The coming USA currency crisis and Argentina

[objectiveous]

From your CNN link:

David Frum writes a weekly column for CNN.com. A resident fellow at the American Enterprise Institute, he was special assistant to President George W. Bush in 2001-2.

Hardly a not-interested source. We could directly open or veins and pump our blood through tubes to the AEI, to save this guy so much trouble.

What about the essay did you disagree with? Let me guess, it was the part where he says about Latin America: "A little more social equality would buy a lot more social peace."

 

[gouchobob]

I have previously posted that I would not start a business here, but I have no qualms about my real estate purchases here, especially my second one (the PH in Nunez). You imply (actually, I think you have clearly stated) that even real estate purchases are unsafe, but I have yet to hear of any foreigner who lost property in BA due to a seizure by the government. As you said, the victim of the tax scam actually did prevail in the court system, though I'm sure it was an agonizing process.

Nonetheless, that doesn't really support your sweeping generalization that nothing works here, does it?

Perhaps I shouldn't have said nothing works here, some things do work, and some rather well, just not any that emanate from government offices. I know someone who suffered a similar tax scam as the businessman in the article. The person brought in money to buy property but that's another story.

To answer your question nobody has lost property as the result of government seizure to my knowledge, nor or are there any plans by them to do so. I would rate the possibility of this happening as low today. However the possibility of this in the future could change. If they seized your apartment tomorrow you might have little or no recourse. That's the problem with investment in Argentina.

Keep this in mine, the current government is allied with the several of the left wing governments in the region which have expropriated property. Take a look at what Hugo is doing with real estate to the North.

http://www.globalpropertyguide.com/investment-analysis/Rise-of-the-left-the-fall-of-real-estate

A lot could happen here between now and the next election. I don't think the Kirchners plan on leaving office voluntarily. Could the government swing further left in an attempt to keep them in office longer? Could Argentina become a lot more like Venezuela?

Expats in Cuba have been waiting since 1959 to be compensated for the properties and businesses they lost.

 

[steveinbsas]

Perhaps I shouldn't have said nothing works here, some things do work, and some rather well, just not any that emanate from government offices. I know someone who suffered a similar tax scam as the businessman in the article. The person brought in money to buy property but that's another story.

To answer your question nobody has lost property as the result of government seizure to my knowledge, nor or are there any plans by them to do so. I would rate the possibility of this happening as low today. However the possibility of this in the future could change. If they seized your apartment tomorrow you might have little or no recourse. That's the problem with investment in Argentina.

Keep this in mine, the current government is allied with the several of the left wing governments in the region which have expropriated property. Take a look at what Hugo is doing with real estate to the North.

http://www.globalpropertyguide.com/investment-analysis/Rise-of-the-left-the-fall-of-real-estate

A lot could happen here between now and the next election. I don't think the Kirchners plan on leaving office voluntarily. Could the government swing further left in an attempt to keep them in office longer? Could Argentina become a lot more like Venezuela?

Expats in Cuba have been waiting since 1959 to be compensated for the properties and businesses they lost.

Perhaps the US has an even greater potential to become more like Venezuela than Argentina.

Just listen to Obama’s Federal Communications Commission Diversity Czar Mark Lloyd :

http://www.humanevents.com/article.php?id=33353

Caution: This video link contains images of Glenn Beck.

 

[White Chocolate]

If you think that there's anything more than a snowflake's chance in hell that the greenback will be replaced by an "international reserve currency backed by gold and oil" someone must have slipped some crack into your malbec. What is it back by now, gold? NOT! So today it is backed by nothing but the full faith of the US gov't and my guess is that is how it will remain.

That being said, I share your concerns about the future of the dollar. All measures of currency values are measured in "crosses": e.g. dollar - euro cross, euro yen cross, etc. In any investment account you can look at the charts of these crosses and see how currencies are doing in relation to each other. If you are so worried about the future valuation of the dollar (which , without being in panic conspiracy mode I think is reasonable) then just convert some or all of your dollars whatever to whatever currency you prefer!

And if you want to bet on the future of the Arg peso I have some shares of the Brooklyn Bridge I can sell you! ;-)

 

[orwellian]

If you are so worried about the future valuation of the dollar (which , without being in panic conspiracy mode I think is reasonable) then just convert some or all of your dollars whatever to whatever currency you prefer!

If the dollar goes down, so will all fiat currencies.

