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Could have used any other currency to do that, the dollar isnt special. Talk about a drawbacks like tying yourself to a currency which is controlled by the country with the most diabolical and maniacal people. A currency whos entire value is artificial inflated.
This dude is absolutely nuts, and it feels like this is exactly what Argentina needs to get out of the hole they keep digging themselves in. I'm hoping for the best for my southern brethren.
The guy just came to Brazil (aka Argentina's biggest economic allay) To meet with the guy that failed to enact a coup While simultaneously insulting the sitting president directly You said it right, the guy is nuts Cause that is unabashed insanity Imagine Poland's president going to Germany to meet some nazis and badmouth the chancellor Cause that's basically what just happened
As someone who had to vote for Milei even if I don't agree with a lot he says, I sure hope we can leave this hole, but many argentinians love their shovels.
LOLno. He is trumpo, except far dumber/less read, more macho, and unlike donald, that clown didn't even ran lemonade stand so can't even fall back on that argument...
I’m from Poland, we had a similar situation after the fall of communism. Poverty was sometimes being covered up, but then came people like Leszek Balcerowicz, an economist who announced the Balcerowicz plan. Basically, he (and some others) made a lot of reforms (including to the currency) which were pretty controversial at the time, especially for low-income households. But later on, the plan worked and the economy was stabilized and inflation dropped and now, people generally respect Balcerowicz (even those who firstly hated him). So yeah, fixing broken economies may take time and we still have to give Milei’s government a chance to fix Argentina’s economy.
What change, he is going to be president for the next 3 years, are you guys so pressed by him finally fixing an economy that looked like the next Venezuela?
It’s an apples and organes comparison. 🇦🇷 is not an Eu member never will be. Dollarizing the curreny can be very dangerous since the US federal reserve controls it. They are also very low on dollars since they just cannot print it they must trade or get investments and loans for it. It could work out tho we are just going to have to wait and see.
@@wadeday8706US federal reserve is a way more safer hand than Argentina fed, having enough dollars is a issue but it can solve through loans and doing the process slowly, a lot of Argentinian already have a lot of dollars in saving due to inflation.
The dollar is literally being destroyed / debased / devalued. The best performing asset in the history of the world is BITCOIN. It is by far the best store of value. 10 years from now you’ll be thankful for every dollar you put into it.. My two cents.
Regretting missing out on earlier Bitcoin investments, I kept funds in a HYSA. Now, with $200k to invest, I aim to avoid FOMO and buying at the peak. What's the best approach for a newbie to navigate the market?
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Thank you for sharing, I must say, Melissa appears to be quite knowledgeable. After coming across her web page, I went through her resume and it was quite impressive. I reached out and scheduled a call.
One of the most cited quotes in economics, originally written by Simon Kuznets, says that there are four types of countries: developed, underdeveloped, Japan, and Argentina.
@@yomanyo327Argentina has gdp per captia of 13,600$. This is slightly over the average. It’s not a bad economy by any stretch it’s just very unstable and stagnant.
I feel like every Milei idea is on the surface a terrible idea, until you contextualise Argentina's financial situation and then you're like "eh, it might be the best of a bad situation."
It is already the case for huge parts of the economy. Plenty of people prefer to accept US Dollar (all around the world) That's the only option if your currency is dead.
Bingo! Historically Argentina has suffered from uncontrollable expending of the political class and bad after bad policies by this class... That has destroyed the competitiveness of Argentina. This is at least going to control the money printing the Argentinian political class seems to not understand how it works.
Guys what if the solution to years of decline, austerity, privitization, and corruption is to triple our privitization efforts, austerity, and to legalize corruption. Genius.
You should have mentioned that Argentina had a currency peg to the dollar for years. They crashed out of it when politicians overspent and the currency board couldn’t come up with cash to keep the peg. Totally eliminating the peso removes that risk.
Actually the best decade of modern argentina economy where with a currency peg (2002-2012). Rising GDP at china's rate, astonishing reduction in poverty, eradication of extreme poverty & hunger, more external investments, external debt repaid, low inflation, stable prices, best salaries (nominal and % of profits) as well as social security of the whole continent; all while on a stable superavit, even while the world crashed in 08-09'. Cristina Fernandez de Kirchner left office with 70b reserves, something we can only dream about now, more than double so the crisis wasn't due to overspending by definition. Peronism worked so well the US Embassy funded 3 separate ultraneoliberal projects (Videla, Menem, Macri) buying radio, television and internet media spreading fake news and deepfakes, and "aided" with a record illegal loan from the IMF in every attempt. Every argentine over 30 remembers the last 2 times and can add 2+2 to understand when it comes a third one. BTW: Overspending won't crash an economy, its well studied. It can demolish a currency, not the same. By the contrary, public spending is the best possible way to reactivate an economy. Eliminating the peso wont help a bit
@@polakittoExactly for all that you said was elected Javier Milei, to undone all that because was so wrong, first Cristina was the most corrupt politician ever Argentina met, the worst government because even when the commodities was the most big prices Argentina get even loke that somehow she cant make Argentina grown economically, the amount of corruption and overspending must be huge; second the "buy" you mentioned are not buy, was statizations that const Millons of dollar on demands, YPF only cost 16 billion of deb for that stupid move, also you say they left reserves, but why dont mentioned Argentina was on default, of course had money to left if not pay the loans and debts, like not pay to IMF, third you say overspending is good and don't be a problem, so Argentinas problem where come from?? From air? Is because overspending, your economy theory is what Milei call Keynesianism where boost demand printing money is the key, well the key for make broke a country like cuba maybe, and last thing, the best time of Argentina was on Alberdi time first and later on Menem's period where dollar was 1-1, data dont lie
This is probably a means to wake up people to options. My info is they will go to a digital peso , backed by real assets such as silver and lithium. Let's see how it plays out.
