Do Milei’s New “Dollarisation” Plans Make Sense?
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- čas přidán 6. 07. 2024
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One of Milei's flagship policies is his plan to dollarise the Argentine economy and this week he announced the "second phase" of his economic program. So in this video, we'll explain what this actual involves and whether or not it's even a good idea.
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1 - pro.morningconsult.com/tracke...
2 - www.reuters.com/markets/europ...
3 - www.cato.org/blog/economist-g...
4 - www.bloomberg.com/news/articl...
5 - www.bloomberg.com/news/articl...
6 - www.reuters.com/markets/argen...
7 - www.cato.org/briefing-paper/a...
00:00 Introduction
01:09 What Does Dollarisation mean?
03:31 Why Milei is Keen On It
04:22 Is It a Good Idea?
07:58 Too Long
This Coca-Cola anecdote is so weird but yet understandable.
Maybe sugar addiction is similar to printing money?
lmao there are so many places in Latin America that have only been reached by the church missionaries or the Coca Cola distribution network
@@lematindesmagiciens8764I mean if you can just print money to pay off your debt you would be addicted too lol even if it’s a bad idea long term
I can't find any source about it on the internet. I would be nice to have it on the notes lol
Save northern Syria For the fifth day in a row, Türkiye prevents the use of the Internet and cuts off all communication networks in northern Syria
The pesos on the animation are from more than 40 years ago! 😂
Never say that TLDR doesn't respect history!
he used those because the new bills don't look like real money. I wonder why is that... lol
just like their pov
TLDR often gets stuff like that wrong, but it's just an overview of the topic ^^
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.
This is an incompetent group of paid activists, they don't care about accuracy. They just care about getting some money rolling in from labor party.
As an Ecuadorian the dollar has helped us not become like Venezuela. It has its drawbacks, but it has saved this country time and time again
Ecuador is doing so well these days.
@@davidmaisel8062if not for the dollar it would be doing a whole lot worse.
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.
@@firephoenixgamers8590 if you're moderately wealthy, ecuador is doing terrific
if you're in the lower 50%, you're cooked
Did dollarization prevent China from crashing the economy and taking over Ecuador in order to take all the oil?
I don’t think the risk of default from dollarization is real. Argentina has defaulted 9 times in history, with at least 3 in the last 30 years
it just makes it harder to sell your countries Bonds or to find investors
@@ericb1882sad for those whole 5 people who wanted to buy argentina bonds. Lol
@@ericb1882surely if it’s denominated in a more useful currency it’s actually more valuable?
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."
Everything about him is like that.
Sounds bad but if you look into, it makes way more sense than modern schizonomics.
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.
Or you could just not print money
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.
that why is so hard to do it especially in a democracy where you find yourself fighting to administer the "medecine"
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.
@@wadeday8706You can compare Apples and oranges
@@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.
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
Amen to that, bro! If they fully succeed we will all be motivated in a positive way.
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...
Ridiculous
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 is right wing lmao
@@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.
@@WolfHeathen thanks :)
The Venezuelan economy has been "unoficially" dollarized for years by now. Literally what helped the economy somewhat stabilized
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.
@@romanplays1It isn't, people just started using the dollar as currency because the bolivar was(is) worthless
@@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.
@@romanplays1the euro isn’t pegged to the dollar
Except they produce basically only oil so they're forced using the dollar
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.
Nobody knows why Japan keep growing, nobody knows why Argentina doesn't.
Everyone knows why, idiotic politicians.
@@yomanyo327 But most countries have idiotic politicians, this doesn't say anything
@@realkekz Japan is not growing, that era is over. They are facing huge problems
@@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.
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”?
Have you not seen the hyper inflation due to the countries curoption
Isnt one of their export problems the ridiculous export taxes they have? Their farmers get rinsed, and not even by the importing country...
@@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.
Argentina is led by the guy starring in the Hobbit
K detected
He's the only one brave enough to take the Argentinian central bank to Mount Doom.
if Hobbits were on cocaine
lol… Naaa he’s Elton John’s smarter cousin
And he is still doing a better job than the country rapists.
