Has inflation hit?

[MBerton416]

Just looking at exchange rates at WU 98:1 CAD. When I was last in BA (November/December) it was under 50:1.

How has this crazy devaluation of the peso affected prices on the ground?

 

[sts7049]

i dont think inflation ever stopped here

 

[jblaze5779]

The prices for most essential things in AR are frozen or set by the gov.

So it allows them to inflate the currency without impact the citizens with the reduction in purchasing power of the peso.

 

[MBerton416]

Interesting. So if you're spending US or even Canadian dollars your purchasing power has essentially doubled in the last 8-9 months.

 

[EL_TIGRE_de_Tigre]

My personal opinion. The inflation forces have not yet begun to do what they will eventually do here.

Massive currency printing is going on (This is what you can do when the gold standard has been trashed. Nothing backs up a currency except for the full faith and ability of the issuer ... The issuer here is ARGENTINA - Enough said on that one!) An economy that has no pulse. In recession for quite some time ... then going from hobbled to crippled by The COVID 19 shut down effect. UnEmployment that has not even been measured properly. Job losses well beyond reported statistics. And if that isn't enough for you, a company has to die before they can separate from employees. So, there are companies doing just that ... DYING! Closing for good! And the strong multi nationals or regionals are fleeing to other countries. Anywhere but here ... Do you hear that sucking sound as Ross Perot once asked? It is jobs being sent out of the country! That is what you are hearing. REAL ESTATE LOCKED! Look at rental rates ... in the G U T T E R / Gutter! Amazing!! MASSIVE DEBT - Renegotiated but still will be defaulted on in the future ... you can almost bet on this one. Hmmmmm ... as a matter of fact, people are betting on this one! Have you seen the price of the bonds lately? It certainly looks like whoever holds them / trades them has priced in the next default that is about 1 to 3 years away from today. The bonds are being handled like a hot potato. LOCKED out of the international credit markets ... OFF THE RECORD. People would have to be crazy to lend money regardless of rate of return ... It's simply no good with a serial defaulter as your borrower. Not enough for you? There is more ... The rest of the world is challenged ... There are no strong buyers of whatever Argentina can export. Thus, tax revenue is strongly hampered. 40% of the population below the poverty line and that number may very well swell to 50%+ perhaps as high as 60% when everything is said and done. How the heck can you recover from something like this? I am seeing 100% to 200% inflation over the next 5 to 10 years here! I am seeing a lost generation ... forget about a lost decade! Someone with a financial service background, set me straight if I am missing something here!

 

[EL_TIGRE_de_Tigre]

The prices for most essential things in AR are frozen or set by the gov.

So it allows them to inflate the currency without impact the citizens with the reduction in purchasing power of the peso.

Sooner or later when the government takes their feet off the breaks, all hell is going to break loose with respect to essentials. UNAVOIDABLE!

 

[Alpinista]

My personal opinion. The inflation forces have not yet begun to do what they will eventually do here.

Massive currency printing is going on (This is what you can do when the gold standard has been trashed. Nothing backs up a currency except for the full faith and ability of the issuer ... The issuer here is ARGENTINA - Enough said on that one!) An economy that has no pulse. In recession for quite some time ... then going from hobbled to crippled by The COVID 19 shut down effect. UnEmployment that has not even been measured properly. Job losses well beyond reported statistics. And if that isn't enough for you, a company has to die before they can separate from employees. So, there are companies doing just that ... DYING! Closing for good! And the strong multi nationals or regionals are fleeing to other countries. Anywhere but here ... Do you hear that sucking sound as Ross Perot once asked? It is jobs being sent out of the country! That is what you are hearing. REAL ESTATE LOCKED! Look at rental rates ... in the G U T T E R / Gutter! Amazing!! MASSIVE DEBT - Renegotiated but still will be defaulted on in the future ... you can almost bet on this one. Hmmmmm ... as a matter of fact, people are betting on this one! Have you seen the price of the bonds lately? It certainly looks like whoever holds them / trades them has priced in the next default that is about 1 to 3 years away from today. The bonds are being handled like a hot potato. LOCKED out of the international credit markets ... OFF THE RECORD. People would have to be crazy to lend money regardless of rate of return ... It's simply no good with a serial defaulter as your borrower. Not enough for you? There is more ... The rest of the world is challenged ... There are no strong buyers of whatever Argentina can export. Thus, tax revenue is strongly hampered. 40% of the population below the poverty line and that number may very well swell to 50%+ perhaps as high as 60% when everything is said and done. How the heck can you recover from something like this? I am seeing 100% to 200% inflation over the next 5 to 10 years here! I am seeing a lost generation ... forget about a lost decade! Someone with a financial service background, set me straight if I am missing something here!

Overall i share your doom & gloom view. Two things
1) naturally it is difficult to predict when inflation will really kick in. However, my view is that it won’t take 5 years. I would be very surprised if that doesnt happen within 12 months time. And once it is spiralling out of control, there is also no limit to even four digit inflation
2) whereas i see also the economy hit rock bottom next year, this is not to say that it will result in a lost generation. If (and thats a very big IF) a new government came into power in the next years and do structural reforms that are required, then it could go up quickly. If this will happen, i have my doubts. Somehow Argentinians seem to be happy with the Peronist version of socialism ....

 

[on the brink]

Don't underestimate Argentina's resiliency. It has been left for dead quite a few times before.

 

[QuilmesSlo]

Maybe someone can correct me here, or shed detail, but I am under the impression that Argentina has a much weaker federal government than the USA relative to the provinces, and this makes it much more difficult for the federal government to promulgate reforms, even in the eras when you have a reform minded government. Is that accurate?

 

[EL_TIGRE_de_Tigre]

Maybe someone can correct me here, or shed detail, but I am under the impression that Argentina has a much weaker federal government than the USA relative to the provinces, and this makes it much more difficult for the federal government to promulgate reforms, even in the eras when you have a reform minded government. Is that accurate?

The federal government of Argentina is on par with a US major college student government. These people are in way over their heads.