[HN Gopher] In Argentina, inflation is a way of life
       ___________________________________________________________________
        
       In Argentina, inflation is a way of life
        
       Author : argentinian
       Score  : 124 points
       Date   : 2022-01-27 15:15 UTC (7 hours ago)
        
 (HTM) web link (www.washingtonpost.com)
 (TXT) w3m dump (www.washingtonpost.com)
        
       | argentinian wrote:
       | Fortunately, lately I don't see any new article from the USA
       | praising MMT.
        
         | uejfiweun wrote:
         | Unfortunately, it's because the acolytes of MMT already won.
         | The national debt has completely exploded and there's no
         | putting that genie back in the bottle without hyperinflation.
        
           | wbsss4412 wrote:
           | MMT is not, nor has it ever even the dominant ideology of
           | those who are actually in control of monetary policy.
           | 
           | I know it's a popular boogeyman, but it's pure fantasy.
        
             | uejfiweun wrote:
             | Gotcha. Well, whatever the name of the theory is that says
             | it's OK to just rack up a ginormous national debt, that's
             | what I am against.
        
               | wbsss4412 wrote:
               | That theory is called "starve the beast" wherein tax
               | hawks seem to believe shrinking the federal budget is
               | simply a matter of cutting taxes and engaging in
               | brinksmanship, despite the fact that their ultimate goal
               | of cutting SS and Medicare has been a political non
               | starter for decades.
        
               | uejfiweun wrote:
               | Yeah, I don't really get why you would pre-emptively cut
               | taxes in anticipation of future spending cuts. If there's
               | one thing we can bank on in history, it's that
               | governments always get bigger. Spending cuts are just
               | very unlikely to happen.
        
               | wbsss4412 wrote:
               | Seems to be good politics I suppose.
               | 
               | The thing about MMT, is that it's not about racking up
               | gigantic debts _per se_ , their thesis is that deficits
               | and debt don't matter in an absolute sense, but in
               | relation to other monetary factors. Eg. _once_ inflation
               | picks up, _then_ it becomes necessary to cut budget
               | deficits.
        
               | notch656a wrote:
               | Then a new goal is needed. Allow anyone to opt out of
               | SS/Medicare for life, cutting themselves off from social
               | aid in exchange for not providing it.
        
               | wbsss4412 wrote:
               | I mean, that isn't a different goal.
        
           | netcan wrote:
           | _The acolytes of MMT_?
           | 
           | Sheesh! How come anything touching on "what is money" gets
           | goofy immediately?
           | 
           | Most of the world's monetary systems have been run under
           | Monetarist theories for 40-ish years. Theory is now entirely
           | at odds with observed realities. New theories gain ground.
           | 
           | National debts "exploded" a long time ago. Japan's exploded
           | over a generation ago and most of western economies
           | "exploded" 10-15 years ago. Except these explosions aren't
           | explosions. Central banks continue to decree whatever
           | interest rates they want, with no market pushbacks.
           | 
           | The monetarists and goldbugs have been screaming "inflation"
           | constantly for 25+ years. That does not mean that their
           | theory of inflation (national debt) is true. It isn't.
        
             | anm89 wrote:
             | Not clear to me what is "goofy" here. You dislike the word
             | acolytes?
             | 
             | > Japan's exploded over a generation ago and
             | 
             | And how did that go?
             | 
             | > Most of western economies "exploded" 10-15 years ago.
             | 
             | Sure and they had 15+ years worth of runway to lower rates.
             | So seems about right that they didn't have an issue while
             | their strategy was still viable.
             | 
             | > That does not mean that their theory of inflation
             | (national debt)
             | 
             | What does this even mean? Debt to GDP is ~130%. Seems like
             | what most of them have been consistently predicting for
             | years.
        
             | uejfiweun wrote:
             | I think it's less that inflation is caused by the national
             | debt, and more that it will be nearly impossible to _pay
             | off_ the debt without massive inflation. Certainly the Fed
             | is in a box with the debt, as it can 't raise interest
             | rates without massively increasing US Government debt
             | payments. The only solution seems to be to keep rates low,
             | which results in inflating away the debt.
        
               | mullingitover wrote:
               | > ...it will be nearly impossible to pay off the debt
               | without massive inflation
               | 
               | Isn't it the opposite, that it's impossible to pay off
               | the debt without massive _de_ flation? 'Paying off the
               | debt' means reducing the money supply, which means money
               | later is worth than money now. That never ends well.
        
               | uejfiweun wrote:
               | Well my understanding is "paying off" the national debt
               | amounts to reducing the amount of value that is owed. You
               | could do this in two ways.
               | 
               | Way 1 is what you described, which is directly paying off
               | the debt. This is the path of austerity, high taxes,
               | spending cuts, etc. Agreed that this never ends well.
               | 
               | Way 2 is that you reduce the value of the debt by
               | reducing the value of the currency it is held in. This
               | isn't really an option for most countries, but the US is
               | unique in that it controls the world reserve currency and
               | can directly print the debt away. This would be a far
               | politically easier option as inflation is a complex
               | phenomenon that can't simply be blamed on harsh austerity
               | policies.
               | 
               | It does strike me that they are going to go with option
               | 2. The political conditions for this aren't quite there
               | yet, but you can see it forming with articles like the
               | OP.
        
               | mullingitover wrote:
               | > but the US is unique in that it controls the world
               | reserve currency and can directly print the debt away
               | 
               | This doesn't seem like a real option, though. The United
               | States doesn't simply print money, we issue debt to
               | increase the money supply. If we just started literally
               | printing new, unbacked money we'd immediately lose our
               | reserve currency status and it would likely be the end of
               | US global hegemony. Maybe the end of the US, period.
               | 
               | Meanwhile, using our standard practice of issuing debt to
               | pay for it wouldn't work here because that would be
               | exactly counter to the thing we're trying to do: reduce
               | our debt.
        
             | argentinian wrote:
             | > Most of the world's monetary systems have been run under
             | Monetarist theories for 40-ish years.
             | 
             | Argentina's monetary system hasn't.
        
               | wbsss4412 wrote:
               | It hasn't been run under MMT either, given that it's an
               | entirely new academic theory.
        
               | netcan wrote:
               | Both true.
               | 
               | I'd even say that "theories," is probably the wrong term.
               | More "school of thought."
               | 
               | I would also point out that the USD/EUR/GPM/Yen/etc _are_
               | "run under MMT" in the basic sense. They simply have
               | different ideas about inflation.
               | 
               | Broadly, MMT thinks same year spending is the main
               | inflationary mover. Monetarism thinks cumulative national
               | debt is what impacts inflation.
        
               | wbsss4412 wrote:
               | Agreed in the sense that MMT theorists assert that their
               | theories describe what happens in practice.
               | 
               | I disagree if the assertion is that policy makers have
               | been consciously crafting policy under MMT this whole
               | time.
        
         | sleepingadmin wrote:
         | >Fortunately, lately I don't see any new article from the USA
         | praising MMT.
         | 
         | UBI certainly died as a subject as well. The "basic income"
         | benefits wasn't even universal and exactly what everyone said
         | would happen has happened.
         | 
         | I still think a fiscal conservative with an army of accountants
         | could figure out UBI and make it work. Effectively it would
         | greatly punish anyone who works under the table.
        
           | anm89 wrote:
           | > I still think a fiscal conservative with an army of
           | accountants could figure out UBI and make it work.
           | 
           | This is totally lost on me. Why? I don't see how any of the
           | issues with UBI are accounting based. We already can spend
           | money we don't have in the short term so nothing prevents
           | transfer payments of any size in a purely logistical sense.
           | 
           | The issues with UBI are regressive redistribution, long term
           | effects on the labor market, and long term effects on the
           | currency. None of those are accounting issues.
        
         | Proven wrote:
        
       | bravura wrote:
       | I have a friend living in Argentina. His father-in-law is a
       | businessman with a factory. Like many successful people in
       | Argentina, he is a master at exploiting chaos for personal
       | benefit. The father-in-law praised inflation, explaining it was a
       | useful tool for people like him, and offered the following story:
       | 
       | I was walking down the street and found my wares being sold in a
       | shop that doesn't retail for me. Doing some digging, I found
       | incontrovertible proof that my foreman of ten years---ten
       | years!!!---had been stealing from me.
       | 
       | Did I fire him? No. It is impossible to fire your employees, even
       | for provable malfeasance.
       | 
       | Did I sue him? No. You lose 95% of these kinds of cases.
       | 
       | Did I tell the police? No. You can't get the police involved with
       | anything important, like my business, they are too corrupt.
       | 
       | So what did I do? I simply told him I would never give him a
       | raise again. And he understood that---due to radical inflation---
       | his salaried buying power would keep dropping and dropping, until
       | it was chiseled away to nothing. So he quit.
       | 
       | [edit: I am in no way suggesting that FIL was the moral actor in
       | this story, I don't know if he was or wasn't screwing his foreman
       | into poverty before the theft. What I found fascinating about
       | this story was how things were systematically _fucked_ in across
       | so many possible dimensions, that individual instances of
       | corruption and inefficiency and lack of faith are intertwined.
       | i.e. there 's a whole rat's nest of problems to untangle and a
       | point intervention is unlikely to prompt broader change. Also see
       | interesting discussion below about root causes of the inflation,
       | which connect to some of the anecdote above:
       | https://news.ycombinator.com/item?id=30101931]
        
         | dominotw wrote:
         | Is your friend's FIL ceo of my company? This is my employers
         | current strategy to increase profits.
        
           | nate_meurer wrote:
           | Is this likely to result in employees leaving the company?
        
             | dominotw wrote:
             | i put in my 3 week notice last week. I don't understand
             | ceo's logic here, just counting on inertia?
        
               | nate_meurer wrote:
               | Ha! Well there you go.
               | 
               | I worked for a large company that was perpetually being
               | (and being prepared to be) sold. Three acquisitions in
               | three years, each preceded by a company-wide dictate to
               | increase the company's cash value by lowering costs.
               | 
               | My director told me their most powerful cost-cutting
               | lever by far was to lower headcount. So that's what they
               | did. Then after the sale they'd be desperate to hire and
               | train new engineers. The churn killed productivity for
               | years afterward, due to the technical nature of the work.
               | After a year there I still wasn't up to speed.
               | 
               | Sometimes the folks in charge are just shortsighted and
               | incompetent.
        
         | l30n4da5 wrote:
         | > Doing some digging, I found incontrovertible proof that my
         | foreman of ten years---ten years!!!---had been stealing from
         | me.
         | 
         | > I simply told him I would never give him a raise again. And
         | he understood that---due to radical inflation---his salaried
         | buying power would keep dropping and dropping, until it was
         | chiseled away to nothing. So he quit.
         | 
         | Just to play devil's advocate here, and I'm not saying that
         | stealing is wrong by any means, but this just makes me feel
         | like the reason he was stealing to begin with was that his
         | income was too low to live off of.
        
           | DoctorDabadedoo wrote:
           | Difficult to say without having background for such
           | situations. As a latin american myself I think it's not far
           | fetched to say that in LA there is an ominous sensation that
           | there is always someone taking advantage of you: your boss,
           | your employer, your government, your politicians, the police,
           | etc., so taking advantage yourself, although immoral, is "par
           | for the course". Theory of broken windows and a way to carry
           | on.
        
           | danlugo92 wrote:
           | My family ate beef/chicken leftovers (from butchers and such)
           | when they moved to my city.
           | 
           | They never stole.
           | 
           | Stealing is never OK.
        