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
I think that some people do not understand that in Latin America the institutions do not work and even a foreign country can manage them better.
@@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.
@@polakitto What you just said doesn't make sense, you literally sound like an addict who decides to continue using drugs instead of facing detox.
Greetings from Argentina 🔵⚪🔵
🇦🇹🇪🇺❤🇦🇷good luck from austria
Good luck from Mexico 🇲🇽
Canada here. How are things these days?
I wish we had a Milei...
@@_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?
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.
@@WolfHeathen it’s still the direct consequence of dollarization
@@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.
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
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
@@carmineingaldi47 How is Argentina a US colony?
@@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".
@@gargoyle7863 is that a serious question? Currency manipulation is basic export/import economics
🎶Don't cry for me Argentina
The Truth is I'd never live there...🎶
actually an amazing place to live and travel. Just dont work here and you'll do wonderfully
Brasil's real plan which ended inflation was a peg between the new currency and the dollar up until 1999.
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
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
no one has explained what he wants to do properly. it’s better to read Milei’s books directly.
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.
Competing currencies
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.
Will never happen
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🙏🙏🙏
you are right .
Most people don't invest due to ignorance.
People are scared of Investment because of high rate of scammers on the market
But of a truth they are scammers but real brokers are out there too waiting for investors.
So don't be scared of giving any one a try.
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.
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.
Ensuring that future administrations stay in line is the best thing Milei can do…👍
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 You clearly don't understand how corrupt are institutions in latin American countries
@@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.
It’s exactly what Menem did in the late 90s. It ended… not very well.
understatement of the year
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)
Free market of currencies but without pesos! That's the trick.
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
@@ssuwandi3240 not only China. Japan, South Korea and all of asia pacific. There is not a single country keeping Treasures in a few years.
@@Sebastian-gf2fk Wrong bud. Japan scooped whatever China feared to hold in G7 banks. Japan is still the Net Buyer of Treasury
@@ssuwandi3240 yen is in free fall, how they gonna keep buying?
If Trump gets in he could help Millei find the dollars he needs.
Dollarisation in an import-oriented country is a mess
Argentina's exports are greater than imports.
@@Nat-uw4fs The amounts of food argentina exports is enormous, and they export oil too, the country is just so much of a fkn mess that they can't get out of the hole in spite of their natural resources
@@Nat-uw4fs not at all. its actually pretty level in the aggregate, since we export mainly oil and soy/wheat.
Everything else is deficitary, and now we are importing more than ever (since this model demolishes small local companies that have to compete against a subsidized "import dollar" 50% off.
Its a ripoff, and will break our commerce balance. Even if it didnt, farmers wont sell off their crops unless the rate is more competitive, and it only gets worse by the day (since the crawling peg is set at 2% and inflation is +5% monthly and rising again)
Can't find this on Nebula?
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.
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)
As a Brazilian, use Dollar or Euro, the printers are here in Brazil too
@@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.
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)
I hope he succeeds. Greetings from Brazil.
This is the way to go! Good reporting on your side, but there were various facts that were outdated/wrong, but it’s nice to see you cover Milei! Ok 👍
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
Won't that just make them rely on US politicians though?
@@Zonca2 and who is not? NATO is literally depending on US elections now
@@Zonca2would it be better to keep spiraling downwards then?
@@Zonca2 US politicians are more fiscally responsible, as shown by the US' strong economy.
@@user-cu3mn9qc9y you know that is not a good thing right?
Milei is essentially acting as Argentina's janitor, cleaning up the Peronists' cyclical mess.
That's what you gonna be saying for 8 years because nothing will be his fault.
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?
Drastic times call for drastic measures. We all hope he is successful.
With the fall of the petro dollar, and the steady de-dollarization of the BRICS nations, shouldn't President Muttonchops favor the Yuan-i-zation of the Peso instead?
he has no plan. never had a plan. has no economic or mathematical justification... Just a mandate from his embassy boss to keep the circus going while they take more and more already defaulted debt.
I guess your other option is to mint real gold/silver/copper coins.
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.
