What Would Dollarization Mean for Expats?

[Quilombo]

it might not have been 100% aligned with the dictionary definition of socialism, but it's definitely under the umbrella. i ndon't see how you could argue otherwise.

socialism takes many forms. if the hard K's and Grabois had his way with this universal basic income, that right there is a big red flag.

What specific aspects of the Ks are socialism? UBI is something literally proposed by libertarians too, so that doesn't make it inherently belong to any political affiliation, let alone socialism.

Whatever a political system is called it's how the system actually works (or doesn't) and how the populace are affected that matters. In effect it is more a centrally planned economy than free market.

Heritage.org

Again, nobody is disputing that things are broken, but I've yet to see anyone spell out what socialist policies the government of Argentina has that aren't found in other capitalist countries around the world, the difference being things are more corrupt, broken, and dysfunctional here.

And the Heritage Foundation is literally a right wing think tank, these are the kinds of people that say Canada is a communist country lol

 

[FrankPintor]

It doesn't really matter if Argentina has ever had a 'Socialist' or 'Marxist' government by name.

Whatever a political system is called it's how the system actually works (or doesn't) and how the populace are affected that matters. In effect it is more a centrally planned economy than free market.

Argentina is not a centre left, South American Sweden and is increasingly closer to Cuba economically and politically. For which many see Milei as the solution.

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Heritage.org

Argentina’s economic freedom score is 51.0, making its economy the 144th freest in the 2023 Index. Its score is essentially unchanged from last year. Argentina is ranked 27th among 32 countries in the Americas region, and its overall score is below the regional and world averages.

Aggravated by corruption and political interference, the lack of judicial independence has severely eroded limits on government. Leftist spending measures and price controls distort markets, and government interference still hobbles the financial sector. Fading confidence in the government’s determination to promote or even sustain open markets has discouraged entrepreneurship.

These zombie arguments keep coming back... about how "Argentina is socialist", when in fact it never has been, and "never mind the terminology, it really is socialist" . And now how Argentina is "closer to Cuba economically and politically" Is this the "fill the zone with shit" Steve Bannon argument? WTF?

If you'd bothered to do any checking on the subject, rather than just regurgitate some low quality Heritage screed ("Leftist spending measures"? Really? They don't even make an attempt at serious analysis), you'd see that Argentina scores highly in political and personal freedom. See Freedom House (https://freedomhouse.org/country/argentina/freedom-world/2021) for example, or Legatum (https://www.prosperity.com/globe/argentina):



And what's with the demonization of socialism anyway? In the UK, the Labour Party (socialist in name, at least) is a government in waiting, and the financial markets are entirely untroubled. The Labour government after the divisiveness of the Thatcher years was initially a very welcome change. I lived in Germany when Gerhard Schröder's socialist party won power after the stagnation and corruption of the conservative Kohl years. His government was a welcome breath of fresh air, lowering taxes and reforming the social security system.

By "tarring" someone or some group with the socialist tag you're saying more about yourself than about your topic.

 

[Jtee125]

These zombie arguments keep coming back... about how "Argentina is socialist", when in fact it never has been, and "never mind the terminology, it really is socialist" . And now how Argentina is "closer to Cuba economically and politically" Is this the "fill the zone with shit" Steve Bannon argument? WTF?

If you'd bothered to do any checking on the subject, rather than just regurgitate some low quality Heritage screed ("Leftist spending measures"? Really? They don't even make an attempt at serious analysis), you'd see that Argentina scores highly in political and personal freedom. See Freedom House (https://freedomhouse.org/country/argentina/freedom-world/2021) for example, or Legatum (https://www.prosperity.com/globe/argentina):

View attachment 9024

And what's with the demonization of socialism anyway? In the UK, the Labour Party (socialist in name, at least) is a government in waiting, and the financial markets are entirely untroubled. The Labour government after the divisiveness of the Thatcher years was initially a very welcome change. I lived in Germany when Gerhard Schröder's socialist party won power after the stagnation and corruption of the conservative Kohl years. His government was a welcome breath of fresh air, lowering taxes and reforming the social security system.

By "tarring" someone or some group with the socialist tag you're saying more about yourself than about your topic.

Starmer is fairly Blairite which I think contributes to timid market shock, certainly compared to if Corbyn was the government in waiting. In any case 13 years of Tories has been a disaster, for those who aren’t cronies at least. 2007 seems like such a prosperous time compared with now. Almost half of my life has been continuous Tory government until now and I can’t wait for a change. The sooner a general election, the better

 

[Carloncho]

It could mean a lot of things depending on how it plays out in conjunction with other elements of his plan of action. If the regulations for commercial and personal transactions remain the same but rewritten to eliminate the word peso, not much would change.

