Argentina foibles (inflation, currency and potential anarcho-capitalist experiments)

Welcome to the Precious Metals Bug Forums

Welcome to the PMBug forums - a watering hole for folks interested in gold, silver, precious metals, sound money, investing, market and economic news, central bank monetary policies, politics and more. You can visit the forum page to see the list of forum nodes (categories/rooms) for topics.

Why not register an account and join the discussions? When you register an account and log in, you may enjoy additional benefits including no Google ads, market data/charts, access to trade/barter with the community and much more. Registering an account is free - you have nothing to lose!

pmbug

Your Host
Administrator
Benefactor
Messages
15,074
Reaction score
4,873
Points
268
Location
Texas
United-States
Argentina is making it harder for people to buy U.S. dollars to pay for travel abroad.

A new rule published Monday says anyone wanting to buy dollars for travel must first prove their money was obtained legally, and provide the tax agency with trip details including why, when and where they are traveling.

Many Argentines only declare part of their wealth and income to evade taxes, and use black-market currency exchanges to convert their inflationary pesos into dollars. Travel agencies are the latest target since they manage multiple currencies and offer customers black-market rates for their money.

President Cristina Fernandez is cracking down to keep hard currency from flowing out of Argentina, which needs the dollars to maintain its central bank reserves and pay debts.

http://news.yahoo.com/argentina-more-controls-buying-us-dollars-180240507.html

:noevil:
 
WOW! Capital controls already? Argentina is still a neurotiuc wreck. From confiscation of privatew retirement accounts to controls on exports.....what's next? They are in just as deep a pile of shit as they were when they last defaulted. Their growth rate just isn't accountable for with higher soy production. Methinks there is some fudging tf the numbers here, in an attempt to draw in foreign capital. They will go the way of Bolivia and Venezuela.......irrelevance.
 
Latin America’s political shift to the Left is starting to have serious consequences as far as mining companies are concerned. In April the Argentine government renationalised the oil company YPF, and early last week introduced a new law aimed at reducing mining companies’ imports into Argentina.

Last year foreign investment in Argentina’s mining sector almost reached a new record of $3 billion, but this new law calls into question future investment. This new decree means that the government will start to control all imports by mining companies, in an effort to boost Argentina's foreign currency reserves and its trade surplus.
...

More: http://www.goldmoney.com/gold-research/roman-baudzus/argentine-government-moves-against-miners.html
 
I could cry for Argentina. Can you imagine that this country was one of the richest on earth just 100 years ago? So sad.
 
I could cry for Argentina. Can you imagine that this country was one of the richest on earth just 100 years ago? So sad.

Those riches where remedied by currency devaluation, social welfare, and universal healthcare....

Sounds familiar?
:shrug:
 
I have been to Argentina. There are a lot of talented people there. Food's good!

But why do the Argentines keep electing socialists? Beat's me!

Yes, they were almost where the USA and France were 100 years ago. Elections DO have consequences.

I just hope Peru does not go down that road. New(-ish) Peruvian President Ollanta Humala decided (it would appear) NOT to go down the Chavez / Kirchner route.
 
Lessons from Argentina

For those that think it could never happen in the U.S., look at modern day Argentina:
http://dailyreckoning.com/learning-from-the-best-inflation-lessons-from-argentina/

"He tells us that it is said to be a crime in Argentina to mention the “parallel” market in dollars. On the official market, the peso still trades at about 4.4 to the dollar. On the unofficial exchanges, that is, on the parallel market, the “blue” peso trades at less than 5.1 to the greenback.

But it’s apparently illegal to mention it.

So is it supposedly illegal to publish the real inflation rate. The Argentine feds have their rate; it’s a crime to contradict them."



Edit: Looks like this could be merged with this previous thread:
http://www.pmbug.com/forum/f4/argentina-tightening-up-capital-controls-1047/
 
Last edited:
It's heresy to contradict the high priests of finance!
 
BUENOS AIRES, July 5 (Reuters) - Argentina's central bank on Thursday formally banned people from buying dollars for the purpose of saving them, confirming the government's de facto policy aimed at safeguarding foreign reserves.
...
The currency controls are aimed at stemming capital flight and easing downward pressure on the peso in the local foreign-exchange market, where the central bank intervenes nearly every day.

More: http://www.reuters.com/article/2012/07/06/argentina-dollars-idUSL2E8I60BF20120706
 
Argentina has enough domestic production to have a decent self supporting economy if they can just bring themselves to vote in a conservative leader, instead of these socialists who hate productive people with more than a few hundred pesos.