             | monsieurbanana wrote:
             | We should all be clamoring that stealing is never OK. But
             | NOT with examples of poor people scraping for food.
             | 
             | Stealing is a deep problem in our society, and poor people
             | have nothing to do with that.
        
             | frgtpsswrdlame wrote:
             | Stealing is okay in all sorts of situations. Many things in
             | life are more important than the rule of property.
        
               | mgh2 wrote:
               | Scale up this mentality, you have South America
        
               | frgtpsswrdlame wrote:
               | But I didn't say all stealing was okay, I said some
               | stealing definitely is okay. I still think that's true.
               | Some things in life are more important than property.
        
               | kortilla wrote:
               | Like what? Having a nice watch? Some Nike shoes?
        
               | nybble41 wrote:
               | > Some things in life are more important than property.
               | 
               | If the property isn't important, why are you stealing it?
               | 
               | Personally I don't really care whether you think it's
               | moral or not to steal, as long as you acknowledge that a
               | victim of theft has an equally moral right to "steal"
               | _back_ what was taken, and to use a similar justification
               | to steal a proportional (additional) amount from
               | perpetrator.  "Turnabout is fair play" and all that.
        
               | nate_meurer wrote:
               | Out of curiosity, what are some things that are _not_
               | more important than property rights in your opinion?
        
               | QuercusMax wrote:
               | Intellectual property rights?
        
               | bananabreakfast wrote:
               | Please specify some of these important things that you
               | clearly feel would be okay having stolen from you
               | personally.
               | 
               | Or did you mean it's okay to steal as long it's from
               | _other_ people?
        
             | Grimburger wrote:
             | Stealing food to survive and not die of hunger while
             | there's abundant waste all around is not "ok"?
             | 
             | I'd imagine that strong allcaps viewpoint would change in
             | certain circumstances.
        
               | MomoXenosaga wrote:
               | Yeah stealing food so that you can sell it on the black
               | market lol.
               | 
               | Most poor people are not thieves, they are decent
               | hardworking people and don't want to be associated with
               | crime thank you very much. Stop glamourising theft
        
               | mgh2 wrote:
               | Dumpster diving or getting "waste" to survive is not
               | stealing, is being resourceful. It is like "hacking" vs.
               | "cheating" the system, subtle difference.
               | 
               | Nobody "owned" it since it was thrown away - unless you
               | think racoons have rights...
        
               | 8note wrote:
               | It's still owned by the person while it's in their trash
               | can, til the trash is collected.
               | 
               | It's stealing; just not stealing the owner is likely to
               | care about. Sometimes they do, and put locks in their
               | dumpsters though
        
               | tick_tock_tick wrote:
               | No most countries consider trash abandoned property and
               | free for anyone to grab.
        
               | mgh2 wrote:
               | Maybe they lock dumpsters because of liability
               | https://www.avvo.com/legal-answers/if-i-give-a-homeless-
               | pers...
        
               | nate_meurer wrote:
               | Around here, dumpsters are often locked to prevent
               | dumping. The apartments across the street are plagued by
               | dumpers who come at all hours and fill the dumpsters,
               | mostly with construction debris it seems. Residents end
               | up just piling shit on the ground around them.
        
             | loceng wrote:
             | You can't imagine any circumstance where it's okay?
        
             | munk-a wrote:
             | Lets say that the manager's incontrovertible proof proves
             | to be incorrect and neither party has committed a moral
             | fault. The system the manager has leveraged for enforcement
             | is protected from any sort of rebuke (I assume you can't
             | sue someone for failing to make CoL adjustments in
             | Argentina) so freezing someone's salary essentially just
             | comes down to a form of wage theft.
             | 
             | Bear in mind that in America, I'm not certain about
             | Argentina, wage theft is the most expensive crime (summed
             | across all instances) worse than burglary, stealing office
             | supplies, or even robbing your employer.
             | 
             | I agree that stealing is generally not OK - but maybe lets
             | start by addressing the most prevalent form of stealing -
             | by the powerful against the powerless.
        
               | maxilevi wrote:
               | With that logic the one doing the wage theft is the
               | goverment for causing the inflation in the first place
               | and not allowing other currencies to be used.
        
               | nate_meurer wrote:
               | No, if CoL adjustments were not built into an employment
               | agreement, then it's not wage theft in any sense.
        
             | [deleted]
        
             | exolymph wrote:
             | Stealing is sometimes okay, but usually the kinds of people
             | who try to justify it do so because they infantilize
             | criminals, which is maddening.
        
           | XIVMagnus wrote:
           | This is a Hispanic country, so the traditional morals and
           | ideologies of regular people are not the same. I come from a
           | hispanic country and lived in Miami almost my whole life.
           | (take a guess where I'm from lol).. Basically what I'm trying
           | to convey is that hispanics are hustlers, almost by nature.
           | Due to living in relatively poor countries and forced to
           | figure out new ways to survive. Not saying that Argentina is
           | so terrible that you need to be hustling this hard, but
           | sometimes people want a bit more. For example, my friend
           | which was born in Argentina recently went to visit and
           | explained to me how prices for goods that come from the U.S.
           | are extremely expensive but rent+food is extremely
           | affordable. Just from that little bit of detail alone, I'm
           | guessing anyone who is hustling for more money. Is doing it
           | because they want to live a more 'luxurious' life style. Less
           | humble maybe?
        
             | chespinoza wrote:
             | I think your comment is shamelessly racist and ignorant, to
             | be honest, have you been to every hispanic country to treat
             | hispanics like that? you'll see hustlers everywhere and in
             | every culture and country, also Argentina is not the only
             | Hispanic country so please try to make more educated
             | comments, and if you feel the way you describe it as for
             | Hispanic people, please talk about yourself and don't
             | generalise.
        
               | anthk wrote:
               | I am from Spain. May I introduce you to the old
               | "picaresca" from The Lazarillo of Tormes?
               | 
               | We Hispanics gave the world great people, but we got lot
               | of hustlery and bribery since the Roman Empire. Italy is
               | like that too.
        
           | RedBeetDeadpool wrote:
           | This perspective of blaming the motive of the perpetrator
           | instead of the perpetrator itself leads to blurred lines of
           | judgement that makes establishing common rules impossible. If
           | you have ever caught someone doing something evil, you would
           | know just about any crime can be morally justified for a
           | cause of some sort.
        
           | kamarg wrote:
           | There's plenty of well off people that steal because they
           | want more. The fact someone is stealing doesn't lead to the
           | conclusion that they don't have enough income to live off of.
           | And if things in Argentina are really as bad as the business
           | owner claims where you can't fire employees and you can't go
           | to the police, theft is probably seen as an extremely low
           | risk activity. For many people, increasing your income by a
           | significant amount through actions that are highly unlikely
           | to have a negative outcome wouldn't require much
           | consideration.
        
             | Izikiel43 wrote:
             | > things in Argentina are really as bad as the business
             | owner claims where you can't fire employees and you can't
             | go to the police, theft is probably seen as an extremely
             | low risk activity
             | 
             | This we call Monday in Argentina
        
         | edko wrote:
         | That seems unlikely. That foreman most probably belongs to a
         | union. Unions in Argentina are very powerful and they negotiate
         | at the National level. Whatever increase they negotiate, your
         | friend's father-in-law will have to pay.
        
           | jsiaajdsdaa wrote:
           | Time to sell the business and move to a better country.
        
         | jfroma wrote:
         | > So what did I do? I simply told him I would never give him a
         | raise again.
         | 
         | It is true that salary have been always losing purchasing power
         | but don't forget also that employees have compulsory raises.
         | This comes from two sources: 1. minimum wage raises 2. believe
         | it or not, unions negotiate with the gov the raises, those are
         | called here "paritarias".
         | 
         | Everything is broken here, laws favor the employees always and
         | that's why no one wants to start a business. When you talk with
         | small businesses this is their number one fear.
         | 
         | Half of the population is convinced that business and owners
         | are the devil, and that they need to die in fire.
         | 
         | And as for inflation, there is nothing to praise.
        
           | FredPret wrote:
           | I moved from a broken society to a first-world one. I'm
           | supremely lucky in this.
           | 
           | There are many interlinked systems that have to work for a
           | society to progress. It's nearly impossible to line up all
           | the required factors at the same time. Makes it rather
           | frustrating when first-worlders shit on their own cultures.
        
         | berns wrote:
         | This is obviously false. First, employers can't just stop
         | giving raises. Raises are governed by law and by collective
         | agreements (although they are often below inflation). Second,
         | no one just quits, especially a crook. Why? Because you can
         | always force the employer to fire you. How? In general, nothing
         | too obvious, you just stop working too hard. Until your
         | employer offers you to leave and is forced to make an
         | arrangement and pay you compensation.
         | 
         | > Did I fire him? No. It is impossible to fire your employees,
         | even for proven misconduct.
         | 
         | > Did I sue him? No. You lose 95% of these types of cases.
        
           | tester756 wrote:
           | >This is obviously false. First, employers can't just stop
           | giving raises. Raises are governed by law and by collective
           | agreements (although they are often below inflation).
           | 
           | You mean minimal wage?
        
             | distances wrote:
             | I don't know about Argentina specifically, but in many
             | countries unions negotiate salary raise percentages for the
             | whole sector. If the country follows universal collective
             | bargaining, this may also be a binding minimum raise for
             | non-unionized employees in the same sector, even in
             | companies that aren't members of the trade union that
             | bargained the deal.
        
           | wslh wrote:
           | No, for example in IT they are connected to the "commerce
           | union" but it doesn't include an agreement to adjust by
           | inflation. Obviously IT has strong market forces in favor of
           | the employee but this is an example.
           | 
           | Also many unions lost against inflation.
        
             | maxilevi wrote:
             | > No, for example in IT they are connected to the "commerce
             | union" but it doesn't include an agreement to adjust by
             | inflation.
             | 
             | Most factory jobs do have those agreements though.
        
           | [deleted]
        
       | irfwashere wrote:
       | It's going to be really interesting to see how Jack Mallers' app
       | Strike now entering Argentina is going to change things in the
       | country.
        
         | tute666 wrote:
         | Why would anything change? There is a dozen apps/bank analogues
         | and fintechs that deal with crypto. They are all subject by and
         | large to argentine banking law.
        
       | achow wrote:
       | https://archive.fo/nRK7O
        
       | mercy_dude wrote:
       | Not surprised to see the good old liberal outlets like WaPo
       | changing the narratives and trying to tell us how inflation is
       | all normal and to suck it up. Guess what serfs, Argentina has it
       | way worse.
       | 
       | I guess after 5yrs of covering Trump and spreading wokeness, WaPo
       | forgot what struggle really feels like for people here.
        
         | empalms wrote:
         | It's been a while, but I vaguely remember an economics
         | professor of mine stating that it's not inflation which is the
         | core issue for people, firms, and economies, but an increased
         | price volatility which positively correlates with high
         | inflationary rates. The take-away was that when people can
         | reasonably predict what inflation might be MoM, or QoQ,
         | businesses and individuals are able to price transactions and
         | required rates of return accordingly.
         | 
         | So yeah, by that understanding, inflation can be normal in a
         | healthy functioning economy. It is uncontrolled/unpredictable
         | inflation that's problematic.*
         | 
         | *Grain of salt, I'm not an economist and it's been some time
         | since I've seriously studied the subject matter. Commenting to
         | join the discussion
        
           | collegeburner wrote:
           | No, prices and wages are stickier and often don't move as
           | fast as you think, even with digital communication. Menu and
           | shoeleather costs remain serious harms of inflation even if
           | you have some system where it is predictable. Anyway, it is
           | not, look at how many macro people say for months "inflation
           | is transitory" but no.
        