 

[Lucas]

Hyper-inflation is the terminal stage of any fiat currency. (Argentina knows it very well) In hyper-inflation, money looses most of its value practically overnight. Hyper-inflation is often the result of increasing regular inflation to the point where all confidence in money is lost. In a fiat monetary system, the value of money is based on confidence, and once that confidence is gone, money irreversibly becomes worthless, regardless of its scarcity. Gold has replaced every fiat currency for the past 3000 years.

The United States has so far avoided hyper-inflation by shifting between a fiat and gold standard over the past 200 years.

Fiat Money History in the US

 

[marksoc]

If the dollar goes down, so will all fiat currencies

No, they will not. The process of de-USA-fication has started. Only a few years more, until the Chinese have enough of a consumist middle class to stop caring about the "Americans". The USD will not "go down", simply will davaluate steadily, maybe slowly, maybe not, against the other currencies.

Hyper-inflation is the terminal stage of any fiat currency

But it is not what happens to all fiat currencies (lets call them for their name in the real world: currencies). I don't understand this American obsession with gold. Currencies are backed by the real production activity of the local economy. Maybe the zeroes can grow and be cut, but generally societies are pretty much stable (but notable exceptions). Money is only a way to exchange commodities-meerchandise (work-force, products, etc), always remember that.

 

[White Chocolate]

If the dollar goes down, so will all fiat currencies.

I agree with Marksoc, very few currencies are directly pegged to the US dollar any more. "Fiat Currency" from the Latin "Fiat" means "Let there be". It is currency by government decree, without being backed by tangible assets, such as the gold. Almost by definition, all fiat currencies move independently as their value is based solely on the confidence people have in each government that prints them.

This as opposed to 'pegging a currency' to the value of the dollar (or other anchor). When this happens, all pegged currencies would move in lockstep with the dollar. As far as Argentina's history with that, if anyone does not know it you should do some reading because it is a textbook study in pegging and then de-pegging, if you will, your currency to the dollar.

In my opinion, the current US currency situation is like the mutually assured destruction of the cold war. Some would say we are screwed if China (and others stop) loaning us money. We are like US individuals too used to living above our means. This may be true, but at least for the time being, if China and these other countries stopped loaning us money we would stop buying all their crap so they would just be shooting themselves in the foot. That is why it most likely will not happen at least not in the foreseeable future.

So again, I say to the original poster of this thread do not worry too much about it and if you are, simply put some of your money in some other currency. I am somewhat concerned about the short term valuation of the dollar so I plan to convert my cash position into 1/3 dollars, 1/3 Euros, and 1/3 Brailian reals before moving at the end of this month. If anyone in the forum would like to chime in as to what they feel are the best currencies to hold your money in while in BA and why I would love to hear your opinions.

 

[orwellian]

That is why it most likely will not happen at least not in the foreseeable future.

It's already happening. The Chinese aren't buying your securities anymore. That is why they have to print money to pay for the debts.

If anyone in the forum would like to chime in as to what they feel are the best currencies to hold your money in while in BA and why I would love to hear your opinions.

Gold is the only "currency" I would hold. If I had to pick a fiat currency, I'd pick the yuan. When gold goes up, all other currencies go down. Which is precisely what we have seen happening for the last few years.
But what you should do is diversify into commodities and not hold any fiat currencies, IMO.

 

[Cangurito]

White chocolate, i think somebody is having a sugar rush.

Replacing the USD as the worlds reserve currency is probable. One year ago bernanke floated the idea that the US currency would be replaced. Since then, both china and russia have discussed it publicly. If it is a mexican stand-off like you say then perhaps we'll just have to wait and see who shoots first. Anybody who observes currency behavior and news will know that world economies are actively decoupling from the US.

The US is in no position to call the shots as the fed is in an impossible position. They are trying to stimulate growth by buying bonds like a man on crack and keeping interest rates low. If they stop printing money then they will have no money to buy bonds because the chinese sure aren't buying them. If they raise interest rates they will cause more companies to fail and more housing and commercial real estate defaults. The fed is weakened because it serves different masters who do not understand economics 101 and for that reason it will never grow a backbone and withdraw the stimulus thereby allowing smelly debt ridden companies to fail.

India just bought a significant amount of gold and if the imf, the worlds largest holder of gold reserves sells then it will be a buying opportunity for all. They won't sell though because it's the only real way to preserve wealth as currencies deflate in value.

I have much more to say about this but am typing this into my phone on a bus to pergamino and my fingers hurt.... Stay tuned.