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.

Comments

"Cashless" is meaningless

[jodido]

Cashless is a convenience. You need a currency. And once there is one, you're in the dollar world again.

Re:"Cashless" is meaningless

[roman_mir]

It's not meaningless if your goal is to steal and that's what that 'article' proposes - theft.

1. Government steals by forcing people to declare all of their cash savings and to justify them to transfer them into the electronic form.

2. Government steals by creating inflation electronically, so it's cheaper and faster for the government to create vast amounts of virtual money and dilute existing savings, thus stealing (creating inflation).

3. Government can steal everything at any time by simply emptying your bank account and leaving you with nothing.

4. Government will steal by setting stupid exchange rates that are absolutely fake, like pegging the exchange say 1USD to 10Pesos while on the 'black market' you would get many times more pesos, for example 100 for 1.

5. Government can control you if you do not have access to your own money, and it can prevent you from doing anything they don't like and punish you for doing anything they don't approve of.

It's a gigantic con, don't fall for it, it doesn't matter what the name of the currency is if you are not even able to have it in your own hands.

Basically if you cannot hold your own money in your own hands but government holds it for you (directly or through proxy banks) you are fucked, you have nothing.

If you try to switch to gold and other currencies of your choice, you will be labeled a 'speculator' and 'enemy of the working class' etc., and you can be dealt with criminally.

Re:"Cashless" is meaningless

[MightyMartian]

Indeed. I fail to see what the difference between $1 electronically stored in a bank account or being transferred between two banks is measurably any better than a one dollar bill.

A unit of currency, whether digital or physical, is issued by a country's central bank and backed by the country's government. If Argentina burned all its physical currency tomorrow, everything would still be denominated in Argentinian pesos, whose value, by and large, would still be determined by the same mechanisms. I suppose certain aspects of physical currency, like counterfeiting and hoarding, might be eliminated, but it certainly wouldn't prevent monetary crises.

This article seems to have a rather odd view of what modern currencies are.

Re:"Cashless" is meaningless

[rwa2]

There are loopholes around that. Several towns (even in the US) have a barter economy based on hours of labor, so you could go volunteer time doing something for someone (like mowing lawns) in exchange for other services (like bicycle repair). Bonus for avoiding regulations and taxes.

e.g. http://ithacahours.info/

I wouldn't be surprised if some of what Argentina is doing is similar to that. And probably also similar to what Russians would do during the lean years.

Re:"Cashless" is meaningless

[PolygamousRanchKid]

You need a currency.

"1000 Quatloos for the newcomers!"

It will be interesting to see how Greece gets out of their mess, when they run out of Euros. Pundits are guessing that Greece will issue "scrips", which are a kind of government IOU, and pay government salaries and pensions with them.

The only problem with that is . . . who will want these scrips? Certainly not even the Greeks themselves. They want Euros. And they will try to get rid of their scrips as soon as they can, in exchange for something of value.

Car sales are up now in Greece by something like 40%, as people worry about if their bank accounts will get raided by the government. An automobile is considered as something "valuable". The cruel irony here, is that Greeks prefer to buy German cars . . . exactly the folks who Greeks blame for all their problems. So the Germans are actually benefiting the most from this.

Re:"Cashless" is meaningless

[fche]

... a convenience, especially to a government that wishes to dip into people's savings and tax every transaction.

Re:"Cashless" is meaningless

[stephanruby]

A digital currency could help curb black market exchanges, fight corruption and restore the country's image.

On one hand, the poster wants to create a black market of digital currency outside the reach of its government and outside the reach of its laws.

But on the other hand, he wants to curb black market exchanges and fight corruption. I'm having trouble seeing the difference. A government official will be just as happy stealing bitcoins and amazon gift cards as stealing cash.

Re:"Cashless" is meaningless

[CrimsonAvenger]

exactly the folks who Greeks blame for all their problems.

So, the Greeks are blaming the Germans because the Greek government couldn't pay its bills? Interesting....

Re:"Cashless" is meaningless

[YrWrstNtmr]

No, it's because the Germans wouldn't bail them out. The fact that the Greek govt needed bailing out is a sideline.

Re:"Cashless" is meaningless

[CrimsonAvenger]

Hmm, by that logic, *I* can demand that the Greeks give me a metric buttload of money, and then insist in public that they're evil if they don't, right?

I bet that'll work well....

Re:"Cashless" is meaningless

[peragrin]

In the USA barter hours are taxable
http://www.irs.gov/taxtopics/t...

Re:"Cashless" is meaningless

[suutar]

If I understand it right, Greece is an example of a country which gave up its own currency (and with it the power to play certain tricks to nudge the economy) without having the productivity to make it work without those tricks. So they ran into trouble, and asked the controllers of the currency for help, which was refused except on terms that minimized the helpfulness (austerity measures make sense for balancing a budget but do very little to increase the flow of currency in the economy - and "flow of currency" is pretty much what an economy is, so...) Since Germany's the one with all the productivity, and hence a lot of the power over the Euro, they get blamed by the Greeks for the lack of helpfulness. Whether it's really warranted takes more knowledge than I have.

Re:"Cashless" is meaningless

[Impy the Impiuos Imp]

You worthless, echo-chamber, meme-regurgitating sack of shit. India requires expats returning to pull all foreign accounts back into India at the theft-based government exchange rate. You get ripped off and the government gets your dollars.

Why do brain-dead buffoonery like you always think the opposite of pituitary gland tumor gigantism in government is solved by an anarchy? What lovely straw men you set up in your economic disasterbation fantasies!

Re:"Cashless" is meaningless

[goose-incarnated]

You need a currency.

"1000 Quatloos for the newcomers!"

It will be interesting to see how Greece gets out of their mess, when they run out of Euros. Pundits are guessing that Greece will issue "scrips", which are a kind of government IOU, and pay government salaries and pensions with them.

The only problem with that is . . . who will want these scrips? Certainly not even the Greeks themselves. They want Euros. And they will try to get rid of their scrips as soon as they can, in exchange for something of value.

Car sales are up now in Greece by something like 40%, as people worry about if their bank accounts will get raided by the government. An automobile is considered as something "valuable". The cruel irony here, is that Greeks prefer to buy German cars . . . exactly the folks who Greeks blame for all their problems. So the Germans are actually benefiting the most from this.

It's a non-problem. If a country cannot control the money supply they are left with few options to control their economy. Using interest rates and money supply a central bank can very strictly control all aspects of their economy (spiraling debt, runaway inflation, etc). Greece does not control their own money supply.

There will always be a weakest state in the EU; almost just by definition alone that weakest state will face trade deficits with the rest of the EU. With no way to control their own currency they will get weaker and weaker unless the rest of the EU keeps them afloat.

Lets say that the EU /doesn't/ keep that weakest state afloat... with no other option the weakest state will eventually be forced to leave the EU and start printing its own money (or scrips, as you referred above to them). This leaves the creditors of that state in the unenviable position of being forced to either forfeit the debt or accept the newly issued money at a certain exchange rate; a rate which will be set artificially high by the state purely to offset as much of the debt as possible.

The best chance the creditors have to get their money back eventually is to ensure that the weakest state remains in the EU... Because, you see, once that weakest state leaves the EU and discharges its debt with worthless scrip, there will be another "weakest state" in the EU! The process will then repeat for that state too, even faster this time because the new weakest-EU-state saw how the previous-weakest-EU-state got a whole lot of money from creditors and didn't have to pay it back!

So, now it's Greece; if Greece leaves EU without fulfilling its debt obligations to Germany, then the new weakest state might be.... Portugal? Someone, at any rate. After two years this Greece process will repeat with that new weakest state. And so on, until only two states are using Euros.

So the EU cannot do anything that will cause a country to leave. They know this. We know this. Anyone who's ever been a creditor knows this. You never let your debtor go bankrupt until after they've settled their debt to you.

After all getting *most* of your money back is better than getting almost nothing (or, in the case of Greece, nothing at all).

If Greece only owed a little then the EU might let them leave in a huff - the scrip they offer might offset that small amount they owe. But Greece owes a lot, more than the EU can afford to write off as a bad debt.

And all this because weak countries will be unable to focus their economies due to having no control over the money supply

TLDR:- There's a saying amongst capitalists, venture or otherwise: If you owe your bank $100,000 and cannot settle it then you have a problem. If you owe your bank $100 million and cannot pay, then it's your bank that has a problem. It's not Greece that has the problem, it's the EU!

Re:"Cashless" is meaningless

[cheesybagel]

No. It's the Greeks are blaming the Germans for pressing the Greek Goverment to bailout Greek PRIVATE Banks which owed money to German Banks.

Re:"Cashless" is meaningless

[Firethorn]

Great! Where do I mail the chicken?

Re:"Cashless" is meaningless

[PolygamousRanchKid]

A slight correction. Greece has already received two bailouts worth billions in the last five years . . . with the condition that they will implement necessary structural reforms in their economy. For example, pensions in Greece are way to high for what the people paid in. And their are way too many civil servants.

Greece essentially "cooked the books" and hid state debt. This only works for a while. When this was discovered five years ago, Greece was shutout from the international capital markets: No one would lend to them anymore. However, a lot of private banks had too much exposure to Greece, which forced the Troika, the EU, the European Central Bank (ECB) and the International Monetary Fund, to arrange a bailout, to avoid financial contagion. The private banks received a "haircut", which means that they would only receive a smaller percentage of the money owed to them. Most of the debt now rests on EU taxpayers.

Greece dragged their feet on implementing reforms. So a second bailout was necessary. Things were getting better, as they now had GDP growth. Well, then the Greeks went off at the beginning of this year, and elected a new coalition of Radical Left Marxists, and Right Wingers. And since then, things have taken a major turn for the worse. The new government promised to:

Raise pensions
Hire more civil servants (to reduce unemployment)
Erase bailout debts

Sounds like a nice plan . . . but where do you get the money to finance this? Well, the EU should just give more Euros to Greece! Which is politically untenable for the rest of Europe. The only way this could work, is if Greece had their own currency to devalue. So, in the long run, Greece needs to leave the Euro. Except, a majority of Greeks want to stay in the Euro. Thus, the current Greek government wants to get kicked out, so they can blame the EU for it. But the EU does not want to take the blame, so they won't kick out Greece. What we have now, is a slow speed train wreck.

Re:"Cashless" is meaningless

[ShanghaiBill]

I fail to see what the difference between $1 electronically stored in a bank account or being transferred between two banks is measurably any better than a one dollar bill.

Clearly you are not Argentine. The difference is that the government can seize bank accounts. Or forcibly convert them to another currency. The US dollar stuffed under your mattress is safer.

Re:"Cashless" is meaningless

[PolygamousRanchKid]

If you owe your bank $100,000 and cannot settle it then you have a problem. If you owe your bank $100 million and cannot pay, then it's your bank that has a problem.

Actually, I have heard that quote was made by none other than John Maynard Keynes!

Re:"Cashless" is meaningless

[rahvin112]

It's not a sideline, it's entirely the point. The German citizenry isn't willing to see their taxes go up again to pay Greek debt that was incurred buying votes. The again in that sentence is the important bit. Germany has already raised the taxes on their people to pay the original Greek bailout. They will NOT allow their government to do it again. And it infuriates them to no end that this happened because the Greek government lied about their spending and borrowing and used much of the proceeds to "buy votes" by raising minimum wages, increases pension plans and other electorate appeasing measures that require cash.

For example, the current Greek government refuses to lower the minimum wage. Most people don't even realize that the minimum wage in Greece is almost 50% higher than in Germany! This goes for almost all the items of the bailout under attack. The most galling thing to most Europeans is that the troika didn't even require the Greeks to cut their higher wage rates, higher pension payments and such to match their European neighbors, they only required that they reduce them partially and this is how the Greeks react?

Coming down to reality is hard, they built up a system with purchased votes that wasn't sustainable and it's a big impact to lower down to reasonable values. I personally don't agree with the austerity push, I think it's catastrophic policy with no historical backing and heavy counter demonstrations that it doesn't even work. But, I do agree with the rest of the Europeans that the EU and IMF have been extremely lenient with Greece and to have it thrown back in their face as asking too much is frankly stupid.

But that's the problem with Greece's current government. They should have attacked austerity, not the measures they are expected to undertake to re-balance their economy with the rest of Europe. Many of the Torika's requirements were real improvements that would have been long term very positive for the Greeks economy and some of those are the ones the Greeks are attacking the hardest, rather than attacking the real problem, which is this Austerity idea that you can succeed by cutting spending during a recession. The Greek economy was heavily damaged by the Austerity drive where the measures should have been more targeted towards competition and divestiture of state assets because it was those very state assets and the salaries they included that bankrupted the Greek government to begin with. And this dragging of the feet on everything and inexperience has just created an environment where everyone in the economy is running for cover. The cuts to the pensions and minimum wage levels should have been done with a permanent freeze to increases until inflation balanced them with the rest of Europe because of the direct and immediate damage a large cut would do. The biggest problem the greeks face is a general disrespect for tax collection, that's what government should be spending their time fixing.

Re:"Cashless" is meaningless

[gox]

5. Government can control you if you do not have access to your own money, and it can prevent you from doing anything they don't like and punish you for doing anything they don't approve of.

They already can do that, so I think it's important to clarify the distinction. Governments do not handle your money directly, but they restrict you to licensed entities, like banks, payment processors, etc. These entities are subject to broadly defined rules which make them responsible about not only identified crimes, but potential future crimes. On top of that, in many countries these entities are aligned to particular political groups, and in the case of multinational entities, foreign powers or international organizations. Basically, you can be instantly screwed because of your behavioral pattern or political activity, without being charged with any crime.

I don't think we will be "fucked" in the sense that confiscations will be prevalent. We will and do adjust our behavior and expectations from life. We will and do move to a monopolar world much faster than everyone imagines.

Re:"Cashless" is meaningless

[xvan]

The math is not so easy, you need to consider the risk of being robbed vs the chance of being seized by the government.
And the main reason people don't have their money in banks is not because they're afraid of the government ( people tend to forget about the pain ), but because tax evasion and informal economy.

Re:"Cashless" is meaningless

[NostalgiaForInfinity]

Everybody knows that the areas of the world with the least government are utopian paradises whose citizens enjoy more wealth and liberty than all the other nations combined!!!

Liberty has been working very well for Americans, compared to Europe and the rest of the world. That's why we should continue in the direction of more individual liberties and less government intervention.