           | remarkEon wrote:
           | Wages are "sticky", and do not adjust as fast as prices for
           | goods and services, and certainly don't change much MoM/QoQ
           | outside maybe a few niche industries.
           | 
           | That's the problem with high or relatively high inflation.
           | 
           | The professor is correct, though, that consistent and
           | predictable inflation is at least less bad than inconsistent
           | and unpredictable inflation.
        
           | bko wrote:
           | There are huge inefficiencies with high inflation, even if
           | predictable.
           | 
           | For instance, if you know your dollar is worth considerably
           | less every day, you're more likely to go spend it on things
           | that you may not need as long as they retain value. Barter is
           | inefficient as well. You'll be willing to wait on line as
           | soon as you receive your paycheck. You'll fill up your tank
           | more often. There's expenses with adjusting people's pay to
           | account for inflation and keeping track of what a
           | "reasonable" price should be or whether you're getting
           | fleeced. I agree uncertainty is a huge problem, but even high
           | anticipated inflation is a huge pain in the ass.
           | 
           | That's not even considering the capital controls that are
           | often put into place that prevent you from holding stable
           | assets. So you're stuck holding this depreciating asset or
           | you're bending over backwards to buy as much stuff as
           | possible to retain you wealth.
        
         | jayski wrote:
         | My take away from the article wasnt that inflation is normal
         | and suck it up, it was: inflation sucks we cant allow it to
         | keep increasing
        
         | throwaway0a5e wrote:
         | The really infuriating part is that these same damn people were
         | just screeching insistently about how "pulling yourself up by
         | your bootstraps" is unrealistic. The kind of savvy it takes to
         | not slip backwards in a high inflation environment is exactly
         | the same kind of savvy it takes to pull one's self up by your
         | bootstraps.
         | 
         | Regardless of how realistically achievable you think the latter
         | is does not change the fact that the cognitive dissonance is
         | apparent.
         | 
         | This will come back to haunt them. People don't like economic
         | uncertainty but they can't do much about it so they just deal.
         | People really, really don't like spineless shysters that change
         | their opinions to whatever is convenient that minute and they
         | can marginalize said shysters in response.
         | 
         | Where is the captain of this ship? Why isn't there someone with
         | a longer than next week timeline saying "hey let's stop
         | lighting our credibility on fire like this"?
        
         | dang wrote:
         | Please don't take HN threads into political or ideological
         | flamewar. It makes discussion repetitive, tedious, and nasty.
         | We're trying to avoid that here.
         | 
         | https://news.ycombinator.com/newsguidelines.html
        
           | chespinoza wrote:
           | this is nothing, a lot of comments I've seen are already
           | flamewar and even racist, nasty generalizations, suddenly
           | everyone is an expert in hispanics countries as if they would
           | be all the same or as if they would share the same currency
           | or economical situation, a lot of ignorance.
        
           | [deleted]
        
         | totalZero wrote:
         | WaPo always seems to support leftist political forces in South
         | America, even where there is no parallel domestic narrative in
         | the US. For example, they supported Evo Morales in his bid for
         | a fourth consecutive presidential term despite the Bolivian
         | constitution limiting presidents to two consecutive terms.
         | 
         | https://www.washingtonpost.com/politics/2020/02/26/bolivia-d...
        
       | kobalsky wrote:
       | > There's a long tradition here of purchasing U.S. dollars as a
       | hedge.
       | 
       | There's a 200 usd quota per month shared between products,
       | services and currency exchange. If you buy something that exceeds
       | your monthly quota it means that your quota for the next months
       | will be affected.
       | 
       | It's a system designed so that no one who can save money can buy
       | dollars. When poor people started selling their quotas the
       | practice got quickly stopped with taxes that got its price above
       | illegaly traded dollars.
       | 
       | So basically if you need to buy dollars here you are a criminal.
        
         | noduerme wrote:
         | Ah but I heard if you worked for the government during
         | Cristina's presidency when the official price of pesos was
         | artificially kept low, you could get paid 20% of your salary in
         | USD at the government rate!
        
         | [deleted]
        
         | mgh2 wrote:
         | "Criminal" is strong word here, there is no "rule of law" in
         | Argentina, it is not one of the country's values.
         | 
         | Crime is the norm, not the exception, starting with the
         | government and trickling down to the people.
         | 
         | It is the wrong culture: "If higher ups cheat to get ahead and
         | get away with it, why shouldn't I?".
         | 
         | Result: scaled up crime - corruption, tax evasion, robbing,
         | slacking, etc.
        
           | piva00 wrote:
           | The same in Brazil, mi hermano...
           | 
           | It's incredible how similar Latin American corruption is
           | across countries, I feel that every time I met another Latin
           | American here in Europe/Sweden there's this instantaneous
           | bond on how fucked up our governments (and everyday
           | corruption) are.
           | 
           | I decided to leave and believe it's been the best thing I've
           | ever done for my life, I miss the people I love but I don't
           | miss life back there.
        
             | everybodyknows wrote:
             | Uruguay is said to be better -- true? Not true?
        
               | user-one1 wrote:
               | Yes, corruption in Uruguay is way lower and the country
               | is more stable. But also it's a very small country, so
               | not many opportunities around for most people.
        
               | f00zz wrote:
               | Yes. Low corruption, low taxes (zero corporate tax for
               | income received from outside the country), and you can
               | even open bank accounts in foreign currencies.
        
             | iqanq wrote:
             | >It's incredible how similar Latin American corruption is
             | across countries, I feel that every time I met another
             | Latin American here in Europe/Sweden there's this
             | instantaneous bond on how fucked up our governments (and
             | everyday corruption) are.
             | 
             | Catholic vs. protestant culture.
        
               | cpursley wrote:
               | Yep, same reasons Orthodox Christian countries are way
               | behind. It's an uncomfortable topic, but Protestant
               | dominant cultures are generally more equitable and less
               | corrupt.
        
               | mgh2 wrote:
               | Exactly: https://trendguardian.medium.com/in-data-we-
               | trust-2978dacc8c...
               | 
               |  _"Culture is religion externalized."_ - Douglas Phillips
        
               | brnt wrote:
               | The main thing to understand about protestant culture is
               | that it can afford a beter PR machine. Think 1984 vs
               | Brave New World.
        
           | wslh wrote:
           | > Crime is the norm, not the exception, starting with the
           | government and trickling down to the people.
           | 
           | I agree with the starting with the government but I am lost
           | when you blame the people (except for obvious crimes):
           | literally there is not law in Argentina, tax evasion is not a
           | crime because it is impossible to have a business without
           | evading taxes (a friend told me) because the system is a trap
           | where everyone could be attacked by the force of law based on
           | ambiguous arguments.
           | 
           | And in Argentina is easy to bribe judges and move the "law"
           | to the direction you want, more if you are powerful.
        
         | f00zz wrote:
         | When I was in Argentina a few years ago there were money
         | changers peddling dollars on every corner in downtown Buenos
         | Aires, at a time this was illegal (Cristina was president).
        
           | maxilevi wrote:
           | Funnily enough they are called "arbolitos" (small trees).
           | Because they are stationary and have green leaves (dollars)
        
             | [deleted]
        
             | technofiend wrote:
             | I can still hear them chanting "Cambio, cambio, cambio" and
             | it's been a few years. ATMs give hardly anything and charge
             | a large fee per transaction as well, so it's no surprise
             | people go to arbolitos.
        
               | bradstewart wrote:
               | You'd also get a better exchange rate from the arbolitos
               | vs the ATMs.
               | 
               | If I remember correctly, it was referred to as the "black
               | rate". If you paid a vendor in USD directly, you got the
               | "blue rate". Both of which were much better rates than
               | the ATM.
        
               | maxilevi wrote:
               | In reality most people don't use "arbolitos" because
               | their rate has a big spread.
               | 
               | Instead people who need to exchange regularly go to
               | "cuevas" (caves) which are just hidden and illegal
               | currency exchanges that have much more volume.
        
         | [deleted]
        
         | xtracto wrote:
         | This is crazy, no wonder a lot of people in there are turning
         | to cryptocurrencies, particularly stablecoins.
        
           | mgh2 wrote:
           | Crime begets crime
        
             | maxilevi wrote:
             | Buying stablecoins is not illegal though.
        
               | retrac wrote:
               | It probably is in countries with capital controls, if you
               | use it as a means to circumvent those capital controls.
        
               | bally0241 wrote:
               | as if capital controls are not a crime in of
               | themselves...
        
             | mgh2 wrote:
             | "crime" here means that crypto incentivizes crime itself,
             | not that it is "illegal" in the country: pump and dump,
             | scams, cybercrime, tax evasion, etc.
        
       | MrPatan wrote:
       | Why, when presented with an article like this, do we discuss the
       | content of it, but seldom why does it exist in the first place?
       | 
       | Why would this newspaper want to say these things precisely now?
       | 
       | What prompted the editor to pick this story and this angle?
       | 
       | Nobody finds that question interesting?
        
         | lamontcg wrote:
         | Making everyone very, very concerned about inflation and
         | starting to talk about it.
         | 
         | The USA could probably use a decade of double digit inflation
         | (with coupled wage-inflation so a nice wage-price-spiral) to
         | adjust asset values and wealth disparity back down to more
         | reasonable levels. It would come with economic stagnation but
         | that will be better than the alternative.
         | 
         | What all the talk about inflation is doing is getting people
         | very worried about any uptick in inflation and prepared for
         | austerity measures to prevent it, which will probably lead to a
         | depressive spiral and lancing the long-term bubble that we're
         | in. If the "Great Resignation" trend of workers having power
         | over wages continues, then I suspect you're going to see a
         | large degree of inflation panic pushing for austerity.
         | 
         | I don't think it'll land this year, though, this is just the
         | warm up act. The Fed policy changes this year will likely be
         | insufficient and its more likely that this time next year it
         | really starts to ratchet up (and I don't know what'll happen in
         | the midterms exactly other than the Republicans will make gains
         | which makes austerity even more likely). Things will likely be
         | getting exciting again in 2024. Sooner or later we're likely to
         | have a post-pandemic party for a bit, then I think policymakers
         | will start to seriously panic about inflation and workers
         | demanding raises and drive the economy into a depression. I
         | could be off in the timeframe, but after 2-3 years of workers
         | having negotiating power I think policymakers will start to
         | think that it is intolerable.
         | 
         | The inflation messages, though, are clearly the manufacturing
         | of consent for what is likely to come.
        
           | nate_meurer wrote:
           | It all depends on how the pandemic goes. As Bill McBride says
           | over and over, _the course of the economy is dependent on the
           | course of the pandemic._
           | 
           | https://www.calculatedriskblog.com/2021/10/early-q4-gdp-
           | fore...
           | 
           | I'm particularly interested to see how long supply
           | disruptions in China persist, as effected as they are by
           | China's zero-COVID strategy.
        
           | fuoqi wrote:
           | >The USA could probably use a decade of double digit
           | inflation
           | 
           | It's a very thin ice to walk on. High inflation threatens
           | USD's global reserve currency status and it's in addition to
           | using financial control for political pressure of opponents
           | (e.g. threats to ban countries from SWIFT). When (not if)
           | this status will be lost you will get serious additional
           | inflationary pressure from foreign governments and private
           | investors dumping USD-denominated assets. In the best case
           | scenario it will be a prolonged multi-decade process as with
           | GBP, but in the worst case scenario unwinding can be quite
           | fast, especially considering China's reserves (i.e. it can
           | start selling USD-denominated assets as a form of financial
           | attack).
        
