A PhD in Monetary Catastrophe
Editor’s Note: As you know, Bill believes the U.S. is about to experience a violent monetary shock. So today, we’re sharing with you a classic from the archives. It’s Bill’s firsthand account of Argentina’s monetary crisis. But as an American, you may eventually experience a very similar situation …
Cash Only
One of the things that vexes just about everyone in Argentina is money. The value of the peso changes rapidly. There is the official rate. And there is the unofficial rate.
Nobody knows what a peso is worth. Many people – including your humble editor – have to do some pretty serious calculating. The parts of his brain that do math must be swelling from overexertion.
“We need gas for the truck,” said Elizabeth yesterday.
“Well, I don’t have any more peso cash. Let’s put it on a credit card.”
“They don’t take credit cards. Cash only.”
“Then let’s pay with dollars.”
“Don’t be silly. That would cost us 50% more. He won’t give us a good rate.”
“Then let’s get some pesos at the ATM.”
“That’s just as bad … we’ll get the official rate.”
Let’s see: We want to pay in pesos, but only if we get the pesos at the unofficial rate. Otherwise, it’s better to pay in dollars, but only if the person on the other side will take the dollars at the “blue” or free-market rate.
Usually, you end up somewhere in between. If you try to bring money into the country, the government insists you trade it on the official market. But you can still work out trades at the “blue” rate – either by bringing physical cash into the country or by working with an unofficial money changer.
…click on the above link to read the rest of the article…