Re:"Cashless" is meaningless

[ChrisMaple]

With a government controlled electronic currency the government could handle your money, and you only have to piss off one bureaucrat to have anything in your name electronically made worthless. There are already people who think all Republicans should be killed, and others who think all "global warming deniers" should be killed. Do you want someone like that with the power to turn off your money?

Re:"Cashless" is meaningless

[NostalgiaForInfinity]

Greece is an example of a country which gave up its own currency (and with it the power to play certain tricks to nudge the economy) without having the productivity to make it work without those tricks

There are no "tricks" you can play to actually make people wealthier. All governments can do is redistribute money to gain some political advantage for themselves. Even that runs into natural limits as people simply pack up and leave sooner or later.

Re:"Cashless" is meaningless

[NostalgiaForInfinity]

The only way this could work, is if Greece had their own currency to devalue.

If a country devalues its currency, it's no different from a massive tax on savings and a massive cut in wages. It's politically easier to deal with problems that way, but economically, it makes no difference what currency Greeks use.

Re:"Cashless" is meaningless

[NostalgiaForInfinity]

It's the Greeks are blaming the Germans for pressing the Greek Goverment to bailout Greek PRIVATE Banks which owed money to German Banks.

Did Merkel threaten to whip the Greek prime minister with a wet noodle or what? The reason Germany has power over Greece is because Greece wants to continue borrowing money. If Greece didn't want to borrow more money, it could tell Germany and the rest of Europe to go f*ck themselves.

Re:"Cashless" is meaningless

[Bengie]

Ohh blackmail, that's illegal also. Both a criminal and civil issue. You can be thrown in prison on top of being sued for losses.

Re:"Cashless" is meaningless

[ChrisMaple]

The weak countries are weak because the government has screwed up the economy. (In the Greek case, the government has been elected by people who insist that the government continue its bad practices and make them worse.)

Take just the example of minimum wage controls. If the economy is weak, then the Greeks must not be doing enough work to earn enough money. This happens because other people see Greek labor as too expensive. In a labor market without minimum wage, wages would drop until someone saw Greek labor cheap enough to be worth buying, problem solved!

Alternately, if the Greeks keep their minimum wage but get off the Euro and make the drachma the official currency again, the value of the drachma will fall until Greek labor is worth buying at the revised exchange rate, if the rate is allowed to float.

There's no reason for a "weakest state" to drop out, it just has to stop destroying itself. Alas, as long as the people elect politicians selling fantasies, the destruction will continue.

Re:"Cashless" is meaningless

[gox]

Certainly possible. Ecuador had plans to do that, but I don't know how it went.

However, I think states around the world will prefer having an extra layer of protection in the form of licensed private entities, and this system is pretty much already established, particularly in favor of the western world.

Citizens are required to use one of these, they can still be made worthless but the bureaucrat(s) in your example will be shielded from any potential backlash.

You don't need to pass laws to change the world into whatever you favor and you won't even risk being the bad guy. Everyone will continue to hate banks and intermediaries, but their place will continue to be guaranteed. Similar to the current state of affairs, but more efficient.

Re:"Cashless" is meaningless

[FooAtWFU]

The funny thing is that the Germans have already substantially bailed out Greece's existing debt, and everyone expects that they'll take massive debt write-offs. But the real problem is that the bailout was finite, so suddenly Greece needed to run a balanced budget -- instead of a 10% deficit. Greek politicians have sold their public on the idea that these cuts are the fault of the Germans being really mean and obnoxious and demanding onerous repayment schedules. This is part of an impressively effective propaganda machine for an increasingly authoritarian government where Syriza officials are characterizing dissent from their policies as treasonous "fifth column" collaboration with the shadowy outside capitalist conspiracies.

What Greece really needs is reform that will allow its private sector to actually conduct capitalist, profit-making businesses. Presently it is hampered by an onerous and corrupt bureaucracy that enjoys bribery and favors existing cartels over new businesses, some of the world's strongest labor unions who will fight any reform that would make new employers interested in establishing a business, and a population which views more government spending and government jobs as the answer to all economic woes (the public sector is an awesome 40% of Greece's economy) even as the government has run out of tax revenues to spend. Speaking of which, Greece also needs to somehow move from "taxes are stupidly high because most people evade them anyway" to a normal regime.

Instead, Greece will stifle dissent and double down on a system that has made universal healthcare available to anyone who can afford to bribe their doctor. Their exit from the Euro and further economic stagnation is probably inevitable.

Re:"Cashless" is meaningless

[rwa2]

Yes, under certain conditions you can deduct what you pay other people for their hours helping you with your tax preparation.

No, it is not a capital expense, it's more of an operations expense.

Re:"Cashless" is meaningless

[NicBenjamin]

You don't. You sell it on the market, buy US Dollars, and send those with your tax return. Otherwise the IRS will not credit your account. They'll probably east the chicken, tho.

One thing Bitcoiners and gold bugs alike really have trouble understanding is that the reason the USD has value is that the US Economy is one of the best in the world, to participate you have to pay taxes, and the taxes can ONLY be paid in United States Dollars. Many people who do not participate in our economy (such as ex-pats whose sole income is in their new country) have to file taxes, and if they owe they have to buy United States dollars, or they are tax cheats and any bank who ever does business with them will be banned from the world forever.

Re:"Cashless" is meaningless

[cheesybagel]

You don't get it do you? Been hearing the news? The ECB is threatening to stop providing "liquidity assistance" to Greek banks. Banks not the government.

The government will also hit into a liquidity problem eventually but the government is actually the entity with the least liquidity issues.

Re:"Cashless" is meaningless

[Ralph Wiggam]

So, in the long run, Greece needs to leave the Euro. Except, a majority of Greeks want to stay in the Euro. Thus, the current Greek government wants to get kicked out, so they can blame the EU for it. But the EU does not want to take the blame, so they won't kick out Greece. What we have now, is a slow speed train wreck.

The part of the story I find interesting, that nobody is talking about, is that there are no written procedures for either kicking Greece out of the Euro Zone, or for Greece to voluntarily leave the Euro. One side or the other would have to unilaterally declare their action, and then dare the other side to deal with it. There will be 8000 lawsuits in 30 different courts asking judges to essentially create the rules as they go. Those cases could drag on for years. The financial markets would hate that kind of uncertainty.

Re:"Cashless" is meaningless

[NicBenjamin]

exactly the folks who Greeks blame for all their problems.

So, the Greeks are blaming the Germans because the Greek government couldn't pay its bills? Interesting....

That's the way the Germans and Northern Europeans think of it.

The way much of the rest of the world thinks of it is that the Greek government lied to everyone about it's books, the Germans didn't notice, which led to a Greek economic collapse; and now the Germans are refusing to help their fellow Europeans because those damned Greeks should have noticed their government wasn't telling the truth.

Moreover countries where the government responded to the crises by spending extra money (like the US and UK) tended to do much better then countries where they cut the budget to the bone in an effort to save 100% of the bondholders and not spend any EU money. Even the Eurozone's poster-child Ireland got through it mostly because the Brits were willing to aded billions of pounds more then the EU Troika.

Which has led to a massive confidence-loss in the very concept of the Eurozone, could possibly lead to Greece leaving the Western alliance for Russia, and the Germans still paid more then they would with a more generous early bailout because they had to repeat the process. There was never a rational reason to insist that people who don;t have money pay 5.5% interest, and even the 3.5% interest the Germans agreed to in the last round of bail-outs means they'll make a significant profit.

Re:"Cashless" is meaningless

[robbiedo]

Blackmail is fair less dangerous than tax cheats.

Re:"Cashless" is meaningless

[NicBenjamin]

The problem you get is that Greece is not a dictatorship.

The King cannot simply decree "everyone will take huge cute to income, it will suck ass for six years, but years 7-10 will be great and I will be remembered as a brilliant leader."

You have to show results in year two or three. If your problem is too many government employees, and you keep firing government employees to keep your budget near the deficit numbers the Troika likes, things will not improve by year three. Which means that your pet austerity-Cabinet gets it's ass kicked by a bunch of people who suck at economics and are convinced you are the cause of every problem the world has ever seen.

Re:"Cashless" is meaningless

[Austerity Empowers]

Why can't the government print more pesos, inflating it anyway? The only difference is electronic funds may be easier to trace, but this is a loser in that they still have to pay to imprison you for being an enemy of the state. Easier just to "steal" via inflation, and knock you down to size and redistribute the extra pesos based on whatever their algorithm is (usually fraud).

If your government turns against you, you are fucked, period. Your only real hope is that you had some investments they can't reach, and you can get yourself out of the country before they close the borders.

Re:"Cashless" is meaningless

[Solandri]

But that's the problem with Greece's current government. They should have attacked austerity, not the measures they are expected to undertake to re-balance their economy with the rest of Europe. Many of the Torika's requirements were real improvements that would have been long term very positive for the Greeks economy and some of those are the ones the Greeks are attacking the hardest, rather than attacking the real problem, which is this Austerity idea that you can succeed by cutting spending during a recession. The Greek economy was heavily damaged by the Austerity drive where the measures should have been more targeted towards competition and divestiture of state assets because it was those very state assets and the salaries they included that bankrupted the Greek government to begin with.

The Greek economy was damaged by spending beyond their means. "Austerity" is just an attempt to simulate what would normally happen to a currency when a country goes as badly into debt as they did (average income exceeds average productivity, so the economy has to contract until these two are in balance again). Had Greece still been on the Drachma when they went into debt, the value of the Drachma would have fallen against other currencies (much like the Argentine Peso has been doing), and the Greek economy would have shrunk until the artificial "growth" due to their previous (and current) overspending had been erased. Eventually the Drachma would've settled at a value where Greeks were no longer making more income relative to their productivity than other countries.

However, since Greece was on the Euro, this couldn't happen. They were being artificially buoyed by the other economies on the Euro. Or alternatively, their debt was dragging the rest of the Eurozone down. The austerity measures were merely attempts to simulate what would've happened if Greece had still been on the Drachma, while keeping them on the Euro. That's what most Greeks don't seem to understand - the austerity measures are not meant to punish them, they're a last-ditch attempt to normalize their economy relative to the rest of the EU so Greece can stay on the Euro. Any "punishment" that results from austerity was caused by their own overspending. If Greece refuses to accept austerity, the only remaining option is to boot them off the Euro, forcing them back to the Drachma, at which point the Drachma would go into freefall crushing their economy just as if they'd accepted the austerity measures or worse.

Re:"Cashless" is meaningless

[NostalgiaForInfinity]

A liquidity problem is when you have money available in principle but it's not liquid. The Greek government doesn't have a liquidity problem, it has a massive debt problem, about 170% of GDP. The causes are massive deficit spending, corruption, and tax evasion.

Re:"Cashless" is meaningless

[Anonymous Coward]

Minimum wage in Greece is not 50% higher than in Germany. What are you guys smoking? Google it:

683.76 EUR per month (Jan 2015)
1,473.00 EUR per month (Jan 2015)

And the real problem is you cant really find a full time job to get those 684 euros. If you're lucky, you'll find a job (4h a day instead of 8) that will only pay half that. Meantime the cost of living is pretty much on par with Germany,

http://www.numbeo.com/cost-of-living/country_result.jsp?country=Greece
http://www.numbeo.com/cost-of-living/country_result.jsp?country=Germany

Is media bias and misinformation that bad in Germany?

Re: "Cashless" is meaningless

[cyber-vandal]

The UK didn't spend extra money. We've been putting up with austerity measures and significant cuts for the last 5 years, and no doubt for the next 5 years as well since the narrative is that the effects of the global financial crisis on a country that is a major financial centre was completely the fault of the previous administration.

Re:"Cashless" is meaningless

[itzly]

The ECB is threatening to stop providing "liquidity assistance" to Greek banks. Banks not the government

When the banks loan that money back to the government, it's the same.

Re:"Cashless" is meaningless

[itzly]

and the Germans still paid more then they would with a more generous early bailout because they had to repeat the process

A more generous early bailout would have meant that the Greeks spent it even faster.

Re:"Cashless" is meaningless

[ultranova]

Basically if you cannot hold your own money in your own hands but government holds it for you (directly or through proxy banks) you are fucked, you have nothing.

If you can't trust the local government, either because it's corrupt or because it doesn't exist, you're fucked anyway. Not only is your cash not safe from theft (or forgery - let's not forget that), but you also can't trade efficiently since there's no way to enforce deals.

If you can't trust the local government to enforce your claims of ownership, they're utterly meaningless.

Re:"Cashless" is meaningless

[ultranova]

It will be interesting to see how Greece gets out of their mess, when they run out of Euros.

They'll get another bailout, of course. The alternative is to let them leave the Euro, which would likely start a landslide and cause the whole project to collapse. At it's heart, the Euro is an attempt to institutionalize neoliberal economic ideas; as such, it lacks any way to deal with trade imbalances (since those should be automatically dealt with by the free market, according to the theory). And they are being dealt with, however this in practice means destroying the countries which can't compete and starving their population.

Of course no nation will simply stand by and watch this happen, thus the attempts to mitigate the problem with one-off fixes, which basically amount to bailouts. But since the ideology underlaying the Euro forbids admitting the problems are inherent to the system (since every set of countries will always have a weakest link), it also prevents creating any mechanisms to handle the problem long-term. So Greek gets just enough bailouts to keep it afloat, but not enough to pull it to the water, everyone else gets bill after bill, European economy continues spiraling downward, and everyone is getting fed up with being told they must tighten their belts for a project and ideology that's not beneftting them in any way.

Uncontrolled free markets had their day in the 1800's. That world has long since gone, and won't return, since universal suffrage makes it impossible to simply ignore everyone but the richest. Even in their heyday they never brought a golden age, just gilded. And now they can't bring even that.

Re:"Cashless" is meaningless

[ultranova]

"Austerity" is just an attempt to simulate what would normally happen to a currency when a country goes as badly into debt as they did (average income exceeds average productivity, so the economy has to contract until these two are in balance again).

Austerity fails at that because when a currency devaluates, it makes imports more expensive which increases exports and boosts domestic production. Austerity, on the other hand, decreases all three. It's the exact wrong policy in pretty much every imaginable situation.

Had Greece still been on the Drachma when they went into debt, the value of the Drachma would have fallen against other currencies (much like the Argentine Peso has been doing), and the Greek economy would have shrunk until the artificial "growth" due to their previous (and current) overspending had been erased.

Had Greece still been on the Drachma when they went into debt, the value of Drachma would have fallen against other currencies, making Greek exporters more profitable, making Greece a better destination for tourists, and shielding domestic manufacture from foreign competition, thus quickly and efficiently rebalancing the economy. And of course they wouldn't had gone into debt but simply printed more Drachma's and let inflation deal with tax evasion.