             | lamontcg wrote:
             | I think the depression we hit due to austerity could also
             | severely threaten the global reserve currency status.
             | 
             | Although that's another good argument as to why
             | policymakers are going to panic over inflation.
        
         | otikik wrote:
         | I think you might enjoy this video from Tom Nicholas, "The Myth
         | of a Free Press: Media Bias Explained"
         | 
         | https://www.youtube.com/watch?v=v-8t0EfLzQo
        
       | 101008 wrote:
       | Argentinian here, 30 years old, middle-class. Yes, we have a big
       | inflation problem and what the article says is correct, except I
       | don't know anyone who buy tuna or pasta or whatever to store
       | because of inflation. In fact, anyone who would do that wouldn't
       | be smart at all, would be pretty stupid. A few ways to fight
       | inflation is buying dollars and selling them later: our inflation
       | index goes hand to hand with our USD:ARS, even even below that
       | (intuitevly it may be a problem). So it makes no sense to buy
       | things to store later. What we do is buy stuff such as
       | electronics in isntallments payments, even if the interest rate
       | is high. Quick example: If I buy a computer in cash, its price is
       | 100. If I have to pay 12 installments, each installment is 20
       | (240 in total). However, in one year, due to inflation, 20 may be
       | nothing compared to what i earn (salaries are also raised to try
       | to keep up with inflation), so big payments we usually do that.
       | But almost no one get groceries in installments, etc (also: your
       | credit card / bank imposes you a limit on installments payment,
       | so it doesn't make sense to waste them in daily things and you
       | try to save it for when you need it, such as electronics or
       | emergencies)
        
         | caeril wrote:
         | > In fact, anyone who would do that wouldn't be smart at all,
         | would be pretty stupid
         | 
         | Can you expound on why this would be "stupid"?
         | 
         | Holding dollars to exchange for later incurs a 7% (current
         | dollar purchasing power loss rate) loss on top of exchange
         | fees. The can of tuna retains its food value exactly as-is for
         | years, with no currency exchange costs. Seems to me that the
         | tuna beats holding dollars handily.
        
           | lottin wrote:
           | Currencies don't have inflation rates. Countries do.
        
             | legutierr wrote:
             | Do two countries that share the same currency have
             | different inflation rates? Are El Salvador and Ecuador
             | experiencing different inflation rates than the United
             | States?
        
               | noselasd wrote:
               | Yes they have different inflation rates.
        
               | lottin wrote:
               | Inflation rates even vary among different regions within
               | the same country.
        
         | yazantapuz wrote:
         | Argentinian here, 37 years old, middle-class. I known a lot of
         | people who bought all the non-perishable food they can like
         | tuna, and others good because the rampant inflation. Myself
         | included.
        
         | anikuni wrote:
         | Is the Argentinian inflation being "fought" by any government
         | program? I've studied a lot of Brazil's hyper-inflationary
         | period, and boy was it difficult to overcome it. Basically,
         | once the industrial growth went below the inflation-rate
         | everything went (slowly) belly up. It happened at two distinct
         | times: one at Kubitschek's presidency, and the other during the
         | military junta. Trouble is that our economy became "indexed"
         | everywhere, so people would mark-up their prices at
         | inflation+x%, then the _actual_ inflation would be the
         | forecast+x%, which is an exponential process. After two decades
         | of failed attempts, the solution was found via a financial
         | reform, done all throughout the 90s, and then a modern copy of
         | Germany's anti-hyper-inflation Rentenmark program, which
         | created the Real. The solution (or so the mainstream history
         | says) was to create a price "anchor" for everyone, which was
         | pegged to the dollar (one of the main culprits were the large
         | devaluations vis-a-vis the USD, a vicious cycle of
         | inflate->devalue->inflate->...), and at the same time
         | attracting foreign investment via a large real interest rate
         | (far above the remaining inflation). What we are going through
         | now in Brazil is a slow reversal of that, inflation is picking
         | up again, and the central bank's actions are seemingly slowing
         | down the economy and not being able to control inflation (so
         | long, Phillips Curve).
        
         | tigershark wrote:
         | I'm trying to understand how would it work for mortgages. I
         | guess that you have no fixed interest mortgages and they are
         | all tied to the inflation rate + some spread, otherwise I don't
         | see how the banks would want to lend you money for a house.
        
           | marcosdumay wrote:
           | Everything is linked to the inflation rate. Fixed interest
           | lending does not exist at all.
           | 
           | Even then long term lending can easily go both ways, and
           | become too cheap or too expensive very quickly.
           | 
           | (I lived my childhood with hyperinflation, not in Argentina,
           | but that doesn't actually change from one place to another.)
        
             | ed25519FUUU wrote:
             | Variable rate loans make a lot of sense. It's still strange
             | to me that in the USA I can get a 30 year FIXED mortgage at
             | 2.75% when inflation was 7%.
             | 
             | Makes "inflated" housing look cheap. Doesn't really make
             | sense that it's even offered.
        
               | JumpCrisscross wrote:
               | > _Doesn't really make sense that it's even offered._
               | 
               | Nobody serious is betting inflation will remain at 7%.
               | That was an annualised rate from a single reading.
        
               | dragonwriter wrote:
               | > It's still strange to me that in the USA I can get a 30
               | year FIXED mortgage at 2.75% when inflation was 7%.
               | 
               | A variable 2.75% with inflation at an unusually high 7%
               | would be weirder than a fixed; a variable rate loan has a
               | rate based on current conditions, a fixed rate loan has
               | rated based on expectations over the lifetime of the loan
               | (both in terms of value of money and risk of loss.)
               | 
               | Now, it may seem weird that you can get a 30-year fixed
               | loan _at all_ , but once you accept that, having the rate
               | below current inflation when inflation has been at a
               | unusually high level for a shirt period of time isn't
               | particularly odd.
        
           | tute666 wrote:
           | Argentinian here.
           | 
           | Personal credit lines are almost nonexistent or have rates
           | which supercede inflation, (inflation+10% is not out of the
           | ordinary). Credit card yearly interest rate for 2 years ago
           | was >= 70%
           | 
           | There are preeexisting credit lines for property, but they
           | are government subsidied mortgages with very a specific
           | target audience. ie: salaried mid income families looking to
           | buy their first property.
        
           | Izikiel43 wrote:
           | > how would it work for mortgages
           | 
           | That's Argentina's secret, there are no mortgages, properties
           | are bought in cash.
        
         | NikolaNovak wrote:
         | Before civil war in my old country a quarter a century ago,
         | people were doing the same thing: buy something big and
         | expensive in installments. First couple would suck. Last few
         | were negligible.
         | 
         | Another story that seems surreal to me now (having lived in
         | Canada 25 years): My grandma and virtually everyone her age was
         | habitually 3 order of magnitude off when it came to money.
         | She'd give me a 2 million dinar note and say "here's 2
         | thousand".
         | 
         | Every now and then there was a reset - basically you'd print
         | new money and lop of some digits.
         | 
         | I was <12 years old through this so only have vague memories
         | but man, what a crazy way to live -- and yet it was fairly...
         | "normal". Is what it is. Human brain adjusts to anything
         | (including to a certain degree the civil war that followed).
        
           | selimthegrim wrote:
           | When the civil war started (presuming this is ex-YU) did rate
           | of inflation really go up that much compared to before? My
           | understanding is it was bad in the late 80s, very bad 89,
           | stabilized in 90 thanks to Markovic, and then resumed going
           | up once the war kicked off.
        
             | sasawpg wrote:
             | Inflation stabilized very briefly, but the situation was
             | unsustainable and it quickly resumed. I was pretty young at
             | the time, but I remember that many people went for
             | weeks/months without getting paid. Some government
             | positions fared better than others, but overall the economy
             | struggled.
             | 
             | Then the war kicked off in 1991 and everything fell apart.
        
               | selimthegrim wrote:
               | Someone commented elsewhere on the thread with a video
               | clip of Markovic talking to the Federal Assembly.
        
           | kingofpandora wrote:
           | Turkey did a 1,000,000:1 conversion a while back. Before that
           | you could almost say that the local currency was millions.
           | 
           | - "How much is this book?"
           | 
           | - "9 million"
           | 
           | - "Here's 10 million"
           | 
           | - "And one million in change, sir"
           | 
           | OK, so that only worked up to a certain value. No one would
           | say their rent was "1,000 million". In that case, the
           | currency was billions!
        
           | travisjungroth wrote:
           | Mexico did a 1000-1 reverse split in the 90s. You still see
           | the old bills sometimes. You just treat a 20,000 pesos bill
           | as a 20.
        
           | edko wrote:
           | Since Argentina started having its own currency, it had to
           | reset it 5 times, dropping a total of 13 zeroes. I have
           | memories of two of those resets and, similar to what you say
           | about your grandma, I remember older people translating to
           | the older currency for a while, until they fully adapted to
           | the new one.
        
           | sasawpg wrote:
           | Unfortunately there were plenty individuals/businesses that
           | exploited inflation (among other things) during the war (and
           | leading up to it) for massive gain. They'd borrow heavily,
           | buy up as much staple as possible then quickly sell at a
           | discount. By the time original debt was paid back, high
           | inflation ate away at the original value of debt. So despite
           | originally selling at a loss, it was still a profitable
           | business.
           | 
           | That of course is assuming they even bothered to pay anything
           | back. Often enough it was a game of survival
           | (business/personal). Nothing to pay back if the person is
           | dead or business gone.
        
         | aeyes wrote:
         | Let's hope for you guys that some government genius doesn't
         | come up with the system Chile has: Inflation adjusted loan and
         | contract payments, obviously excluding salaries.
         | 
         | https://en.wikipedia.org/wiki/Unidad_de_Fomento
        
           | 627467 wrote:
           | There has been such thing[0] and it unlocked affordable
           | mortgages in a country where in the past years (decades?) it
           | was basically impossible to get (and thus, climb the housing
           | ladder).
           | 
           | [0] https://www.marval.com/publicacion/creditos-en-uva-como-
           | alte...
        
       | [deleted]
        
       | [deleted]
        
       | kerneloftruth wrote:
       | Odd how the author doesn't even touch on the causes of
       | Argentina's persistent inflation. Rather, it's presented as
       | though it came from nowhere, and the only real story is how
       | people deal with it.
        
         | uejfiweun wrote:
         | The Washington Post is no longer concerned with giving readers
         | interesting and useful information. Instead, the entire
         | newspaper is devoted to fearmongering, spin, and propaganda. A
         | quick Google search for "Argentina Inflation Cause" yields the
         | following result: "the price increase in Argentina was fueled
         | by rapid expansion of the money supply". The WaPo very
         | explicitly wants to rapidly expand the money supply in order to
         | redistribute wealth and achieve "equity" or whatever the
         | buzzword is today. I'd guess that this is likely the reason why
         | they don't touch on this in the article - they want to distract
         | you from what's currently happening, and instead are
         | conditioning you to accept the outcome.
        
           | gruez wrote:
           | >The WaPo very explicitly wants to rapidly expand the money
           | supply in order to redistribute wealth and achieve "equity"
           | or whatever the buzzword is today.
           | 
           | Considering that they're owned by jeff bezos, why would bezos
           | want this?
        
