Shuttering their central bank and converting to dollars… Meaning they aren’t actually getting rid of a central bank, but are rather converting to a foreign central bank.
No it’s worse than that. How are they going to purchase enough dollars to replace their own currency? No one is going to give Argentina a loan to do this.
This project is doomed before it starts.
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The gang solved the Argentinian inflation… music starts
Also, Bitcoin!
Good ol’ Mac with the plan!
You get dollars the same way anyone else would in the situation: You carry a trade surplus vs. the United States and then allow tax payments to be made in dollars. Prices settle as a function of dollars available, rate of circulation, and volume of goods & services available.
The policy should produce a boost in exports & employment but also produce a shortage of goods normally imported. It’ll also be a great time for Americans to visit, the dollar suddenly having a lot more purchasing power in Argentina.
The idea is that since the government can’t run a surplus by itself, he will break the capacity of running into deficit and making it so they don’t have any other choice.
It’s a nice-looking, simple idea that some countries try here and there and never work on practice.
never work on practice
There are several countries that use the dollar, including, in Latin America, Ecuador and Panama. They are doing fine.
More pertinently, Zimbabwe’s famous hyperinflation was ended by dollarizing.
So it’s not an outright crazy idea. I think the doomposting is mainly due to “right-wing therefore bad”.
It seems the whole point is adopting a currency they can’t print more of. Because of the ‘print more money’ thing doesn’t seem to be solving their inflation issues.
For some context, during the last 4 years the quantity of money our governemnt needed to print* was so high that our printers weren’t enough and we had to pay other countries to print more pesos.
For some context, during the last 4 years the quantity of money our governemnt needed to print* was so high that our printers weren’t enough and we had to pay other countries to print more pesos.
Usually in modern language “printing money” is simply the central bank moving a numbers on a spreadsheet, not necessarily creating new currency notes. This is especially true if the newly “printing money” is being used to repay foreign debts.
Are you saying Argentina is actually running out of currency? If so, where is it all going?
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The goverment spends more than it can, so to pay it’s debts, the goverment print more and more money. This makes each bill to have less and less value generating inflation.
That’s a good explanation about how a government can cause rapid (or even hyper)-inflation, but most of this impact isn’t felt with people handling currency as far as number of bills they have to carry.
A government devaluing its currency usually prints larger denomination notes. As an example:
If a home appliance like a stove costs 100 Argentinian Pesos it might be paid for with ten 10 Peso notes for a total of 100 Pesos.
After a couple of years of rapid inflation the same stove might cost 2000 Argentinian Pesos. While someone buying a stove could technically still use two hundred 10 Peso notes for a total of 2000 Pesos, that’s a lot of currency to carry. Instead government print larger denomination notes. A quick look at the wikipedia page on the Argentinian Peso confirms what I’m talking about. In May of this year, they started printing a 2000 Peso note. So that stove from the example could be paid with a single note, not two hundred.
I would guess usually when these larger notes are being printed the same number of notes in circulation doesn’t need to change that much because the new notes are worth exponentially more than the old notes they would have produced in the same amount of time. In May of 2017 the smallest denomination note was 20 Pesos. However, in May 2023 the smallest denomination note is 100 Pesos.
If that is the case, where is the need to increase the number of notes in circulation, when the value of each note has gone up so much more?
To be fair, Argentina was never really self-sufficient in money-printing. Brazil has so much volatility on the usage of the printers that it’s always cheaper for other countries in South America to import.
But yes, the amount they have been importing recently was completely out of the norm.
It’s not like the fed dosen’t print money as crazy too.
And the Dollarzone grew three sizes that day
I wonder how long it will be before I can point to this as yet another example of why libertarian policy is absolute bullshit.
My guess is not long.
From the moment he opened his mouth
Have to wait for the bears first.
i can usually understand most political views, but libertarians just make me confused
You are still not half as confused as the average libertarian.
TL;DR: Basically, in the US at least, Libertarians are spoiled white guys who don’t even understand how good they have it and have Ayn Rand power fantasies that they’ll make their own way and the rest of the world has just been dragging them down.
A couple of my college buddies are full on Ludwig Von Mises/Murray Rothbard anarcho-capitalist nutjobs. The basic conceit is that all governments and states are illegitimate uses of force and are drags on the free functioning of the economy. Left with no “coercive” governments, people will competitively self-organize into private collectives to replace all governmental services, and all resources will flow to their best and natural use. It’s absurdly naive and ignores absolutely everything about human nature and even the de facto reality of their desired end state.
