Hyperinflation ante portas

Alpinista

Registered
You don’t have to agree on anything that economists such as Javier Milei are saying. But I certainly share his view that the inflation will accelerate very sharply, and rather sooner than later.

Do you prepare yourself for this scenario? If yes, how? Some thoughts

• obviously you try to minimize your pesos in cash (and current accounts). But this is nothing new
• if you have a peso income, a sharp decrease in the purchase power is to be expected (as i would expect the adjustments lag behind and probably not to the full extent of the inflation)
• “pesify” the expenses. Especially lease agreements etc (here the negotiating power should be strong). Probably also worth to check clauses in regard to indices to avoid problems (what reference is the adjustment based on, as of when exactly does it apply etc)
• pay in cuotas? It is not something I am using as i don’t have bank account / credit card. But this might be an interesting option for those who have
• personally i will also organize a bit more usd in cash to prepared in case the current payment methods are getting more difficult

In case this “hyperinflation” gets reality: do you expect an increase or decrease of your purchase power in usd? (ie will the peso lose more to the usd than the inflation rate)
 

Rich One

Registered
You don’t have to agree on anything that economists such as Javier Milei are saying. But I certainly share his view that the inflation will accelerate very sharply, and rather sooner than later.

Do you prepare yourself for this scenario? If yes, how? Some thoughts

• obviously you try to minimize your pesos in cash (and current accounts). But this is nothing new
• if you have a peso income, a sharp decrease in the purchase power is to be expected (as i would expect the adjustments lag behind and probably not to the full extent of the inflation)
• “pesify” the expenses. Especially lease agreements etc (here the negotiating power should be strong). Probably also worth to check clauses in regard to indices to avoid problems (what reference is the adjustment based on, as of when exactly does it apply etc)
• pay in cuotas? It is not something I am using as i don’t have bank account / credit card. But this might be an interesting option for those who have
• personally i will also organize a bit more usd in cash to prepared in case the current payment methods are getting more difficult

In case this “hyperinflation” gets reality: do you expect an increase or decrease of your purchase power in usd? (ie will the peso lose more to the usd than the inflation rate)
Adding to your clever comments

  1. Stock on durable goods, big pantry
  2. Cash minimum of dollars as needed
  3. Find out how the tricks on how people survived during the past periods of hyperinflation
 

antipodean

Registered
Bulk buy household goods (within reason)
It protects from both shortages, inflation and reduced purchasing power.
Things like frozen goods, bottled beverages, wine, beer, cleaning products, coffee etc. Also batteries, printing supplies and other occasional consumables.

Plant food plants at home (herbs, berries, vegetables etc.) to have one less thing to worry about buying.

Depending on the amount of surplus of pesos some people also buy property (especially new projects with like 30 installments) cars, art, jewelry etc.

Get a bank account and debit card and/ or Mercado Pago. Cash could cease to be a real thing a la Venezuela and it’s own 21st century hyper.

Abandon ship....?

It is actually hard to predict purchasing power in USD terms as it depends on a lot of factors including accessibility/ FX, supply of goods, policy and timing. For sure when people start “thinking and pricing” in real USD by default it becomes more expensive as $200 is $200 x Y. If it is worth $200 or not never seems to matter here if people think they themselves are worth it and still have vacation plans in Miami later in the year.

Some locals tell me of the last hyper where prices would increase a few times a day and transactions were linked to values at the specific time of day they took place - so everyone moved with calculator in hand.
 

Rich One

Registered
Bulk buy household goods (within reason)
It protects from both shortages, inflation and reduced purchasing power.
Things like frozen goods, bottled beverages, wine, beer, cleaning products, coffee etc. Also batteries, printing supplies and other occasional consumables.

Plant food plants at home (herbs, berries, vegetables etc.) to have one less thing to worry about buying.

Depending on the amount of surplus of pesos some people also buy property (especially new projects with like 30 installments) cars, art, jewelry etc.

Get a bank account and debit card and/ or Mercado Pago. Cash could cease to be a real thing a la Venezuela and it’s own 21st century hyper.

Abandon ship....?