It doesn't really matter anymore, Euro won't survive this crisis since it's its direct cause. The important question is: will the EU survive? If not, then Europe will return to its historical state of constant warfare.

Re:"Cashless" is meaningless

[Carewolf]

What Greece really needs is reform that will allow its private sector to actually conduct capitalist, profit-making businesses

No, they have that. What they need is to stop being corrupt and actually collect taxes also from their rich friends, and stop giving out surprisingly well payed government jobs based on nepotism.

Re:"Cashless" is meaningless

[swb]

At it's heart, the Euro is an attempt to institutionalize neoliberal economic ideas; as such, it lacks any way to deal with trade imbalances (since those should be automatically dealt with by the free market, according to the theory). And they are being dealt with, however this in practice means destroying the countries which can't compete and starving their population.

I thought the most basic function of the European Economic Community was to be a free trade zone. When combined with a shared currency, I'm not sure that the idea of a trade imbalance has the same meaning as it does between countries with trade barriers (taxes, tarrifs, etc) and differing currencies.

It's a little like saying that there's a trade imbalance between Elm Street and Main Street because all the shops and businesses are on Main Street and Elm Street has to import everything from Main Street because all they do is mow lawns and babysit on Elm.

I think the biggest problem was the overexpansion of the Euro zone to countries like Greece which had a history of dubious economic performance, Government economic performance (budgeting, tax collection, etc) and basic economic capability.

Re:"Cashless" is meaningless

[Carewolf]

So, in the long run, Greece needs to leave the Euro. Except, a majority of Greeks want to stay in the Euro. Thus, the current Greek government wants to get kicked out, so they can blame the EU for it. But the EU does not want to take the blame, so they won't kick out Greece. What we have now, is a slow speed train wreck.

The part of the story I find interesting, that nobody is talking about, is that there are no written procedures for either kicking Greece out of the Euro Zone, or for Greece to voluntarily leave the Euro. One side or the other would have to unilaterally declare their action, and then dare the other side to deal with it. There will be 8000 lawsuits in 30 different courts asking judges to essentially create the rules as they go. Those cases could drag on for years. The financial markets would hate that kind of uncertainty.

Nah, the problem is more that leaving the Euro is effectively impossible unless your economy is stronger than the Eurozone average, whether they want to or not. Currently everybody in Greece have their income and accounts in Euros, and those with a choice would continue to keep it that way, as any new currency would only be introduced to be devaluated, so no one would WANT the new currency, and only the poorest could be forced to use it. If most of the economy would continue to operate in Euros because no one wanted the new currency, then changes in the value of new currency would have no effects on the economy. And being useless the value of new currency would hyperinflate.

Re:"Cashless" is meaningless

[goose-incarnated]

Alternately, if the Greeks keep their minimum wage but get off the Euro and make the drachma the official currency again, the value of the drachma will fall until Greek labor is worth buying at the revised exchange rate, if the rate is allowed to float.

Which is precisely why the EU would not want Greece to break away from the Euro. Because Greece is a sovereign nation they can peg the value of the scrip (Drachma) to whatever they want. It will be set artificially high on the day of the break-away and all debts will be considered in Drachma (sovereign nation, remember!). A year later when they finally pay (and the drachma is 1/10th of it's value) the creditors get an effective 1/10th of their debt while the debtor gets to settle their debt for 10c on the Euro.

The value of the labour is not what sets a country's currency value anyway, it's the value of the country.

There's no reason for a "weakest state" to drop out, it just has to stop destroying itself. Alas, as long as the people elect politicians selling fantasies, the destruction will continue.

There's always one reason - with a single currency between a group of countries the weaker economies will always be at a disadvantage *because* they have no control over the money supply. Without control over the money supply you can forget trying to control the economy. This is the primary reason few countries use commodity backed-currencies (gold, silver, etc) - they have no control over the supply of the commodity and hence they cannot control the economy.

Re:"Cashless" is meaningless

[Richard_at_work]

Actually, there are written procedures for removing a member country voluntarily or involuntarily from the Eurozone (the ECB can simply stop dealing with that country), but there (deliberately) isn't any procedures for removing a member country voluntarily or involuntarily from the EU. The issue resides with the fact that (apart from countries with a written opt out), EU countries are required to be part of the Eurozone, so leaving or being forced to leave the Euro raises fundamental conflicts with EU membership.

Re:"Cashless" is meaningless

[Richard_at_work]

You realise that Ireland received a massive bailout from the ECB, right? That's spending EU money right there...

Re:"Cashless" is meaningless

[Charcharodon]

Not even anarchy, but criminal, war-torn, rape and pillage, tribal Africa, anarchy.

Re:"Cashless" is meaningless

[Charcharodon]

Liberty HAD been working very well for Americans, compared to Europe and the rest of the world. There fixed it for you.

Just because Europe and the rest of the world is worse off than in America in many ways does not mean America is doing great.

Re:"Cashless" is meaningless

[ultranova]

If a country devalues its currency, it's no different from a massive tax on savings and a massive cut in wages.

Except it won't affect the price of domestic products, which typically includes everyday necessities like staple foods and rent. In fact, since imports go up in price, domestic production gets de facto protective tolls to help boost it across the board. And of course exports also become more profitable, giving economy a further boost. So it's almost completely different.

Re:"Cashless" is meaningless

[tomhath]

it's because the Germans wouldn't bail them out

Actually, the Germans did give Greece a bailout. But instead of using the cash as a lifeline while they fixed their problems, the Greeks spent it and came back for more.

Re:"Cashless" is meaningless

[NostalgiaForInfinity]

US has the second highest incarceration rate in the world [wikipedia.org]. So please explain exactly what liberty are you talking about?

You generally expect incarceration rates to go up the more liberties citizens have, since the only way to restrain criminals in such a society is to incarcerate them. On the other hand, the more you run your country like a jail house, the less need there is to incarcerate people, since government supervises the day-to-day activities of all citizens closely. Clear enough?

(The US should decriminalize drugs, however.)

Re:"Cashless" is meaningless

[NostalgiaForInfinity]

Liberty HAD been working very well for Americans, compared to Europe and the rest of the world. There fixed it for you.

Relatively speaking, the US is still doing a lot better than Europe.

Just because Europe and the rest of the world is worse off than in America in many ways does not mean America is doing great.

America has been deteriorating, in large part because of an influx of bad European ideas about government and society. It's a trend we can reverse.

Re:"Cashless" is meaningless

[NostalgiaForInfinity]

Except it won't affect the price of domestic products, which typically includes everyday necessities like staple foods and rent

Food depends on lots of imported inputs: fertilizer, machinery, energy, probably water in the case of Greece.

And of course exports also become more profitable, giving economy a further boost. So it's almost completely different.

Exports only become "more profitable" because workers got a pay cut. And that only "boosts" the economy if the workers are overpaid in the first place (which, however, in the case of Greece they probably are).

In fact, since imports go up in price, domestic production gets de facto protective tolls to help boost it across the board.

Devaluation just means a cut in the cost of domestic inputs to production (labor, land, etc.). But that cut is only temporary, since workers and land owners are soon going to raise their rates, since most of the stuff they need to buy depends on imports and goes up in price.

Even if it were a "toll", tolls are not "protective" of anything other than the financial interests of inefficient, badly run industries.

Re:"Cashless" is meaningless

[NicBenjamin]

Which included 7 Billion quid from the Brits, altho the Irish only seem to have used £3.2 billion. Additionally the UK's attempts to stabilize it's own banks have resulted in £14bn going to their Irish subsidiaries.

The Eurozone has badly fucked up this situation by trying to nickel-and-dime these bailouts. For Greece they needed to do €200-250 Billion Euros at nominal (as in zero or 1%) interest back in 2010. They insisted on much less (€110 billion) at 5.5%. Then they acted surprised that a year later they needed to arrange that €100 billion (aka: almost all the money from the first bailout) needed to be written off and the interest rate reduced on the rest. But they're still charging interest (altho 3.5% is slightly less fucking stupid then 5.5% was). And they'll probably have to do a third bailout.

But Ireland, which didn't get nickel-and-dimed by a bunch of self-righteous Germans, is gonna be fine.

Re:"Cashless" is meaningless

[NicBenjamin]

and the Germans still paid more then they would with a more generous early bailout because they had to repeat the process

A more generous early bailout would have meant that the Greeks spent it even faster.

That would actually be the point.

Look at this from an engineering point of view. The problem is Greece has debts it can't pay off. The reason it can't pay it off is the economy is too damn small, not growing fast enough, and lenders are convinced they won;t be paid back if they send in more checks. If you have a mini €110 Billion bailout (at 5.5% interest) then the Greek government has to fire slightly fewer people then if there were no bailout, but it can't create business tax incentives/build infrastructure/buy domestically produced tanks/or any of the other things governments can do to make the economic pie actually grow. None of the problem has been solved and you'll just have to spend €150 Billion (at 3.5%, except the €100 Billion write-down in debt from the last bailout) more next year.

Which will still not be enough to allow the Greek government to spend new money on shit that might grow the economy, so a few years after that you have to deal with Syriza. Which means that a) you have not solved the problem, b) you're not getting paid back on the €260 Billion you gave them, €160 Billion at 3.5% and c) you're really truly not getting paid back on the €100 Billion gift.

OTOH, let's say you started at €200 Billion. You didn't charge interest, or you charge 1%. Maybe you're feeling really generous payments don't start until there are signs of growth. You insist the Greeks make major changes to their economy (for example, reducing pensions and replacing their easily bribable tax enforcement guys with real tax enforcement guys). They use the extra money to grow their economy. Which, BTW, is logically equivalent to saying "they spent the money."

Now you have solved the original problem, you are getting paid back on all of it, and nobody has to worry about the end of the Euro. You have not caused a banking collapse in Cyprus, you do not have to deal with Syriza, there is a 0% chance Putin can turn your entire left flank simply by courting the Turks and telling the Greeks "you realize if you just stopped paying those guys I'd protect you, right?," etc. etc. etc.

Re:"Cashless" is meaningless

[Lennie]

You should look at it an other way:

Greece and Germany 2 very different countries shouldn't have been part of the same monetary and economic policy system, in this case the Euro.

When Greece wanted to join they had to much debt to be allowed to join by the EU-rules.

So far so good. Nothing bad happened.

Now there is this company in the US called Goldman Sachs which was willing to take on this debt for a number of years in return for a hefty payment.

Greece accepted that offer, which if they really understood the terms and consequences of the agreement they probably would have never done so.

If I remember correct they for example had the interest rate pegged on an index inverse to the GDP of Greece or other similar variable connected to the economy of Greece.

Now after that deal Greece didn't have that large of a debt any more and was able to join the EU.

The terms of the Goldman Sachs agreement said they would need to pay it back after 10 years or whatever but after at that point Greece would not only get their debt back but also a new debt with Goldman Sachs. Obviously Greece couldn't pay that. They probably paid the at least part of the Goldman Sachs debt by getting loans from others. Because the interest of the Goldman Sachs loans was very high especially after the financial crisis.

So Goldman Sachs made a lot of money and had very little risk as the EU would have a big stake in Greece not failing and if the economy of Greece was doing awesome Goldman Sacks would also get paid.

Have a look at the video, you'll probably want to enable the subtitles:
https://www.youtube.com/watch?...

Now Germany and a lot of other EU countries want to put as much of the burden of this problem with Greece, as much as Greece can bear.

Basically about trying to find the right balance:
The people in Greece say: we are suffering enough, our economy is shit and things will get really bad and recovery will take decades.
Germany and other EU countries are saying: you can bear some more of the burden.

However Germany and others are not interested in seeing Greece leave, that would be bad for the Euro.

So the Greece government had some leverage there to force the other EU countries to help them.

As I mentioned at the start, Germany and Greece shouldn't have been in the same monetary system, if they were not Greece would have been able to go bankrupt and just take their losses. They would have recovered much faster from that then being stuck as they are.

Re:"Cashless" is meaningless

[Lennie]

Just watched part of the documentary from early 2012, I didn't remember correctly, but the consequences are the same, probably worse.

Re:"Cashless" is meaningless

[cheesybagel]

The banks are being forbidden by the ECB to buy Greek government bonds in case you did not read those news either. They still need the financial assistance anyway.

Re: "Cashless" is meaningless

[Charcharodon]

The US is also composed of many nation states as people are bound to forget. Places like California, Illinois, New York, Maryland are collapsing under the weight of government. Places like Texas, North Dakota, and Florida are doing better but the disease of gov't is spreading there as well.

Re: "Cashless" is meaningless

[Stuarticus]

YEs, America was much better off before the disease of government came, when was that again? About 1620?

socialism's benefits

[turkeydance]

"People are desperate...", maybe posting on SlashDot will help. or not.

Re:socialism's benefits

[Tailhook]

It's all lies. Argentina has no reason to seek alternatives; they have a fair, equitable socialist government that would never manipulate its fiat currency to raid savings.

We must outlaw these robber baron digital schemes right away. These digital currencies are a threat to The Good and the Great's ability to provide the fair and just governance the people of the world deserve.

Re:socialism's benefits

[TWX]

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.

Re:socialism's benefits

[xvan]

Wow, you portrait this in an amazingly clear way for somebody that doesn't look Argentinian on a first glance.

Re:socialism's benefits

[Tailhook]

Good thing the brilliant Great Leaders of Argentina banned gold trading almost three years ago. No wonder their economy is the pride of South America. They've applied their benevolent justice to thwart every scheme those dirty capitalists have attempted!

Re:socialism's benefits

[NicBenjamin]

It's Argentina. I can't remember the last time I read about the Argentine government doing something smart.

Seriously, these are people who responded to Brazil ,a href="http://en.wikipedia.org/wiki/South_American_dreadnought_race#Counter:_Argentina_and_Chile_respond">buying two extremely modern naval vessels by insisting that a) it was evil that Brazil do this and the entire world should come to a stop while to problem was solved, and b) the most equitable solution would be for the Brazilians to give Argentina one of them. The foreign minister was fired after much drama, including the revelation that the back-up plan was an invasion.

So I suspect the ultimate Argentine reaction to their current predicament will be to go all-in on a solution and then stubbornly refuse to change until it's clear they should have changed 50-6 years back.

The IMF should be worried

[spiritplumber]

once one country gets rid of cash, if it works, it'll avalanche. Goodbye to seignorage.

Re:The IMF should be worried

[digsbo]

I don't understand how cashlessness prohibits the benefits of seignorage. It would seem to me the beneficiaries of seignorage in the US economy are already doing well with that mechanism without cash. Can you please elaborate?