They have been suffering a neurosis for some time now, and have chased away investment with confiscatory taxation and stifling regulation. They are in fact their own worst enemy. Same for Equador, Chile and Venezuela. If and when the socialists take over in Colombia, all will be lost in South America. Chavez has already destroyed his economy by stealing privately owned oil production and giving it to cronies to run in to the ground. For a country that used to have a very healthy and vibrant economy, desperation and poverty are now the norm for many. As soon as you begin to take from those who produce, those who produce will flee. The "brain drain" in Venezuela includes many of the folks who keep the oil infrastructure alive. Engineers, geologists, etc. have left for more fertile ground, having been penalized with reduced salaries post-theft of companies and higher taxation.
 
Argentina just made it more expensive for its people to use credit cards outside the country, and more dangerous for cardholders who aren't paying all the taxes they should.

One measure published in Friday's official bulletin adds a 15 percent tax every time people make a purchase outside the country using a card issued by an Argentine bank. Another requires the banks to report every credit card purchase, home or abroad, to the tax agency.

The moves target Argentines who have discovered that by using credit cards outside the country, they can get around increasingly tight currency controls and shelter their money from soaring inflation. Purchases outside Argentina using peso-denominated cards soared 48 percent in June compared to the year before, obligating the central bank to send $289 million out of the country in just one month. Overall capital flight soared to $23 billion in 2011.
...

http://news.yahoo.com/argentine-tax-agents-track-credit-card-buys-141152829.html?_esi=1
 
Quote :
BUENOS AIRES, July 5 (Reuters) - Argentina's central bank on Thursday formally banned people from buying dollars for the purpose of saving them, confirming the government's de facto policy aimed at safeguarding foreign reserves.
...
The currency controls are aimed at stemming capital flight and easing downward pressure on the peso in the local foreign-exchange market, where the central bank intervenes nearly every day.

This is a blueprint, what will happened in the future, more or less everywhere, just replace "pesos" with dollars above, and "dollars" with gold/silver.

It happens to-a-letter, every time, everywhere, whenever public loses faith in local currency - people turn to some external form of money, outside government control - depending on geography and culture, be it Dollars, Deutsche Mark, Swiss Franc etc.

Since "native" people owning dollars, in the event of faith collapse, wouldn't have the alternative currency to convert to (when dollar goes, everything else goes with it), they will turn to gold/silver (probably, more to silver than to gold, gold will be waay to expensive for average folks).

And obviously, government, in the coup to "control" the impossible monetary situation, will impose the same bans/confiscation. As they always did, as they did everywhere.

So, be prepare to be vindicated, but also, be prepared to go below the radar.
 
Yep. Watching events unfold in Argentina is like getting a sneak preview for what's coming everywhere else.
 
Yeah, I have relatives in Argentina. I can only shake my head in dismay.

#fiatmoneyproblems
 
Argentina%20Protest.JPEG-036c6.jpg


Thousands of Argentines marched Thursday night in the largest protests yet against the government of President Cristina Fernandez, who has lost popularity since her landslide re-election last year due to corruption scandals, violent crime and her ever-tightening controls over the economy.

“Cristina, the vote doesn’t provide impunity for moral frauds or wiping out the economy,” read a huge red sign that a group of young protesters carried into the Plaza de Mayo, in front of the Government Palace.

The pot-banging protests known as “cacerolazos” are an Argentine tradition, and this one appeared to be organized by everyday citizens on social networks without the support of opposition parties. In numbers bigger than any protests seen since Fernandez took office in 2007, people marched on public plazas in the capital and other major cities around Argentina.
...
Crime, inflation and currency controls were the main worries of people who surveyed last month by Management & Fit consulting firm, which found 72 percent disapprove of her management of the economy, and 58 percent disapprove of her performance overall. The survey of 2,259 people nationwide, which had a margin of error of 2.2 percentage points, found that nearly 70 percent also disapprove of her political opponents’ performance.
...

http://www.washingtonpost.com/busin...4e07d2-fe11-11e1-98c6-ec0a0a93f8eb_story.html
 
http://dailyreckoning.com/que-quilombo/

Holy hyper-inflation...
"During the past four decades, when all was said and done, after the various changes of currency and slicing of zeroes, one peso convertible was equivalent to 10,000,000,000,000 (10^13) pesos moneda nacional."

Overall, a good article on the troubles in Argentina. It is a very good example of how to ruin a currency. Once the USD loses it's global reserve curreny status, I see no reason why the dollar will not follow the same path.
 
Argentine President Cristina Fernandez de Kirchner’s foreign-exchange controls are driving pesos underground.

