Hyperinflation ante portas

[jblaze5779]

I found this to be an intersting subject and found this website:

https://www.thebalance.com/what-is-hyperinflation-definition-causes-and-examples-3306097

It should explain all your questions.There's a special section on Venezuela that seems familiar...increasing money supply, forcing digital currency, freezing prices, 20% unemployment.

 

[jblaze5779]

Would it not be an option to basically circumvent the whole peso mess and go directly into a full USD economy?

This would be the best thing to do but it would be a hard pill to swallow because it takes away the government's ability to spend money like crazy. People have to work and create value on their own without the government giving them money. Ecuador has done just this.

It is also a blow to the ego since it is admitting that you can't handle management your own sovereign currency.... Arg is known for some egos.

 

[Alpinista]

What can happen with such enormous growth rate? I'm totally ignorant on this subject - anyone who understands it, please explain a bit...!

I think your intuition on this is not quite right. Even so the poverty is going up, this is not really a factor in the inflation game. The one big issue is the amount of pesos in the market. So if from one day to the next the pesos in the market is doubled (by the printing press), then this would imply a devaluation of 50% of the pesos (which equals an increase of 100% in the inflation rate). Of course there are always time lags, expectations etc which dont make it an exact science.

 

[jblaze5779]

I think your intuition on this is not quite right. Even so the poverty is going up, this is not really a factor in the inflation game. The one big issue is the amount of pesos in the market. So if from one day to the next the pesos in the market is doubled (by the printing press), then this would imply a devaluation of 50% of the pesos (which equals an increase of 100% in the inflation rate). Of course there are always time lags, expectations etc which dont make it an exact science.

Also hoarding, which is discussed in this thread, leads to the rise in prices since goods will become scarce. People will begin to buy more now to prevent paying more later. Cycle accelerates.

 

[antipodean]

This would be the best thing to do but it would be a hard pill to swallow because it takes away the government's ability to spend money like crazy. People have to work and create value on their own without the government giving them money. Ecuador has done just this.

It is also a blow to the ego since it is admitting that you can't handle management your own sovereign currency.... Arg is known for some egos.

Ecuador switched to US dollars 21 years ago! Inflation is about 1 or 2% per year with positive economic growth every year since then except for 2016. Poverty rates have also been in steady decline. Panama and Zimbabwe also use USD.
Problem with USD is that politicians can't just print off another batch when they want to feed the system (or their secret stash)
For exporters it makes their products less competitive (but hey, so do minimum prices which AFIP just reintroduced on all exports...) and Argentina has a more significant export sector than Ecuador, Panama or Zimbabwe.
For expats like us, it would also mean a far more expensive cost of living in the "middle class" bubble ... those cars they are selling for $50,000 would mean $50,000 (and not the $25,000 you can get it for today...) Not a problem per se but worth pointing out.

 

[Rich One]

Control water Pressure and Temperature...!!!
The world population is still divided between the Conbidet and the SansBidet.

Ecuador switched to US dollars 21 years ago! Inflation is about 1 or 2% per year with positive economic growth every year since then except for 2016. Poverty rates have also been in steady decline. Panama and Zimbabwe also use USD.
Problem with USD is that politicians can't just print off another batch when they want to feed the system (or their secret stash)
For exporters it makes their products less competitive (but hey, so do minimum prices which AFIP just reintroduced on all exports...) and Argentina has a more significant export sector than Ecuador, Panama or Zimbabwe.
For expats like us, it would also mean a far more expensive cost of living in the "middle class" bubble ... those cars they are selling for $50,000 would mean $50,000 (and not the $25,000 you can get it for today...) Not a problem per se but worth pointing out.

Same problem with Italy before the Euro they could devalue and become More competitive. Come the Euro and the game is over..!

 

[toongeorges]

That is a really scary thought: a cash-free society where the government basically has total control over you (not only tax wise).

It has also been widely discussed over the last years in Europe where government and national banks wanted to lower the negative interest rates (with cash in hand you can obviously avoid this).

I think people nowadays have the alternative to trade in virtual coins. People could buy and trade stable coins. It has never been easier to set up an (unregulated) bank: you can create your own currency and link it 1:1 to the USD. This currency can be deployed to the Ethereum blockchain, it takes less than 100 lines of code in Solidity and less than 30 seconds to activate. It is out of reach of any government. If someone deposits to you, you can send them your virtual currency. If someone deposits back their virtual currency, you can give them back the USD. (Transferring money is very easy in crypto wallets.) Someone with a virtual currency can install https://metamask.io/ (or another crypto wallet) for free and send the virtual currency to anyone for a transaction fee that is a fraction of a dollar. The more the Argentine government tries to grab the money that is outside its reach, the further they will push the money away, some of it to crypto currencies and once it is there, it is out of control for ever.

 

[FallenAngel]

... and Argentina has a more significant export sector than Ecuador, Panama or Zimbabwe.

Why would you assume the inefficient argentine's have a more significant export sector? The funny thing is Argentina exports less than each of the listed countries adjusted for economy size. In fact, Argentina exports about the least amount of any country in the world. Not only are it's markets terribly inefficient but geographically it is not well suited.

 

[antipodean]

Why would you assume the inefficient argentine's have a more significant export sector? The funny thing is Argentina exports less than each of the listed countries adjusted for economy size. In fact, Argentina exports about the least amount of any country in the world. Not only are it's markets terribly inefficient but geographically it is not well suited.

https://oec.world/en/profile/country/arg/

Argentina = USD 60.8Bn Products & USD 14.7Bn Services. USD 1.37k PC. About 20% ends up in Asia and about 16% of exports are manufactured goods like automotive products.
Ecuador = USD 22.1Bn Products & USD 2.3Bn Services. USD 1.3k PC. About 12% ends up in Asia and about 5% of exports or less are manufactured goods.
Panama = USD 3.9Bn Products & USD 13.8Bn Services. USD 950 PC. About 20% ends up in Asia and almost 20% of exports are manufactured goods like ships and components.
Zimbabwe = USD 4.46Bn Products & USD 0.38Bn Services. USD 309 PC. Over 50% ends up in Asia and about 2% ends up in the Americas while manufactured goods are almost non-existant.

 

[on the brink]

In fact, Argentina exports about the least amount of any country in the world.

Please elaborate - on what do you base this opinion? Hard information is better than sweeping generalizations.