@@romanplays1 The currency is not pegged to the dollar, why are you talking about subjects you are uninformed about? The exchange rate changes literally every day, that is the definition of a floating rate.
We dollarized in El Salvador and it has saved our country. The slow growth of our economy since 2000 is a function of crime, violence, and corruption and has nothing to do with dollarization. However, dollarization has saved us from rampant inflation and monetary mismanagement, because over 1/3rd of Salvadorans live in the United States there is simply no way we could have a huge influx of dollars into our central bank to be converted into colones - it would have broken the back of the bank. Now that we have rebuilt from crime and violence we should be adopting the same banking laws as Delaware or South Dakota - literally take their laws and put them through Google translate - and invite every major US bank to open up into El Salvador making us more like another state or territory and more attractive to credit and investment
I suspect scholars will be studying Argentina and El Salvador's history in this decade for many decades to come. Best of luck to you and your countrymen
"saved us from rampant inflation and monetary mismanagement" and put you at the whims of US form of rampant inflation and monetary mismanagement. Mind you the Fed is just a vendor to the US government, and such can do whatever it pleases (all central banks are that with the exception of 3 countries), especially abroad. Also their police have jurisdiction wherever its used. meaning they can come and kill somebody in your country and walk away without being punished since they have jurisdiction over you but you don't over them. The IRS a collections arm of the Fed had this happen many times over inside of USA, you think they will care about your citizens?
My country Brazil is infinitely more violent and corrupt than any other Latin American country but even so it grows faster than the rest of Latin America combined and never had to dollarize the economy even though it went through a period of hyper inflation in the 80s.
@@victordias1840mexico é um país mais violento que o Brasil e mais corrupto porém nos últimos anos teve um crescimento econômico maior Inclusive o pib capita mexicano é relativamente maior que o brasileiro Países como o panama e república dominicana são mais corruptos e segundo o WorldBank as estimativas de crescimento econômico desses países são maiores
Just wanted to let you guys know you’re using a picture of an old Argentinian peso, the “Peso Ley 18.188”, that was used from 1973 to 1983. Argentina has had 3 or 4 different currencies after that one depending on who you ask. The current peso of lowest denomination still being used is the $20 bill which has a Guanaco (animal similar to a llama), or a portrait of former governor of Buenos Aires Juan Manuel de Rosas depending on the year of issue.
I think the drastic changes have become necessary because of the complete inaction for such a long time. I'm no anarcho capitalist but I think the current system cannot work anymore.
What does anarcho capitalism even mean? It's the same as "Social Democrat" it can be leftist, right, mostly centrist. No side on the political spectrum is 100% right, democracy lets one shift between left and right to use all tools available from low taxes to social security, workers rights to less regulations. Economy is dynamic and so needs our political system to be, only democracy lets one use all the tools without violent change.
@@Zyzyx442 "Anarcho" (in the context of Anarcho-Capitalism) comes from Individualist Anarchism (not to be confused with standard Anarchism, which is explained further down) where individual freedom to dictate your own life as you wish without any interference from the government takes priority. You decide what happens to your land and your property. The government should have no right to tell you what you can build, store, grow, or do with your own land. You own it, therefor you decide what to do with it. It's basically what comes to mind when you think of the stereotypical US patriot. "Capitalism" (in the context of Anarcho-Capitalism) comes from libertarian free market capitalism. This is why, as previously mentioned, "Individual Anarchism" shouldn't be confused with regular old Anarchism, as Anarchism is a leftist philosophy that's traditionally anti-capitalist.
@@Zyzyx442 anarcho-capitalism basically means an "anything goes" mentality to government policy. You deregulate everything, and I mean EVERYTHING. The government should have the most minimal amount of power, and people should decide for themselves. People, in this logic, also refers to corporations, who are also deregulated, and allowed to do anything they want. You can probably see which this methodology is a bit problematic. It's not entirely bad. It's good to put more power to the people, because the ideology says bureaucratic government is bad, because it bogs down decision making and can be wielded against the populace to make decisions they don't want. All that is 100% true. But anarcho-communism offers an alternative that's bad in all the opposite ways. It trades the elitism of federalized governments for the insanity of cyberpunk dystopias.
Because politicians that you typically know are stupid, ignorant and extremely corrupt ones that doesn't solve problems and love power for the sake of it.
Many countries have all but abandoned their own currencies for the us dollar, lebanon did and it's situation improved dramatically. It certainly couldn't hurt to dollarize the nation for a time, seek to repair the damage done to it's own currency, have the nation's best and brightest economic minds put together a plan and present it to the UN and the World Bank, take their time, and get it right policy wise, in the meantime have people use American currency or credit for the time being.
maybe the worst idea i've heard ever. It would make much more sense to use the chinese rembimbi/yen since its our primary partner, or the Euro since we actually get those from commerce. USD are in deficit, not superavit. You cant dollarize without dollars.
