Dollar Hoarding Gone Wild.

[syngirl]

Exactly, it's a question of relativity. Just how many savings options does the average Argentine have? USD aren't failsafe (what investment is?), but they are far more stable than the peso, widely accepted throughout the world, more accessible to Argentines than other hard currencies (such as the pound), and a lot easier to squirrel away than precious metals (I don't know anything about buying or selling gold in Argentina, but in the country of inside-job salideras and home invasions, I'd be terrified.) I have Argentine friends that are just as happy with euros as they are with dollars - it's just a matter of which one is easier for them to get their hands on.

Add to that extremely limited investment options, stock market off limits to most, and even so it's very small here, gold as was discussed in another thread here isn't really even worth it -- by law Argentines are only allowed to buy Argentine gold -- which is not recognised on a global scale. It sounds equivalent to buying a kirchner-backed bond -- it has value, until it's worth less than the paper the certification is written on. (Thanks to dennisr/splaying et alia for explaining )

Recently luxury car sales are going through the roof (limited of course to the few that have stuck around in Argentina) -- it's become another investment that people hope will hold it's value.

You can buy gold in Argentina. The funny thing is, it must be genuine certified Argentine gold. NO IMPORTED GOLD permitted. How they are able to distinguish Argentine gold bullion from say Canadian gold bullion is beyond my very limited knowledge. Know a fine jeweler and he just rolls his eyes when we talk about it.

 

[Rich One]

To play the Devils Advocate ...The need to find instruments to save, shows that many Argentinians have plenty of "Disposable Pesos" due to inflation? People in Spain can not make ends meet! as in many other countries.

 

[sesamosinsal]

All this "fall of the USD" talk is beyond premature. The USD will be king at least until if/when China makes the RMB fully convertible AND issues debt on a scale similar to what the US Treasury does.

Premature? Try telling that to the Chinese that have $3 trillion USD (worthless paper) in forex reserves. Nobody wants to collapse the dollar, not even the Chinese. It would be counterproductive. China and the U.S. know that that the dollar cannot be the "hegemon" among currencies. See the Triffin Dilemma. Timothy Geithner (when he was in the administration) publicly said that he would favor the phasing in of the SDR to replace the dollar. That's the best option that they have at this point because the U.S. consumer is tapped. You can only print so much, and doing so without any exit will lead to a financial crisis that makes 2008 look like child's play.

And China has no interested in making the renminbi a world reserve currency like the USD. China already sees the consequences of a country exporting its currency instead of actual goods. PROC Central Banker Xiaochuan's essay is a pretty interesting read, and it is the reason why China has pursued various currency swap agreements since 2009, the year that essay was written.

The swap agreement with Brazil, for example, would guarantee trade between the two countries for six months. If worrying about a dollar crisis is "premature," as you say, why is it that China has signed some 19 swap agreements, nearly half of them with G20 states?