So somehow private property will continue to exist and be protected by voluntary courts and security, and funny how it works out that in this case my buddies get to keep the fruits of the privilege enjoyed by centuries of their ancestors and built up in a decidedly non anarcho-capitalist system. All existing government property will be sold off and the proceeds distributed to… someone? No word on how natural monopolies like the best water route between two river ports will be handled, but it will be privately negotiated and definitely perfect!
It will be a utopia of people pulling themselves up by the bootstraps and not letting silly things like “personal safety” or “living wage” or “stewardship of resources” get in the way of making the completely even-handed and non-coercive deals that all people will make with the private entities that spring up to replace governments, but only VOLUNTARILY! People definitely won’t make deals they don’t like, and that reduce their future power, to avoid death in a “market” with limited opportunities. They definitely won’t leave their shares (or whatever) to their children and recreate all the same social structures we have now, but with corporate self-interest as literally the only governing norm.
Now, I suppose you could end up with corporate bodies that are outcompeted by “fairer” competitors (ignoring, of course, all first mover advantages and the willingness to protect profits by violent force that we already see in so many times and places), or maybe certain security and judicial corporations will make agreements with each other and install themselves as a layer over the more economically productive companies and collect fees that are definitely not taxes. Maybe some of them will be the “fairer” entities.
But where does that leave you? Basically, our current world is already at least a little better than the libertarians’ best-case scenario, and what their system really does is tell people to give up, that they are not worth one cent more than the economic value they can provide to someone else, and that they deserve no voice in the governance of their lives beyond what they can take.
How this doesn’t descend into competing warlord fiefdoms, eventually to be swept away by spasms of violence (in this system, “competition” is just a euphemism for politics and war), is beyond me. With some luck, it might lead to some parts of the world on a tortuously slow and uneven march in the vague direction of egalitarian governance to moderate the use of coercive force. In that case, CONGRATULATIONS! You’ve landed the world right back where it started, but now with millions dead and the Earth in even worse shape than it would have been.
Comment saved because my god I get so tired of trying to explain this to people, and I’ve never done so as eloquently as this.
I mean, the anarcho-capitalists are fairly extreme, but the libertarians in general seem to be people who want to lock in the benefits they’ve got in the current system and remove any barriers to fucking over people who don’t have them. They also seem to forget that you can’t just declare that coercive force no longer exists. The best you can do is try to have some sort of consensus to apply it fairly and sparingly and in the pursuit of noble ends. All of their proposals are just variations on directing the thrust of that power to enforce the status quo when it comes to property holders.
The crazy thing is I’m not even particularly ideological, and I imagine our friends on the .ml domains would not be fans of me. I am just in favor of measures to moderate the worst tendencies of capitalism and to preserve the fact that no one succeeds in a vacuum, things like paying my fair share so people can have safety and opportunity. The Libertarians are just not what they claim to be, either because they’re evil or naive.
Agreed. The only thing to add to this is that government systems are voluntary and propped up by the people. The reason our current system actually works so well is because there is already a strong sense of local governance and accountability albeit on some rails. Each state defines the types of organized entities that if will sanction. In NJ for example, we have townships, but you could also register using other systems like village, etc. If they wanted to appease the libertarians a little, they could potentially allow for that experiment to exist in the same way that Indian reservations are their own systems.
People have effectively set up libertarian reservations for themselves. It never goes well.
What an amazing, cojent and objective description. You’ve definitely done your homework. Glad to see you passing on your good knowledge to someone more ignorant
I can almost understand the Personal Liberties Libertarian, which I think is what the philosophy was originally supposed to be about. But we often see Corpo-National Libertarians or Totally-Not-An-Anarchist-I-Swear Libertarians, and both of those are baffling to me.
Yea, the only brand I ever sympathized with was the “Hey man, just let me smoke weed”-bertarians… but all those guys jumped ship a long time ago.
Now it’s mostly just “I don’t want to pay for schools”-bertarians… and that’s ironic because those assholes really need an education.
I’ve meet way too many libertarians who don’t want their taxes to go fund cycle lanes because they don’t ride a bicycle. “it does not benefit me” they say while they fail to see that people in bicycles mean fewer people in cars clogging up traffic.
Libertarian world view cannot even see past their nose
confused
You’ve understood.
It always seems like “common sense” (short-sighted and moronically simplistic) solutions to problems they don’t understand but waffle on about something tangentally related to make it sound like they do.