Re:The IMF should be worried

[Anonymous Coward]

once one country gets rid of cash, if it works, it'll avalanche. Goodbye to seignorage.

All of the alternatives involve seignorage or equivalent. Mobile payments and Amazon gift cards imply giving the telecom or Amazon an interest-free loan between the date the credit is paid for and the date it is redeemed - which is pretty much exactly the same as seignorage, which gives the government an interest free "float" to fill the gap between cumulative tax collections and cumulative government spending. Bitcoin involves continuous transaction fees (whether explicit or implicit in the mining rewards) that are substantial, but largely ignored by the "tech can disrupt everything successfully" boosterism of the Bitcoin fanclub.

Re:The IMF should be worried

[TWX]

To me it comes down to someone or some entity has to maintain the container that is the financial system unless we want to go to an entirely barter-at-transaction in-person economy. Most places use the government that issues the currency and its theoretical management of a central banking system to do that, for both cash-based and electronic transactions. Switch to the use of third parties for management and you still have a container, in the form of the gift card, or those who control access to Bitcoin, or those who control access to any other form of scrip. The only alternative is to trade, face to face, something of value by both parties to the other. That won't work.

I think it makes the most sense to use a central bank and government. It has its downsides, I will not deny that, but the downsides for all of the private methods are worse.

Re:The IMF should be worried

[alexander_686]

All of the alternatives involve seignorage or equivalent. Mobile payments and Amazon gift cards imply giving the telecom or Amazon an interest-free loan between the date the credit is paid for and the date it is redeemed - which is pretty much exactly the same as seignorage, which gives the government an interest free "float" to fill the gap between cumulative tax collections and cumulative government spending.

You have the concept of seigniorage slightly wrong. It has nothing to do with government tax collection and spending. Just as every Amazon gift card is a interest free loan to Amazon, every physical dollar is a interest free loan to the federal government. This is seigniorage.

That being said, I don't think we should spend much time with seigniorage. While it might be worth billions to the federal government, compared to the trillions that the government spends and borrows each year it is small change and has a low impact.

Re:The IMF should be worried

[khallow]

I think it makes the most sense to use a central bank and government. It has its downsides, I will not deny that, but the downsides for all of the private methods are worse.

Except when they aren't, of course. Argentina sets a low bar.

Re:The IMF should be worried

[TheGavster]

Seigniorage is the difference between the cost to produce currency and the face value of the currency. Hypothetically, a cashless system would eliminate this inefficiency. There will inevitably, though, be "service fees" or somesuch taken from each transaction for administering the system.

At the end of the day, though, seigniorage is chump change compared to the power to deficit spend. What the Argentinian government really wants is to have its population to use a currency that they can make more of. If citizens are only accepting a foreign currency, or some private credits, the state has to directly collect taxes, which can be problematic politically. Forcing citizens to accept the Banana Dollar or whatever is simply the formalization of the state consuming goods and services from the population without having to answer to a set revenue policy.

Re:The IMF should be worried

[digsbo]

I assumed he was talking about monetary seignorage, which is the benefit the first entities which are granted newly created monies gain by using that money before the general price level increases. I didn't think anybody really cared about the cost of currency creation these days. So...I'd like clarification from spiritplumber.

Re:The IMF should be worried

[digsbo]

Seignorage is used with multiple definitions. Several have been bandied about here without any being exactly wrong.

Re:The IMF should be worried

[NicBenjamin]

That form of seignorage isn't a big deal today.

Most actual seignorage comes when the Federal reserve bank decrees that there will be x Billion in this bank account so we can use it to buy bonds.

cashless = no privacy and lots of govt control

[ciaran2014]

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.

Re:cashless = no privacy and lots of govt control

[Anonymous Coward]

This is not about privacy. This is about the government manipulating the exchange rates to steal money from its citizens.

Oh boy!

[Anonymous Coward]

Bitcoin!!!

Democracy

[jklovanc]

Argentina is a democracy. Vote the idiots out of power.

Re:Democracy

[Anonymous Coward]

That's true, but what happens when the alternative is another idiot?.

Re:Democracy

[tnk1]

Welcome to Decision 2016.

Re:Democracy

[Anonymous Coward]

Some idiot over the internet decided to write a sensationalist post about some far-away country (he lives in Spain). Some guys start talking about a country they don't know of, but since it's not the US or rich Europe, it must be populated by sub-monkeys. No news for nerds, but for Tea Partisans. Sad.

Re:Democracy

[neo-mkrey]

Just like we do in America every four years -- and look how well it has worked for us.

Re:Democracy

[jklovanc]

The US has yet to have a huge problem like making the currency unusable. I bet if that happened elections in the US would be very different. By the way there are midterm elections as well so there are elections every 2 years.

Re:Democracy

[bobbied]

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...

Re:Democracy

[jijitus]

They are not idiots. They have been smart enough to keep a sizeable electoral base (20 to 25%) in poverty and ignorance receiving subsidies from the government and without the need to perform any job. So, they always have a 20% difference to the next candidate... it's a system designed to sustain a party in the office indefinitely.

Re:Democracy

[gwolf]

Remember this is the third voted Argentinian government that implements this line of policies. Last election (2011) was won by an overwhelming 58% (which, in a real multi-party country, is a landmark to achieve — Kirchner's government won with slightly over 20%. There is a presidental election for this year, and everything points at a fourth mandate.

So, do you really think they are bad economically or desperate?

Re:Democracy

[jklovanc]

Keep voting the same people in and they deserve what they get.

Re:Democracy

[ChunderDownunder]

Sounds like Peronism in a nutshell. Cristina can do whatever she likes as long as she invokes the spirit of Evita.

Nearby neighbours Chile and Uruguay both came out of military dictatorships at roughly the same time but don't have the same crony cult of personality.

Re:Democracy

[gwolf]

right! Maybe it's because the government is doing a good job (or at least, a not-bad-enough job) for people not to want to change them. Remember that Argentina is a really lively democracy, with people much more involved in politics than what I know in other countries. And that there are not only two or three parties, but a rich gradient of political viewpoints.

Re:Democracy

[Xifer]

Here in the United States, we let the greedy banks and corporations vote large amounts of reforms and windfalls for themselves The lobbyists buy up all the influence in Washy DC for the military industrial complex so we can export debt and war and let our infrastructure go to hell. A silver dollar to our government may be a dollar but is is worth 13 dollars on the silver market. Electronic dollars won't be worth so much on the market. Our progressive politicians also have a record of having fatal accidents here as well. We can still object to the perversion of the government but it is like a tree falling in the deep forest, they are too busy doing their Washington thing and the media can't hear us without any big money. Electronic money is a good way to get nothing tangible for your work.

Re:Democracy

[NicBenjamin]

If you think that a number of parties greater then one is correlated with more viewpoints you really need to watch a Republican Presidential debate. The reason those guys have the same label isn't that they all agree on everything, it's that they all disagree with the Democrats coalition more then with each-other. In Northern Europe you could probably have a less drama-bullshit-you're-better-then-Hillary-you-traitor-to-freedom-party if you forced the local center-right guys (frequently called Christian Democrats) into the same party as the center-left (usually called Social Democrats) and one or two of the minor parties.

And you're talking Argentina. They haven't had an effective economic policy for more then a century, which is they you went from richer then Italy (France and Germany too) to poorer then Italy; they've been surpassed by the Chileans and the Uruguayans; and the Mexicans/Brazilians/etc. are all on pace to beat them. An Argentinian talking about economic prosperity is like a virgin talking about sex.

They should not have a long-term set exchange rate at all. Particularly to a currency that's got a completely different growth strategy then them. It's dumb economics.

Re:Democracy

[jklovanc]

Then why are they having currency issues if they are so good?

Re:Democracy

[gl4ss]

sure he did.

he proposed switching to a cashless system.
but cashless doesn't make a system currencyless.

like, move to bitcoin? perhaps.

but if you move to amazon payments, paypal or whatever, then you're just moving to dollars. or if you're moving to a peso based cashless system, you're still operating with pesos.

it's a stupid article really. "just move back to dollarzzz!!!"

Isn't cashless the problem most of SA has to begin

[macbeth66]

Just asking.

First understand money

[Anonymous Coward]

Money is a token for promises. Nothing more, nothing less. When confidence is lost, nothing can restore it (hyperinflation)
On the other hand, other parts of the world have an excess of trusted promises. These will dissapear (deflation).

Re:First understand money

[MightyMartian]

But is it really overvalued? Debt is only part of the equation. When the statement "the dollar is backed by the US Government", that means the whole thing; Executive (including the Federal Reserve, military, and so forth), the courts, and of course Congress, not to mention the collective will of the citizens of the United States. When you look at the greenback in that light, it's hard to imagine a currency in modern times as well backed.

Re:First understand money

[MightyMartian]

Since value is relative, then being the best currency means being the best currency, even with the shortcomings.

So far as I understand it the US has carried debt uninterrupted since the Civil War (maybe even before). Even in times of war and national emergency (including a few self-inflicted ones like the Tea Party trying to go kamikaze), the US Government has demonstrated its will to honor its debts and back the US dollar. It may be overvalued by some standards, but in general, I think the US dollar remains, and likely will remain for decades to come, the most important currency in the world. It really has no competitor.

Re:First understand money

[rch7]

It failed on it's promise to exchange USD to gold in 1971, and USD was devalued. Some may call it a bankruptcy, just like in Argentina.

Re:First understand money

[ChrisMaple]

Fiat money is a token for promises. FTFY.

Digital Economy = Totalitarianism

[Anonymous Coward]

Its just another bugging device...

Whoa

[GameboyRMH]

You know it's bad when Bitcoin looks like a better alternative! O_O

Re:Whoa

[dkatana]

Right! Look at the NYT article: http://www.nytimes.com/2015/05...

reopen harrads

[steak]

if people will just keep spending money they will have more money to spend.

Too much technology

[jklovanc]

So no money can change hands without lots of technology and probably an internet connection.

How do you deal with small purchases from small vendors? An example would be a child's allowance.

Re:Too much technology

[PRMan]

You send the allowance to your child's phone or just get them some Pesos. Using Coinbase in the US, you can just send bitcoins to their e-mail address.

Re:Too much technology

[jklovanc]

You missed 3 points.
1. Not everyone has a cellphone.
2. Not everyone has an email address.
3. Using Pesos is using cash therefore it is no longer cashless.

Scoreboard: Creativity 1, Curency Controls 0

[Anonymous Coward]

You have no idea how creative the Argentine people are. Especially with inflation running about 30% per year. The official exchange rate is down to a little over eight pesos to the dollar while the "blue rate" is about 14 pesos to the dollar.

After a month in a Hotel in Mar del Plata, Argentina I paid not with cash or a credit card but with two cruise ship tickets that I bought online with my US credit card. The proprietor wanted to take the cruise after doing business in South Florida. He was heading to Miami with two suitcases stuffed with US dollars so he could add to his portfolio of rental condos. Did I forget to mention that he has both French and Argentine passports?

I've spent years in South America. This type of behavior is not exceptional in a country that has an extremely tenuous grip on reality.

Greetings from Argentina

[ericlondaits]

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.

Re:Greetings from Argentina

[gwolf]

This. Mod parent up. Few people commenting this thread have the slightest idea on how Argentina is.It's living among its best moments in decades.

Re:Greetings from Argentina

[ericlondaits]

Tax fraud is rampant in Argentina. The government having a tight control on citizens cash flow would mean more taxes... so yes, of course nobody would accept this.

Also, Argentine people distrust banks... LOTS of well educated middle class people I know don't have bank accounts or credit cards and don't want to.

Re:Greetings from Argentina

[dejaniv]

Having big inflation and wild currency value fluctuations is not normal and requires identifying the source of the problem and detailed plan of action. Without that I would say the situation is quite desperate. Going "cashless" sounds like plan and I would agree, not a good one.

Your post suggest the government has the plan and its execution is yielding positive results. Is that so or are people getting used to despair because they know how to navigate it?

Re:Greetings from Argentina

[ericlondaits]

We don't have wild currency value fluctuations. Go here

http://www.dolarsi.com/cotizac...

That's a graph of conversion rate from 2009 to 2015. You'll see a steady increase with a single devaluatory hike after which the line continues steadly. It's a predictable rate in tune with inflation.

The price of the black market dollar has a bit more fluctuations... but that's the nature of the beast... just like the stock market it responds to news, scares, manipulations and such. Also, there's no official source for the actual price of the black market dollar... it's surveyed in illegal exchange dens... and of course when it soars most people wait for it to go down again, so it readjusts... it normally corrects itself in a week or two at most.

Here's the graph of the black market dollar (blue line) vs the official rate (green line)

http://dolarblue.net/historico...

Also, consider that the black market is mostly used by middle class and small businesses... bigger businesses, importers and other people buying large amounts of dollars use alternate sources which follow more closely the curve of the official rate.

Re:Greetings from Argentina

[ericlondaits]

As a side note: What's "normal" for us argentinians would probably be a crazy ride on the despair train for americans... although considering the whole world americans are the exception and not the norm. ... But we've had big economic crises in the near past (the last big one in 2001) and those are have:

- Political instability: Presidencies are toppled, ministers quit, vultures circle above.
- Social instability: Constant strikes, pickets, rallies and protests of all kinds.
- Credit absolutely dissapears... it's impossible to buy anything in installments, for example. Many businesses stop accepting credit cards. Importers stop selling because they don't know at what price they'll have to buy to replenish their stock. Prices are marked in dollars instead of pesos.
- Everything comes to a standstill... companies don't spend money in any projects, no new jobs open, salaries often get delayed (getting paid 2 or 3 months late is not outside of the realm of possibility) and/or cut.

Right now we're nowhere near that. People are complaining about the way things are, sure, and some things are a struggle... but we're moving ahead at a steady pace.

Re:Greetings from Argentina

[hjf]

"Among its best moments"? Then why can't i buy more than 2 (two) things from ebay a year?

Re:Greetings from Argentina

[Lman_ar]

Actually, no.

We now have a steady 25-30% yearly inflation rate, and salaries are not being able to keep up thanks to a regresive tax called "Impuesto a las Ganancias" (Profit Tax) that is being applied to workers. Yes, to our government, your salary is a profit, so the more you earn, the more you have to pay. Did I mention that said tax doesn't apply to Finances? That's right, if you work in finances, and you do a few extra hours and make AR$100k, you pay nothing, but if you are a worker that pulls a few extra hours to put your salary up to a certain point (AR$10k) you have to pay the tax, and probably end up losing the money you earned in those extra hours and even more!