Ideally, to Milei's sympathizers and with the repeal of tons of regulations Milei is promising, it could mean a jump start to the economy with easier international trade for both imports and exports, more stable/expected consumer prices, less banking restrictions regarding permissible amounts, increased foreign investments, etc. These seem to be good things for property values (to the expats who own properties) and would potentially end some of our chatter regarding (how do i do/find/backdoor x) and maybe open some doors for local investing.

Worst case could mean prolonged deflation and shortages, and a significant increase in crime due to increased desperation. And if part of the casta, a pretty hefty haircut on the kickbacks without the Cantillon effect and multiple exchange rates to wield to its favor. But probably some serious (and probably state-sponsored) civil unrest for a bit. Probably not great as an expat or most anyone else.

Boring it will not be....

Additional commentary: the media will now push the voto bronca/hartazgo, but most Milei sympathizers I've spoken with approach the subject more from a side of hope for the future with real quality of life improvements, not just straight temper-tantrum burn-it-down sentiments. Grabois would appear to represent that sentiment: end capitalism, expropriate properties, encourage violence, play the victim, and the rest of the angry face college kid NPC meme run-of-the-mill nonsense.

A cultural return to the ideas of Domingo Faustino Sarmiento and Juan Bautista Alberdi at the expense of those of General Juan Domingo Peron and Nestor Kirchner might not be a cause for alarm.

Wow! Sarmiento and Alberdi ideas against those of Peron and Kirchner means the old glorious Argentina against the populist and socialist "villa miseria" of today's Argentina.

 

[FrankPintor]

How much of the economy operates, and is affected by using the official Dollar exchange rate? Given that we have the free-market Blue Dollar rate, and (I read) up to 17 managed rates like the CCL, MEP, Qatar, Soya, Wine Dollars and so on, which are in varying degrees closer to the Blue Dollar, how much work is left to convert to a free-market rate? Would it make a major impact on peoples' lives? Has, in fact, most of the hard work in moving to a free-market rate already been done?

I still believe completely dollarizing is just for show, a lot of work and a big risk for not much return. It's not just that there's a built-in inflationary trend as people round prices up due to the lack of small change, but the opportunities for corrupt insider trading, as well as a one-off price jump at the conversion are enormous.

Actually, Milei needs to talk both the economy and the Peso down, imagine, if the free-market with all the aggregated managed rates plus the official rate settled at say 600-800 Pesos / Dollar rather that the 1600 that's been mentioned, he'd need twice the Dollar amount to convert the banknotes in circulation. He'd look pretty stupid if that happened.

 

[Quilombo]

Actually, Milei needs to talk both the economy and the Peso down, imagine, if the free-market with all the aggregated managed rates plus the official rate settled at say 600-800 Pesos / Dollar rather that the 1600 that's been mentioned, he'd need twice the Dollar amount to convert the banknotes in circulation. He'd look pretty stupid if that happened.

That's the other elephant in the room, at what rate? Assuming we could even get loaned 40 Billion+, dollarization via that loan assumes the current blue rate more or less, but if Milei wins, there's also the following hurdles:

- There will be even more upward pressure if Milei comes in first or makes it to the ballotage
- It's a long time between October 22, the ballotage, and December 10th
- The dollar blue will not stay frozen at ~$720 until he becomes president if he wins
- Reality will also sink in as people realize we don't have anyone to lend us 40 Billion, let alone 50, 60, etc. to dollarize at under 1,000 pesos per dollar, and this could create a feedback loop driving the value of the exchange rate up
- Even if we somehow manage to get 40 Billion Dollars, it's not as simple as waiting for a SWIFT transfer, you need the cash. Argentina is a very cash centric society in pesos, and almost exclusively so in dollars. Even with Milei as president, do you think anyone here will want to keep their dollars in the bank? Once bitten twice shy, and it was barely 20 years ago.
- The dollars we have here are also disproportionately $100 bills, not great for buying a single alfajor with
- Logistically this will be fun, especially as we will need $1, $2, $10, and $20 bills mostly. This is what transporting $40 billion USD to Iraq was like, logistically, not to mention the bundles that will naturally "go missing" along the way here at Ezeiza like they did in Iraq, even under US Army/Marine supervision
- What's the plan for coins? Are there any left? Haven't people been selling them to scrap yards by the pound for the last few years? Now we'll have to mint coins in a sort of hybrid currency like Ecuador does, and that isn't something that happens overnight.
- The longer this takes, the more macro economic distortions will happen. You better believe the market and people will stop accepting pesos for most things before December 10th if Milei wins, I sure as shit will, I don't want to be left holding the bag with colorful toilet paper

I am confident the people supporting Milei have not through the logistics of this, and the impact it will have short term. I'm in my early 30s and have had the pleasure of knowing several older Argentines who have told me stories of life during the assorted currency panics and changes. You know what none of them said? "It was a smooth processes". And that was when most of the government and society was onboard with the change, unlike now, where 30%+ of people don't support this.