             | caeril wrote:
             | > why would bezos want this?
             | 
             | Easy answer: The Cantillon Effect [ https://en.wikipedia.or
             | g/wiki/Richard_Cantillon#Monetary_the... ]
             | 
             | Whenever Central Banks print money, they don't load up
             | helicopters and distribute the funds evenly among the
             | populace. They work through close relationships with
             | Primary Dealers. The money enters the system through asset
             | purchases. But when banks' assets are replaced on their
             | books with cash, they have to _do_ something with that
             | cash. What do they usually do? Buy _other_ assets. Like
             | corporate debt. Like stocks. Money is fungible, and unless
             | there are specific regulations preventing it, the first
             | place freshly printed money goes is to the banks. The
             | second place it goes is whatever those banks buy. Think
             | index funds. Think AMZN.
             | 
             | Even in open-market operations, the money still finds its
             | way to AMZN. Example: The Fed pins the 2y-7y maturities
             | down by buying in OMO. SOMEONE is selling. Usually, it's
             | some sort of institutional fund with variable capital
             | controls. With the TSY prices too high for their desk, they
             | look for somewhere else to park their cash, like AMZN, or
             | the SPY.
             | 
             | The first at the trough always wins. The second at the
             | trough wins really big as well. Hacker News readers with
             | their FAANG incomes, RSUs, and 401ks, are pretty big
             | beneficiaries, too. The guy that raises your pastured free-
             | range eggs, though? By the time he's buying coop materials
             | and fencing, most of the purchasing power has already been
             | sucked dry from Bezos and you.
        
             | tomp wrote:
             | Because he has real wealth (Amazon stock) that isn't
             | affected by inflation (stocks rise as money loses value).
        
               | thebean11 wrote:
               | So who is wealth being redistributed from?
        
               | otikik wrote:
               | It's not the middleclass.
               | 
               | It's _everyone that isn't rich enough_.
        
               | MrPatan wrote:
               | You
        
               | thebean11 wrote:
               | Unless I happen to have a mortgage, or other dollar
               | denominated debt..
        
               | jaywalk wrote:
               | The middle class.
        
               | option_greek wrote:
               | Its not a distribution. Its a dilution. The rich gets
               | richer as they have most of their savings and capital in
               | form that is not taxable and also set to rise with
               | markets and real estate. The poor and middle class have
               | much smaller percentage of income working for them and
               | not usually have access to high growth opportunities.
        
               | uejfiweun wrote:
               | It's always the middle class that gets screwed, dude.
               | Happened with the income tax, happening now with
               | inflation, and will happen again once well-intentioned
               | but naive people pass a wealth tax.
        
               | itsumoiru wrote:
               | Whoever has the most USD cash. (In proportion to their
               | total wealth) most certainly not the "rich".
        
               | tomp wrote:
               | People with cash savings.
               | 
               | Employees with salary.
               | 
               | Owners of fixed income securities (government & corporate
               | bonds, mortgages).
               | 
               | Even owners of capital that sell stock (inflation causes
               | imaginary "capital gains" and the corresponding taxes).
        
             | beiller wrote:
             | Seems like it could be the bread and butter for Amazon's
             | new fintech startup - BNPL loans which is perfect for
             | hyperinflation based economies! Coming soon to a country
             | near you!
        
             | [deleted]
        
           | kgin wrote:
           | That's a lot of big claims about a very specific agenda. What
           | are you basing this on?
        
           | everybodyknows wrote:
           | > fearmongering, spin, and propaganda
           | 
           | You're missing the biggest one, the first commandment of 21st
           | century journalism:
           | 
           | Thou shalt not criticize the culture of another people,
           | howsomever much all evidence of a trouble's causes may point
           | in that direction.
        
         | harpiaharpyja wrote:
         | It's pretty bizarre.
        
         | steelstraw wrote:
         | That is curious. What are the causes?
        
           | pmcollins wrote:
           | gov't insiders printing money
        
           | hogrider wrote:
           | We print money like there's no tomorrow lol.
        
             | betwixthewires wrote:
             | Examining your statement literally is also very
             | illuminating. They literally treat the money like tomorrow
             | does not exist.
        
           | missedthecue wrote:
           | They are printing so much money that they had to outsource to
           | foreign printing presses -- their domestic facilities are
           | already running 24/7 at full capacity.
           | 
           | http://mriguide.com/argentina-plans-to-outsource-currency-
           | pr...
        
             | oneoff786 wrote:
             | Why wouldn't you just print larger denominations
        
               | notch656a wrote:
               | Because that would be admitting there is a problem. Do
               | you want to be the politician that authorizes change in
               | denomination while simultaneously explaining why you
               | haven't addressed why that is required. I'm guessing the
               | politicians don't want to touch inflation with a 10 foot
               | pole, because solving inflation is painful in the
               | beginning so it tends to be very bad for anyone elected
               | on any timespan less than a decade.
               | 
               | Milton Friedman called inflation like alcoholism, great
               | at the start but quitting is long and painful and most of
               | the rewards of stopping are delayed with only pain up
               | front.
        
               | edko wrote:
               | I would add to your excellent answer an anecdote about
               | the tricks of a previous government (with mostly the same
               | people as the current one) to hide inflation: the
               | Secretary of Interior Commerce (a complete thug) forced
               | McDonalds to freeze the price of the BigMac, so that
               | Argentina would look good on the BigMac Index. The prices
               | of all other burgers were more or less free to increase.
        
           | edko wrote:
           | Fiscal deficit. The public sector grows and grows by hiring
           | friends, family, and party members. In addition to that,
           | every government contract is overpriced for kickbacks, and
           | the government meddles in everything seeking opportunities
           | for corrupt personal profit. All of this spending and
           | corruption is financed by very high taxes that oppress the
           | private sector, and by debt. When you cannot increase taxes
           | anymore (in some cases, Argentina taxes are over 100%) and
           | when nobody lends you money anymore, the only solution is to
           | print money. But everybody knows that money is not worth
           | anything, thus creating very high inflation.
        
           | ajot wrote:
           | IANAE, but I'll say it's mostly seigniorage to fill up for
           | the fiscal deficit.
           | 
           | And if you try to cut the money printer (without taking
           | some.huge debt), you have to squash the deficit, which is
           | mostly subsidies to electricity, gas and public transport,
           | and non-contributive retirements. You can't, politically
           | speaking (and maybe legally too), cut the retirements, so you
           | have to cut the subsidies, which will increase the measured
           | inflation, at least for a few months.
        
             | Izikiel43 wrote:
             | > You can't, politically speaking (and maybe legally too),
             | cut the retirements
             | 
             | Funny enough, that's what the current government did. They
             | removed a law from the previous government which ensured
             | that pensioners would be paid inflation + x% so that their
             | real income won't decrease, and now the government decides
             | on a whim what the pension raise would be (the pensions
             | have been increased by very little very sparsely),
             | effectively cutting retirements, as inflation eats through
             | them.
             | 
             | They can't cut subsidies because most of their voters are
             | poor, and if they touch that, shit hits the fan, whereas
             | they don't give a shit about old people, since they lose
             | them money and don't vote for them.
             | 
             | I'm so happy to have moved to the us and have a 401k and
             | ira accounts the government can't touch.
        
           | sleepingadmin wrote:
           | I don't know the answer, I never invest in south america so I
           | haven't really checked. So let's look together.
           | 
           | Inflation seems to have been a problem since around 2002.
           | From 2006 to 2015 it was kind of stable but bad. The currency
           | then dropped out.
           | 
           | GDP across that entire period seems collapsed. They
           | constantly are dipping into recessions. Their manufacturing
           | industry seems to be in decline since ~2012. Agriculture is
           | suspiciously flat. Mining is in decline for that entire
           | period. Seems to be whole economy collapse to me.
           | 
           | Labour participation rate is steady around 45% suggesting not
           | much tinkering with employment numbers. Which looks also
           | steady about 42%. Unemployment is pretty steady from about
           | 2006 to present around 6-8%. So their productivity is poor.
           | They'll very likely always be a second world country. What a
           | sad outlook.
           | 
           | Central bank balance sheets are all the rave, they only go
           | back to 2012. It looks as bad as any other country as of
           | late.
           | 
           | Money supply is sky high. They probably have ~300-600%
           | inflation locked in here. Holy.
           | 
           | Interest rates are in the 40-80% ranges? But real yields are
           | negative for sure. You cant save a dime in this environment.
           | 
           | Balance of trade is good since 2019 or so, but that probably
           | lines up well with collapse of their economy. Probably means
           | poverty on the rise bigtime? Otherwise has been bad for years
           | and has been in decline in scope.
           | 
           | Tourism died long before covid. Roughly in 2016 something
           | happened to kill their tourism industry.
           | 
           | Government credit rating is trash. Yet government debt is
           | rising.
           | 
           | Argentina's military spending had been bad since the 1990s.
           | 
           | No surprise to see their economic competitiveness is nearly
           | lowest ranked in the world.
           | 
           | household debt to gdp? Argentina has no household debt? You
           | cant get a mortgage at 40%+ interest rates. Therefore you
           | cant have debt. Their people have no debt and they are sitll
           | in collapse?
           | 
           | Corporate tax rate is recently down from an outrageous 35% to
           | a slightly less outrageous 25%. Personal tax is 35%, Sales
           | tax at 21%. So a total tax burden of easily well over 80%.
           | Argentinian people work for the government at least 80% of
           | the year. Does the government provide 80% back in services
           | and goods? I highly doubt that very much.
           | 
           | Since the problem has been ongoing so long. Politically it
           | can't be solved. I must admit I know nothing about their
           | politicians but if I were to shoot from the hip, their
           | current leadership is not ideologically aligned with fixing
           | it.
           | 
           | So easy prediction without crystal ball? They have at least 3
           | more years of absolute collapse. We're talking probably 20%
           | of people will enter poverty before this ends. It's going to
           | be very bad for the argentinian folks.
        
             | valcron1000 wrote:
             | As an argentine this is a spot on summary. We are in a
             | shitty situation and things are just gonna wet worse
        
               | notch656a wrote:
               | Given that large businesses are taxed and impeded to hell
               | and employees are taxed to the bone, is there any leg up
               | for those running a single man sole proprietorship
               | running business informally? As a total outsider I feel
               | like there's a special niche area left for 1 man run-his-
               | own-business opportunities to make a living here by
               | exploiting the structural problems that weaken the
               | marketability of larger business.
        
             | Izikiel43 wrote:
             | > From 2006 to 2015 it was kind of stable but bad.
             | 
             | Just an FYI, the government at that time (which is the
             | current government) fudged the official inflation numbers
             | to pay less interest and to say there was no inflation, so
             | if your inflation numbers are from official sources for
             | that period, they are not true, inflation increased every
             | year since 2002.
        
           | mgh2 wrote:
           | They have a history of defaults, but mainly gov. corruption
           | 
           | Crypto fans like to compare to the US, but there is a key
           | diff: the work ethic.
           | 
           | Money printing + no production = stealing + inflation +
           | defaults
           | 
           | The US has the production and work ethic to compensate so far
        
           | victorcharlie wrote:
           | It's a combination of factors but, basically: Populism and
           | its mania with expending more money than what it generates in
           | stupid ways.
           | 
           | An obsession from a big part of the society to sustain
           | obsolete and uncompetitive industries with state money just
           | to avoid "losing jobs".
           | 
           | Draconian taxation for productive and competitive industries
           | (Ag mostly, IT affected too). Slow, confusing and corrupt
           | bureaucracy requiered for starting a new bussines.
           | 
           | A hecktonne of social assistance that barely keeps the
           | persons from starving but don't provide real social
           | ascension.
           | 
           | Obscene subsidies to electricity and natural gas (think about
           | rich people warming their pools during winter).
           | 
           | Sorry that I don't provide raw numbers, I'm in my lunch break
           | and really don't want to sour it.
        