It is actually hard to predict purchasing power in USD terms as it depends on a lot of factors including accessibility/ FX, supply of goods, policy and timing. For sure when people start “thinking and pricing” in real USD by default it becomes more expensive as $200 is $200 x Y. If it is worth $200 or not never seems to matter here if people think they themselves are worth it and still have vacation plans in Miami later in the year.

Some locals tell me of the last hyper where prices would increase a few times a day and transactions were linked to values at the specific time of day they took place - so everyone moved with calculator in hand.
Some survivors of Hyperinflation periods mentioned that employees were paid weekly and they would run to the Bank to purchase dollars.
How many Australes? per dollar
Not many supermarkets then..? changing prices 3 times a day could be exhausting..?

Hyperinflation periods 1975 Rodrigazo and 1989 - 1990 a galloping 3.079 % per year.
Chau President Alfonsin... He called for earlier elections in 1989 and surrendered the Baton..!Escepter . He left walking
." La casa esta en Orden"


1595172408197.png
 

antipodean

Registered
Some survivors of Hyperinflation periods mentioned that employees were paid weekly and they would run to the Bank to purchase dollars.
How many Australes? per dollar
Not many supermarkets then..? changing prices 3 times a day could be exhausting..?

Hyperinflation periods 1975 Rodrigazo and 1989 - 1990 a galloping 3.079 % per year.
Chau President Alfonsin... He called for earlier elections in 1989 and surrendered the Baton..!Escepter . He left walking
." La casa esta en Orden"


View attachment 7135
Imagine if it happened tomorrow and people were still limited to $200 a month...

During the Brazilian hyper around the same time (when price tags were still a thing) the products on supermarket shelves had a “crust” of expired price tags as they had to be updated almost daily.
In this digital age I can only imagine the line for the price-check scanners at Jumbo will mirror that of the fruit and veg scales while the check-out process will take another 20 minutes from your day as people argue over what price was shown on the shelf and what they are getting charged, combined with the already familiar arrangement of cuotas / mortgages/ barter/ organ donation at the till to pay for it all.

But on a serious note, barter economy actually would become a thing again like in 2001/2. Keep a reserve of “luxuries” to trade.
 

on the brink

Registered
Argentine 1989 hyper-inflation - some personal anecdotes.

Supermarket shoppers were chased all the way to checkouts by employees frantically re-ticketing things already in their baskets.

My cousin was once standing in line waiting to pay for a set of faucets - by the time she got to the cashier, the price had gone up four times.
 
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Rich One

Registered
"
Argentine 1989 hyper-inflation - some personal anecdotes.

Supermarket shoppers were chased all the way to checkouts by employees frantically re-ticketing things already in their baskets.

My cousin was once standing in line waiting to pay for a set of faucets - by the time she got to the cashier, the price had gone up four times.
As some wisecrack Eyetalian said "Si non e vero e Ben Trovato"

Argentina Economics 101 :
A business man told me that before he would price a product for sale , he would close an order with the supplier for a replacement , then add 100 % to the new price Por siaca..!
 

on the brink

Registered
During the hyperinflation I tried to buy a wallet, but the merchant refused to sell it. Said he did not know if he could get another, and if he could, what would the price be. Things were not sold at the marked price, but at the ESTIMATED restocking price.

It was surreal. Amazing, how unsettling it is to have NO set prices for anything. Like being blindfolded.
 

FallenAngel

Registered
Hyperinflation will of course result in an increase in purchasing power of the USD. In USD terms, it is a hugely deflationary event. For example, all those contracts in society that are in pesos just lost enormous value. In addition, other society contracts like minimum wages, sticky wages, etc, just lost tons of value. Argentina economy is like 60%+ service, so the loss of labor value will be huge benefit for USD holders.

During the initial disruption there could be a supply or hoarding shock, which could cause a temporary shortage or overprice of some goods. During this time period that trade slows down drastically between parties, then it may be disadvantageous even for USD holders. However, this would be a temporary shock. That is why it is good to stock a few things to ensure you have all the products you need during any moment of disruption.

Overall, the hyperinflation will relatively benefit expats greatly.
 
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