Topic: Argentine leading candidate: Pro Bitcoin, anti CentralBank, wants dollarization (Read 476 times)

The world is waiting to see the countries in Latin America slowly adopt bitcoin and begin to use it either as a legal tender or together with their USD which is the most used currency in all of Latin America. But I think that it will be based on several factors such as the rate of inflation and the consensus agreement by the central bankers. As for Javier Milei, Argentines can see what is going on. They know his true motive and it is not bitcoin but to dollarize the Argentine economy. I haven't counted though but I do not think that the times he has mentioned about bitcoin is up to 100.

Assuming Javier Milei wins and he actually follows through with pro-Bitcoin policies, it'd be massive for Argentina and Bitcoin. Triple digit inflation rates are a result of the money printing related to COVID and other matters -- the central banks have been trying to fight bad fiscal policy for years. If he wants to limit central bank influence, that would mean prolonging the inflationary spike and let the economy/prices naturally recover. They would be better off than letting the banks trying to conduct an impossible balancing act of balancing the economy and interest rates.

This would be great if Argentina can get such a forward looking and modern president that might be able turn the country around. Getting rid of the central bank all together might be a bit extreme and will hopefully not going to happen, but reducing the power of the central bank sounds like a good idea. The whole issue of the Argentina economy and currency is that they tried to rely on the US Dollar in the past without securing the value itself. They were supposed to store large amounts of US Dollars when pegging their own currency to a fixed US Dollar amount. Once it became public that there aren't enough foreign exchange reserves the value dropped freely. Even today with capital bans on the US Dollar, most people still hold large amounts of it instead of their own currency. Ditching their own currency might be way too extreme again, but relying on the US Dollar will help to bring down the inflation.  The idea now is to create a foreign entity that will hold a majority of the state-owned companies. Against these assets the government can take out a lot of loans in US Dollar to try and rescue the economy. For foreign investors it's great because their loans are secured and for Argentina it would mean a much higher debt level. The only issue would be if Argentina defaults again then they could lose ownership of their state-owned companies. Not only relying on the US Dollar, but also focusing on Bitcoin is another great idea. El Salvador did it in the past and so far, the country seems on track to recovery.

They're already doing that (I guess you mean interest rates ... they're growing every month or so), but it's not enough. As I wrote in my discussion with DrBeer, the big problem is the "structural" deficit due to corruption. The state loses, I estimate, at least about 5-10% of its budget due to corrupt overpricing of third-party services and low productivity due to "ñoquis" (state employees doing nothing or almost nothing). The "printing" problem is also linked to the inability of Argentinian treasury to issue bonds for reasonable rates. So they recurr to "MMT" instead.

That's actually wrong, I wonder where yo've read it. The other two are correct (he has denied climate change in the past, although it's not part of his official proposals, and anti-abortion, he justifies this one with the libertarian "no-agression" principle, but here he's clearly favouring the right of the unborn child over the right of the woman to not be target of "aggression").

That's what I think too. Dollarization hasn't solved all problems of Ecuador, El Salvador and Panama. Above all Ecuador, which is the largest of these countries and thus the one most comparable with Argentina, has ran into several defaults since 2000 and has enormous problems with organized crime (which is, by some, linked to dollarization, as dollarization decreased the income of poor people with informal jobs, and drug lords are recruiting them easily).

The better alternative in my view is a regional currency with Brazil, the main trade partner. I can think of some alternative ideas which could include a state-sponsored stablecoin based on commodities, but they're not discussed in Argentina (although commodity-backed stablecoins do exist there, for example Agrotoken).

I read more about his economic and political beliefs, and it seems that they align perfectly with a pro-Bitcoin position, so it's not just a random publicity stunt on his part to support Bitcoin. He's a libertarian, supportive of the ideas of the Austrian School of Economics. However, it makes me sad that he's politically radically right-wing (anti-abortion, anti-immigration, denier of climate change), so I wouldn't want Argentina to elect him despite his pro-Bitcoin stance.
Economically, Argentina clearly needs a change, but I'm not sure his radical minimal state idea is what it needs. Sometimes ideas that look interesting on paper turn out to be devastating in practice.

I would understand the pro bitcoin part but I am not entirely sure if ant-central bank is a good idea for them. This is a nation that is already having some trouble and if they lose their central bank as well then it is going to end up with a lot of trouble and I do not think that it will be promising for them in the future.

I do hope that we are going to end up with a solution that would be better for them on the long run, it should be considered different for us on the long run. If Argentina wants to have a more stable currency, they should simply stop printing more, and start giving higher rates, and it will be a high recession period but if they push through it, no matter how long it takes, they are going to be fine eventually.

according to the news I read, Milei has not officially become the new president of Argentina but Milei successfully won the presidential primaries last year, this proves that he is already in the hearts of many Argentinian citizens, besides that there are many citizens who support his ambition to make cryptocurrency a one of the means of payment in argentina.

his journey actually wasn't so smooth because he was linked to the Coinx ponzi scheme (dunno what really happened, I don't really follow the politics in argentina), but I doubt whether his ambition to do "dollarization" will succeed if he is elected because after all USA and Argentina have been a coalition for a long time.