A quarter of Argentines are keeping their pesos at home, up from 19 percent a year ago, according to a survey conducted in September by the Catholic University of Argentina and TNS Gallup. The increase reflects how people are shifting money out of banks to trade dollars in a cash-dominated black market where the cost of the U.S. currency has surged 35 percent this year, according to Buenos Aires-based research company EconViews.

The migration of cash out of the financial system is stripping banks of funding and undermining Fernandez’s efforts to hold down interest rates and bolster an economic rebound. The 30-day deposit rate has jumped 1.8 percentage points in the past four months to 14.8125 percent. A three-day decline of 0.8 percentage point that pared the increase in the benchmark rate will prove short-lived as annual inflation of 24 percent drives more Argentines to move money into the underground economy, said Eric Ritondale, an economist at Econviews.

“Money’s moving out of the banking system and out of the formal economy,” Ritondale said in a telephone interview from Buenos Aires. “As much as the government wants to promote the use of pesos, the truth is they won’t be able to achieve it. You can’t get it done” with interest rates below inflation.
...

More: http://www.businessweek.com/news/20...ound-as-dollar-ban-backfires-argentina-credit

It's a similar dynamic with money flows into precious metals (see Turkey).
 
For posterity:



Economic conditions today are just a continuation of the problems from a decade ago. I just shake my head when I hear folks trumpet how we have a recovery here in the USA. The fundamental problems remain and will percolate back to the surface again.
 
If you got any relatives or friends in Argentina, warn them.
The CDS market is implying 60% probability of an IMMINENT default.

20121116_ARG.png
 
Well, I'll tell them, but I know what they are going to ask me - what can I do about it? The banking system is already on lockdown.
 
Get some food and water reserves and enough bullets to defend yourselves. Buy gasoline, cigarettes and alcohol as trading items.
 
Argentina in the last 100 years has never seemed to learn. YES to what SA says, any of YOU or you with relatives should try to buy PMs or survival and barter items.

Same advice for forward (!) thinking Americans. Coming to an Amerika near you soon?
 
... Today, in a futile attempt to halt inflation, the government of Cristina Kirchner announced a two-month price freeze on supermarket products. The price freeze applies to every product in all of the nation’s largest supermarkets — a group including Walmart, Carrefour, Coto, Jumbo, Disco and other large chains. The companies’ trade group, representing 70 percent of the Argentine supermarket sector, reached the accord with Commerce Secretary Guillermo Moreno, the government’s news agency Telam reported. As AP reports, "The commerce ministry wants consumers to keep receipts and complain to a hotline about any price hikes they see before April 1."
Perhaps they will. What consumers will certainly do is scramble into local stores to take advantage of artificially-controlled prices knowing very well they have two short months to stock up on perishable goods at today's prices, before the country's inflation comes soaring back, only this time many of the local stores will not be around as their profit margins implode and as owners, especially of foreign-based chains, make the prudent decision to get out of Dodge while the getting's good and before the next steps, including such measures as nationalization, in the escalation into a full out hyperinflationary collapse, are taken by Argentina's female ruler.
...
So to summarize: first capital controls, then a currency crisis, then expectations of sovereign default, then a rise in military tensions, and finally - price controls, after which all out chaos usually follows.

Study this sequence well: it is coming to every "developed" country near you in the months and years ahead.

But, as with every other hyperinflationary implosion, there is a silver lining: the stock market is soaring...

More: http://www.zerohedge.com/news/2013-...et-prices-halt-soaring-inflation-chaos-follow

:(
 
...

Argentina is shitting into its mess-kit faster than $25 hooker rides her johns.

By now, the WHOLE WORLD knows that price controls (particularly on food staples, etc.) DO NOT WORK. President Cristina probably has some other agenda she is working on here, I wonder what is going on in that devious mind of hers. Skim-and-scoot? Even she knows this will not end well for Argentina nor for her legacy.

Legacy? Bwa ha ha ha ha ha ha ha ha!
 
Yeah, I'm afraid this is a desperate measure. Time may be running short for Argentina.
 
I remember the 90 day price freeze back when Nixon was Preezy, remember how well that worked?
 
Days After Freezing Prices, Argentina Bans All Advertising

http://www.zerohedge.com/news/2013-02-09/after-freezing-prices-argentina-bans-all-advertising

in the latest stunner of a government decree (which like Venezuela yesterday is merely a harbinger of what is coming everywhere else), has banned advertising in the Argentina's newspapers in an attempt to weaken what's left of a private, independent media, and to punish those who don't comply with the government's propaganda.
 
Unbelievable. When do the Argentine people get riled up enough to revolt?
 