I don’t think most of it is common sense. I’m a voluntarist, which is an ethical position for me.
it’s like I’m always with them for the first few seconds, then they just go way off base out of knowhere at some unexpected point in time
just make me confused
It’s very simple. They incorporate as a superperson. You’re a human, somewhat rich. You get a corporation. You put it on like a magic suit and you have super-immunity (impunity) from laws, you can do anything.
The freedom that they want is the freedom to exercise their power (money) with no bad consequences for them.
It’s a simple theology: “Me first. Fuck you. Every man for himself.”
While it fits great on a bumper sticker, it’s a suboptimal strategy to build an economy, nation-state, or anything really.
It’s neoliberalism
This move is a necessity in Argentina’s Political and Economical situation, by shutting down the Central Bank (and subsequently moving to Dollars) Milei is killing the Politicians’ (long standing and abused) Ability to finance themselves with monetary emissions (their Agendas and Deficient governments just to not say corrupt money laundering), which is the cause of inflation, which makes all Argentines poorer by the hour.
It is if not his biggest, one of the major promises on his campaign and the one most people voted him for, Argentines understand (as seen trough Random Street interviews) that this will create major hiccup on Economy while they transition to dollar, but given it’s long tern effects are willing to put up with it
Sounds like they want to heal the country by murdering it’s economy.
Amputating a Cancer-Infected Leg to save a whole body is a common practice. The prosthetic replacement comes later
But they are doing it with a chainsaw and set to let the patient bleed out.
Like we have been for the past 2 decades!
Best of luck with that.
The long term effects are going to be serious whiplash. The monetary regime would go from severe inflation to super low inflation (below what Argentina needs). They will essentially be using Argentinian Government funds to buy US dollars, thereby helping the US keep its inflation under control.
That’s good for the US, but Argentina may fall into a recession. Growing economies need a growing money supply or businesses will not be able to borrow money to expand. By essentially hitching their economy to the slower growing US economy, Argentina is ensuring that their businesses pay high interest rates to borrow money. The US government is paying you 5%, risk free. Why tf would anyone loan money to Argentina less than 10-15%?
Remember how US tech companies all fired people at the same time when the Federal Reserve increased interest rates (it happened)? That’s what will happen to many companies in Argentina at the same time.
Edit: lol, he was just lying about “dollarization” for votes because it’s nuts:
He added no dollarization was planned in the short-term, as fiscal and monetary stabilization were need, the first source said.
https://news.yahoo.com/finance/news/milei-economic-team-led-former-175214678.html
Yes, its gonna be serious and difficult, but like said they are willing to put up with it… with they I mean the 55% that voted him of course…
And no, the dollarization was not a lie, like he said (his whole campaign…) it’s for the long term, first comes solving the gigantic Economical Deficit the State currently generates, then it’s Public Organization’s and then cutting taxes, only then he’ll move forward with it obviously because otherwise is suicide.
And this is very important to remark: News Outlets other than Javier Milei’s Official Twitter Account or the Government’s Official Channel (after December 10) ARE NOT TO BE TRUSTED. You may think this is just him shielding against media “calling him out” but there is a serious issue with Argentina’s News outlets: They are funded by the current government and are VERY functional to it. Other International Media arent necessarily but yeah it’s obviously more profitable to report “Argentina’s new president is A NAZI” than “Argentina’s New President Denies the Made up Number of Dictatorship deaths” (which just in case, the authorities that made up the number did confess to making it up in national TV)
Hell, its even as bad he’s been putting “Official Communication” posts to clarify that what the media is saying about his proposals or plans is false, including those claims of him backing down on Dollarization.
I’m sure crime will not rise up when people have no food because they don’t have dollars, I’m sure people will not go out violently on the streets and raise hell, yes the policy may be be beneficial to those who have their on dollar reserve, but the rest? Save my comment, and hope that doesn’t happen.
You mean the heists that have happened since August of this year when the dollar was even lower than now? Or are we talking about actual big amounts of people dying for not having money or food and insecurity striving like in the pandemic Two Years ago? (Argentina being one of the worst casualties rate of the world with covid, thanks to the current government)
Yeah that says a lot about Argentina. If you have two brain cells even, just to rub together a little bit, you realize this is an idiotic idea, incompatible with taking part in the modern, global economy.
Except that there’s countries that did the exact same thing and are doing fine. There’s also the ones that dont and it shows it’s a gamble.
Not taking the Gamble however means to take the risk-free secure pathway to Venezuela and luckily majority of Argentines understood that.