As an argentinian myself i can agree than me and every person i know has his savings in dolars, because you cant actualy save money in pesos if it gets devaluated so fast.
I see some people arguing about it will hurt money sovereignty. It is kinda difficult to do that if maintaining the Peso is have two digits of inflation per month because some governments love overexpending
@@segiraldovi Speak for your country only. In my country institutions work far better than Argentina, and in some cases even better than the US. We would be far worse at the mercy of direct foreign interests.
you wrote overendebting wrong. And you can have a working economy with 2 or even 3 digit inflation just fine (its not desirable but not at all an impediment). You'll see how much money sovereignty matters next time china devalues and suddently, you can't sell shit and all workers are poor due to relative appreciation (all goods and services become instantly more expensive, forever). We are all (lower, middle, upper working housholds, aristocrats and businessmen alike) doing incredibly worse with Milei's monthly 5% than with Fernandez's 13%. FAR WORSE (half the meat sales, +5% drop in GDP, twice extreme poverty/hunger, 15%+ new poor people. Its an absolute disaster.
Dollarisation as a threat to monetary sovereignty is only real for countries with weak exports who can't secure steady dollar income flows. Argentina has solid resource export potential, so while dollarisation might be a problem in the long term, as reindustrialisation happens, it won't be a big problem when your economic backbone consists of resource exports.
You apparently don’t know what sovereignty means. No part of exporting to secure a currency that’s not sovereign to you makes you sovereign. What the hell is supposed to happen? If Argentina secures enough dollars is president of the US going to call them up and say, “congratulations, with that many dollars you’ve unlocked sovereign rights over our currency”?
@@sciencefliestothemoon2305 The export taxes, as I understand it, are because they can only get foreign currency through state-run exchanges. Meaning a farmer who sells soy to the international market will be forced to accept pay in pesos at the rate set by the government. With the government moving closer to a fluid exchange rate with the US dollar, these exchanges may well be history, and the Argentine export sector will be allowed to freely export crops, meat and minerals. This will impact inflation at home though, since they'd rather export their goods at a profit instead of being forced to sell for cheap at home.
@@francisluglio6611 Monetary sovereignty only works if you're astute and disciplined in how you use it. Which the previous 70 years of decline show us the ruling elites in Argentina are incapable of. So giving up on sovereignty doesn't actually impact Argentina, if the alternative was hyperinflation and economic stagnation. Sure, US federal reserve policy will impact inflows and outflows of liquid assets to and from Argentina. But there will be flows, unlike the last few years where Argentines were forced to trade capital at bogus rates invented by the Buenos Aires government cabals. In the future, when Argentine industry comes back, you'd see more of an impact, if the federal reserve employs policies that are counter to the economic cycle in Argentina, but right now Argentines probably just want the heart of their economy to beat again.
@@saricubra2867 That is the reason that Panama has never defaulted on its debt or devalued its currency, which is the Balboa. The Central Bank in Argentina is the problem, not a solution - historically speaking
Argentina had the exact same thing until the early 2000s, it worked to keep inflation low, but it was all manufactured, the Argentinian peso was never worth that much, and the amount of debt and privatizations that were needed to maintain the pegging destroyed the country. Once the lie couldn’t be maintained any more, the 2001 crisis happened, and normal people lost their savings.
@@agme8045 Normal people lost their savings === 66% poverty rate (more like ~80% if you calculate w/ international prices), default, total national bank freeze
As long as he fixes the Central Bank and makes sure it operates efficiently, dollarization can be extremely beneficial. Ecuador did the same thing and within a year, inflation plummeted from 96.1% to an annual rate of 22.4%. In 2002, inflation had gone down to 12.5 %. By 2004, inflation sat at 2.7 %. In 2017, Ecuador's inflation rate was only 0.4%. El Salvador's dollarization hasn't managed to work the same miracle, though. However, this is mostly due to much wider macroeconomic factors and issues that needed to be addressed before dollarization was implemented, which hadn't been done.
0.4% inflation is terrible for any country’s economy. Inflation is a reflection of the amount of currency in circulation, to much leads to devaluations, to little, and the economy starts to stagnate and potential for it to go in the negative, leading to recession.
You're all forgetting to mention that Dollarization was a disaster to Ecuador! Before it was a small economy, but politically stable. After Dollarization the drug cartels shifted their operations there, and now crime rules the cities. The main drug export shifted to Ecuador, now they don't have to worry about exchange rate anymore. The country is unstable, people are fearful, investments have disappeared and the beautiful poor but stable country is a hot mess.
@@claudiaroedel1368 That's not the fault of dollarization. That's the fault of the politicians. Regardless of what currency a nation adopts, government should always be able to keep the country safe.
@@gilbertohernandez2409 but 0.4% inflation is a blessing for low incomes due they suffer most from it. Social unrests ans stability are easier maintained during low inflation and stagnation then during high inflation and high growth who only profits certain parts of the society. The resulting stability makes it easier to go to get a growth again.
