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The Solution To Argentina's Banking Problems Is To Go Cashless
dkatana writes: There is no way back for Argentinian people to trust their own currency. Several governments have used the "Peso/Dollar" exchange to dig into people's savings, reward their friends and limit the freedom of citizens to use other currencies.
Short of Dollarizing the economy again, the only solution for the country is going cashless. People are desperate, and they're looking for alternatives such as mobile payments, Amazon gift cards and Bitcoin to store their savings away from government control. A digital currency could help curb black market exchanges, fight corruption and restore the country's image.
Short of Dollarizing the economy again, the only solution for the country is going cashless. People are desperate, and they're looking for alternatives such as mobile payments, Amazon gift cards and Bitcoin to store their savings away from government control. A digital currency could help curb black market exchanges, fight corruption and restore the country's image.
Cashless is a convenience. You need a currency. And once there is one, you're in the dollar world again.
We've made very little progress in anonymising cashless transactions (and this proposal might rely on transactions never being anonymous).
This not only reduces people's privacy but also gives government officials a way to remotely block you from making any payments. That's severe.
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Given that we just had this discussion within the last few weeks and most of the armchair solutions completely ignored Argentina's history with its currency, hyperinflation, being artificially pegged to the US Dollar, and then the problems that had to be addressed when they chose to top artificially pairing with the Dollar, I don't think it'll help at all.
Currencies only work when everyone trusts them. People trust them when their governments and banks engage in responsible monetary policy. If monetary policy gets so out-of-whack that the people don't trust the currency then the government itself is in jeopardy the state-issued fiat currency is how it conducts business.
I expect that most Argentines don't want violent or protracted revolution, they want the system to be repaired. Most solutions that were offered last time were based on circumventing the government, which would bring about the downfall of anything resembling the status quo, rather than correcting minor to moderate problems.
This isn't Greece or Venezuela or Somalia, there's the ability to fix it if people are willing to commit themselves to it and to not syphon-off all of the gains for themselves.
Do not look into laser with remaining eye.
1 - We're nowhere near desperate. We've been desperate-ish in the past... not lately.
2 - We have a high but predictable inflation... it's impossible to save in Pesos, so it stimulates spending and the economy survives.
3 - Purchase of dollars is restricted but there's a "healthy" black market that sells at a higher but well know rate (it's published in the newspapers and there are websites that inform the black market rate as well). The government counts on the existance of this black market to keep peace.
4 - Going cashless solves nothing..!!! Your cashless bank account still lists an amount of pesos and if you want to convert them to dollars the normal restrictions apply. People taking advantage of bitcoin and other schemes are simply operating in the black market... it could be bitcoin, it could be bonds or stock.
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Argentina, like most Latin American countries, would do well to toss the Presidential system. The US, by and large, has lucked out, in no small part to what Bagehot referred to as Americans' "genius for politics". But in other societies, where the legislative and judicial branches have remained stunted as compared to the US Congress, SCOTUS and the Federal Courts, all the Presidential system does is deliver near-dictatorial powers into the hands of the President. The checks and balances may exist on paper in countries like Argentina, but the reality is that legislative assemblies and courts become little more than rubber stamps.
A parliamentary system like the Westminster system would, I think, work far better. The titular head of state of a parliamentary state does hold some potent reserve powers, but is restricted from using them in all but the most extreme circumstances. The "effective" government, that is the governing Executive, only survives so long as the legislative assembly retains confidence in it, and ministers are normally chosen from among members of the legislature, and thus, at least in a nominal way, remain equals to every other person sitting in the legislature. In a parliamentary system, the titular head of state represents a sort of negative power; in that he or she deprives the effective executive of absolute control of reserve powers and prerogatives.
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When 51% figure out that they can keep voting themselves resources by electing the right people, the end is near. Venezuela is an example of how this works. Once it was a thriving economic power house in south America, resource rich and hard working. Now, though the "reforms" of Chavez and his successor the country's economic engine has been running on sugared gasoline while the politicians poured fine sand in the crankcase and tried to floor the accelerator. Democracy voted itself out of existence as the popular "Let me make sure you get your share!" refrain echoed through the ever swelling ranks of the poor and dependent.
Revolution is at the door, because eventually the government and the politicians that run it won't be able to cash the checks they've written. And the people who voted out of greed, to get something now and a promise of more to come, and those who objected to the perversion of their government, will ALL pay along with their children, grand children and great grand children, many with their lives.
The sad part is that history clearly shows how this will progress, and even so, there are many countries on the same path...
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Hi from Buenos Aires.
No, the solution is not going cashless. We don't have a banking problem. We have a currency problem, because the government steals from us in the form of inflation. Going cashless is giving the government more power to screw us.
Also we know very well how to play this game. If you can save, you buy other currencies like dollars. Or houses, if you are rich.
If you need the money, you convert and spend as fast as possible. Inefficient and somewhat expensive, but possible.
Bitcoin is easier to transfer, but too volatile. You might as well save in pesos.
Not at all. The federal government was supposed to have only enumerated powers. If the states may not do it and it's not an enumerated power of the federal government, then only the people (individuals and businesses) may do it.