       | culopatin wrote:
       | I took my American girlfriend to my hometown this winter (summer
       | there) and we both realized that what Argentina needs is a Nelson
       | Mandela of sorts.
       | 
       | There is SO MUCH to do. But everyone has just given up.
       | 
       | It's a psychological and social problem more than an economical
       | problem now.
       | 
       | I tried to generate business for people paying for things in
       | dollars and the mistrust is so high that no one wants to do
       | anything because they think you're about to scam them. And they
       | have reason to. But no one is starting a business there, why
       | would you?
       | 
       | The entrepreneurial vibe of HN is absolutely nonexistent in
       | Argentina. So much that when someone young opens a business that
       | is mildly successful the news dedicate an article to them. "Look,
       | Argentinians generating jobs!"
       | 
       | It's sad and I bang my head everyday at how I can go back home
       | while creating jobs and fighting the stupidity of the government
        
         | [deleted]
        
         | nate_meurer wrote:
         | What would you want Argentinian Nelson Mandela do to try to
         | turn things around?
        
           | culopatin wrote:
           | People need to believe that they can change the situation
           | they are in. They need to think of what they are capable of
           | working on and feel like other people will join them to do
           | good, not to fuck with them.
           | 
           | Things as simple as not dumping trash outside of where you
           | live. Or getting together with your neighbors to clean up
           | your block to make it look nice.
           | 
           | Helping each other is no longer a thing in Argentina from
           | what I can see. Everyone is so used to having to protect
           | everything they have that they have isolated themselves in
           | their pockets and everyone else can go fuck themselves. You
           | can't get up and go work like that.
           | 
           | I think Argentina needs a social leader that will make them
           | think this way.
        
             | cjbgkagh wrote:
             | South Africa is on my watch list for a failing state. Not
             | sure if Argentinians situation could be improved by
             | emulating it. This is what happens 'when money dies'. I
             | worry that there is now a false nostalgia,a simulacrum, for
             | communism without an understanding of the damage it does.
             | In Eastern Europe I unexpectedly bore witness to the scars
             | left on the human psyche from those who lived it. Even long
             | removed from it they are still very damaged by it. There is
             | no analog in the west so it is hard to explain, it's like
             | chunks of their soul were removed. Their specter has
             | haunted me ever since. What's happening in Argentina was
             | entirely predictable and unfortunate.
        
             | nate_meurer wrote:
             | Is there any hope? That is, are there any people currently
             | in Argentinian politics who might be credible agents of
             | change?
        
               | Izikiel43 wrote:
               | Not really. There are new libertarian congressmen making
               | waves (Javier Milei and Jose Luis Espert), by demanding
               | taxes be lowered and public spending reduced as people
               | can't afford to live anymore (Argentina spends waaaay
               | more than it makes, hence inflation and debt), but they
               | are still small parties in the national scale.
               | 
               | The big ones (Peronismo, which is a national socialist
               | fascist leftist communist party (yes, it's weird, but
               | it's that), and Cambiemos, which is Peronismo light
               | mostly) are more or less in accordance to keep the status
               | quo as politicians and public employees like how life is.
        
             | mistermann wrote:
             | This describe much of the western world at this snapshot in
             | time, if to differing degrees.
             | 
             | In Canada for example, it seems many people are treating
             | real estate like the lady in the story treats cans of tuna:
             | buy as much as you can afford. And, our government seems
             | similarly disinterested in the problem.
             | 
             | It's very tempting to conclude that this is all by design
             | (this sentiment is picking up a lot of steam in Canada, and
             | I wouldn't be surprised if it is partially true), but I
             | think what's more realistic is that this is simply
             | emergence in action: a system such as the one we live in
             | (Earth, humanity, etc) combined with particular forms of
             | governance (representative democracy) eventually produces
             | the phenomenon we are now seeing more or less globally:
             | concentration of wealth and power, at a constantly
             | increasing rate.
             | 
             | I think it's possible for leadership to change this, but I
             | do not personally believe that representative democracy is
             | necessarily capable of discovering such a leader and
             | allowing them to advance through the ranks. Perhaps in
             | anomalous situations someone could slip through, but my
             | intuition is that anyone with righteous populist goals
             | (maximizing well being for all people) would make it
             | through the many sophisticated filters that exist, one of
             | the main ones being the media.
        
         | Atlas667 wrote:
         | You seem to have a pretty idealist notion of societal
         | development. Did you ever think that maybe your business did
         | not inspire confidence?
         | 
         | What you see in your country is true of any nation in distress
         | and has nothing to do with the individuals moral or mental
         | capacity. It has more to do with the economic policies and
         | conditions of the nation. Industry lackey politicians from
         | every side and the IMF have more to do with this than the
         | people's lack of entrepreneurial spirit, I'm surprised the
         | article didn't even mention them.
         | 
         | "Men make their own history, but they do not make it as they
         | please; they do not make it under self-selected circumstances,
         | but under circumstances existing already, given and transmitted
         | from the past."
         | 
         | "...the final causes of all social changes and political
         | revolutions are to be sought, not in men's brains, not in men's
         | better insights into eternal truth and justice, but in changes
         | in the modes of production and exchange."
        
         | CountSessine wrote:
         | It sounds like what Argentina needs is Paul Volcker, not Nelson
         | Mandela. What would Nelson Mandela do?
        
       | ABraidotti wrote:
       | I spent 9 months in South America in 2012-2013, 5 of which I
       | lived in Palermo Hollywood, Buenos Aires, aka the hipster ex-pat
       | neighborhood. I loved it -- for the most part. I recall a few
       | salient aspects of everyday life related to money:
       | 
       | - sometimes when I'd buy something at the chino (corner store run
       | by Chinese immigrants), I'd get candy instead of my change back,
       | due to the coin shortage. No arguing with them about that.
       | 
       | - I would get empanadas down the street at a bakery almost every
       | day, and the woman who owned it would complain and almost start
       | crying if I brought a bill that was too big (like a 100-peso
       | note). I would occasionally buy fewer items than I wanted because
       | I had smaller bills. I think she was happier that way.
       | 
       | - the best exchange rate for American dollars was the downtown
       | grey market on Avenida Florida, where tourists would frequent. I
       | would just walk down and guys would notice me as a tourist, and
       | say "cambio alla" and point me around a corner, where I could
       | trade American dollars for whatever the rate in pesos was that
       | week. There was an official unofficial exchange rate, better than
       | the official exchange rate.
       | 
       | - across the river, Uruguay just straight up abandoned their own
       | peso and used American dollars instead. Same with Ecuador as I
       | later found.
       | 
       | - when I got tired of wine, I'd get beer at this brewery in
       | Palermo -- Orion, I think it was called. I can't remember. But I
       | do remember in October 2012, beers cost about 24 pesos and were
       | about 36 pesos by spring 2013. Cheaper for me since my wallet was
       | backed by USD, but that just meant I drank more beer. :)
       | 
       | I really miss BA sometimes.
        
         | msoad wrote:
         | I'm in Palermo right now. As FAANG engineer I'm making so much
         | more money than average Argentine. Life is good! Beer in a bar
         | is $200 peso now. Still less than $1!
        
       | dakial1 wrote:
       | Brazil hyperinflation case is a great read, both on the
       | instruments that appeared to take advantage of it (and ultimately
       | put more gas on the fire) and also on how Brazil managed to
       | tackle it (it was more a behavior science thing than economics).
       | 
       | https://www.npr.org/sections/money/2010/10/04/130329523/how-...
       | 
       | Interesting things that I remember from that time:
       | 
       | - Hypermarkets made a boom, because people would make big monthly
       | groceries purchases right when they got their salaries, and avoid
       | small frequent purchases (as the money would lose value with
       | time, very quickly)
       | 
       | - Price freezes were very frequent and very ineffective as
       | companies would simply stop producing/selling, generating product
       | shortages everywhere.
       | 
       | - A financial device called Overnight, were you would convert
       | your brazilian currency (had many names) into USD at night and
       | then convert it back to BR on the next day
       | 
       | - Government would try to control USD exchange rates and this
       | simply created a black market that got so widespread that the
       | black market (called "parallel market") had its rates published
       | at newspaper and TV like a normal thing.
        
         | matheusmoreira wrote:
         | The value of the old currency approached zero, so we created a
         | new one. This is a pretty standard solution really. This is the
         | fate of all inflationary currencies. What's impressive is how
         | they managed to manipulate the population into believing _this
         | time_ everything would be different. Inflation was not
         | controlled, it continues to this day, only slower.
         | 
         | At least we don't have presidents stealing everyone's money
         | anymore. That's the sort of insanity that cryptocurrency was
         | invented to stop.
        
           | bosie wrote:
           | How does a cryptocurrency prevent a president from stealing
           | money from the population? Public records of all currency
           | transactions?
        
             | matheusmoreira wrote:
             | They depend on the banks to enforce policy. If you get rid
             | of the banks, there's very little they can do. That's what
             | cryptocurrency was supposed to be all about. In practice we
             | ended up with pseudobanks called exchanges running this
             | space.
             | 
             | There were people who saw it coming and withdrew their
             | funds before the president ordered accounts frozen.
             | Everyone thought they were insane because interest rates
             | were sky high. They became richer overnight.
        
         | option_greek wrote:
         | > A financial device called Overnight, were you would convert
         | your brazilian currency (had many names) into USD at night and
         | then convert it back to BR on the next day
         | 
         | Who eats the loss from the fluctuations in this case? Any idea
         | how the providers used to hedge against the risk.
        
       | The_rationalist wrote:
        
       | msoad wrote:
       | I am in Argentina right now. in the two weeks that I've been here
       | I exchanged dollars for 196, 206 and 210 Pesos in each few days.
       | I can't believe the rate changes this quickly.
       | 
       | Tip: if you're planning to visit Argentina make sure you're
       | bringing cash. Using your credit card would mean paying double
       | the amount due to the difference between official and "blue
       | dollar" exchange rates.
        
       | anovikov wrote:
       | In Russia, a period of high inflation in 1990s and early to mid
       | 2000s made people simply think in dollars. Whatever price or
       | income you get, you just convert into dollars in your head and
       | now you know what it's worth. Saving were only USD cash. Although
       | inflation is long gone, people over 35-40 still think this way to
       | this day
       | 
       | In Belarus, where there is no high inflation, but just periodic
       | (once in 3-7 years) sudden devaluations of the local currency,
       | people always think in dollars, and many employers set salaries
       | in dollars too. Even government sets rent on government property
       | and some taxes in dollars or euros just to avoid the hassle of
       | recalculating it too often. After a while, people got used to it
       | and it's not a problem at all - no one but government employees
       | who get salaries in local currency, is even worried about the
       | exchange rate (and those employees can't survive on salaries
       | anyway - they are dependent on bribes as salaries are laughable -
       | and bribes are in USD).
        
         | marcodiego wrote:
         | We had what we called "hiper-inflacao" (hyper-inflation) in
         | Brazil during the late 80's and early 90's. My father
         | calculated the prices in gasoline liters.
        
         | throwaway22032 wrote:
         | > Although inflation is long gone
         | 
         | Well, you say this, but then there was that time in 2014 when
         | the ruble went from about 40 RUB/USD to 60-70RUB/USD...
        
           | anovikov wrote:
           | That's true, but there wasn't any super major inflation
           | spike. Everything just became cheaper in dollars.
        