@@_Solariswe have hope. Inflation has lowered down. But still lots to get out of the hole. If Trudeau is doing what Kirchnerism did here, Afuera Trudeau! And also a problem there is wokism, isnt it?
Excellent work Jack! What an informative and balanced presentation. One thing though… El Salvador is located in Central America, which is a subregion of North America. It is not located in South America.
There are smarter ways to do that though. You could make the reserve independent and tightly regulated constitutionally. It seems as if Argentina is so tired of chicken it's going to eat sh**. I hope that's not the case, It just looks that way
@@RMFofCO Thats possible when you have a culture of strong institutions. (The U.S. Fed, Bank of England, pre-Euro German Federal Bank are/were strong institutions.) I'm not an expert on Argentina but somehow Milei came to the conclusion this isn't a feasible for his nation.
@@gargoyle7863 But by the same logic, say if Milei is not reelected in 2027, dollarization could then be back-tracked, and other opposite policies could then be put in place, calling back the Argentine peso or whatever, so on and so forth... That is the history of the country, no long term policies can be practiced as long as no strong institutions are built. And I think this is the same reason why investing in Argentina is not enticing for investors
@@toriannasigourney9737 except that any country that dollarized, even with the issues that came along, the people dont want to go back to the previous currency, because they dont consider it safe. Correa was extremely left wing and he couldnt revert dollarization, because that would be the end of his government, ask anyone in Ecuador if they want to go back and no one would say they would, if a Party in power tries to do it, being left, right, liberal, etc that party would never reach power again, so those polititians wouldnt want to risk it.
lol peronism left the best stats the country has known in its modern history and neoliberalism broke it splendidly. Now will do the same circus one again. Come again, how taking more debt to prop an artificially strong peso is good or liberal? How will tax be collected if sales are sinking 20-50% YtoY and who exactly will invest in a country where people have nothing left to purchase with?
Successful people don't become that way overnight. most people see at a glance-wealth, a great career, purpose-is the result of hard work and hustle over time. I pray that anyone who reads this will be successful in life🙏🙏🙏
In a way this is what some European countries have done by joining the eurozone. And that has prevented a lot of inflation in countries like Italy that used to devaluate to stay competitive. For these countries it seems like the euro and not being able to have their own monetary policy has been an issue and a brake on competitiveness.. like Milton Friedman predicted
The European central bank indirectly responds to each EU country, so despite sovranists crying about "lost sovereignity" the democratic mechanism in Europe with representation and check/balances still works. In case of argentina or other South American US colonies, their economic policy would be decided based on what's better for US
@@carmineingaldi47well the reason they have done is that their on feds have completely failed to manage the currency. They aren’t our colony because they found more economic security using our dollars than their own.
How is printing money making you more competitive? Friedman might have predicted correctly that this causes trouble (because hiding problems under the carpet of new money isn't an option anymore), but Friedman is wrong in his analysis of "competitiveness".
The video is really well done, but there is one fundamental missunderstanding, what milei is proposing is not a dolarization but a free market of currencies (even here in argentina a lot of people are still confused about it)
Yeah the $50 billion that China dumped their Treasures😊 Coz they switched to the reserve of golds. This would balance the two axis in far shorter periods of time. The consumers spending engine sticks with dollar, the manufacturer engine sticks w the golds
hard to say plenty of subsidies get cut and since peso is get traded now the black market usd actually booming even more and because its black market the price can be anything
Monetary sovereignty is fundamental, at least with the euro countries can try to push certain policies, but how are you going to push the US Central Bank?
Of course, the reality is that you only have so much control over monetary sovereignty. When you have a high inflation, low value currency like the Argentina Peso, people will refuse to use that currency, and convert their assets to Dollars anyway. You see black market dollarization in pretty much every country where the Central Bank screws the pooch. Argentina, Turkey, Zimbabwe. These countries can do whatever they want with their policies, but their currency has no credibility, so you see the local currency replaced by the Dollar or Euro or some other competently run currency.
the euro also mostly works because richer eu countries and non eu countries like switzerland and norway also pay for poorer european countries to develop and become viable consumers.
You use tools not related to printing money, simple as that. Taxation, bond rates, regulatory fees etc. Yes you use the dollar but you can still dictate how far it goes inside your domain. Monetary sovreignty is something you have to earn, you can't take it for granted.
Having control over monopoly money isn’t that useful 😂 I’m exaggerating but most people in the country don’t trust the government to have monetary control, they already use dollars already as saving. You can’t control it but nobody trust them with the wheel.
@ayoCC no, this is the biggest downside of current state of European integration. As long as Eurozone monetary policy is based on contribution mechanisms, EU will be, as Italians say "neither meat nor seafood" and incapable of making impactful strategic choices. We need to back Euro with sovereign debt and debt has to be backed with the possibilty for EU to collect taxes. That's why we have to root for BEFIT and ETS (although this stuff is far from being perfect)
Every time Milei has proposed reforms, everyone says they will never work, then after a few months things seem to be going ok, and the vitriol switches to the next proposed reform.
@@1232-z4n Inflation is much, much lower than it ever was, and this is because the government deficit is much lower than it ever was, and has turned into a surplus. Hard times like this will lay the groundwork for a prosperous future, and I wish that politicians in America had the balls to do the same.