Great! A majority of the unwashed masses, half of whom are illiterate. I’m not really interested in what another illiterate person thinks about economics, either. Shows a total lack of appreciation for Argentina’s most imminent, existential problems, and now you have a majority of the country tricked by a charlatan, and they’re excited about it!
Thanks, social media, for giving know-nothings an “equal” voice. /s
What are you on about with Social Media? For the WHOLE elections Social’s were INUNDATED with Ads and Publicity of Fear Campaign against Milei (from the current government and friends which Official Spending numbers could have paid a lot of debt mind you)
The fact that most people voted for him still is a telling that they are not able to be tricked.
Well, yeah that’s also what democracy is about, no matter your conditions you have a voice, regardless of how educated that is… cough 45% cough . But most of all why would they need to all be Economists to vote for the guy that IS an economist and his economic proposals at that when his opponents have given 0 Proposals ALL COMBINED
You don’t need to be an economist to see he’s a moron. Just listen to him for five minutes. Obviously, you got tricked, though, so…
Innumerate and illiterate!
Obviosly he’s a Moron, any person with 2 Braincells would run for President, Win and continue the status quo stealing from Argentines like the previous 20 Years politicians have, afterall there’s been no consequences for them.
But he’s not doing that, instead he’s complied with his campaing promises and pushes to break Argentina’s decadence with a radical change that so many promised and backed out after winning, putting himself at the stake most of all
So yeah, absolutely crazy from him. Voters? About to be defined
Trust me. I’m an economist from Facebook University
Hey, he may even met our economist, Erdoğan, there!
Come on man, the Turkish economist isn’t Erdoğan , it’s
BerbatbayrakBerat Albayrak
Oh yeah, a bank shutdown turned out great for Argentina the last time they did it.
I missed that previous time, I did a quick Google search but I’m not getting results. Would you know roughly when that happened?
In 2002, there was a major bank freeze overnight in Argentina. They reopened months later, and because of how they now pegged to the dollar, the value of the accounts were functionally cut in half. In those months, many local neighborhoods invented their own bartering systems and it was a whole mess.
This was around the time the USA invaded Afghanistan, which explains why most people don’t know about it, but it was obviously a major event for Argentina.
That was a freeze of citizen’s personal accounts, not a shutdown. People were not allowed to access and retrieve their own money from their personal bank accounts. This is different. This is the Central (National) Bank, and a shutdown at it. Not individuals bank accounts, if I understand what’s going on correctly.
El Corralito
This is false, the Central Bank has not stopped running ever since it was opened and the event you are talking about is also not due to “it closing”
I don’t think it’s False, just you interpreted the reply to be related to the central bank.
Thats fair, however they are from the same person. Cohesion was to be expected
Argentina just activated Fuck Around And Find Out protocol.
Bruh weve been. The world is just paying attention for the first time.
Nos estamos cayendo a pedazos hace décadas y recién ahora se enteran. Me da algo de gracia, arriba alguien confundió el corralito con el cierre del central
Literally order 66
I’m really interested to see how this plays out. If history plays out that country is headed almost immediately for a recession that may or not be purposefully engineered.
Never attribute to malice what can be explained by dumbass political philosophy.
Oscar Wilde
“Regulate money? Amid out of control inflation? Nonsense!”
The market will regulate itself /s
They should just declare inflation illegal like Zimbabwe
Is there any betting on when the Argentinian cannibalism starts?
After we eat through the stray cats
Hey, don’t forget dogs and pigeons!
Rosario siempre estuvo cerca
Una especialidad culinaria de la region
You can always borrow some shorts.
Wait so also the Falklands was non-negotiable?
This is the best summary I could come up with:
BUENOS AIRES, Nov 24 (Reuters) - Argentina’s President-elect Javier Milei said on Friday that the closure of the country’s central bank, a signature campaign pledge, was a “non-negotiable matter”, according to a statement from his office posted on social media platform X.
The comments, in response to what he called “false rumors”, come as the outsider libertarian economist races to put together his team ahead of taking office on Dec. 10, with some signs that he is picking a more moderate Cabinet that expected.
That marks a shift from a previous plan that Milei would appoint a close ally to lead the administration.
Horacio Marin, a private energy sector executive, was also confirmed as the incoming chief of state oil company YPF.
Milei faces major hurdles to implement his more radical reform plans, which include dollarizing the economy, shutting the central bank and privatizing state companies like YPF, which will take time if they can be done at all.
Milei also has to juggle demands from the more mainstream conservative bloc, whose public backing was key to him winning the run-off election last week.
The original article contains 232 words, the summary contains 184 words. Saved 21%. I’m a bot and I’m open source!
