visto en el Daily reckoning
You’ve just returned home from holidays to find your house ransacked, your belongings strewn across the floor, your safe busted open and your precious valuables gone...
Oh! That sinking feeling!
We imagine that’s what it’s like to wake up one day and find that your currency has lost most — or even all — of its value. The long suffering people of Argentina know a thing or two about that. Only they weren’t away on holiday. They were right here, at work. They were saving money for a retirement, a family home, a future. And then the government came, under cover of broad daylight, and pilfered the lockbox.
When it comes to idiotic governmental policies, Argentina stands proud. In this arena, she is second to none. The politicos have tried military dictatorship, dirty wars, right-wing nuts, left-wing fools and every hacktress and botox bag in between. They’ve implemented currency controls, farm subsidies, price regulations and market manipulations to make any well-mustachioed fascist blush. Other countries impose sanctions — import and export bans — on nations they don’t like. Argentina imposes them on herself! The list of things you can and cannot buy here changes every week...but always it grows. Indeed, what the governments of Argentina don’t know about screwing up an economy probably isn’t worth knowing. They’re the experts.
But of all the politicking shenanigans and economic illiteracy, the race to inflation must surely be the most insidious of their crimes. We’re talking about devaluing the money in people’s pockets, stealing from them every second of every day, when they are at work and when they are asleep. Inflation is theft...and the people here know it.
In this space last week, we wrote about how the spread between the official and unofficial peso-dollar exchange rate had widened to a record — 42.7%. Barely a week later and it has stretched beyond 50%. Officially, the rate is 4.95 pesos per dollar. Unofficially — i.e., actually — the rate is 7.5 pesos to the dollar.
What does this mean? What’s going on, exactly?
According to the government’s official exchange rate, a peso will buy you roughly twenty cents. But try getting that rate on the street. Ha! Nobody wants pesos. They’re dead ducks. The “blue” market will pay you just 13 cents for your peso, indicating something closer to its true value.
Argentina is going to hell in a handbasket. But at least it won’t be lonely. Governments the world over have committed the sin of inflation, from coin-clipping Romans to pointy-headed academics in modern day central banks. Beginning with Angola’s novo kwanza and reading through to Zimbabwe’s diminishing dollar, the list of currencies to have been bled by their larcenist protectors is long and unfinished.
We keep a glass bowl full of worthless paper in our little pied-à- terre, here in Buenos Aires, to remind us of the transience of money. When foreign guests come over for drinks, they often remark on how they would never leave a bowl of cash lying around. The Argentines, having seen one worthless note follow the next, know better.
If we were to return from holiday to find our house ransacked, our belongings strewn across the floor, and our precious (few) valuables gone...we could at least be sure the money bowl would still be there.