It is smart to follow your biggest neighbor. The advantage of fiat currency as medium of exchange is ease of transaction and circulation. No matter what happen, geographical proximity means US dollars will always be preferable for nations in America.
This is basically the only reason we Argentinians want dollarization. Even if this government is able to handle the economy flawlessly, we have no assurance the next assholes in office will do the same. And more likely than not, given our history, they will try to destroy everything.
Their economy has likely sharply contracted and their poverty rate is up a lot. It’s all trade offs but it’s not like their economy is having a great time right now. No one knows where Argentinas economy will be when this process is all done and all we can do is watch.
@@alphasword5541Communism and Socialism is definitely a religion, so much that in Soviet Russia buildings were symbolized to represent the ideals of such dogma
Losing monetary sovereignty isn’t an argument when you have such a long history of utter mismanagement of your own monetary policy. It’s like a crack addict saying rehab means they’ll lose their ability to decide how much crack they should have.
The loss of monetary is a problem, but that is not what makes this plan so stupid. Argentina is basically about to use its money to dollarise the country's economy rather than modernize it. This makes absolutely no sense because it is giving up its own currency and central bank to use another country's central bank and currency without any grantees from the other country on the use of its currency or central bank. In effect, Argentina is about to turn itself into a giant Puerto Rico.
@@nmk5003 Argentina has no guarantee it can do anything useful with its money. It’s needs outside funding to modernize and they won’t get that with a tanking currency. Puerto Rico’s financial problems have nothing to do with using the USD and everything to do with a long line of corrupt politicians who gave handouts for power and otherwise mismanaged everything.
Very interesting. There are many countries where currency controller by politicians that know absolutely nothing about monetary policy has had terrible effects. This may finally end the vicious cycle of argentinian economy
If your central bank, other politicians and political system is more current than the Mafia then giving us US power over your currency can't make the situation any worse than your own corrupt politicians would do anyway as soon as they are back in office again.
I'm from Argentina and the title is misleading. The current goal of the government is not a dolarization but a free flow of currencies. Why "free"? Because the USD is highly regulated right now. The dolarization is not the goal BUT it could MBY happen if all the economic agents decide to switch to the USD instead of the Peso once we reach the free flow. Imo I don't think it will happen (even tho I wish it did)
Yes that's milei idea eventually after the free flow of currency everyone will choose the dollar because of it's stability and the country dollarise, of course it will need time.
Doesn't Milei want to allow all currency instead of simply dollarizing? The dollar would be the major one but not because it will be mandated from what I understood
The plan is more of "the currency that Argentinias want to us,e that isn't the Argentinian peso is what we are goign to use" dollar is the most likely but if for some reason Argentinias start to use like the Kuwaiti Dinar, or teh Mexican peso, or anye other that wahat is goign to be used.
@@Ms666slayer companies could also choose their preferred currencies for transactions. for example, oil companies might use wti, gas companies might use btu, and other sectors could select currencies like usd, eur, or cryptocurrency.
the govt determines which currency you can use officially (in every country) since its the central bank the one who will convert. Its asenine to say you can "allow other currencies". Just an euphemism to fool dummies.
I truly believe that the USA will default on its debt (overseas bond holdings) whenever it becomes expedient to do so. There is a precedent for this: when the US unilaterally declared non-convertibility of dollars to Gold in 1971, without simultaneously distributing its federal gold stocks pro-rata to those countries holding dollar reserves.
One of the big points people miss is it's not "Dollarisation" it's free choice of currency, but since 99% of our prices are based on the Dollar, a lot of people call it like that Second point, you have to live here to understand how things work, comparing Argentina to other countries just doesn't work And remember, if leftists knew about economy, they wouldn't be leftists
None of our prices are based on the dollar. For the first 5 months of the year the US dollar was losing value against the peso yet prices raised by 20% / 15% monthly. Now the Dollar value is raising around 12% monthly but inflation is just around 4%. I visited 6 different places to rent in the past weeks and wanted to pay in US dollars and no one would accept. They want pesos adjusted by inflation.
milei effect, first time in life the dollar had lost against the peso, its beautiful,but yes, real state, cars, big investments, everything is valued on usd
From the same guy that said: "I wont raise taxes and I wont eliminate soical programs for the poor".... 4 months in, raised taxes and effed-up social programs and distribution of food for public diners. Tonnes of food are about to go to waste. There was a court order about it, they still did nothing, because they hate the common folk... only have empathy for corporations.
Saying that Ecuador has had slower growth since they switched to the dollar compared to similar economies is just proof of how much GDP growth doesn't really affect ordinary citizens. Ecuador is literally the Latin American country with the highest standard of living and under Bukele, El Salvador standard of living has greatly improved as well. If nobody is struggling and everyone can save up to buy a house, why would anyone care if their neighbors economy technically grew more last years? High growth usually just means the 1% getting richer and inflation going up while wages for the middle-class stagnate.
No. In the 1990s Fernando Henrique Cardoso managed tô control inflation and stabilize the Brazilian currency WITHOUT breaking the country or leading millions to poverty. It's a template that could be adapted.