Factories are forcing vacation on its workforce and lowering activities, and the government is paying part of the salaries just to keep the factories from firing people. FIAT Automotor is suspending 1800 workers, a 60% of its workforce in its factory in Cordoba because they can't sell their production, due to export limits and exchange issues.

Then there is crime, drug related crimes, small business closing because they can't keep up with paying all the ammount of taxes related to owning a business and the taxes related to having an employee, etc.

And i know what I'm talking about, i was born, raised, and live in Argentina for the past 35 years.

Re:Greetings from Argentina

[NicBenjamin]

1 - We're nowhere near desperate. We've been desperate-ish in the past... not lately.

Pardon me, but I'm not sure the definition of desperate is the same for an Argentinean as it is for the rest of us. In the US, or most of Latin America, having a legally mandated exchange rate much different from the actual market-based rate would count as a major problem.

The Argentine attitude seems to be "The legal exchange rate is different from the market-based one? It must be Tuesday."

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.

In theory the smart governmental policy at this point would be to float the Peso and kill the official exchange rate. The inflation would mean that your exports got cheaper in dollar terms (ie: if it costs you 100 pesos to make something, at 9 pesos for a dollar you need to get $11 US to break even; at 15 you're breaking even at $7), which would help the economy.

But as far as I can tell the people of Argentina have specifically designed their economy so that, with a significant amount of scrambling, everyone can be roughly as prosperous today as their ancestors were in 1905. Which is not that bad (Argentina was pretty rich in 1905), but also means that a) you've missed out on a century of economic growth, and b) you're doing so much scrambling you're surprised anyone else thinks you should not be scrambling.

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.

I suspect when a Bitcoiner says "cashless" he means that there's no government-currency involved at all. So a cell phone transaction involving your bank account would be cash.

This is why I try to avoid economic discussions with bitcoiners.

Re:Greetings from Argentina

[mjwx]

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.

The problem here is that on ./ there are a few people who have a hard on for going cashless despite the fact it will only increase costs (banks dont do things for free) and make every purchase you make traceable so whenever economic issues are mentioned they tout this as a magic solution to whatever economic problems are being mentioned. They're a lot like Libertarians in the way their solutions dont make sense. If Argentina went cashless, wouldn't everyone just start using US dollars given there's already a thriving black (more a darkish shade of grey) market for them?

There will never be a cashless society because cash is so useful, if the government tender becomes useless, people will adopt another form. We see this when a nations currency devalues to a point where it's useless, they simply adopt the currency of another nation. Even if every nation went cashless, we'd end up with a black market currency as an alternative.

Re:Greetings from Argentina

[ericlondaits]

If Argentina wanted it could ditch the argentine peso and start using dollars... that's what Ecuador did at one point. It doesn't need to go cashless for that. But it's not without consequence... it'd tightly couple Argentina's economy to the US, disabling the possibility of monetary emission and the ability to adjust exchange rates to make its products as cheap and as profitable as possible. It could fall in a similar situation to that of Spain or Greece in the Euro zone without any of the advantages they have for participating. ... In fact Argentina had its currency tied to the US dollar from 1991 to 2001 through a law that equaled the value of 1 peso to 1 dollar and the possibility to convert them back and forth at will. It ended in a huge economic crisis with repercussions we're still fighting with.

Why do we keep getting these Argentinian Economy "

[xvan]

Argentina has other problems, currency is just an symptom.

1) There is no dollar outrun, there is a government that artificially keeps the dollar cheap for political / economic esoteric reasons. So it needs to prevent massive access to that cheap dollar market.
2) Most the population hardly reaches the end of month, so the "lack of dollars" issue directly affects less than 30% of it, because the rest don't even have pesos to exchange for dollars.
3) The real problem of the people is that we've no credit... No 20 years mortgages for buying a house, 6 years is the best you can get, and only in specially stable situations. So the little guy can't "invest" his little money in anything bigger than a car. That has the secondary effect that the little money you save, you need to spend it quick before the government eats it. That's good for the economy, good for the government, bad for the little guy.

All in all, this is a government that has "kept" unemployment rates low, sacrificing other economic variables. Yes, it's socialism, but that's better than what we had from previous governments. And yes, this is a corrupt government, but that doesn't really make our country a special enough to be news for nerds.

Illogical

[gurps_npc]

The government that abused the hell out of Argentina's currency doesn't want to fix it. They are the ones that intentionally abused it in the first place.

Any government that was willing to not abuse the currency could simply STOP ABUSING the currency. They would not need to go cashless.

Going cashless would at best be a meaningless symbol.

Re:The solution for Argentina is competent governa

[MightyMartian]

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.

Local Currencies

[Anonymous Coward]

They could also look to local currencies schemes.

Local Currencies, or rather, minor currencies where people typically use a skill or service they have to do it for someone else, and they get paid in a virtual currency, which they can use to pay others for similar jobs.
This can help communities really grow, and has done many times over the years in communities hurt by recessions, general financial abuse and crises.

There are an ungodly number of local currencies around the world.
Most of them, ironically enough, exist in places where there isn't even really any financial crisis, or wasn't at least.
Many people use them quite literally as a favor-system, which is basically what it is anyway, a currency-backed favor system.
They can be used to complement legal currency systems, and yes, there are even many local exchanges for some of them to convert them to real money.
Some local currencies don't want that though, and some even have outright maximum "credits" that you can gain to stop hoarding and other such things.

In a sense, it would be sort of like what Bitcoin has become in recent years. But this wouldn't be as volatile as BTC.

If you are interested in reading more, just google up on it, there are quite a few wikis with loads of information on them, including.

Re:Local Currencies

[xvan]

Hi, Brilliant Anonymous Coward.
You are proposing your innovative idea 15 years too late.
We had that here in Argentina, it was called "Cupones de Trueque" (Barter cupons)... We used those when people were desperate (because they had no work, no pesos and nothing to eat)... It's something we don't want to go back to.
This is an example http://en.wikipedia.org/wiki/C...édito


Now people are "desperate" because they can't save their extra pesos at a rate they consider fair, It's a completely different situation, and really subjective because people freely buying dollars and taking them out of the country was what triggered (but no caused) our last crisis.

Re:Local Currencies

[xvan]

Slashdot seems to reject non ASCII URIS, this should fix that: http://en.wikipedia.org/wiki/C...

I'm Argentinian and you are wrong

[plerner]

If you do not trust your own country's currency that's your own problem. I do trust my Argentinian currency. What I don't trust is you and everyone else who are always trying to bring our economy down to a crisis, so you benefit with the foreign money you have been accumulating over the years. Just stop trying to convince the hole world that we all want what only you, and very few others want. I, as an Argentinian, am NOT desperate in the way you claim. I, as an Argentinian, do NOT agree with you. Please, Slashdot, if you are going to post things like this at least make a poll to every person in Argentina to know how everybody actually feels. And most of us voted for our actual president, consider that. This post is insulting.

Re:I'm Argentinian and you are wrong

[MightyMartian]

Apparently a helluva lot of Argentinians DO NOT agree with you, and just as importantly, or perhaps moreso, international markets do not agree with you.

Your economy and government are being horribly managed, and you're suffering for it. Quit blaming the rest of the world for your domestic problems.

Re:I'm Argentinian and you are wrong

[cachimaster]

I, as an Argentinian, am NOT desperate in the way you claim. I, as an Argentinian, do NOT agree with you.

I, as an Argentinian, DO agree with him.

Re:I'm Argentinian and you are wrong

[xvan]

Yes there is a helluva of Argentinians that don't agree, that's because Argentina is a big country.
But the voices of people that reach other countries are from the upper classes. They should at least speak english, have internet access/be able to travel outside of the country, and give some shit on the international view of Argentina's economy.
This people are the same subset affected by the dollar restriction, so you get biased sample pool...


To give you an scale, this news looks to me like someone saying that Tea Party represents 30% of US.

And, at some level, I believe the same thing happens with international news regarding Venezuela.

Re:I'm Argentinian and you are wrong

[gwolf]

The current Argentinian government has among the highest approval rates historically in their country. And everything points towards the same project winning this years' elections.

Argentinian economy fares way better and is way stabler than everything they had in most of our lifetimes. Until the early 1980s, the corrupt, inept, USA-backed military broke one of the strongest economies in the post-world-war era; in the 1980s, Alfonsín had to resign after having >1000% yearly deflation. During the 1990s, everything seemed rosy at first as Menem dollarized the economy pegging AR$1=US$1, but the cracks started to appear towards the end of his regime. In 2000-2002, everything crashed down, the currency deflated to a fourth of its value, and there were even provincial currencies because nobody believed in the peso (sounds familiar?)

Then, starting 2003, Nestor Kirchner narrowly won the presidency (24% vs 22% IIRC). He was a huge success at stopping chaos. Four year later, Cristina Fernández took over, nationalized several industries, invested in national development and started a weak currency control. She was overwhemingly reelected in 2011. And despite everything, Argentina looks healthier than it ever was. Life for my friends is not a panacea, but they have a GREAT social security system, state-run health care, universal coverage of MANY important social programs...

And of course, they will most probably elect their great government to continue for the next four years.

Re:I'm Argentinian and you are wrong

[hjf]

The K is strong with this one.

Bitcoins, Dogecoins, etc.

[ArcadeMan]

Even my signature is on-topic!

Oh, the irony....

[vomitology]

Using Bitcoin can "help curb black market exchanges, fight corruption and restore the country's image."

Re:Oh, the irony....

[MightyMartian]

No shit. The one thing bit coin seems very good at is enabling black market exchanges and corruption. We all know how Silk Road was such a warrior against criminal and corrupt activities!

Bitcoin? Nonsense

[cachimaster]

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.

Do not get fooled by Keynesian arguments

[Trachman]

I have an issue with your item #2: inflation stimulates spending and that is how economy survives. This is a Keynesian theory, which, however, inaccurately switches cause and the outcome.

Lets assume, for the sake of the argument, that there is no inflation, there is a predictable interest rate and the people can save it.

If people can save it, there will be a market for deposits countered for the market to borrow the capital. People could expect predictable interest rate, and those who wanted to borrow could expect a place where to go and get a business loan.

Those who could get the business loan would actually have to spend it, using their best abilities, weighing all the risks, so that to minimize the risk of loss, maximize the net added value of the project and the benefit to the entrepreneur.

So here is the contrast:

- In an inflationary economy money is spent by the most inefficient player - government. Other than the government people would probably be less inclined to invest in long term projects.

- in a stable economy, with negligible (say zero) inflation rate, people actually save money (the capital). Only the best projects get investment and there is a low probability to mal-investment (such as bridge to nowhere in Alaska).

If someone will say that low inflation is not workable, I can say that prior to WW1 UK, Spain's, Russia's money were pegged to gold, and their economies were growing. 2% interest rate on deposits was considered a healthy return.

Re:Do not get fooled by Keynesian arguments

[ericlondaits]

In #2 I state things as I see them... I am not saying it's good or desirable... just the way it's being going.

We've had a yearly 25-30% inflation for some years now. Prices rise steadily, so do salaries, and as long as they're in sync people get by. Business incorporate this percentage in their calculations... in contrast to hyperinflation scenarios where inflation is unpredictable and everything freezes for a while. Buying in installments (with "zero interest") is a big thing in Argentina and for the last years we've been able to buy appliances, clothes or plane tickets in 12 to 24 fixed installments, which talks a lot of the trust banks have that things will continue the same.

Middle class in Argentina DOES NOT invest (exceptions exist, of course). They've been burned by banks before (last time in the 2001 crisis when there were restrictions to take money out of the bank and when deposits in dollars where converted to pesos for a big devaluation of the peso). Middle class in Argentina has two traditional places to put the money:

- Hidden "under the mattress" in dollars
- Buying property

Because of the high price of the dollar and the restrictions to acquire currency these options are only attractive to the higher sector of the middle class... Standard bank accounts don't have an interest rate that helps with the inflation, or anywhere near it, so whatever is left after paying the bills you spend... ... trips are a big thing right now... my Facebook account has been full of people travelling for the last couple of years. This is because we can pay for the tickets in installments, the cost of food and other expenses is not too far from the prices in Argentina, and you can buy technology, clothes, etc. at lower prices.

Re:Do not get fooled by Keynesian arguments

[cheesybagel]

"zero interest" articles are usually priced with the value of money in mind. In a country with inflation 10 pesos today will be worth 10-10*.25 or whatever pesos in a year. Don't think they do not take that into account.

Re:Do not get fooled by Keynesian arguments

[hjf]

LOL. 12 installments ? hahahahaha only because the government stepped in and it's subsidizing them. Before "Ahora 12" you only had up to 6 "cuotas". Which talks a lot of the trust banks have.

Re:Do not get fooled by Keynesian arguments

[hjf]

Zero interest is a "service" offered by credit cards, to their CLIENTS. A credit card client is the cardholder. The merchant? The merchant is just scum.

When you sell *any* product in fixed installments, Visa pays you the full amount 48 working hours later, and discounts the interest rate. here you can see the rates: 45% annual. That table lists the "coefficient" you should mark up:
If you want to get paid $100 for an item that you want to sell in 12 payments "zero interest", you have to see the row with the 12, the value of the coefficient is 1.2571. So you multiply 100 * 1.2571 = $125.71. If you enter this amount, Visa will end up paying you $100 (minus the 3% transaction fee, the 21% VAT on that fee, 3.5% provincial tax, and 0.6% that the government collects in every non-cash transaction)

People don't know you can make a "minimum payment" (minimum payment doesn't apply if you have an installment plan: you have to pay in full every month's installments, and you can make the minimum payment in regular 1-payment operations).

I don't accept credit card for less than 2 payments, because Visa ,in this case, takes 28 working days to pay me. With >2% monthly inflation (plus all of these other discounts i told you before), you can see it's not convenient for me to do it.

Re:Do not get fooled by Keynesian arguments

[cheesybagel]

In other words they take inflation into account as expected.

Re:Do not get fooled by Keynesian arguments

[aBaldrich]

In other words, people don't have any hopes left. Low class people just don't care to progress (less than 40% finish highschool, unemployment in 20-somethings is huge). Middle class people don't have a future: you can't own a house unless you inherit one. High class people are usually those who in their late 20s migrated to the first world and got money from outside. One-percenters multiply they richness, bank stock has gained value like never before, etc.

