Milei Wants Argentines to Dollarize the Economy for Him

[Redpossum]

mismatch between average savings (total divided by number of people) and median savings (sort all people from smallest savings to largest and pick the middle one) can easily be 10 times.

Which means that typical / median person has only $500 in cash. But average (total divided by number of people) is still $5500.

Ten times? In Argentina it could easily be 20 times or more. The inequality of wealth in this country is outrageous. The whole reason why the Peronists are so vilified by the rich and the burguesía is because they sought to ease this a bit.

 

[Rich One]

Ten times? In Argentina it could easily be 20 times or more. The inequality of wealth in this country is outrageous. The whole reason why the Peronists are so vilified by the rich and the burguesía is because they sought to ease this a bit.

The income ratio between the top 10 % and the bottom 10% 14 times . Official data Sept 2024

 

[Redpossum]

The income ratio between the top 10 % and the bottom 10% 14 times . Official data Sept 2024

A relevant fact, Rich One, thank you.

But allow me to point out that in a nation of 45 million people, 10% is 4.5 million. This means that that top 10% is not just all the ultra-rich, and all the rich, (who between them account for only a few thousands, I'd wager, surely no more than a 4-digit number, depending on your definition of "rich"), but the great majority of the upper-middle class. In other words, 10% is too big a slice to really reveal the true extent of the inequality of wealth distribution in Argentina.

According to the wiki page, the SRA has 10,000 members, but obviously not all of them are big landowners.

And last but by no means least, "official data", in Argentina? I think most of the top rich people here have a considerable amount of their true wealth off the books, given the brutally punitive rates of taxation. Wouldn't you? (theoretically, hypothetically speaking, of course!)

 

[LuckyLuke]

Perhaps if small dollar denominations in various states of actual circulation wear/tear were readily accepted, then dollarization could theoretically happen. But the current limitations of "new new new pristine condition collectible $100's" make that possibility dead on arrival. A used $1 bill here is practically useless the owner plans of traveling outside Argentina.

 

[Redpossum]

Perhaps if small dollar denominations in various states of actual circulation wear/tear were readily accepted, then dollarization could theoretically happen. But the current limitations of "new new new pristine condition collectible $100's" make that possibility dead on arrival. A used $1 bill here is practically useless the owner plans of traveling outside Argentina.

Another excellent observation.

I posed this objection some months ago, pointing out that huge numbers of small bills would be needed for dollarization. The response I received was that in some other Latin American nation (I don't recall which one), they had used large bills in dollars, and the local currency for the smaller amounts. I personally have serious doubts about that. Like, I'm going to whip out a US $100 bill to pay for a 25 dollar purchase, and then accept my $75 change in pesos? Yeah, sure. But that's the "rebuttal" which was offered.

 

[Rich One]

A relevant fact, Rich One, thank you.

But allow me to point out that in a nation of 45 million people, 10% is 4.5 million. This means that that top 10% is not just all the ultra-rich, and all the rich, (who between them account for only a few thousands, I'd wager, surely no more than a 4-digit number, depending on your definition of "rich"), but the great majority of the upper-middle class. In other words, 10% is too big a slice to really reveal the true extent of the inequality of wealth distribution in Argentina.

According to the wiki page, the SRA has 10,000 members, but obviously not all of them are big landowners.

And last but by no means least, "official data", in Argentina? I think most of the top rich people here have a considerable amount of their true wealth off the books, given the brutally punitive rates of taxation. Wouldn't you? (theoretically, hypothetically speaking, of course!)

Agree 100 % the very Rich represent less than 5% according to another source.

 

[elhombresinnombre]

The income ratio between the top 10 % and the bottom 10% 14 times . Official data Sept 2024

This table is quite interesting, not only because on all the scales it places income inequality in Argentina higher than the official figure but because of the comparisons with other countries in the Americas and worldwide.

List of countries by income equality - Wikipedia

en.wikipedia.org

 

[elhombresinnombre]

Perhaps if small dollar denominations in various states of actual circulation wear/tear were readily accepted, then dollarization could theoretically happen. But the current limitations of "new new new pristine condition collectible $100's" make that possibility dead on arrival. A used $1 bill here is practically useless the owner plans of traveling outside Argentina.

According to information previously given in BAExpats, the store chain Diarco is supposed to be accepting any denomination or condition of USD for over-the-counter payments. Does anybody here ever shop at Diarco? (Me neither) Does anybody here know if the dollar thing is actually happening?

 

[FrankPintor]

Another excellent observation.

I posed this objection some months ago, pointing out that huge numbers of small bills would be needed for dollarization. The response I received was that in some other Latin American nation (I don't recall which one), they had used large bills in dollars, and the local currency for the smaller amounts. I personally have serious doubts about that. Like, I'm going to whip out a US $100 bill to pay for a 25 dollar purchase, and then accept my $75 change in pesos? Yeah, sure. But that's the "rebuttal" which was offered.

It may have been me writing about Ecuador, since I lived there before coming to Argentina, but in Ecuador all Dollar bills are used, except generally for the $1 bill, which is also legal tender, but since they wear out too fast some pre-dollarization coin (I have no idea which, and any embossed lettering is long since worn off) is used as a stand-in.

The central bank collects damaged bills during the year, and at the end flies them back home to the US to be exchanged for fresh ones.

A case of informal dollarization is Venezuela, but bills of all denominations are used, with no easy way to exchange damaged ones for new.

There's a lot to consider for dollarization, going on form I doubt that the government is looking at the implications. I wonder if you could actually calculate the quantity of bills necessary for Argentina?

I read recently that the Treasury (La Moneda), where the Peso bills are printed, is to be closed, another triumph of stupid ideology over sense. Now that we're moving to 10000 and 20000 Peso bills, there will be capacity to profitably print other countries' banknotes, and this was, in fact, being actively pursued by the Treasury. There are only a few Latin American or Caribbean countries with the capability to print banknotes.

 

[dilmah]

The whole reason why the Peronists are so vilified by the rich and the burguesía is because they sought to ease this a bit.

In my observation modern "social democracies" tend to increase wealth disparity between median people and wealthy elites instead of decreasing it because:

(1) government regulations tend to favor large businesses and raise barrier to entry (it's easier for large corporations to conform to all the regulations and to pay minimum wages compared to small businesses);

(2) taxation system based on income heavily penalizes working middle class which pays MUCH higher percentage of its net worth annually in taxes compared to wealthy elites who heavily optimize their taxes.

In order to decrease wealth disparity we need to reverse typical taxation. Older and especially inherited money must be taxed much higher compared to newer money. Income tax should be zero since income is the newest money.