@@agme8045 inflation was over 100% a month. Plano Real controlled that. The currency was stable for a decade. Even now, 30 years later, inflation is controlled, although high is around 10% a year. The currency "exploded" under Bolsonaro, but it's still around R$5 per dollar. Poverty is high but nowhere near what it was in the 80s. Anyway, reduction of poverty is related to public policies, not to the stabilization of the currency.
Non-Argentine Keynesian and monetarist economists should accept the reality that Argentine peso is a practically worthless that it isn't the preferred reference currency for bank deposits and real estate loans, so it does make sense that the Argentine peso should be totally phased out of the circulation and replace it with the US Dollar, Brazilian Real and Euro as the national legal tender currencies. However, Argentine Constitution needs to be amended so that Argentine Central Bank and the worthless Argentine peso will be removed without constitutional impediments.
Keynes defended that the government must in times of economic growth increase taxes and acumulate reserves. He also defended that the world currency after the war ( dollar) needed to be pegged to gold , people that talk about keynes has ZERO ideia about what he defended.
@@tiagofreitas1976yet all of those policies failed US under FDR administration after intervening significantly specially with PWA jumped from 15% unemployement to 19% in 1934, entering in economic recession on the middle of a economic depression. Before the depression Hoover was constantly making sure tarriffs would be increased on exports and imports, with american buisinesses beign under federal control over their own expansion outside. This resulted in a way worse great depression Keynesianism is simply trash You could just look at modern brazil and see how great keynesianosm is (its not)
@@danielbruceagra9022adopting the real would be a terrible idea. By adopting the dollar or euro, we will loose our monetary sovereignty, but we wouldn’t be giving it to anyone else (realistically, neither the US or the European central banks would try to manipulate their currency to screw or benefit from Argentina. However, Brazil, being a much smaller economy with way more interests and links to Argentina, they could literally control our economy, and thus our country. What I mean, is that the EU and the US have way more to loose, for example devaluating their currency, Brazil doesn’t (in fact Lula is doing just that)
@@agme8045 and what your monetary sovereignty produced to argentina since perón? shit, peronists don't know how to deal with money, and half of the people prefer to make the other half live in a miseable life just because they are not state workers, if you are an argentinian who works to the state you will defend peronism with everything you have, but if not, you have to leave the nation or die/live in welfare Also, Brazil is OBVIOSLLY not a smaller economy than argentina, we are the biggest economy in latin america, and ever since the real made impossible for states and red rats to print out of the problems they made we had in general a better economy than argentina, despite the best efforts of our current president(who knows nthing about economy either), the problem of Argentinian economy is not Brazil, US or EU, is argentinian socialists, who use the tito solution and create shit economy, an addict have to suffer to get out of the addiction, I really hope milei stays in the office for at least 2 mandates, argentina will have some downsizes, but this is a chance that happens sometimes in a few years, the alternative is worse, and way worse, Good luck hermanos.
@@jeffdittrich6778 brother our econemy would not function on a gold standard the dollar would be worthless there is not enough gold to keep the dollar at the same value its at if we switched to a gold standard
@@Darkcamera45 you are on a video that literally explains how the central banks are corrupted by politicians, and you are telling me in the comments that the central banks are good.
Gold can also be extracted and is exposed to inflation, though. A gold backed currency requires the central bank to have and grow gold reserves instead (and lie about the aforementioned for convenience).
Not only Argentina does not have the reserves to dolarize the economy, it will tend to loose dollars in the long run. The actual safest way for Argentina to dolarize when they in fact have the reserve is to create a pegged curency. Otherwise it is all just insanity.
you can't have paid that much attention if you don't know the difference between communism and socialism. It was corruption that did for Argentina, Socialism had literally nothing to do with it...The last Argentinian president wasn't a socialist or from a socialist party so i've no idea what you think you're talking about...Google it and see for yourself. (if you really care and aren;t just shoehorning your political agenda in for the sake of it.)
@@michaelcoward1902 You should check the history of Argentinian presidency then. Because this situation hasn't happened in one presidency, but has its roots all the way back to the Cold War era. That's Juan Perón, which even has an ideology named after him "Peronism" which is a branch of socialism. And you talked about "search on google", so I ask you to search "socialism in Argentina" because you lack knowledge in this. Also, Romania during the cold War era was Socialist, Nicolae Ceaușescu was a socialist not communist. It seems I hurt your tiny socialist feelings.
A politician who plans on paying debt?!?! That's amazing!!!! Milei is one of the most interesting people in modern history, even if politics were pushed aside; he seems like such a quirky guy lol
@@TheIrishny you keep earning pesos, there is no politic/economic pressure to prop/stabilize the currency so inflation keeps on killing your salary, meanwhile people that earn in usd are inflation-free getting more food than you for the same work. this was already tried in 90s and failed splendidly. Resulted in millions of new poverty and extreme hunger, before a total systemic collapse with nation-wide bank freezes.
an informative piece about something I have been wondering about. Perhaps in a follow up, you could provide some analysis of the prospective pitfalls of a future dollarized Argentinian economy, including how they could avoid problems that have hit Ecuador and El Salvador. What would be the impact on Argentina's political elites? And also, what would be the benefits if any for companies, ordinary households and Argentina's super rich at home and abroad.
Does it make sense: Considering everything in Argentina right now, Yes. Is it a long-solution: we will have to see, but Milei looks like a better choice for now.