The problem is that, for the last 90 years our people have consistently voted for interventionist governments. You can see the economic trends. In times of freedom, people from all over the world flocked to our country because we had plenty of work, extremely high salaries (compares to other countries) etc. But then people started to vote for Robin Hood State. Stealing from all, giving something to the poor, and keeping a nice cut. We had Fascist-Robin-Hood ("peronism", and military dictatorships) and we had Nice-Republic-Robin-Hood ("radicalism").

When the majority rules, the country gets the government that the majority deserves.

Re:Do not get fooled by Keynesian arguments

[cheesybagel]

I did the math once. It takes a decade of work to get enough money to buy a house here. That's assuming you save it all and don't spend a dime on things like food, clothes, transportation, housing, etc. In my grandfathers time, who bought the house may parents live in, he saved the money for it in two years while working two jobs. That's the difference. It used to be like 3 years salary and now it is 10.

Low people don't care to progress because they know the chance of them actually succeeding is near that of winning the lottery. So why bother.

You are wrong though. The living standards in the US started getting worse when personal income taxes for the rich went down and the loan rates went down.

When loan rates go to zero house prices tend to infinity. Also back when personal income taxes for the rich were higher they would rather keep the money in their corporations and increase net wealth creation via empire building.

Re:Do not get fooled by Keynesian arguments

[NicBenjamin]

>

Lets assume, for the sake of the argument, that there is no inflation, there is a predictable interest rate and the people can save it.

You're hilarious.

This is Argentina we're talking about. There is no such thing as either "savings" or an "interest rate."

You spend whatever you get because the last time you put your money in a bank it got confiscated, and if you have a big pile of bills on the floor the tax man might notice.

Re:Do not get fooled by Keynesian arguments

[NicBenjamin]

... trips are a big thing right now... my Facebook account has been full of people travelling for the last couple of years. This is because we can pay for the tickets in installments, the cost of food and other expenses is not too far from the prices in Argentina, and you can buy technology, clothes, etc. at lower prices.

Which explains why the black market exchange rate is so bad.

To go on a trip you need dollars or euros, which means high demand for those currencies. Since there's very little reason for a non-Argentinean to buy Pesos (except, perhaps, trips to Buenas Aires) there's low demand for pesos.

Which means that it will take a lot of pesos to convince a dollar-owner to give up his dollar, and quite a few people will pay his price.

Re:Do not get fooled by Keynesian arguments

[ericlondaits]

For a couple of years we've had a 35% tax (actually an advance on future taxes, but it works as a tax for most people) on purchases made through credit cards with foreign currency. That added to the fact that sale of dollars in the official exchange market is heavily restricted... so normal people use three different exchange rates:

- Official Dollar (restricted): currently at ARS 8.95
- Credit Card dollar (+35%): currently at ARS 12
- Black market dollar: currently at ARS 12.65

Add that to heavy restrictions on import of goods.

All these measure were put in place by the government to lessen the outflow of dollars and attempting to balance it with the dollars received through exports.

I *THINK* that the government's understanding is that if the official dollar were high (instead of the "middle class dollar", i.e. credit card and black market) that difference would mostly go in the pockets of exporters... and we know enough not to believe in the trickle down fairy tale.

Re:Do not get fooled by Keynesian arguments

[NicBenjamin]

Genuine Argentinian government logic: perfectly coherent, but not connected with reality in any way whatsoever.

Italy was poorer then Argentina per capita back when started this strategy. They blame their current economic problems mostly on their inability to go back to it now that they're in the Euro. It's a very good strategy. In the short term exporters get rich, but it's not like it's hard to become an exporter, or get a job with an exporter.

Note that if everyone is on vacation abroad, they're spending their money abroad, not keeping it within Argentina. It's possible the government's measures are keeping more money at home then would be leaving otherwise, but from your posts and the posts of various other people who live there/stayed there on vacation/etc. I'd have to say it seems much more likely that governmental policy is driving people to hoard their cash until they can sneak it out of the country, and the government puts up with it because they want to win re-election. I suspect an Argentina with a normalish economy (ie: no recent expropriations of major foreign companies, enough foreign friends that the Vulture Funds could be dealt with, etc.) would not have this issue.

Maybe people are not desperate

[gwolf]

My wife is Argentinan, as well as all of her family, and a great deal of our friends. We live in Mexico, and travel to Argentina at least once a year.

The Argentinian exchange rate has dropped in the last year, although not as much as it happened 15 years ago — nor, by far, how it happened 30 years ago. And the local economy is far, far from hopeless— The standards of living in Argentina are quite high, most middle-class people travel outside the country regularly. As a Mexican travelling regularly to Argentina for the last five years, I have seen their life costs go from slightly cheaper to slightly more expensive — and today again slightly cheaper than ours.

My family has their savings partly in pesos, in local banks, and partly in US dollars, in the safe deposits in the bank — AFAICT, they don't have a dollarised bank account. And they have a very decent level of life. My in-laws, as an example, travelled last year one month in Europe, and came to visit for a month in Mexico, without compromising their finances.

This is the second post badmouthing Argentina in Slashdot in the past few weeks. I know I am answering with some (few) personal data points, but that's in the end how reality is: A huge collection of individual stories. And they are far from as dire as you portrait them.

Re:Maybe people are not desperate

[hax4bux]

Mod up

Re:Maybe people are not desperate

[Matias D'Ambrosio]

I agree, I'm from a middle class Argentinian family now living in the US, and the standard of living in Argentina is pretty good, in some ways worse and some ways better than the US. I never had to worry about healthcare or education costs in Argentina.

Bitcoin in Argentina? At the very least you need everyone to have a smartphone, and smartphone penetration in Argentina is nowhere what it is in the US, plus 4G barely exists outside Buenos Aires from what I've heard. Cash is really convenient, and an electronic currency would kill all kinds of under the table deals, so it's an obvious no go.

Re:Maybe people are not desperate

[xvan]

plus 3G barely exists outside Buenos Aires from what I've heard.

TFTFU

Re:Maybe people are not desperate

[gwolf]

Wrong. My wife is from Paraná, Entre Ríos. They have pretty good 3G coverage there. I was for a couple of weeks in Rosario, Santa Fé, which has also great 3G coverage. Of course, Rosario is a big city, and Paraná is after all a central province capital... But it is clearly not just Buenos Aires.

Re:Maybe people are not desperate

[ChunderDownunder]

Here's a coverage map - http://opensignal.com/coverage...

Most of the population centres, it seems.

I wonder if they have managed to produce any *decent*, affordable Android phones out of Tierra del Fuego yet. That silly electronics tax that just hikes up the prices of international brands, so I'd be curious if they have produced quality tech competitive of what's coming out of Asia. They have the same 240V wall sockets as here in Australia - so I could use my electrical devices there but allegedly the wiring was crippled slightly different to disallow exporting Argentinian goods to Australia without regulatory oversight? Well it's all micro-usb now anyway, at least for phones...

Re:Maybe people are not desperate

[NicBenjamin]

Yeah, but keep in mind Mexico is moving up. Argentina is moving sideways. Has been for roughly a century. They're roughly equal in income at the moment, largely because Argentine politics suck. As soon as Argentina finds a solution that works they go crazy, implementing ever stricter versions of it, until it becomes clear that the version they had three years ago was too far and they're all fucked now. At this point they start blaming foreigners, posting melodramatic videos about grandmas prostituting themselves on YouTube, etc. etc. etc. Then the President loses an election, the new President does the opposite, in ever stricter versions, etc. etc. etc.

So your middle-class family is fine, and will likely remain fine. But they ain't gonna be moving up on the income ladder, and the folks who aren't middle class won't be entering it.

Unless they move to Mexico.

Re:Maybe people are not desperate

[gwolf]

My Argentinian family has employed, for house cleaning duty, several people over the years — It's sadly common in Latin America. They have kept in touch with several of those people and their families. Many of their children have pursued higher education, and social mobility is something clearly possible in Argentina. Of course, social mobility also means you can go down — But being born in a poor family in the province does not mean your children will as well.

Here in Mexico it's sad and frankly depressing. Social mobility is close to nil; poverty and lack of opportunities are self-perpetuating. I know a couple of people who have managed to break the "curse" of their history, but it's really, really hard to come by.

Socioeconomic distances in Argentina are way shorter. There are rich and poor people, yes, but most rich people are not *that* much richer and secluded, there is much more social interaction, less ghettoization. That leads to a healthier society.

Re:Maybe people are not desperate

[xvan]

Nothing involving microelectronics is produced in Tierra del Fuego. Goods are brought from Asia but ensembled here.
Then raises Importations artificially raised to keep those "home build" products competitive.

The reason to do that is geopolitical (populate Tierra del Fuego, to keep it out of Chilean ( and UK?) hands.

Re:Maybe people are not desperate

[NicBenjamin]

Just because it's a nice place to live doesn't mean it's not insane. Uruguay manages to have all of Argentina's advantages without the BS exchange rate mechanisms, frequent fights with foreign businesses, etc.

As for social mobility, you're taking a very middle class view of both opportunity and poverty. The working class of Mexico did not have a lot of opportunities to work for a maquiladora prior to NAFTA. Now they've got those opportunities. The ones who don't want to do that can just do what their parents did, but make more money at it because you've got customers from the maquiladoras. Yeah Mexico's poverty rate is astronomical (45.5% according to google), but it's dropping (it was above 46% last year) because you have economic growth. Argentina's is lower, but is virtually impossible to quantify because government statistics are not trustworthy. It's probably above 20%.

Basically what's happened is that in about 1900 the Argentines had a great thing. They were rich. They had no troublesome ethnic or racial minorities (much of Mexico's impoverished 45.5% are descendants of what America would call Native Americans) to complicate their economic situation. And they've managed to maintain that. Meanwhile most of their neighbors, and even many countries that were desperately poor in 1913 (Italy is the most often mentioned, but all of Eastern and Central Europe was poorer then Argentina then, and France and Germany were both comparable to Argentina in per capita terms) have managed to catch up.

Re:Maybe people are not desperate

[PPalmgren]

Large companies are currently afraid to do business in Argentina because of the political climate. Its viewed in a similar fashion to Venezeula - you can invest there and make a good return, but your assets might vanish tomorrow. Sadly, this may become a self-fulfilling prophecy - economic pain by the fear results in the seizures companies fear so much.

The real solution to Argentina's woes.

[MouseTheLuckyDog]

Is to kick out that crazy government and put in one that is good at running the country.

Re:The real solution to Argentina's woes.

[baka_toroi]

put in one that is good at running the country.

Yeah, uhm, that's very difficult to accomplish, to say the least.

they are traditionalists

[Anonymous Coward]

They are allready resorting to the traditional solution for when their enconomoies in the shitter bang the war drum and invade the Falklands.

Re:they are traditionalists

[TWX]

Heh. Government spending for war materiel is an economic stimulus. Along with devaluing currency it's one aspect of what a government can do to affect the amount of money in an economy and to drive how quickly its spent. If Argentina doesn't actually invade then it could help them. If they do invade I expect the militaries of the Crown to cause much more economic damage to Argentina than it would have suffered with no action at all, even if they limit their targets to purely military ones, like ships and bases and aircraft. Ships are expensive.

Re:Sound Money

[queazocotal]

Great.
Gold and silver coins as money.
None of this electronic crap.

Alas...
Taking the very simplest definition, and only replacing all cash with precious metal equivalents.
There is currently around 4 trillion dollars worth of currency in the world.

There is - just about - enough gold totally mined ever - to do this at current gold prices, but only by a factor of two.

But replacing pocket change and what's in wallets is the tiniest, tiniest fraction of the total global money.
If you required a 1:1 gold backing for every thing, then congratulations, you've just shifted a _shitload_ of money around, and made people with small jewlery collections quite wealthy.

The price of gold has gone up by 10-40 fold.
If the USA was the only country to do this, then you've just made mines elsewhere _ridiculously_ profitable, and smuggling is the new major industry. Forget drugs.

Re:Why do we keep getting these Argentinian Econom

[gwolf]

Yes, you have a point — And specially in point #3. I live in Mexico, where few people can afford to buy a house as well. And there's a big difference favoring Argentina: The rental contracts. Legal rental contracts are always for two years or more, and with prices fixed in pesos (this means, you know how much you will pay for your rental two years from now). Although this won't allow you to buy a house, it does allow you to mid-term plan your finances better than in most of our continent.

Never gonna happen under Kirchner Kleptocracy

[Chas]

Seriously.

She honestly doesn't give a shit about her people.
She just wants her percentage of whatever can be bilked out of the populace and world in general.
And her solution to every problem is to ignore its very existence. Entirely.

Basically Argentina needs a bloody revolution and then a general election.

Likely that'll never happen though.

Re:Never gonna happen under Kirchner Kleptocracy

[ChrisMaple]

Basically Argentina needs a bloody revolution and then a general election.

I took a quick look at Argentina's history on wikipedia. It looks like they've tried the revolution-election thing three times.

Bloody revolutions tend to produce a scared populace that doesn't care so much about the quality of a post-war government, as it does about having the violence end. Repression and universal theft will look positively attractive. Good election results require a calm, rational, and informed electorate.

Re:It *is* news for nerds

[baka_toroi]

OK, I'm an Argie and I don't like this government. But that link you posted couldn't be any more biased. Why should I trust them? Under that same domain you have this article: http://www.heritage.org/events...

I can't and I won't ever trust a website that claims "they [the U.S. and Israel] must remain steadfast allies if they are to overcome the serious challenges threatening both nations in today’s world." This is an 'us vs. them' kind of bias. They can shove their economic freedom index up their ass as far as I'm concerned.

Re:Gold and Silver?

[MightyMartian]

Yes, instead you create an inflexible currency system based on assigning arbitrary value to a physical commodity.

Outside of its industrial uses, gold has no more intrinsic value than a lump of dog shit. I mean, why not peg your currency to Renaissance paintings?

NSA-like spying on steroids

[mi]

They don't mean "barter", when they talk of "cashless society" — and it is the Statists' prescription for everyone , not just Argentina.

The electronic transactions will be subject to the same surveillance our phone-calls already are — who (other than the totalitarian Statists) would seriously consider it, is a mystery to me.

Re:Gold and Silver?

[goose-incarnated]

No one's ever thought "hey maybe the government and bankers are using fiat currency system is screwing us all and we should go back to the monetary system that we've had for most of recorded history"?

A lot of people will point out the short comings of a precious metal money supply but it has one big advantage: You can't create gold through quantitative easing or other manipulative accounting tricks. You actually have to trade goods and services in order to accumulate it.