1. The guy's name is Milei, not Maile.
2. You're the second one posting that Milei is connected in some way by the US government (see this post), but I do not agree, see this post and the link I show there.
3. You're wrong about the assumption that Argentina needs any "consent" to make the dollar the national currency.

All what it's needs is a law which allows the dollar to be legal tender in the country. If the US has something against that, it can of course impose sanctions (like penalty tariffs), but it can't prevent the dollar being used elsewhere. History shows that the US had never any problem with other countries like Ecuador, Panama and El Salvador using the dollar, the same happened for example with the Euro in parts of the Balkans.

@DrBeer I completely agree, see my last post (I was criticising this idea that dollarization would solve corruption too, I only showed you the arguments of people believing this.)

Dollarization of your economy isn't the best approach towards building a healthy economy. The politician should know that, increasing your production bases is one major factor to building an economy, also export of finished product too also helps. I agree with you about the the fact that, a politician will say anything just to get elected, because they just promised some of this policy's just to gaslight the people in believing them.

This is where I disagree. "Dollarization" does not solve the problem of corruption. Not at all. Dollarization of the economy is a stabilization mechanism. And corruption is a completely different process. It was there when kauri shells were in circulation, it is there under the dollar, it is there under local currencies, it is there in the crypto world. It's not a question of currency. Corruption is a systemic process inherent to a community, not a financial system.

Javier Maile is a very radical politician who is possibly sponsored by the US government. Without the consent of the American government, the dollar cannot be made the national currency. Argengina applied for membership in the BRICS, and with such a policy there is no need to even make revolutions. American corporations will very quickly become the owners of major assets in the country.

What I meant was that those people who support dollarization mean that this would force the country to more fiscal discipline, and that a side-effect would be a more efficient fight against corruption, because there is less money available to "waste" in corruption.

I add an example. In Argentina it's quite common that some obscure administrative structure or agency is created (often with very general and broad names such as "Citizen's Agency"), only to give work to friends or family members of high-ranked politicians, or long-time party members (we can't really talk about "work" here, more about "income", as these people are usually extremely unproductive, to the point they do not even assist to their offices). Dollarization supporters think that would cease after dollarization because the different ministeries would have to justify the money they spend creating administrative structures, and thus the creation of these "fake agencies" would not be possible anymore.

The first part of the sentence, i.e. that fiscal discipline is incentived, is correct in my opinion, and it somewhat worked in the 1990s. Argentina had a relatively low deficit in the first years after the "currency board" was introduced. (That changed in the mid to late 90s.)

But you wrote approximately in your own answer what I think about the second part (the part about the side-effect). If corruption is deeply rooted in political culture, then it requires additional efforts to fight it. Having 5 or 10% less money to "waste" doesn't guarantee the creation of these dubious administrative structures. They would more likely remove other expenses, like welfare or construction, than to change these practices.

By the way, it seems that Bitcoin regulation in Argentina is moving forward - as I interpret the article, a permissive regulation which "protects the investors" is intended.

I'm going to assume that I didn't quite get your point across... Honestly, I reread it several times, but .... it's kind of hard to take. I will be very grateful if you give your answer in simpler words - English is not my native language, perhaps this is the reason.

But from what I understood, I'll speak about this phrase ""Fans of dollarization", of course, believe that such a step will "dry up" corruption, because there will be less ("printed") money for distribution.".
I disagree, dollarization will not "dry up" corruption. It may "stabilize" it and make it more attractive.  Let me explain.
Dollarization of the economy is an "extreme option". It is more about saving the financial system than fighting corruption. Corruption thrives regardless of the means of payment. Peso, real, dollar - it does not matter for corruption. Corruption is a SYSTEMIC process, it has a different "nature".  But a TIME switch to a secured, albeit "foreign" currency can stabilize the ECONOMY. And as I wrote - the transition to a "foreign currency" is only a temporary solution. Temporary - until adequate politicians come to power and a real fight against corruption.

The "dollarization fans" of course believe that such a move would "dry out" the corruption as there would be less ("printed") money to distribute. But what they miss is that if this move isn't sufficient as the difference isn't that big. If a country has a 5-10% structural fiscal deficit like Argentina today, then only dollarization won't stop the usual suspects to steal their part. If the available money is 5% or 10% less, they won't care. The 1990s, when Argentina had a 1:1 currency board and thus "money printing" was restricted, were probably one of the most corrupt times (together with perhaps ~2008-13 and some of the military dictatorships the country has experienced) of Argentina's history. Its president Menem was even convicted for one case but he fled the country to Chile ...

