Argentina’s President Calls Crypto a ‘Hard Currency’ that Can Fight Inflation

MilHojas

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Sequoia1321

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What’s the reasoning behind making crypto like Bitcoin a legal currency? Would something like this work to reduce inflation? I believe El Salvador has made Bitcoin legal tender, if I recall it was to help people who are unbanked, and for cheaper transfer for those living abroad to send money to their family. What’s the reasoning that it would reduce inflation? Capped supply? Would that actually work in practice? Don’t know much about economics.
 
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lunar

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What’s the reasoning behind making crypto like Bitcoin a legal currency? Would something like this work to reduce inflation? I believe El Salvador has made Bitcoin legal tender, if I recall it was to help people who are unbanked, and for cheaper transfer for those living abroad to send money to their family. What’s the reasoning that it would reduce inflation? Capped supply? Would that actually work in practice? Don’t know much about economics.

The government's ability to print money and use it to the right needs to give it to the right people is one of the important sources of the power. And the whole idea of having an alternative currency in circulation (whether it is the bitcoin or dollar) kind of undermines it.

There already was a time when the peso was pegged to the dollar, that was supposed to stop the inflation, and it didn't work out so well, as you know.


AF looks to by pass the usd that we always lack. Remember that China has its own crypto currency.

Yeah, this way we will lack bitcoins :). China has its cryptocurrency, Venezuela has its cryptocurrency, JPMorgan has its cryptocurrency. You can have your own cryptocurrency. As long as there is a single party that controls it, it will never get universal acceptance. Or it will be just a "digital dollar" on a blockchain network - a technological advance that does not change the nature of things.
 

Bajo_cero2

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The government's ability to print money and use it to the right needs to give it to the right people is one of the important sources of the power. And the whole idea of having an alternative currency in circulation (whether it is the bitcoin or dollar) kind of undermines it.

There already was a time when the peso was pegged to the dollar, that was supposed to stop the inflation, and it didn't work out so well, as you know.




Yeah, this way we will lack bitcoins :). China has its cryptocurrency, Venezuela has its cryptocurrency, JPMorgan has its cryptocurrency. You can have your own cryptocurrency. As long as there is a single party that controls it, it will never get universal acceptance. Or it will be just a "digital dollar" on a blockchain network - a technological advance that does not change the nature of things.
You are not understanding. Rusia and China are struggling to dethrone the usd for international trade. And Argentina’s issue is the lack of usd.
This “power” you mention is called sovereignty. The printing money machine was used a lot at the US and all around the world with this pandemic.
If you see Ecuador, they do not have a national currency and this is why they were powerless to deal with the pandemic: do you remember the corps in the streets abandoned? Or burner?
 

antipodean

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Ecuador was powerless to deal with the pandemic? Despite not having anywhere near the infrastructure of Argentina, to date they have reported 31.870 deaths (population 17.000.000) and now have 25% of their population fully vaccinated. Certainly no worse than Argentina reporting 108.000 dead and 21% fully vaccinated. But yes, sovereignty solves everything?
 

lunar

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You are not understanding. Rusia and China are struggling to dethrone the usd for international trade. And Argentina’s issue is the lack of usd.
Let's say Argentina has a supply of yuans, or soy, or beef, or gold, or anything of value, for that matter. Then it can go and sell/exchange them to USD. Problem solved.
So, it is not USD per se that Argentina is lacking, it's economic problems in general.
This “power” you mention is called sovereignty. The printing money machine was used a lot at the US and all around the world with this pandemic.
I'm pretty sure it is called monetary policy. There are sovereign countries that have different monetary policies and this doesn't make them less sovereign. A tradition to print money as a solution to every problem started in Argentina long before the pandemic. And it is not called sovereignty, it is called an "irresponsible monetary policy". But a sovereign country can have any monetary policy it wants :).
If you see Ecuador, they do not have a national currency and this is why they were powerless to deal with the pandemic: do you remember the corps in the streets abandoned? Or burner?
There are plenty of countries in a similar situation that do have national currency. India, for example.
 
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sts7049

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You are not understanding. Rusia and China are struggling to dethrone the usd for international trade. And Argentina’s issue is the lack of usd.
This “power” you mention is called sovereignty. The printing money machine was used a lot at the US and all around the world with this pandemic.
If you see Ecuador, they do not have a national currency and this is why they were powerless to deal with the pandemic: do you remember the corps in the streets abandoned? Or burner?
right away, you start by not even acknowledging what the real root issue is. argentina's problem is not lack of dollars. it is a complete absence of fiscal control and terrible decision making for decades.

now, this doesn't mean the USA is any better. the USA is spiraling downward too into a debt bubble so large that when it does collapse someday, it will be historic. one day, the dollar may not be the global powerhouse it is now. but that day isn't coming anytime soon, plus the USA has a relatively strong economy and can survive the printing for now. argentina cannot and has no such luxury.
 

Sequoia1321

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Sorry, initially I said Equador made bitcoin legal tender when I meant to say El Salvador. I then edited that, but noticed some others refering to Ecuador instead of El Salvador. Anyways, the president of Argentina seems to think that bitcoin might help solve inflation issues, though he’s not taking a hard line but having more of a thought it seems. The crypto and bitcoin supporters often seem to cite bitcoin’s limited supply as something that is helpful against inflation, and say that it’s something that people will go to in order to protect their wealth. For example, I heard people express unhappiness that the product of their hard work, their money, should be devalued by the government printing money, especially when it’s over printed. I wonder how bitcoin and crypto might be helpful now for Argentinia, either as legal tender, or just as something that people have available to put their wealth into. I believe crypto might be useful to the unbanked, allowing them to transact easily and cheaply without a bank account. But the topic the president of Argentina brought up is inflation, and I’m not sure how bitcoin can help with that in practice. Let’s assume that a large portion of Argentinians start transacting in bitcoin, or some other crypto, or even in a stable coin that is pegged to the USD or something else, or a crypto that’s pegged to gold for example. Will this solve anything for Argentina? Bitcoin is very volatile right now, so not sure how it might work as legal tender. But there are many other crypto options.
 
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