That's the problem with gold and silver - you have to actively trade goods and services in order to accumulate it. What happens when technology and human innovation and efficiency proceeds at a rate several orders of magnitudes greater than the mining of gold and silver[1]? With gold/silver you cannot match value against currency in a stable and consistent manner. With fiat money you can.

[1]Like with the mass-production of the transistor, or the last two decades of efficiency improvements due to computers, etc.

Paintings?

[Anonymous Coward]

Because the dang things get creases when I fold em up to put in my pocket.

If both are backed by the same entity....

[ewhenn]

If both are backed by the same entity, specifically the faith of government X, why the hell should their e-currency be any more valuable than their paper currency? If I was lying to you what difference would it make if I wrote it down on paper or sent it via text message?

Sad...

[koan]

As if it will be any better with digital currency.

Re:Sound Money

[magarity]

they chose to make issuing paper money illegal - "No State shall ... make any Thing but gold and silver Coin a Tender in Payment of Debts;..."

the key word being "State". Whenever reading the Constitution, pay attention to whether it specifies "Congress" or "States". The item you've quoted specifies States may not, meaning the Congress may. Other items specify Congress may not, meaning States may. The terms "Congress" and "States" are not just interchangable, generic terms for "government" in the Constitution.

Really surprised to see this story

[Espectr0]

Argentina isn't desperate and is actually holding on their own, their biggest issue is inflation which is about 25%. So i am surprised to see this story being about Argentina and not Venezuela

Now we venezuelans are indeed in much trouble. The inflation is so high the government doesn't publish it anymore, but is expected to be near 200% per year. Every item you can think of it's scarse since most of them are being imported and the government ran out of dollars since oil price has gone down (and corruption gets getting higher)

We get fingerprinted at supermarkets so we aren't able to buy twice the same item in a week, yet there are people that pay the government and get items and resell them on the black market. I am talking mostly about food, toiler paper and most supplies.

A car here costs more than an apartment, for another example.

Conversion rate is nearly 320 bolivares per USD, while 3 years ago it was about 20 bolivares per USD

Re:Really surprised to see this story

[DigiShaman]

Honestly. Guns, ammo, water, and MREs. You need to be a "prepper". Your nation will have a bloody revolution, and you will want to protect yourself. Can't say what the outcome will be, but what can't go on forever, won't!!!

Re:Really surprised to see this story

[NicBenjamin]

What angle could a geek post on Venezuela?

Argentina has a large enough middle class that a cashless system based on geek-related crypto-currencies is possible. They've all got smartphones.

Venezuela's problem is that you have a) oil wealth, b) a relatively small number of whitish middle-class people with the money for a smartphone, and c) a bunch of really poor, less whitish, working class folks with very little understanding of economics. Without a very good method of dividing up the country's wealth, you ended up with the working class saying "fuck it," and using their superior numbers to legislate income equality. This has led to massive economic problems, which will only be solved permanently if the guy who replaces Maduro can convince the whitish folks from b) to pay more in taxes then they did pre-Chavez, and the slightly-less-whitish folks from c) to accept less in government benefits then they did under Chavez.

Re:Sound Money

[NostalgiaForInfinity]

he item you've quoted specifies States may not, meaning the Congress may.

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.

Maybe Solution?

[Greyfox]

They and Greece could convert to the Vietnamese Dong. The people are getting a whole lot of Dong anyway, so they may as well make it official!

Dude, again?

[keko]

This is the second "Argentina is desesperate" article in a few weeks. We (Argentinians) all know where this comes from (and no, I'm not that paranoid): Thomas Griesa and hedge funds, led by Paul Singer. This is just another paid article stating that the country is desesperate, while it's quite the opposite. We just live by with our local currency, there's no "desperation", public health works, public education works, national debt is being reduced, employment is up. Yeah, we have our whole deal of issues, that are *very* far from desperate. There will be presidential elections this year. I'm not very optimistic, the huge propaganda machine (which includes this article) seems to be working, 3 of 4 of the running candidates are known for favoring Griesa and Singer and putting the country back 30 years. The fourth one is the guy with less chances.

Written like someone from Europe

[Anonymous Coward]

Written like someone from Europe.
Have you ever been to Argentina?
They buy houses with CASH there. I'm serious.

After you get a loan for the place, you go to the bank, get CASH in a bag or two, hire a few security guards to walk with you to the street, then all 3 of you get into a cab for the drive to the closing.

Sometimes people are robbed just outside the bank after picking up their life savings. Clearly, someone tipped off the robbers.

Oh - and many people there don't use credit cards or anything except cash for all their needs outside BsAs. I'm not going to say that there are places where digital currency will work, but truck drivers and people working in small family-run businesses around the country will still need cash.

And how will they pay for the hookers that are part of society there? I take that back - they already accept credit cards, I hear.

Heck - in my travels around Argentina, getting drinking water from a tap was enough of a challenge. They did have internet everywhere I was, but I was only on well-travelled tourist places. Half a mile off that path - no electricity, no potable water, no internet.

Re:The author has never been to Argentina

[hjf]

as an Argentinian: I agree with this guy. I do business transactions with my kind all year long. And they want to fuck you up every chance they get. It's just ridiculous. So, you get fucked up, and lose money. The only way to make up for it is just to fuck someone else up.

Re:The solution for Argentina is competent governa

[liquid_schwartz]

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.

Based on the record power grabs by the executive branch in the past couple administrations the US luck is fast running out. We've worked our way from free country to police state light. Sadly I expect in my lifetime that will become a full police state or, as I like to say, a banana republic.

Live in Argentina five years ago

[Anonymous Coward]

Five years ago, I lived in Argentina when it was 3.8 pesos/dollar and not one single person approached me about changing money. To see how far they gone down to the toilet bothers me for my friends still there.

Personally, I don't think they'll trust cashless. The day that they overnight, devalued the currency 3 to 1 is not forgotten. If you had dollar accounts, they devalued your dollars by taking them at the 1:1 ratio converting them into pesos, then devaluing it by 1/3rd. They also well remember "corralito" (little corral) when they wouldn't give you access to your money and limited how much you could take out. My friend had money saved but couldn't get at it and had to sell stuff and borrow to get by when he had a decent bank account.

They told me that when I come back to visit, bring dollars, they'll take care of me :-).

Re:Gold and Silver?

[ChrisMaple]

Good currencies are divisible, portable, a store of value (which make it stable), and not counterfeitable. Renaissance paintings fail at least 2, and possibly all 4. Dog shit has such low intrinsic value that enough to buy a magazine would not be portable.

In addition to industrial uses, gold is used in jewelry and other decorative applications, and in science. Technically, is is an excellent conductor, extremely chemically resistant, and extraordinarily ductile. It is scarce, which helps make it stable.

Yes, instead you create an inflexible currency system based on assigning arbitrary value to a physical commodity.

Inflexibility is precisely a property currency should have. A flexible currency is like a flexible law: a tool of tyrants. The value of gold is largely inherent; it is not having an arbitrary value assigned to it, a value is assigned to a currency by giving it a fixed relation to gold.

You have a poor understanding of value, so I will amplify the last point. When I say gold costs $1200 a troy ounce, I am not naming the value of gold, I am naming the value of a dollar.

Re:Gold and Silver?

[ChrisMaple]

That's the problem with gold and silver - you have to actively trade goods and services in order to accumulate it.

That's not a problem, that's a good thing.

What happens when technology and human innovation and efficiency proceeds at a rate several orders of magnitudes greater than the mining of gold and silver[1]? With gold/silver you cannot match value against currency in a stable and consistent manner. With fiat money you can.

Different goods change prices in different directions. If a fiat currency tracks bread, it won't track transistors.

The controllers of a fiat currency, while technically capable of keeping its value stable, in practice never do, and don't have any motive to.

With gold/silver you cannot match value against currency in a stable and consistent manner.

When gold is the currency, the value IS the currency, the match is perfect.

Re:Sound Money

[NicBenjamin]

Reread your Constitution. Article 1, Section 8, on the list of enumerated powers:
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

In 1819 McCulloch vs. Maryland established that printed paper money was valid due to this clause and the "necessary and proper clause." ie: the Courts ruled that it was both necessary and proper for the Feds to "coin" paper bank notes.

Cashless Society=Government Excuses to Steal

[hackus]

with far greater control might I add.

Technology is a great idea, but not using it to centralize currency manipulation by the government to seize and loot peoples assets is even better.

Yes, a cashless society would offer certain benefits, but it would prove to be far too tempting a target by governments and criminals.

Centralization of power is always a bad idea. Decentralized everything, from countries, to militaries to commerce.

The name of the game is to minimize risk, from psychopaths who are invariably attracted to power in government jobs.

With decentralization, no way could they organize stuff like the looting they did in 2007 by the banks of some 17 trillion dollars of American tax payer money to gve to all of their banker buddies/friends.

Argentina is not doing badly

[submergingmkt]

This hysterical proposal is ludicrous, completely out of touch with Argentina's economic realities. First, for all her faults, and not withstanding the debt vultures' incredible legal chicanery, the fact is that Kirchner's gov has achieved a remarkable reduction in the country's net foreign public debt since 2004, to the point where its market value, net of reserves, is well under 50% of GDP -- the lowest level since the military junta seized power in 1976. Second, the fact is Argentina's own elite not only owns most of the remaining "foreign" debt itself, but also owns more than $400 billion of offshore flight wealth. None of this wealth is accounted for in Argentina's national economic statistics, and very little of it pays any taxes -- despite the fact that Argentina has a world wide income tax, like the U.S. So Argentina's economic problem is not now one of an unstable currency, but of its inability to tax its wealthy elites on all this offshore loot -- or to provide incentives for it to come home. Third, Argentina happens to be sitting on shale oil reserves that may well be larger than those of the U.S. All things considered, relative to its current population, it is one of the richest, most NEGATIVELY indebted countries in the world. Its currency is if anything undervalued, as are its gov bonds -- and as soon as the silly debt vulture problem is solved, and a new government is elected, the conditions may well exist for a sharp rise in inward investment. That, in turn, may require Argentina's central bank to move deftly to sterilize the inflows so that the peso doesn't appreciate too quickly. But overall, there's no reason for Argentina to repeat any of the weird experiments with monetary policy that the disastrous military gov of the 1976-83 and the mad cavallo gov of 1992-2001 ran -- policies that left the country heavily indebted, and hostage to NY judges.

Re:Argentina is not doing badly

[rch7]

Calling people who invest money in your pure economy "debt vultures" and vilifying everybody who is able to manage money better than you and has more as a result, is nothing new in this world. This always leads to nothing more but wild fights for power and freedom to steal from each other.

"... to store their savings away from government"

[LewekLeonek]

Go cashless... "...to store their savings away from government control." Ha ha ha ha haaaaa HAHAHA!

Argentina needs to use Yapese stone disks as money

[Applehu Akbar]

Argentina insists on trying to use convenient financial media like Cheerios and M & Ms as currencies. These are fun to use, but have historically lent themselves to inflation, Argentina's picturesque national sport. It should try this monetary base instead: http://en.wikipedia.org/wiki/R...

Two immediate advantages: it's more difficult for bureaucrats to add zeroes to them, and they can't be pickpocketed.

Re:The solution for Argentina is competent governa

[NicBenjamin]

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.

Based on the record power grabs by the executive branch in the past couple administrations the US luck is fast running out. We've worked our way from free country to police state light. Sadly I expect in my lifetime that will become a full police state or, as I like to say, a banana republic.

Dude, this is all designed into the system. Checks and Balances are meaningless if the a) the Executive never does anything worthy of being checked, and b) everyone is not constantly bitching/arguing about which things should have been checked.

Here's what's not designed into the system: a lawyer makes a Youtube video alleging he's going to be assassinated by the President's thugs, then he pays someone to shoot him, and shuts down the country for six months until the cops figure it out. Or the time the President ordered the Army to administer a referendum allowing him to run for a third term, and the Constitutional Court and Senate decided this was impeachable, and ordered the army to exile him. There's still some debate over whether that counts as a coup d'tat. On the one hand, the Army stormed the Presidential Palace, on the other the Supreme Court said it was ok.

In the US we avoid these things largely because we've got a religious/./slavish devotion to the Constitution, and the guy trying to get around it by framing Obama for murder or arranging a secret impeachment trial would be fucked politically. And it seems to be working pretty well in some of the bigger countries of the world (ie: Indonesia, Brazil). But in quite a few Latin American the intricate levers of power, the numerous opportunities for stupid BS fights, etc. just seem to overwhelm the political system and you get a level of bullshit unimaginable for an American.

If you had a nice, boring Westminster system you'd have less personality cult (because the dude in power would technically be subordinate to a powerless President), less bullshitty (a PM is a creature of the Legislature, so if the Senate gets pissed at the PM of Honduras it just fires him and doesn't give a shit about either the Constitutional Court or the Army), elections matter less (Obama is Presient until 2016 come hell or high water, if David Cameron or Steven Harper fuck up enough they could be fired tomorrow), much simpler lines of responsibility (there's no ability for the Executive to claim the Legislative screwed up, and if they'd only supported that bill he'd wanted [Bad Thing] would have been avoided if the Legislative and Executive are the same guy), etc.

Re:Sound Money

[NicBenjamin]

That was always the intent in certain areas. In currency, defense, and foreign affairs in particular the Feds were supposed to completely dominate everything so that an ambitious Governor of South Carolina couldn't trade Charleston to the King for a Ducal coronet.

In economics the problem is that so many states really aren't viable economic units. You can't have anybody but the Feds decide how to divide up the Colorado River. State-based regulation of air pollution would be even stupider. Every corn farmer is sending his product to Chicago, and that just doesn't work if Nebraska has different rules then Kansas. Militarily there's no way Kansas could have a well-armed militia. They'd need an Air Force, and they can't afford it.

Life happened, and a lot of the Founders limits on Federal power (and Presidential power) just stopped being particularly meaningful.

Re: Sound Money

[ragingbull1965]

Gold coins are impossible to counterfeit. Try searching the internet for an example of a fake coin that has the proper size and weight. It doesn't exist. This is because gold is way heavier than everything else except tungsten and uranium. Uranium is more expensive, and tungsten is too brittle to stamp with an image. You can only use tungsten to make fake gold bars because those aren't stamped. You can verify a gold coin with a cheap plastic scale.

Unfortunately, gold bugs don't realize that gold isn't used to transact any more, not because of regulation, but because it sucks compared to digital currency because you can't spend it at a distance to buy things online. Using a gold-backed debit card puts you back in the same position as government currency because you have to trust the issuer that your gold is there, and you are actually just using digital currency to pay. Bitcoin was the first digital currency to eliminate this counterparty risk.