That video you posted above PMbug shows quite a few revolting near the end. It's also set to a song/rap that's subtitled, very powerful to listen to/read when you think of what's coming our way soon. I will be interested to see how the people respond to this as a sign of what could happen here when they start doing similar
 
Residents of the Falkland Islands voted almost unanimously to stay under British rule in a referendum aimed at winning global sympathy as Argentina intensifies its sovereignty claim.

The official count on Monday showed 99.8 percent of islanders voted in favor of remaining a British Overseas Territory in the two-day poll, which was rejected by Argentina as a meaningless publicity stunt. There only three "no" votes out of about 1,500 cast.
http://www.reuters.com/article/2013/03/12/us-falklands-referendum-idUSBRE92B02T20130312

99.8% ??? That's hard to believe...
 
Sure, a lindslide was to be expected, but 99.8%. That's a soviet style result. There should have been a few more pro-Argentinian votes imho.
 
Argentina Turns To Gold As Inflation Tops 26%

Despite an increase in risk appetite in recent months, systemic risk remains. As Reuters' Pedro da Costa noted the "global impact of events in Cyprus casts doubt on the notion that the financial system has gotten a lot stronger since the crisis." The Cypriot deposit levy is creating jitters among some investors who are increasing their gold positions.

Argentines are buying more gold than ever to protect their savings from the Western Hemisphere’s fastest inflation reported Bloomberg.

Banco de la Ciudad de Buenos Aires, Argentina’s only bank offering gold bullion coins and bars to investors and savers is negotiating with mining companies to purchase gold direct as surging demand depletes the scrap supply.

The bank began marketing gold to clients after Argentina tightened currency controls in October 2011, selling 280 kilos in year one for 102.6 million pesos ($20 million).

Argentines are utilizing gold to hedge their savings as economists forecast the peso will lose more value than any currency in the world, and President Cristina Fernandez de Kirchner forbids dollar purchases.

The nation’s inflation rate of 26% is also eroding Argentina’s peso- denominated bonds to fall 5.5% ytd.

“I’m buying gold every chance I get,” Guillermo Acosta, a 27-year-old security guard, said inside a branch of Banco Ciudad in downtown Buenos Aires. “With this inflation, I feel like my savings will evaporate if I keep them in pesos.”

Acosta’s initial investment of 10 grams of gold in February last year has returned 47% as the price per gram rose to 381.5 pesos from 260 pesos.

With Argentina printing pesos to finance itself, the growth of pesos in the economy has rose 38% in the past year, leading analysts to predict that the currency will depreciate 12.9% through year-end, the highest of currencies tracked by Bloomberg.

Banco Ciudad is the only bank left that trades in gold after Fernandez banned the purchase of certified 99.99% pure gold for savings in July. The bank sells it at 99.96% purity, according to Carlos Leiza, who oversees the lender’s gold trading.

There is a 35% gap in the prices to buy and sell physical gold at Banco Ciudad, while there’s no premium to sell the country’s benchmark 2017 dollar bond in the local market, according to the Buenos Aires-based Open Electronic Market, known as MAE.

Gold sold by Banco Ciudad also isn’t recognized internationally, making it more difficult to determine its value, he said.

The cost of 100 grams of gold in Argentina as of last week was 36,646 pesos. In New York, the same amount based on the benchmark troy ounce (31 grams) sold for about $5,126.

The bank multiplies that price by 0.95 to account for the lower quality of the gold to get a dollar price of $4,870.

“Historically, gold has been seen as a store of value, so as long as options for doing that in Argentina are limited, people are going to keep buying it,” Banco Ciudad’s Leiza told Bloomberg.:wave:

http://goldsilver.com/news/argentina-turns-to-gold-as-inflation-tops-26/
 
According to Google, 36,646 Argentine pesos equals $7,190.86.

($7,190.86 / 100 grams) * (31.1034768 grams / troy ounce) = ~ $2,236.61 per troy ounce

Whoa!
 
The streets of Buenos Aires are full of revolting Argentinians this evening as they protest President Cristina Fernandez de Kirchner's (CFdK) plans to 'increase' state control of the court system. CFdK's proposal looks to limit the judicial system's ability to bring actions against the state, as Bloomberg reports, leaving citizens and companies unprotected against state actions affecting their finance or assets (i.e. mass nationalization or confiscation). ...

More (incl. pics): http://www.zerohedge.com/news/2013-...-government-push-take-control-judicial-system
 
That looks pretty well organized to me, everyone is holding the same signs and balloons. So who is organizing this?

arg2.jpg
 
Back
Top Bottom