@@claudiaroedel1368Brazil already had, and still has, most of its population living under poverty…
spanish british and americans will steal them again, no thanks
Argentina really elected bilbo as their president
K detected
He's a Smeagol if I ever saw one
Bilbo on cocaine
Bilbo that speedran gollun's arc
Heh, nothing surprises me since Ukraine elected a guy who was known for playing piano with his penis.
The US$ is issued by the Federal Reserve Bank, which is not owned by citizens of the United States of America (or its government), but by a secret consorium of European banks. It is not 'covered' by any solid asset like gold or silver. In 1913, President Wilson made a huge mistake in establishing this 'bank', which he latere acknowledged publicly. In fact, the USA was already bankrupted in 1933, and has been borrowing money left right and centre (wirh treasury bills), and thereby creating an ever increasing 'fiscal cliff'. Hasn't the IMF recently expressed grave concern about this? While many other countries are 'de-dollarizing', I do not understand why Argentina would go in the opposite direction. Might this not sour any possible relationship with the BRICS block?
lol
I like that they used pesos bills from like 50 years ago instead of the current ones lol
"I distrust the central bank, that's why I will tie the currency to the US central bank"
He's also cracked down on protests rights despite being a "libertarian".
I'm pretty sure he's a US asset. CIA love South America.
i mean, we had 1400% inflation of the peso the last 4 years, us might be bad but surely is an improvement from our current situation
It’s a third party. That’s the point.
A body whose decision making is not dependent on local politics.
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.
the USA central bank has to create new dollars every year in order to keep up with corrupted congress blowing all their money for votes.
Wasn't this done before in Argentina?
Yes, you just need to be old enough to remember. It is not a silver bullet.
And it didn't work. Austerity measures don't work. They only work for the investors.
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
why shouldn't argentina just peg the peso with the us dollar instead?
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
How about the results of dollarisation in Panama? Which is also a comparable Latin American country
It’s so interesting that tldr-News is actually the most in depth outlet around
It's not. I like them a lot. But it's not.
Try the Caspian Report. Thank me later
@@loco4017 He's too specific, while at the same time, not being explicit enough. It's less a news channel and more geopolitics.
You'll learn nothing here you won't find elsewhere.
@@heychrisfox yeah I guess it just depends on what you’re looking for. I like to see where
things fit in the bigger picture
If you suspect the person elected to replace you will be a financial moron, then dollarization makes sense.
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.
It is certainly a "good idea" for those who HAVE lot's of money. But for the working poor, this can be disastrous.
If you already dont have money, how is it an issue? You go from not having many Pesos to not having many Dollars?
@@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.
ps, the "working poor" are now 2 out of 3 argentinians.
@@polakitto Aren't people already using dollars when they can because Pesos are losing their purchasing value so quickly?
Paying down debt is an underrated policy
I remember when Argentina *was* pegged. Then 1997 happened.
But sure, let's try it again.
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.
@@IsAcRafT you are correct. I oversimplified.
@@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...
4:17 This is very easy TLDR . You levy a tax on everybody and you start spending in your newly created currency.
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.
With the rise in the number of countries going the BRICS I'm surprised Milei doesn't want to adopt the Chinese yuan?
Can we get a geopolitical analysis of Milei and his US supporters and possible economic interests he may repressent in Argentina?
No because that is an inconvenient truth that must never see the light of day.
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.
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
I mean I agree. They would be commies and not Leftists (dem socs and soc dems).
As much as I dislike Lef*ists as a commie, Brazil did so well under Lula. Your quote about le*tists can be applied to Ri*twingers as well.
Brits says “Back of the sofa” instead of “under the mattress”? I hope those guests on the sofa don’t have larceny in their hearts.
The meaning is similar, but a little different.
The stuff under the mattress was put there intentionally, to hide it. You look there when you need to find your savings, and you might have a lot of money stashed.
The stuff at the back of the sofa fell down between the cushions, by accident. You look there when you're desperate because your savings have run out. There might be a few coins down there, but they're unlikely to be worth much.