         | foobarian wrote:
         | In ex-Yugoslavia, due to large numbers of people guest-working
         | in Germany, we ended up de-facto pinned to Deutschmarks.
         | 
         | One of my favorite memories is watching the news where Ante
         | Markovic announced the denomination of the dinar, where they
         | basically ran out of room on the bills for all the zeros and so
         | just declared that henceforth they would print "new dinars"
         | which are same as "old dinars" but without the trailing 4
         | zeros. Markovic waved one of those bills in front of the
         | parliament, started laughing with joy, and there was applause.
         | [1]
         | 
         | [1] https://youtu.be/G3dSOfoQiaY
         | 
         | Of course what I didn't understand at the time is that they
         | also officially pegged the exchange rate to the German Mark,
         | which made the currency convertible and stabilized the
         | inflation rate. Now I see that deleting the zeros was mostly
         | showmanship (though it helped lessen the confusion).
        
           | keiferski wrote:
           | Bosnia still has the mark. It's an interesting link to the
           | past.
           | 
           |  _Initially the mark was pegged to the German mark at par.
           | Since the replacement of the German mark by the euro in 2002,
           | the Bosnian convertible mark uses the same fixed exchange
           | rate to euro that the German mark had (that is, 1 EUR =
           | 1.95583 BAM)._
           | 
           | https://en.m.wikipedia.org/wiki/Bosnia_and_Herzegovina_conve.
           | ..
        
             | foobarian wrote:
             | That is amazing. Straight out of an episode of Top Lista
             | Nadrealista.
        
               | sasawpg wrote:
               | Don't think I ever expected to see that reference here!!
        
           | selimthegrim wrote:
           | Well, that clears things up.
        
         | spuz wrote:
         | This is known as currency substitution or dollarization and can
         | be done officially or unofficially. But what happens when the
         | world's currency also inflates?
         | 
         | https://en.m.wikipedia.org/wiki/Currency_substitution
        
           | adventured wrote:
           | > But what happens when the world's currency also inflates?
           | 
           | It's a relative premise of course. The USD Index [1][2]
           | (currently over 97 and rising) indicates the USD isn't being
           | debased at a faster rate than the other major currencies. The
           | EU, China and Japan have debt & spending problems every bit
           | as bad as the US (with the EU and Japan having far worse
           | growth problems), choking at their economic and political
           | systems persistently and requiring forever interest rate
           | games. So if, this decade, Argentina's currency debases at
           | 20% per year and the USD debases at 5% per year, and there
           | are no superior alternatives in the currency realm (eg the
           | other major currencies are doing something similar), you'll
           | largely mentally disregard the USD inflation, as all the
           | major boats are getting the same tide, and your USD choice is
           | still the right one vs the local currency. And if you can,
           | you may properly choose to diversify whenever possible into
           | inflation hedging assets with surplus cash, trying to balance
           | holding enough transactional USD vs inflation hedges to limit
           | some of the USD damage.
           | 
           | [1] https://finviz.com/futures_charts.ashx?p=d1&t=DX
           | 
           | [2] https://www.investopedia.com/terms/u/usdx.asp
        
         | gabythenerd wrote:
         | Venezuela sounds exactly like Belarus, bribes are expected for
         | common state procedures, even with those that the government
         | already set in dollars like getting a passport.
        
           | deadalus wrote:
           | Venezuala ranks 177th out of 180 in the latest Corruption
           | Perceptions Index (CPI) :
           | https://www.transparency.org/en/cpi/2021
        
       | totalZero wrote:
       | This article paints a pretty picture of how Argentine people
       | manage persistent inflation, but reality in the interior of the
       | country (ie not Buenos Aires) is much less clever and functional
       | than what is depicted. Not everyone can buy peanut butter on
       | credit. Rather than seeking arbitrage opportunities and investing
       | in nonperishable goods, many people are fatigued by inflation.
       | Some live hand to mouth. Shopkeepers don't always move their
       | prices when the currency moves. The national bank publishes
       | currency bid/offer numbers that falsify the offer side of the
       | market for pesos. Surrounding nations have seen an influx of
       | projects from Argentine investors who seek to take money into
       | more functional economies.
       | 
       | Meanwhile, people in Argentina have cultural characteristics that
       | I found surprising. The more bohemian people have an anti-work
       | culture yet they blamed Macri and other capitalists for not
       | having promptly repaired the damage done by leftist predecessors.
       | Some indigenous groups enjoy receiving free seeds and ignore
       | other factors that may affect their prosperity. When the country
       | brought Kirchner back, the foreign investment community recoiled
       | as evidenced by the overnight devaluation of the currency. Many
       | strategic subsidies exist, and some people don't realize that
       | subsidies and handouts in a nation that can't afford its debt
       | service are not a sharing of wealth, but rather a cause of
       | inflation. Past lockdowns of foreign exchange under Kirchner
       | spooked outside investors, so in some industries such as mining,
       | foreign companies tapered off their projects in mid-2019 when it
       | became clear that Alberto/Cristina would take power.
       | 
       | Resigning yourself to weird survival tactics in a place where the
       | economy doesn't function is not "a way of life." Argentina
       | sustains itself because of its substantial domestic production
       | (which insulates certain markets from exchange rates) and the
       | fact that people depend on government handouts. Hoarding
       | toothpaste may save a few bucks, but it's not paying the bills.
       | The only other countries in the Americas with such a problematic
       | currency situation are the ones facing economic sanctions.
        
         | aunty_helen wrote:
         | >The only other countries in the Americas with such a
         | problematic currency situation are the ones facing economic
         | sanctions.
         | 
         | Chile has economic sanctions? Colombia? Mexico?
         | 
         | Inflation is just a fact of life here to the point that in
         | Colombia there's an inflation adjustment applied to prices on a
         | lot of things as the new year ticks over.
         | 
         | If you look at the USD / Latin American currency pair you'll
         | find none of them are stable but each is at a different stage
         | in the 0-Bolivaries journey.
         | 
         | If you want an anecdote, friends bought a car last year. They
         | can now sell it for a higher price used than what they bought
         | it for. Isn't that great!? They think so.
        
           | travisjungroth wrote:
           | None of those countries are anywhere close to the inflation
           | of Argentina. And the car story isn't just about inflation
           | but a global shortage on cars.
        
             | aunty_helen wrote:
             | >you'll find none of them are stable but each is at a
             | different stage in the 0-Bolivaries journey.
             | 
             | 2 years ago Argentina had similar inflation to what other
             | South American countries are now. They had just had an
             | election and change of govt and that's when currency
             | controls kicked back in, the blue rate started again etc.
             | 
             | Colombia has an election this year and one of the
             | favourites often gets compared to that guy in the
             | neighbouring country.
             | 
             | I would also expect locally produced and sold cars to be
             | somewhat less impacted by this. Literally can't sell these
             | cars in first world markets due to them being stripped out
             | of saftey features, etc.
        
               | travisjungroth wrote:
               | How would you define "stable" so that no Latin American
               | currency matches? MXN has been 3-7% inflation for 20
               | years. CLP had a big swing with the global financial
               | crises and more recently but is otherwise around 5%. COP
               | has been under 10% for 20 years, mostly around 5%. I
               | think what you're saying just doesn't fit the facts.
               | 
               | The claim that they're all at different stages on a
               | 0-Bolivares journey is unfalsifiable. You can always say
               | it's going to happen later.
               | 
               | The car market is global. Colombia imports about half of
               | its cars. A rise in import prices is going to increase
               | domestic demand and prices as well. And the cause of the
               | shortage is the global computer chip shortage, and
               | Colombia imports those.
               | 
               | None of your anecdotes about inflation are unique to
               | Latan America or Colombia. Everywhere has seen car prices
               | spike and everywhere people update prices every year. And
               | just look at the charts if you want some data. The point
               | you dismissed about only sanctioned countries have worse
               | inflation seems correct.
        
               | aunty_helen wrote:
               | >The car market is global. Colombia imports about half of
               | its cars. A rise in import prices is going to increase
               | domestic domains and prices as well. And the cause of the
               | shortage is the global computer chip shortage, and
               | Colombia imports those.
               | 
               | This is becoming very arm chair critic. Cars that are
               | produced locally are shitty Renaults, Nissans Chevolets
               | etc. These cars as I mentioned, can't be sold into
               | markets with normal safety standards, so aren't competing
               | for export sales.
               | 
               | Colombia imports things like Mercedes / BMWs and other
               | brands that a different class of people buy. It's very
               | common here to have a market split between cheap local
               | and expensive, highly taxed imports. Cheese would be
               | another thing example of this. Perhaps that wasn't well
               | represented on your chart.
               | 
               | As for the other points, inflation over 20 years. If you
               | have 12 'good' years and then the most recent 8 have been
               | spiraling out of control does that make the 20 year
               | figure a good representation? You can smooth the recent
               | high inflation out over 20 years just like icing on the
               | cake?
               | 
               | If you want, I'd like to take a long bet with you. You
               | win, I'll pay you in COP, I win you pay me in USD.
        
         | pvarangot wrote:
         | > The only other countries in the Americas with such a
         | problematic currency situation are the ones facing economic
         | sanctions.
         | 
         | Argentina is not receiving economic sanctions but it's pretty
         | much cut out from international credit. Last time the country
         | had access to good credit mostly from other Latin American
         | countries it was not doing that bad. That stopped when
         | Venezuela and Brazil crashed.
         | 
         | Maybe the huge interest rates and being cut out makes sense
         | because "we don't pay", maybe it doesn't because some of that
         | credit was taken by a dictatorship or by wildly unpopular and
         | corrupt governments, but it does work pretty much as an
         | economic sanction.
         | 
         | Honestly I used to think this was unfair in the later 90s early
         | 2000 when most of that debt came from lending by a US backed
         | dictatorship or from a corrupt government that was basically in
         | the pocket of big corporations. But it's true that as
         | Argentinians there was not much we did against the former
         | dictators, who most got pardoned or only saw consequences in
         | the last years of their lives. Oh and the president from the
         | corrupt government died a senator and only saw some years of
         | house arrest from selling weapons to Ecuador when they were
         | sanctioned. It's not clear for me if "the Argentinian people"
         | are really ok with that or not anymore.
        
           | marcosdumay wrote:
           | Being cut from international credit isn't something that
           | creates inflation anyway. The situation is actually that
           | Argentina is cut because of the same bad administration that
           | got you the inflation.
           | 
           | Getting access to international credit also will not stop the
           | inflation. It can help a competent administration to survive
           | the change into low inflation, but credit by itself is not
           | something good (it's actually a bit bad), it's only helpful
           | when invested competently.
        
             | wbsss4412 wrote:
             | Without access to credit, the only way to run a budget
             | deficit is to print money. It is false to assert that
             | having access to reasonably priced credit would have _no_
             | effect on inflation.
        
               | totalZero wrote:
               | Corruption is one major problem with foreign loans to
               | Latin American nations.
               | 
               | In theory, money that is borrowed gets put to use for
               | programs that generate revenue. That revenue may result
               | in taxes or may support the treasury directly in some
               | cases, but either way the notion is that the loan
               | generates a return that pays the debt service (or bridges
               | the borrower over to a future cashflow that can pay the
               | debt service of the new loan).
               | 
               | That return can't be generated if the money is not put to
               | good use. As a result, loans that come due are often
               | either refunded further out, or forgiven/restructured
               | with certain concessions. By "concessions" I mean the
               | country makes domestic and foreign policy changes that
               | benefit the lender in some way.
               | 
               | Argentina tapped IMF funds during Macri's presidency
               | despite the 2014 default. I see the 2020 default as a
               | negotiation tactic. It's a little unreasonable to assert
               | that a country that owes hundreds of billions of dollars
               | lacks access to credit -- and if indeed we describe them
               | as lacking access to credit, it's only because they have
               | over-accessed credit in the recent past.
               | 
               | Lending a country more money under such circumstances
               | often compromises their ability to support self-
               | beneficial foreign policy, and kicks the debt can further
               | down the road. It trades a big problem today for a bigger
               | problem tomorrow.
        
