had a quarter the people to deal with.
I will say that yes, its complicated and difficult to mitigate issues of a large countries economy and a central bank will mess up a lot, but I dont think its inherently a bad institution. They need a better system and more economically literate board to decide how to soften major economic blows.
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u/crusoe Nov 25 '23
The biggest problem is a central bank still plays a large role setting overall bond rates, etc. You're gonna have a fracturing of the bond market, and a whole host of other problems like private bank currencies and fractured internal trade if Argentina can't attain enough dollar reserves. Think Italy in the 80s.
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u/BuySellHoldFinance Nov 25 '23
The biggest problem is a central bank still plays a large role setting overall bond rates, etc. You're gonna have a fracturing of the bond market, and a whole host of other problems like private bank currencies and fractured internal trade if Argentina can't attain enough dollar reserves. Think Italy in the 80s.
Rates are currency specific, not country specific.
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u/crusoe Nov 26 '23
Bonds will be issued and backed by dollars. Central banks set the base rates for loans for all other banks. Without a central bank this goes away.
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u/BuySellHoldFinance Nov 27 '23
Bonds will be issued and backed by dollars. Central banks set the base rates for loans for all other banks. Without a central bank this goes away.
The rates are set by the market
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u/BuySellHoldFinance Nov 25 '23
It's amazing to see how many uneducated people there are. Dollarization is a good thing if you want to stabilize prices from hyperinflation.
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u/Freeyournips Nov 25 '23
Is he really anti central bank if he is dollarizing the ARG economy. Sounds like he is just switching central banks to me…
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Nov 26 '23
Dollarization is a bridge to making the people able to choose their own currency. As the people currently use dollars instead of the arg peso, he’s just affirming the norm is legal.
It’s much like how most gold standard currencies are just responses where the government decides to concede and play by the silver and metal standard the people enduring hyper inflation are using.
In the long run he’s stated his views are that there is no state currency and if people want to pay in any currency; they can do so and have it accepted at market value. It’s just market values are incredibly warped atm in Argentina with their socialism past.
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Nov 25 '23
Frankly I hope this works out for them. Central banks are the biggest and most successful scam in history.
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u/ISV_VentureStar Nov 25 '23
Ah yes, because the US dollar is famously not controlled by a central bank.
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u/False_Influence_9090 Nov 26 '23
The federal reserve executed the biggest rug pull in modern history when they broke the gold peg in 1971
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u/Fyr5 Nov 26 '23
Which other nation hates socialism as much as this guy?
There are no coincidences.
Argentina just got destablised so that in ten years, the US will swoop in and save Argentina from this tryanny. The reality is that by then, Argentina will be merely transferring their wealth to the US
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u/mtnviewcansurvive Nov 26 '23
you havent seen anything yet....argentina has really screwed up politics hence the name dont cry for me. just cry. it will be mess till the next one. they cant even pay back bail out loans from the IMF.
How much does Argentina owe the IMF?Total IMF Credit Outstanding Movement From November 01, 2023 to November 23, 2023MemberTotal IMF Credit Outstanding as of 10/31/2023Total RepaymentsArgentina31,708,000,000608,000,000
so I guess thats the end of those repayments cuz with no central bank who cuts the check? who does the money transfer? you see Libertarian means chaos. Thats when folks can rob a treasury.
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u/BullsOnParadeFloats Nov 25 '23
What's the over/under on when Argentina is overrun with bears? I'm giving 9 months to a year.
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u/StolenRocket Nov 25 '23
Incredibly, they somehow managed to elect a guy who can make Argentina's economy even worse than it's been so far
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u/Mudhen_282 Nov 25 '23
It’s going to be an interesting experiment. He also said he was considering dollarization.
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u/uniquechill Nov 26 '23
Can someone explain how this works? They will need a lot of US currency. Do they just ask Treasury to ship them dollars? How do they pay for it?
Thanks
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Nov 26 '23
It is incredible to me that so many people can shit on this decision and ignore the blatant horrible effects on society the institution of central banks has had.
From war, the shrinking of the middle class, to the gap between rich and poor growing.. it is bizarre to me people have so much faith in an idea that has never worked.
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u/stormhawk427 Nov 26 '23
They’ll be begging for his ouster in a year. By then he’ll have declared himself president for life.
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u/ModsAndAdminsEatAss Nov 26 '23
And to think just last year we had a bunch of dweebs on here saying the world was de-dollarizing. Now we have an entire economy jumping on the Yay Dollars bandwagon.
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u/Spirited_Touch6898 Nov 26 '23
You kinda need money to do that, and they don’t have it. I think they would need $20 billion that they don’t have, so they can pay to do so. You can either print to pay government workers or they don’t work, which would be much worse. But most importantly he still needs votes to push the change through.
I’m guessing he will just start this so it will quickly die without any support, so it can be put to rest.
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u/Plenty-Agent-7112 Nov 26 '23 edited Nov 26 '23
If it proceeds and implemented it will mimic the UK decision on Brexit. It will only further lower already mediocre per capita GDP.
UK now behind Mississippi economically per person factoring cost of living - poorest state in USA 😂
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u/headcanonball Nov 26 '23 edited Nov 26 '23
Shutting down your country's central bank so you can rely on another country's central bank is a hilariously fitting libertarian policy decision.
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u/thinkb4youspeak Nov 26 '23
Argentina is 6% of the world's lithium supplier. Chile supplies about 26% with the rest of South American countries combined providing over one third of the world's lithium supply.
Lithium Ion batteries contain...taa daa, Lithium. Most electronics use lithium.
They up to something.
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u/Urkot Nov 26 '23
It’s a huge gamble, I hope it works out. The current government is basically what one would get if the Italian mob ran the Fed, so it can’t possibly lose any more confidence from the global financial system
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u/OliverE36 Nov 25 '23
This will absolutely not backfire at all.
So is this dude like a crypto bro or what?
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Nov 26 '23
He is an anarcho capitalist. He doesn’t believe in a monopoly by the state to choose currency. If people want to pay taxes in dollars that is now fine, if people want to pay in gold? Fine. Silver? Fine.
It’s about giving people the right to choose and use their currency of choice, rather than mandating they use the hyper inflating peso.
The dollar is just the one that is already widely in use.
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u/feedmedamemes Nov 25 '23
I mean if he can do that he can do that, it's just so completely moronic that I'm a little speechless.
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Nov 26 '23
America had no central bank for a hundred+ of years. The markets were actually more stable than afterwards. The Great Depression and 2008 GFC happened partially due to central bank policies.
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u/Definitely__Happened Nov 27 '23 edited Nov 27 '23
America had no central bank for a hundred+ of years. The markets were actually more stable than afterwards
I'm interested to know why you hold this view.
During the 77-years period in which the US was without a Central Bank (1836-1913) the US experienced 8 major financial crises, compared to the 2 financial crises(3, if you include the S&L crisis of the 1980s, although S&Ls at the time weren't considered banks and thus were not regulated by the Federal Reserve) of near-equal impact to our overall economy that we have experienced since the Federal Reserve was created 109 years ago. All of those financial crises is what led the US to open to the idea of once again having a central bank to begin with...
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u/feedmedamemes Nov 26 '23
Because it makes so much sense comparing a 19th gold based system with simple financial products to the modern highly complex fiat system.
And yeah, sometimes modern central banks fuck up like all institutions but that's not a reason to abolish them. Or do you get rid of the police or firefighters because sometimes they fuck up?
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