After the 2001 crisis, when people lost their savings due to the corralito (a measure set in place by the government to avoid a bank run) Argentinians stopped trusting in local banks. We still use them for day to day transactions, we simply don’t trust them with our savings. And that’s when many people (specially old people) began hiding their savings in their own houses, under the mattress becoming a popular hiding spot. But nowadays the dollars under the mattress idiom refers to both the literal savings in people’s houses, but also the money Argentinians have in foreign bank accounts (which is very very common, even among middle class Argentinians)
You forgot to mention Panama that has always used the UD$ and has been quite stable economically and politically
and how are panamenians doing?
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.
A politician that cares for his countries?Thas new
LOL an imbecile that believes that populists actualy care for the countries ? thats NOT NEW.
Has to get to the point when people are running on pure rage, impossible before that point. Nobody who cares wants to be a politician until then.
Power-hungry "populists" like Milei always *claim* to care about their country, but they're really just in it for themselves.
Just wait.,..his true colours will show through eventually. Libertarians don't care about anything but themselves.
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.
What I get from the attitude of the people to his policies is. At least he is trying to make changes. If it doesn't work that is better than keeping on with what came before.
I don't mind fiscal conservatism, but he also has many right wing social views, like being anti abortion. In this way, he isn't really libertarian
He is ending inflation successfully. Can't argue against success. I must conclude he knows what he's doing. Where is the hate coming from and why?
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.
@@5daysofcoffee as long as line goes up
Let the poor eat cake amiright
You can't understand the hate when everyone is unemployed and in poverty? But hey at least inflation is stable at 267%. Delusional
Capitalism is a religion
@@alphasword5541Communism and Socialism is definitely a religion, so much that in Soviet Russia buildings were symbolized to represent the ideals of such dogma
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.
Yes
Milei is doing a great job. More countries need to hirer him to run their governments after he is done fixing Argentina. Especially firing unnecessary government agencies like incompetent education, corrupt environment, and disasters of sickcare.
Yeah, UK should hire Milei and dollarise
@@lv3609yes please, just take his insanity out of latin America
Take bolsonaro as well
MILEI USA 2024
@@matheussanthiago9685😂😂😂
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.
Why not just fix the central bank? Surrendering your domestic monetary policy to a foreign power (ie USA) is also very risky!
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.
Dollarize while the dollar is about to implode, brilliant
5:26 Actually, reserves have recently become slightly positive because the Central Bank has been buying dollars thanks to all the recent monthly surpluses.
Thanks to all the people being forced to sell their savings in order to sustain themselves you mean.
Getting rid of a "sovereignty" that is about printing as much possible to get rid of its problems isn't a bad idea I guess.
Yes it is like an obese having someone else making their diet, they lose freedom but it is still a better option than staying fat.
Dollarizing Argentina at the same time other countries are dumping dollars, not a good thing.
Not sure if it is a good idea to become dependent on US Dollar.
"U.S mighty sanctions" will have an easier time destroying your economy if you don't agree with them!
I will talk more with the spirit of my late dog to try to elect me president.😂
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 will give the US all the Lithium in the process. As well as the Falklands. vende patrias Milei.
Thank you Luis
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.
There is no "currency competition" system in Peru. The PEN is the official currency and the central bank controls the money printing
You missed Panama, which uses the dollar and is a booming economy.
its all tourists and expats.
ah yes, the narco tax haven where you can either be a millionaire or straight up have no shoes.
Someone:
- Mr Milei, why you haven't dolarised Argentinian economy yet?
Milei:
- ПАТАМУШТА!
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
Yeah you're the type of guy to be interested in Milei huh
Argentina pegged the peso to the US dollar in the 90 and it failed spectacularly.
Yep, because no matter how much the us-backed neolib boys repeat it, inflation is not monetary.
Its multicausal due to expectations, and if you take on debt, its the same (actually, worse since its external) than just printing money, people expect the country to default and devaluate.
Fun fact: milei took, in the last week, debt equivalent to ~35% of the whole monetary base.
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.
This decision is right anyway. All currencies should compete, the government should not have monopoly to money printer
No farmers, no food!
Not 100% sure if this will work out, but I hope Argentina does well.
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.