Re:Sound Money

[NostalgiaForInfinity]

In economics the problem is that so many states really aren't viable economic units. You can't have anybody but the Feds decide how to divide up the Colorado River.

Sure you can: through private property rights. In fact, mismanagement by the Federal Government is primarily responsible for the sorry state the Colorado River is in. The air is similarly mismanaged by the Federal Government.

Militarily there's no way Kansas could have a well-armed militia. They'd need an Air Force, and they can't afford it.

I don't see what exactly you think Kansas needs an air force for. Almost all of our military throughout the past hundred years has been defending the ill gotten gains or cleaning up the messes created by our colonialist, imperialist "allies", with the result that we now have a big target painted on our backs.

Life happened, and a lot of the Founders limits on Federal power (and Presidential power) just stopped being particularly meaningful.

Those limits are as meaningful today as when the US was founded. Unfortunately, European-style worship of totalitarianism and government-by-elites has infected the thinking of many Americans.

Re:Sound Money

[NicBenjamin]

In economics the problem is that so many states really aren't viable economic units. You can't have anybody but the Feds decide how to divide up the Colorado River.

Sure you can: through private property rights. In fact, mismanagement by the Federal Government is primarily responsible for the sorry state the Colorado River is in. The air is similarly mismanaged by the Federal Government.

The funny part is you think you're disagreeing with my point.

I said nothing about how the Feds manage the water. It could be a bureaucratic process. It could be private property rights.

If it's private property rights that means a Court. The only Court that can adjudicate when a rancher from Colorado is screwing as rancher from Utah by taking too much water is the 10th Circuit.

Militarily there's no way Kansas could have a well-armed militia. They'd need an Air Force, and they can't afford it.

I don't see what exactly you think Kansas needs an air force for. Almost all of our military throughout the past hundred years has been defending the ill gotten gains or cleaning up the messes created by our colonialist, imperialist "allies", with the result that we now have a big target painted on our backs.

So their job is to balance the Federal government, potentially by rebelling, but they don't need an Air Force?

What's your head like? It sounds like a very nice place where things are so much simpler then real life.

Life happened, and a lot of the Founders limits on Federal power (and Presidential power) just stopped being particularly meaningful.

Those limits are as meaningful today as when the US was founded. Unfortunately, European-style worship of totalitarianism and government-by-elites has infected the thinking of many Americans.

No they aren't.

In 1789 we had a minuscule military. Congress confirmed every officer in it at actual hearings. This meant that the guy who commanded a ship was answerable to both Congress and the President. Today we have 310 million people. Even if we went to a tiny military we'd have thousands of officers, and Congress just isn't designed to keep track of 1,000 Second Lieutenants. They can still do shit like refuse to confirm the promotion of Kirk Lippold to Captain, but it's no longer a way for them to meaningfully control the military on a day-to-day basis.

Re:Sound Money

[NostalgiaForInfinity]

I said nothing about how the Feds manage the water. It could be a bureaucratic process. It could be private property rights.

If it's private property rights, then it's not "the feds managing the water". The feds may (or may not) be involved in enforcing those private property rights, but the management decisions are taken out of their hands.

That's important because it is the management, i.e., decisions about who may pollute and who may use the resources, that is subject to massive lobbying and crony capitalism and that government is incapable of performing well.

If it's private property rights that means a Court. The only Court that can adjudicate when a rancher from Colorado is screwing as rancher from Utah by taking too much water is the 10th Circuit.

No, it actually means two courts and three private parties: the party taking the water, the party who bought the water, and the party who owns the water. The owner of the water is in breach of contract with the rancher in Utah, and the victim of theft at the hands of the rancher from Colorado. All of this can be handled with simple property law in state courts.

The only reason this is a problem right now is because there is no private property owner for the water, and instead governments are managing water rights in response to lobbying and political pressures, and trampling all over other people's rights in the process.

In 1789 we had a minuscule military.

And we should again.

Re:Sound Money

[NicBenjamin]

I said nothing about how the Feds manage the water. It could be a bureaucratic process. It could be private property rights.

If it's private property rights, then it's not "the feds managing the water". The feds may (or may not) be involved in enforcing those private property rights, but the management decisions are taken out of their hands.

That's important because it is the management, i.e., decisions about who may pollute and who may use the resources, that is subject to massive lobbying and crony capitalism and that government is incapable of performing well.

If it's private property rights that means a Court. The only Court that can adjudicate when a rancher from Colorado is screwing as rancher from Utah by taking too much water is the 10th Circuit.

No, it actually means two courts and three private parties: the party taking the water, the party who bought the water, and the party who owns the water. The owner of the water is in breach of contract with the rancher in Utah, and the victim of theft at the hands of the rancher from Colorado. All of this can be handled with simple property law in state courts.

Bullshit. Let's say you set up this system and there's a drought year. There's less water then has been sold on the private market.

The Court in Utah can't have jurisdiction over a theft that took place in Colorado, and can't force a Colorado rancher to appear. The Judge in Colorado is subject to retention elections. He isn't gonna rule farmer Bob is evil for taking his full allocation.

But even that's assuming a Federal rule of some sort. Why? Because to sue for property rights you have to establish standing, that means you have to show that there's a very concrete dispute between you (and only you) and your opponent (and only him). If you;re one of 300 farmers in Utah with a cut of the river, and one of 200 farmers in Colorado is taking more of his cut then he should, that's a harm shared by 300 farmers in Utah and everyone downstream of that guy in Colorado. Under current private property law you do not have the right to sue. So no, under state private property law you cannot deal with water rights on the Colorado River.

There needs to be a Federal rule (probably a statute), disputes need to be resolvable in Federal Court, and the Federal Marshal's service has to enforce the rulings.

Re:Sound Money

[NostalgiaForInfinity]

The Court in Utah can't have jurisdiction over a theft that took place in Colorado, and can't force a Colorado rancher to appear. The Judge in Colorado is subject to retention elections. He isn't gonna rule farmer Bob is evil for taking his full allocation.

And that is as it should be: the Colorado rancher who took too much water didn't violate the property rights of the Utah rancher, he violated the property rights of the owner of the body of water.

Under current private property law you do not have the right to sue. So no, under state private property law you cannot deal with water rights on the Colorado River.

You aren't listening; as I was saying, to resolve this with private property rights, there ought to be three private parties. The problem we currently have is that there are only two private parties, while the water itself is "owned" by the federal government and managed subject to massive lobbying and crony capitalism.

Re:Inflation

[queazocotal]

'the pain will be staggering' - and also not helpful.
You've just vastly incentivised gold-extraction from seawater, mining gold in conflict areas, burglary, and shifted truly insane amounts of money to the indian community who like to hold wealth as gold.

Excellent discussion.

[illtud]

I don't come to /. for the stories - I come for the comments. I don't think this story was any good, but I was educated a lot by the input from the Argentinians - not a voice I hear elsewhere in my online life.

Thank you Argentinian contributors - your insights are very welcome.

As it happens, I'm posting from Wales, and this year it's the 150th anniversary of the Welsh settlement in Patagonia, the 'Gwladfa' - there are still many hundreds of Welsh speakers in Patagonia, and many thousands of people of Welsh descent.

See http://www.glaniad.com/ & if any Argentinians are in the UK soon, the National Library of Wales are opening a major exhibition in Aberystwyth about the Welsh colony in Patagonia on the 23rd of May.

Re:Sound Money

[NicBenjamin]

So who is this mysterious third "private party"?

If it's a for-profit entity you've just sold the water on the Colorado river to a bunch of shareholders, which not good.

If it's a non-profit it has to be one with a Federal charter, because it's operating in multiple states. It's got a remit that includes law enforcement actions because it's deciding who gets to use river water. Many, many hated Federal Agencies are not that different in structure then this. For example, there would be very little difference between this and the FCC.

Re:Sound Money

[NostalgiaForInfinity]

So who is this mysterious third "private party"?

It's no more "mysterious" than a home owner's association.

If it's a for-profit entity you've just sold the water on the Colorado river to a bunch of shareholders, which not good.

I think a for profit would be very good. But in practice, the for profits and not for profits are not all that different anyway.

If it's a non-profit it has to be one with a Federal charter, because it's operating in multiple states. It's got a remit that includes law enforcement actions because it's deciding who gets to use river water. Many, many hated Federal Agencies are not that different in structure then this.

Private ownership is indeed not very different in structure from utilities and public agencies: it has rules, votes, adjudication, and enforcement. Where it is different is in terms of objectives. Public agencies satisfy the needs of special interests and powerful lobbies; private owners can't be influenced that way, they simply do business with whoever has the greatest need for what they are providing.

Re:Sound Money

[NicBenjamin]

Homeowner's associations aren't for-profit. And it'd be very hard for anyone who didn't read the actual case law to know the difference between them and a governmental body that happens to be totally unbound by the Constitution.

A for-profit River authority would be even more subject to lobbying and crony capitalism then the Feds, because you could simply buy the organization and use it to put your rivals out of business.

Re:Sound Money

[NostalgiaForInfinity]

A for-profit River authority would be even more subject to lobbying and crony capitalism then the Feds, because you could simply buy the organization and use it to put your rivals out of business.

That's not "lobbying" or "crony capitalism", that's putting your money at risk in a business. The problem with lobbying and crony capitalism is that people get money from the government and tax payers without either working for it or investing their own money.

And if you're concerned about "cornering" or "monopolizing" the water market, there are many potential sources of water, so that seems like a small risk. In addition, consumers pretty much already pay monopoly prices anyway (subsidizing big water guzzling agribusinesses).

And it'd be very hard for anyone who didn't read the actual case law to know the difference between them and a governmental body that happens to be totally unbound by the Constitution.

The differences are simple and profound: private companies are legally liable for the damage and harm they do, officers of private companies have a fiduciary duty to owners, and private companies need to make a profit and can't keep borrowing indefinitely. A government agency can screw whoever they want pretty much without repercussions, it can hand out massive amounts of money to corporate buddies of politicians, and it has neither financial transparency, nor accountability, nor any interest in managing a resource responsibly because nobody's money other than the tax payers' is at stake.

Re:Sound Money

[NicBenjamin]

A private companys is by definition not managing things so that the people get the best use of their resource, it's managing things so that it's owners personal well-being is maximized. That could mean either a) maximizing revenue in the short term by ignoring long-term planning, b) finding ways to put competitors to the owners out of business, and/or c) engaging in the owners ideological hobby horse.

It is by definition less transparent then the government because private corporations only have disclosure requirements if they're publicly traded, and since there's no Congress to keep them honest they're notorious for shading things.

For example, let's say the owners decide that global warming is a great threat to their business, and therefore decide to dramatically cut the water allocation to anyone who is using it to raise cattle. Which will incidentally create a huge allocation that the largest shareholder's tomato farm could use. Depending on the exact wording of the contract the ranchers could lose their entire allocation immediately. They're definitely screwed whenever the next contract is negotiated.

The minutes of the meeting where the decision was made can't be FOIA'd because they are private records. Information on whether the company is telling the truth that the tomato farm is paying more then the ranchers is impossible to get without a lawsuit, which may (or may not) be possible under the exact text of the relevant contract, and won't help them anyway because cattle need water every day and they ain't getting none during the lawsuit. You've established there's no Federal legislation in this at all, which means Congress can bitch/moan/and actually do jack-squat.

Re:Sound Money

[NostalgiaForInfinity]

A private companys is by definition not managing things so that the people get the best use of their resource, it's managing things so that it's owners personal well-being is maximized.

By definition, a private company is managing things so that people get the best use of their resource: they sell the resource to the buyers willing to pay the highest prices, and they are able to pay the highest prices because they are putting the water to the best use.

You seem to think that central planners in Washington have a better idea than the market what to do with the water. If they know that for water, why not for iPhones or hourly rates for plumbers? If the central planners in Washington (or the states) are so brilliant, why not switch to a completely centrally planned economy then? Oh, right, because they never actually work in practice.

It is by definition less transparent then the government because private corporations only have disclosure requirements if they're publicly traded,

It is transparent to the people that actually matter, namely the owners. Whether it's transparent to you or Congress really is irrelevant.

For example, let's say the owners decide that global warming is a great threat to their business, and therefore decide to dramatically cut the water allocation to anyone who is using it to raise cattle. Which will incidentally create a huge allocation that the largest shareholder's tomato farm could use. Depending on the exact wording of the contract the ranchers could lose their entire allocation immediately. They're definitely screwed whenever the next contract is negotiated.

That's a rather contrived example, but let's use it for the sake of argument. You say that as if it were a problem. If the owners believe that global warming is such a threat to their business that they are willing to forego massive amounts of revenue, they must have some pretty strong evidence. That represents rational decision making at its best: clear cost/benefit tradeoffs by people to whom the results actually matter. In contrast, allocating water through the political process means that politicians who have no money at stake get visited by a parade of lobbyists, special interests, and self-proclaimed experts, and then come up with some decision that maximizes their short-term chances for reelection. How is that possibly better?

In fact, in a rational world, many farmers and ranchers throughout California should go out of business right away; their politically motivated water allocations are irrational and effectively highly subsidized by California rate payers.

You've established there's no Federal legislation in this at all, which means Congress can bitch/moan/and actually do jack-squat.

Good! That is the whole point!

Completely different retirement schemes

[gwolf]

In the USA, and for almost ten years already in Mexico as well, retirement plans are personal: You save the money for your retirement, usually through a banking branch devoted to long-term finances. And hope for the best.

The scheme we had in Mexico until 2007, and that Argentina enjoys, is largely different: It's solidary retirement. You pay your retirement basically as a tax, it happens automatically before your paycheck arrives to your hands. What retired people receive comes from the active workers' dues.

How much do you receive for retirement? A large percentage (IIRC ~80%) of the salary you got during your last three years of employment, multiplied by the accumulated inflation/devaluation.

FWIW, Argentina moved to individual retirement schemes in the 1990s, when they followed rigidly neoliberal schemes. Retirement funds plummeted at the 2002 crisis, and –to avoid all retired people from losing everything, plus working people's money to disappear as well– they went back to the solidary retirement scheme.

Re:Sound Money

[NicBenjamin]

So a private company, canceling the property rights of landowners for a mixture of political reasons and personal greed, is by definition the highest and best use of the river water.

But the government, choosing to do so through a process that includes opportunities for all sides to make their case (ie: "lobbying") and does not involve directly enriching anyone who makes the decisions, would be illegitimate?

The more I hear limited-government activists talk, the less I believe in their connection to reality.