No country was ever industrialized without clever rate manipulation and other tricks from the state (even US in 19th century). Bottonline: dollarization can only be good if you have a lot of discipline. And it is unnecessary if you have good discipline.
So many errors in your reportage. The whole Ecuador thing is completely wrong and frankly laughable. I was the head of IT of one of the largest banks in Ecuador in 1999 and the way you are recounting the story is not how it happened. In 1999 we were in the middle of a financial crisis, banks deposit accounts (not checking) had been frozen. The banks didn't have money anymore. The Central bank had bailed us out a few times. A few days before dollarization we ran into hyperinflation. On the Friday before, at around 5pm we received a presidential decree to have our systems ready by the next week. The weight of the dollarization process was on the banks, specifically on the IT and Operations departments. The Central Bank had enough dollars to cover withdrawals. The cash was delivered to ATM's and banks as per the usual process using our own armored trucks. The story about using Coca Cola trucks is absolutely fake and makes no sense. No bank is going to put cash in Coca Cola trucks to deliver it to agencies, branches or ATM's when they already have the process to do this every day. The story about the negative interest rates is also fake and wrong. It never happened. That was not the point of dollarization, it was to stop hyperinflation. "Beleaguered" banks didn't offer negative interest rates (which means we would have been charging people for deposits as opposed to paying interest.) We wish we had such a flood of dollars that we would go from paying low rates to actually charging customers for keeping their deposits. LOL. In the end, the economy recovered by itself and since then we have not seen high inflation. Dollarization is good.
Every politician represents economic interests, the key here is that Milei represents reformist economic interests. While the reformists may not be prefect, they are leagues better than their stagnant and corrupt peronist counterparts.
@@perimarc6008 What reformist interests? You mean the corpos? The US that wants cheap lithium, gas and water? Also you say corrupt peronist, people here doesn't understand Peronism papá, you could also say about the corruption within Macri's party Pro, or the own corruption of Milei who is doing private business with public power, or when in campaing he sold legislative seats in his party in exchange for 50k USD.
@@TCOR_ONLINE By reformist interests i mean groups that want reform in the economy. Peronism has been the mainstream ideology in Agrentina for a long time and has failed to bring economic prosperity to Argentina. It therefore represents groups that want to keep the status quo or want lean even more into peronism. They are the establishment. Milei, being a radical reformer, represents radical reformist groups who are against the status quo. It is very reductive to say that Milei just represents corpos and the US when he has such high approval ratings.
@@perimarc6008 peronism worked great at fixing the neoliberally broken economy that ended up in a total systemic collapse and 70% poverty. They left office with the best stats we have ever known in over 5 decades. The crisis Alberto endured was not his to blame, as all external debt was taken by neoliberal Mauricio Macri (and even worse, was illegally taken and even worse, stolen by his family and close collaborators). All IMF staff related to this loan were fired. Dont put this on peronismo. Peronismo saved neoliberal asses way too many times.
Saying that economists are still debating the positives and negatives of dollarization may not be wrong per say but it underepresents the reality that the vast majority of economists think it's a bad idea for Argentina. It's true that Argentina needs fiscal and monetary reform, but taking power away from the central bank is one of the worst things you can do in this situation. What other countries in a similar position did, which worked, was increasing central bank power by decoupling it from polithical whims, that way you get your inflation down without needing that mcuh money and reduce the risk from default while not subjugating yourself to the whims of another country. I hope for the best for Argentina and if this does happen I trully hope that it works for their sake, but I really hope this doesn't happen and instead they choose a more sensible alternative.
It could be his luck due to airplanes being more accessible and social media big exposure. Maybe this and the worlds shift to right could be his momentum but let’s see
For a news/economic standpoint this video was very badly informed and lackluster. It missed so many important points, feels like he has his opinion and he wants to push it
The convertivility (convertibilidad) of the 90s wasn't a dollarization process at all, it was just a a peg of the Argentinian Peso with the Dollar, the Argentinian Peso wasn't replaced at all.
@@igormarcos687 Absolutely... I live in Buenos Aires, and while it's true that many people still support MIlei, A LOT of people that voted for him are vocally opposing many of this policies, and there's a lot of shame for all the stupid things he's said publicly and about foreing leaders. Also, he campainged saying he would "cut off his arm before raising a single tax".... and well, I'm paying triple taxes now and he still has both arms attached. Buenos Aires has become more expensive than MIami, and this is not even the priciest city (Bariloche and Ushuaia are even more expensive). And let's not even get started with the corruption scandals...
In my case, I have 120,000 US dollars under the mattress, plus 91,000 lent to the Argentine state (bonds), plus 82,000 in US treasury bonds. I don't think I have more than 1,200 dollars in a bank. We, the Argentines, are afraid of banks.
What about the US Central Bank? How could he think that the US Central Bank won't mess things up? Instead of dollarizing Argentina should peg their currency to a commodity like gold and silver. You can never print your way out of danger. Printing is the danger.
The US Red Reserve is bad, but "bad" in America is 10% inflation. "Bad" in Argentina means 300% inflation....Most people would choose "bad" American Central Banking.