Mate Ecuador is one of the most dangerous countries in South America. They had criminals invading live tv and not giving a shit about repercussions
literally became USA satellite state
But people are ok with this
At least the economy may get better a little
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
Free currency usage, dollar, real or whatever you want, keep crying kkuka
Maybe open up a kick starter for the ownership of Argentina with certain government policies being enacted as stretch goals.
Considering the exploitation of the central bank and it's currency by the argentinian federal government, dollarization is essentially a safety mechanism, like a term limit of sorts, on it, so that future governments can't print themselves (on the backs of the country and its people) out of bad policy making. Trouble is it's execution.
Those conditions could be made by consensus. Not by renouncing sovereignty. He won't because the real political issue is that you have largely economic groups that supports extractivist policies, and other groups that want Argentina to thrive beyong just selling primary goods like any advanced economy does. The bill he passed has a chapter for (very) big investments that largely gives away natural resources in exchange for... nothing. No USD past the second year. No taxes whatsoever, not import/export restriction for 30 years. They only added that 25% of workers should be argentinian. Sovereignty is not something he worries about.
Whole world needs it
Just out of curiosity - is it not easier to peg your currency to the dollar at 1:1 rather than dollarize the ecocomy. That way you can keep your currency too and move back to fiat in distant future.
No, because it's not as simple as saying "okay it's worth a dollar now." You have to engage in very expensive currency manipulation, by buying and selling your own currency at a loss, to keep it 1:1, or it floats.
Pegs are easy to remove, dollarisation isn’t
You didn't watch the whole video did you?
@@zachb1706 Not true. You can easily print new money and get rid of dollars. Its because of costs, like above comment says.
@@yisraelmeirsobel907 actually commented before getting to that section. My bad!
I think the easiest way is to slowly buy gold and then that for dollars?
the reason hes doing this is to proevent future regimes from spending like idiots the argentine gov can control gold they cant control dollars
@@Darkcamera45 but you will be in more U.S control
You can't disagree with U.S or else take these sanctions and your economy is gone!
@@haroonafridi231Not the us, it is free currency usage, the dollar is the most convenient one
Important step to dollarization: learning how to manufacture your own dollars.
Saddam tried this
weird policy turning yourself into a colony of another country but ok.
just like panama, ecuador, and all of international trade and bank reserves.
Brics will send all usd to argentina as they wont be needing it anymore
I love Milei! I need to move to Argentina. UK is in terminal decline
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.
ive never rooted so hard for a foreign politician
You've clearly never been in Argentina, nor visited since he became president. A friend just came to visit from Spain a few weeks ago and said "I can't believe things are more expensive than in Madrid". Same is true when compared with Miami.
I used to pay about 60 USD for my medical insurance a month in December... July will cost me 140 USD now. All because Milei "liberalized the markets from the oppression of the State".
Well... I've never felt more oppressed by any goverment than now. Taxes are also up, and Milei institued a Wealth Tax for the middle class and a tax cut for the ultra rich last month. If you make more than $1,800 USD a month, you are Wealthy now. (considering a 1 bedroom flat costs about 400-500 USD, and the basic market basket for an individual is about 800 USD). It's increible to think that for MIlei's goverment, you can no longer be middle clas... you're either poor or wealthy and must pay extra taxes. Stop buying whatever BS their selling you in the media... come see how the real people are doing and then decide if you want to still root for the guy.
BTW, for context, the basic salary right now is about $190 USD, so aobut half of a normal monthly rent.
...to come to the USA and run this shttshow
things were bound to get worse before they get any better, this is about employing long term sustainable policies, not short term relief just to have it all blow up for the next president (as usually done here in arg)
@@xanderprangler8621 no ive never been to argentina to have a point of comparison between before milei and after. i dont know jack about argentina. i just know that milei is presented as some kinda ancap eccentric that a lot of people seem to be wishing ill of which naturally causes my contrarian nature to like him
This experiment is very painful
Didn't Argentina join BRICS because of the supposed/proposed gold backed alternate currency to the US $?
Here in Argentina when you buy or sell a car or a house we use dolars, sense forever, sooo its already dolarized (informaly)