Argentines Live Off of Mattress Money

Hyperinflation caused by venal government is a commonplace in backward nations, especially those terrorized by war or ruthless rulers. When the affliction approaches in established or “civilized” countries, it can be of special significance to those of us blessed with better experiences. This weekend’s New York Times story from Buenos Aires describes how ordinary businesspeople and others function after a series of left-wing populists in power have debauched the local peso to the point where only the use of U.S. dollars–wads of them–has made transactions possible. Unfortunately, crypto currencies haven’t (yet?) evolved to where they can be useful substitutes. Same with gold after it was no longer minted into common coins. Therefore, a “hard” currency such as the dollar becomes a next best–indeed it has proven a stopgap in desperate situations such as Zimbabwe a dozen years ago (it’s desperation time there again, it seems.) As a historical reminder, Argentina in the early years of the 20th century was one of the 10 wealthiest nations in the world. Germany before Weimar-cum-Hitler was a respectable society. So, destructive inflation can happen nearly everywhere. It is unfolding, in earlier stages but worrisomely, in a couple of NATO members with strongmen in charge: Turkey and Hungary. A functioning monetary system has to be able to override political or potentate interference in order to maintain trust, and once there’s a breakdown, it’s hard to go back to normal lives.

Published by timwferguson

Longtime writer-editor, focusing on topics of business and policy, global and local.

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