 

[sergio]

That's the other elephant in the room, at what rate? Assuming we could even get loaned 40 Billion+, dollarization via that loan assumes the current blue rate more or less, but if Milei wins, there's also the following hurdles:

- There will be even more upward pressure if Milei comes in first or makes it to the ballotage
- It's a long time between October 22, the ballotage, and December 10th
- The dollar blue will not stay frozen at ~$720 until he becomes president if he wins
- Reality will also sink in as people realize we don't have anyone to lend us 40 Billion, let alone 50, 60, etc. to dollarize at under 1,000 pesos per dollar, and this could create a feedback loop driving the value of the exchange rate up
- Even if we somehow manage to get 40 Billion Dollars, it's not as simple as waiting for a SWIFT transfer, you need the cash. Argentina is a very cash centric society in pesos, and almost exclusively so in dollars. Even with Milei as president, do you think anyone here will want to keep their dollars in the bank? Once bitten twice shy, and it was barely 20 years ago.
- The dollars we have here are also disproportionately $100 bills, not great for buying a single alfajor with
- Logistically this will be fun, especially as we will need $1, $2, $10, and $20 bills mostly. This is what transporting $40 billion USD to Iraq was like, logistically, not to mention the bundles that will naturally "go missing" along the way here at Ezeiza like they did in Iraq, even under US Army/Marine supervision
- What's the plan for coins? Are there any left? Haven't people been selling them to scrap yards by the pound for the last few years? Now we'll have to mint coins in a sort of hybrid currency like Ecuador does, and that isn't something that happens overnight.
- The longer this takes, the more macro economic distortions will happen. You better believe the market and people will stop accepting pesos for most things before December 10th if Milei wins, I sure as shit will, I don't want to be left holding the bag with colorful toilet paper

I am confident the people supporting Milei have not through the logistics of this, and the impact it will have short term. I'm in my early 30s and have had the pleasure of knowing several older Argentines who have told me stories of life during the assorted currency panics and changes. You know what none of them said? "It was a smooth processes". And that was when most of the government and society was onboard with the change, unlike now, where 30%+ of people don't support this.

Who said change is a smooth process?

 

[ArgentinaVet]

How much of the economy operates, and is affected by using the official Dollar exchange rate? Given that we have the free-market Blue Dollar rate, and (I read) up to 17 managed rates like the CCL, MEP, Qatar, Soya, Wine Dollars and so on, which are in varying degrees closer to the Blue Dollar, how much work is left to convert to a free-market rate? Would it make a major impact on peoples' lives? Has, in fact, most of the hard work in moving to a free-market rate already been done?

Fuel (gasoline, diesel, jet fuel, natural gas) is still priced at the official rate as are medicines and other medical products. Auto parts that going into vehicles manufactured inside Argentina are also priced at the official rate.

 

[Redpossum]

For those who really care, this wiki page on the Argentine Peso is worth looking at, more specifically the History section. The current Peso convertible (ARS) is the 4th currency Argentina has had since 1970

Peso ley, 1970–1983
Peso argentino, 1983–1985
Austral, 1985–1991
Peso convertible, since 1992

Ozymandias, eh?

This particular post is meant as a historical note only. I am not, in this one post, arguing either side, just offering a bit of data. In case you are wondering, "WTF is that damn marsupial trying to say here?!?"

 

[earlyretirement]

What specific aspects of the Ks are socialism? UBI is something literally proposed by libertarians too, so that doesn't make it inherently belong to any political affiliation, let alone socialism.


Again, nobody is disputing that things are broken, but I've yet to see anyone spell out what socialist policies the government of Argentina has that aren't found in other capitalist countries around the world, the difference being things are more corrupt, broken, and dysfunctional here.

And the Heritage Foundation is literally a right wing think tank, these are the kinds of people that say Canada is a communist country lol

Yeah that's why many Canadians want the hell out of their country. Most of my Canadian friends are getting to the point they want out. Many of them are getting permanent residency in Mexico and buying places down there. Just go to a town like Chapala or Ajijic or Puerto Vallarta or many others. Every time I go I see more Canadians.

Canadians are some of the gentlest, nicest people I know but now they are talking shit about their country. For good reason.