![]() ![]() Last year, I went to visit a friend in the Buenos Aires province who casually informed me there was $20,000 in cash hidden in their small one-bedroom apartment. “What’s not normal here? Things working well,” the person responded, laughing. When someone was describing to me their peso-to-dollar-to-mattress scheme for saving money recently, I remarked how abnormal it was. Every time I’m back, I’m always struck by just how strange the state of economic navigation is, even if I more or less still get it. I want to keep up my permanent residency in case everything goes to hell in the US, and also I go because it is fun and great. I lived in Argentina for about seven years and go back from time to time. What it looks like to live in an economy where you trust no one Worse, getting that confidence and stability back is a tough order. The fear of contagion is strong, as America’s crisis is now spreading into Europe and the risk of recession seems to be on the rise once again.Ī well-functioning economy requires confidence in the banking sector and the financial system when that confidence is eroded, the entire system becomes unstable. It’s sparked widespread concern about the soundness of the US banking system despite the federal government’s best efforts to shore up confidence. Just look at what happened in the US with Silicon Valley Bank’s collapse. If you can’t rely on your bank to have your money when you need it or your government to keep things stable, it can wreak all sorts of havoc on society and on the economy. ![]() But it’s worth backing into the bigger picture here, an issue that matters whatever the context: the question of institutional trust. There’s no one explanation on why it is the way it is, or how to fix it. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.Īrgentina, like every country, is its own unique beast with a distinct set of political, economic, and historical issues that tend to render its economy a bit of a consistently inconsistent mess. “The Argentine economy has taught the people here not to trust in institutions in general but also not to trust in one of the central institutions for the functioning of the economy, which is money,” said Santiago Cesteros, a research fellow at the University of Zurich and former consultant at the World Bank.īy submitting your email, you agree to our Terms and Privacy Notice. It’s about double the official rate - at the moment, the official exchange rate is around 200 pesos to a dollar, while the blue rate is around 380 to one. The government limits how many US dollars people can buy at the official exchange rate, if they’re allotted any at all, and so they buy them at a much higher black market rate, called the “blue” dollar. When you don’t think you can trust the bank, the currency, or anybody in charge, things can get pretty weird pretty fast.Īmid super-high inflation, people can’t bet on the value of the Argentine peso staying stable, so when they’re paid in them, they spend them fast or convert their money to American dollars - it’s unwise to keep your money in pesos for too long. It’s a coincidence that has, um, given me some things to think about.įor those unfamiliar, the ways people in Argentina navigate the day-to-day economy can sound wild. I’ve been in Buenos Aires, Argentina, for the last month, including through the recent turmoil in the banking industry in the United States and Europe. ![]()
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