@@TheIrishny Historically what you say is true. I used to trade my local currency for dollars back in my childhood when I sold newspapers on the street, so as to inflation protect my earnings. However, this time the central planners of the United States have printed so much currency that it is difficult to envision a scenario where we escape this with just 10% a month inflation. This one is going to be a massive devaluation with a bottom unknown. Trillions have already been printed and spent, and eventually these new dollars will make their way to our shores. It is impossible to predict how far the dollar will crash, but when it does it will be much greater than 10% a month. Milei is better off putting Argentina on a gold standard, or at the very least, for now, starting to buy large quantities of bullion with the purchasing power he still has.
For context, in the last IMF staff report the Argentinian goverment said that the primary objective is a "currency competition" between the Peso and the Dollar. That system is in place in Perú and Uruguay and legalize the use of the Dollar but it doesn't make it a "official currency" meaning you can't pay taxes with them. In these last months the dollarisation topic was put aside in the political conversation, being the capital controls (Cepo) the main point of discussion. On my opinion though, dollarisation may never happen or it will in a potential second term of Milei
But he campaingned on dollarization, so basically he lied. And the last IMF staff report said he need to start making a sustainable surplus. He basically had surplus because he stopped paying everything else and he needs to end the monetary exchanges controls (which he has no reserves to do it). To put it in layman terms that Milei loved (comparing a country economy with home finances) he didn't pay the bills, didn't pay gas, put groceries on the credit card and he was happy that he saved money at the end of the month. He's whole plan at the start when taking office was to pass beneficial decrees to corpos, wishing the IMF lends him some money until april when the agro business sells, which they wont do since he benefited everyone, but left them higher taxes.
A lot of companies go to foreign countries to manufacture goods because the lower cost of production, which include the exchange rate. If this is “advantage” is gone, it will be more difficult to attract investment capital. The county will loose the flexibility to manage money supply too.
Argentina is not an industrial country, we would never be able to compete with Brazil, Mexico or any African/asian nation with tens of millions of people more than Argentina and with considerably lower living standards. If manufacturing teslas is profitable in the US, were wages are high asf, then it would also be profitable in a dollarized Argentina. And Argentina needs that level of investment, not toys or toaster factories, those will never be profitable.
No, it was just a a peg of the Argentinian Peso with the Dollar. But they could still print pesos, which ended up in a massive crisis. The dollarization is precisely to prevent that. The government won't be able to print more money. The idea is to force future administrations to only spend what they earn.
No, Argentina has never been through a dollarization. We had the peso pegged to the dollar for a decade, but the government was terribly corrupt, government spending was never cut back and we relied issuing debt and privatization of public companies (and eventually the government ran out of companies to sell and of organizations to borrow money from)
yes, its the exact same thing we already saw 3 times, with the exact same politicians (except for the president who is a stick figure). Caputo, Sturzenegger, Menem, Bullrich. Dollarization as described by milei fanatics is not possible without a complete constitutional replacement (not gonna happen with current congress distribution). They are just ignorant. They'll keep propping the peso while taking on extreme debt (current rate: 1/3 monetary base every week) and let the next peronist take the blame
Ive been investing in Argentine banks for the past year. I've made a lot of money so far..but i'll make a ton more if Argentina can fully stabilize its Peso (or if they can pull off dollarization) Excellent video. Basically details my investment thesis & the risks involved. You do a better job than a lot of 'financial analysts' out there
That's great, because that mean he is converting the debts of past government into money, that goes onto new state instruments, really smart move to reduce inflation and debts at same time, genius guy
The Argentine private sector and savers are already dollarised. Doubt many people trust their savings in Argentine banks after many chronic devaluations and defaults. Dollarisation seems to work fine in Panama.
Argentina should make sure that it dollarise the economy on a reasonable rate. Let’s say if you dollarise your economy in a way minimum wages being above 1000 dollars it would mean that Argentina loses all its competitiveness and becomes a marketplace for Brasilian exports. They should keep the minimum wage around 500-600 dollars that way they can both have a stable currency and competitive workforce.
minimum wage is way below 1k , minimum is about 225 US dollars thats also the problem bc thats crazy low so yeah people who get that need to do other activities to survive like selling stuff on the street or doing what we call changas , some like the elderly who get only that are supported by their children.
Actually i just realised Brasil’s minimum wage also seems like around 250$. Argentina has to take Brasil into consideration in order to balance its export import capability.
Milei's already say in advance he will remove cepo at rate of 1016 pesos, and minimum wage is nota problem, actually on Argentina yes the minimum is around 250 but you forgot that's not the real salary, is a Average number, mean many are low that, but there are also high salaries... For example on south salaries are way more high than 1000 and Argentina don't go down, Brasil is not a problem also because they are not as productive as Argentinians, they compete but Argentina is on easy mode now, they are not producing fully so the strong Brasil is competing to the most weakest Argentina, and still toe to toe. Salaries are starting to go up also and companies are coming to Argentina still so if they come they will pay higher salaries still
Go read Argentina history for the 90s. Unsustainable, ended in the biggest crisis of the country. In 6 months of Milei, every economy index is in 2001 values.
Already been there, it was great while it lasted, but after the dream was over, we woke up to one of the worst economic and social crisis in Argentinian history
Like some said was already done on past but politicians don't care and broke it still to print money so while politicians exist they will broke it again and again, that's why Milei want do something irreversible