         | MomoXenosaga wrote:
         | IMF handouts. I suppose the rest of the world can't let
         | Argentina turn into a failed state so they'll be bailed out.
         | 
         | I wonder if Argentinians feel shame or humility?
        
           | tute666 wrote:
           | Just a scorching hate for our politicians.
        
             | CountSessine wrote:
             | ...and yet you voted for those politicians?
        
               | tute666 wrote:
               | a majority of people voted for this govt in particular,
               | yes. Thats how democracy works. Its the same system that
               | voted for bolsonaro, trump, etc...
        
               | CountSessine wrote:
               | So clearly some people _didn 't_ hate them? In fact,
               | maybe the majority?
        
       | ajot wrote:
       | As I read on Twitter the other day: this is the country where you
       | buy home appliances in 24 monthly payments (without interests)
       | but you buy a house in one payment, cash only.
        
         | victorcharlie wrote:
         | Cash = USD.
        
       | alexpotato wrote:
       | This reminds me of the "fake money" story NPR did a while back
       | about why the Brazilian currency is called the "real" (pronounced
       | "reh-al" but literally "the real").
       | 
       | It's a fascinating story on how to approach inflation using a
       | combination of classical and behavioral economics
       | 
       | https://www.npr.org/sections/money/2010/10/04/130329523/how-...
        
       | [deleted]
        
       | gtirloni wrote:
       | I don't understand why Argentina doesn't just do like Brazil did
       | [0] to fix its inflation.
       | 
       | 0 - https://en.wikipedia.org/wiki/Unidade_real_de_valor
        
         | diego wrote:
         | Study Argentine history. They have tried everything imaginable,
         | and managed to control inflation for a while. Look at the 1-1
         | peg between the peso and the dollar that lasted 9 years. It's
         | much more complicated than you think.
        
           | Izikiel43 wrote:
           | I mean, they tried everything, except the measures that
           | actually work, i.e., reducing public spending, raising
           | interest, stop printing money for a few years.
           | 
           | Every country that did that got inflation under control, the
           | problem is Argentina doesn't want to spend less, so they
           | print like there is no tomorrow.
        
           | fuoqi wrote:
           | The peg was one of the main reasons why Argentina got into
           | this mess in the first place.
        
             | diego wrote:
             | That is an opinion. The 2001 crash caused a crisis, then a
             | recovery, then two decades went by with many ups and downs.
             | The entire peg might have never happened and Argentina
             | might still be where it is today. Are you old enough to
             | remember the hyperinflation of the late Alfonsin period? I
             | lived through it. No peg preceded it.
        
           | maxilevi wrote:
           | Except reducing the fiscal deficit, seems like no goverment
           | wants to try spending less than what they have.
        
           | marcosdumay wrote:
           | They never tried a program like the Real.
           | 
           | Currency pegs are one of those things that known to fail
           | every time, by the way.
           | 
           | Anyway, the answer to the GP is that the government will need
           | to severely cut their spending. That's the same reason on
           | every country with high inflation.
        
             | diego wrote:
             | Exactly. The reason inflation happens is that the
             | government overspends, then prints money because it can.
             | There are no magic tricks to stop inflation if you're
             | constantly devaluing your currency.
        
         | [deleted]
        
         | tute666 wrote:
         | This resolves the psychological inertia component of inflation.
         | Its not a solution on its own. It also requires political
         | compromise, reduction of govt expenditure and ,at the very
         | minimum, curtailing expansion of the monetary base.
        
       | cmusfan wrote:
       | Is this better or worse than Bitcoin? Not an an economist, or
       | Bitcoin invester, just curious.
        
         | RedBeetDeadpool wrote:
         | Inflation as a way of life is living with a mercurial
         | definition of a measuring stick for the promise of economic
         | stability provided by someone else.
         | 
         | Personally I'd say its a lot worse.
        
       | thesausageking wrote:
       | I've hired a lot of contract developers in Argentina over the
       | years and most now ask to be paid in Bitcoin. If I wire them USD,
       | between fees, loss from the "official" exchange rate, and
       | inflation, they lose 15-30%.
        
         | pera wrote:
         | It's actually much more than 15-30% if you go with the
         | official/legal way: I would say you likely lose ~70% at the
         | moment. Most people doing contract jobs in Argentina have a
         | bank account in Uruguay, the US or Europe, and use
         | cryptocurrencies or travel to bring cash.
        
           | anm89 wrote:
           | That's pretty astounding. Would you be willing to breakdown
           | how 70% gets lost on a transfer?
        
             | edko wrote:
             | You will be compelled to exchange your dollars at the
             | "official" exchange rate (which is about 1/2 of the real
             | market value), so you lose ~50% there. On top of that, you
             | have to pay taxes.
        
             | emi420 wrote:
             | When a company sends USD to a bank account in Argentina,
             | the bank must to convert that amount to "pesos argentinos"
             | (ARS), using the "official rate". You can't get USD
             | transferred to your account from other people than yourself
             | (or a company owned by you).
             | 
             | Right now the "official rate" is 110,5 ARS for each USD,
             | but if you sell your USD (using crypto or in the "dark
             | market") and get ARS, you'll get 222,5 ARS for each USD.
             | 
             | And that's before the taxes.
        
               | yazantapuz wrote:
               | And you can't bought more than 200 USD per month at the
               | official rate, so the need to bought the USD through an
               | exchange or in a "cueva".
        
         | gabythenerd wrote:
         | I currently live in Argentina, the loss rate is much higher,
         | between fees and the official exchange rate you lose about 65%
         | of any income you perceive. Aside from crypto, Payoneer is also
         | popular (you go outside the country regularly to get cash).
        
         | Izikiel43 wrote:
         | > 15-30%
         | 
         | What a weird way to write 60-70% (you are forgetting taxes)
        
           | wbsss4412 wrote:
           | Do taxes only exist in Argentina? Are you advocating tax
           | evasion here?
        
             | Izikiel43 wrote:
             | In Argentina, tax evasion is a way of living, everyone
             | there, young or old, rich or poor, looks for a way to avoid
             | taxes, since taxes coupled with inflation make life very
             | expensive, no matter your income -\\_(tsu)_/- .
             | 
             | The best way to live in Argentina is to be a ghost. No bank
             | accounts, nothing declared, everything you own should be on
             | someone else's name, earning usd in a foreign account and
             | you should live on cash (converting usd to pesos as
             | needed).
        
               | wbsss4412 wrote:
               | Tax evasion is likely what's causing the inflation.
               | 
               | Not saying I don't get why an individual does it, but
               | without the ability to reliably collect taxes, there's no
               | way to stop rampant fiscal deficits.
        
               | berns wrote:
               | But don't forget that no matter the amount of taxes
               | collected, politicians will find a way to spend more, so
               | there will always be a deficit and more money will always
               | have to be printed and whoever wants to reduce the
               | deficit will be accused of "tightening" (ajustar) the
               | Argentine people.
               | 
               | Argentina leads a ranking of world tax pressure:
               | 
               | https://www.ambito.com/economia/impuestos/la-argentina-
               | lider...
        
               | maxilevi wrote:
               | Not really. Tax collection from the Argentine goverment
               | grows higher than the inflation rate year by year.
               | 
               | The problem is over spending.
        
               | Izikiel43 wrote:
               | No, spending more than you earn like there is no tomorrow
               | for 20 years has caused inflation
        
             | 627467 wrote:
             | Is tax evasion worst than trading on unofficial channels? I
             | guess it depends on the jurisdiction doesn't it?
        
             | sbierwagen wrote:
             | It's a failed state. The taxes don't go to schoolteachers
             | or whatever, they go into the offshore account of the local
             | boss.
        
       | mgh2 wrote:
       | Video: https://m.youtube.com/watch?v=sWr-Ht1S_4U
        
       | cardosof wrote:
       | I used to work with team members in Argentina. They received in
       | local currency, so they had salary raises every now and then. It
       | sometimes didn't match inflation, though, and the moment the
       | members started talking about missing eating premium meat or
       | going to restaurants, I knew the company was running late to one
       | of those raises.
        
         | Jtsummers wrote:
         | The raises are often negotiated months to a year in advance
         | based on predicted inflation (and other factors). This means
         | they can easily fall short. When inflation rises enough faster
         | than expected, there may be additional raises put in to
         | compensate, but it isn't guaranteed.
        
       | wolfgang000 wrote:
       | I'm Venezuelan and today argentina's inflations look like the
       | venezuela's one in 2014~2016 and as you may already know that
       | only got worse and worse, hopefully, that is not going to happen
       | this time but looking at this trend I believe the best course of
       | action would be to be prepared to leave the country before all
       | collapse
        
         | tute666 wrote:
         | Whilst similar, you need to take into account that there is a
         | diversity in argentine economic activity that never existed in
         | venezuela. If there is some redeeming quality that can be
         | gleaned from argentine history is that it rebounds rather
         | quickly.
        
         | asabjorn wrote:
         | And it's the same kind of ideology that ruins both countries in
         | spite of both being extremely rich in natural resources.
         | 
         | My impression is that the various offshoots of Marxism, e.g.
         | Chavismo in Venezuela or wokism in the US, is a means for a
         | coalition of mostly upper middle class people to replace the
         | current ruling coalition with something that is effectively
         | feudalism with themselves on top. These people seem to feel
         | like they have the right to occupy the most powerful roles,
         | either due to the excellence of their ancestors or envy of
         | those that are perceived as their superiors, but doesn't
         | because they are mostly mediocre and often have wealth as well
         | as position through inheritance. That's why prosperity
         | typically fall after their takeover, as these are primarily
         | motivated position and not by an obsession about what the job
         | entails.
         | 
         | Has this been your experience with the Venezuelan ruling class?
        
           | mrjangles wrote:
           | If you read history, you quickly realize that this is what
           | socialism always was, even back in the mid 1800's: A counter
           | revolution against the capitalist emancipation of the world.
        
         | gabythenerd wrote:
         | It's interesting that Argentina is in the same decline
         | Venezuela was in (and still is), just with some years of
         | latency. Both countries are in the same economic region, one
         | would think someone would learn from having a hyperinflation
         | near them.
         | 
         | A lot of Venezuelans immigrated to Argentina years ago, and are
         | now leaving Argentina and immigrating to other countries. Some
         | are even going back to Venezuela now that everything there is
         | in dollars and the situation seems to be stabilizing. A
         | somewhat popular opinion is that the country is very corrupt
         | but you can live with it if you earn in dollars.
        
           | betwixthewires wrote:
           | Well what is there to be done about it really? You stop
           | printing money and servicing debt and you wind up in default,
           | now unable to import goods, which you rely heavily on because
           | you wouldn't be in this situation in the first place is your
           | domestic production was strong. So you get... prices going
           | sky high on imported goods. Either way you dice it, they're
           | fucked. It's an entire country stuck in a debt trap. The only
           | outcome is economic collapse, and all the government can
           | really do is fudge the numbers to slow it down.
        
             | notch656a wrote:
             | It's my understanding Argentina actually isn't heavily
             | dependent on imports. Not only are taxes high on imports,
             | they have a net trade surplus. Argentina also is extremely
             | lucky like US they have extremely diverse environment
             | including excellent farm ground, natural resource, and
             | coastal access. Defaulting on debt might be a good option.
        
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