To be fair, Milei (the Argentine anti-Central-Bank candidate) promises to clean out the country's ministeries and secretaries from inefficient politicians, for example with stricter periodic evaluations of their work. So at least there is a vague anti-corruption plan. However, in the pre-primaries campaign, he and his own party had some scandals (for example, he was accused by a party colleague to have aggressively demanded "positions" in a provincial administration, and candidatures for the Congress were sold to rich people for 50.000 USD). So unfortunately it seems he's not very different from the "normal" corrupt administration, even if he claims so.

@justdimin: I agree somewhat. There are "socialist" countries doing well (Scandinavia, to a lesser extent most of Europe, and also China) and also more "capitalist" ones (USA, Australia). Most have mixed systems anyway with free market and some regulation, I'm not aware of a "pure capitalist" nor a "pure socialist" country (even North Korea has a strongly hierarchic/unequal system). However, I think some policies are objectively bad, like the Soviet bureaucracy, and even a non-corrupt political system probably couldn't have countered its negative incentives.

That is the reason why all these talks of "conservatives vs liberals, socialism vs capitalism" and all that sucks, there is no point on that. You know why? A nation with conservative rulers who are legit and want to make the country a better place will make it a better place, but also a liberal nation with rulers who are not corrupted will be good too, a capitalist nation will be good without corrupt and so will a socialist one.

It is not the political agenda that the rulers have, it's the corruption. If a nation has a government that is not corrupted and actually thinks the best of their citizens, then that nation will be better no matter what their political ideology is, that part is irrelevant and will always be.

I agree. As controversial as it is with all the negative notion Bitcoin have and the move for dollarization, if it is the best and only way to bring temporary yet much-needed stable currency and economy for Argentina, then so be it. Right now, it is a step and it is a good beginning to address the financial, debt, and economic crises Argentina has been facing for decades.

It seems to me that Argentina's Javier's attraction toward Bitcoin is borne out of exasperation. Argentina has been in all kinds of debt crises, banking crises, and other financial crises in many many decades already. Even before I was born, the country has already been through all of this. Milei must have already been fed up with this problem that characterizes the country's economy all his life.

It's not surprising, therefore, that an Argentinian leader would just want to eradicate the highly incompetent, corrupt, and inutile central bank once and for all. It probably explains why, while he is pro-Bitcoin and anti-central bank, he is also compelled to embrace a foreign yet more stable and dependable currency. That to me isn't controversial. That is realistic and practical. That's probably better than just declaring Bitcoin to be the one and only official currency when he becomes president.

While this isn't the solution, this may be a good place to start. This may indeed just be a band-aid solution but it'll at least somehow stabilize the economy. Having a stable currency is a good start.

it will definitely give a good morale boost for his people. because up until now, a lot of people are hesitant to touch this market because of the negative notion that media is portraying for this market. with the back-up of their leader, these people will try their hands on because if this market is only for illegal activities, then, their leader won't participate.

Thanks for your reply, and interesting thoughts !

I believe that corruption and its "derivatives" are at the root of economic problems. No, there are still options, of course... but I will dismiss the global idiocy and dementia of the government
As sad as it may sound - but corruption is the worst poison for the economy. I am not pleased to talk about it, but the truth is more important, in my country, Ukraine, today's government has brought corruption again, almost to the level of "ideology of power", as it was under President Yanukovych.... And this is still at a time when the country is being subjected to external terrorist aggression.
I won't say it, but corruption has penetrated very deeply into the economies of South America.  When I've traveled around the world, I've often been to South American countries. Brazil, Argentina, Chile, Ecuador, Dominican Republic. and others. And everywhere, talking to the local population, I have heard that corruption in their countries is almost "part of the culture". It's very bad. Without the elimination or global reduction of corruption, it will not be possible to "boost" the economy.  If there is corruption, neither the dollar nor bitcoin will help. Corruption is a kind of "black money hole", it drags the budget money with terrible force.... And only "pennies" are left for the economy

While many may be baffled by the combination of Bitcoin enthusiasm and the transition to the USD, Milei gets it, and it's obvious he's on to something. As you noted, the nation needs severely to find a way out of its current financial catastrophe

Getting rid of the central bank? A bold move. I've always believed that central banks have too much authority, and Milei's goal might be the world's needed wake-up call. Some may view full adoption of the USD as a surrender, but let's face it: the peso has been a complete failure. Argentina needs some stability at this point

You make a valid point about how people perceive Bitcoin. It is a ray of optimism in the face of inflationary nightmares, but with a switch to the USD, its function might change. But keep in mind that Bitcoin is more valuable than just money; it represents the direction of finance. Milei notices that. The guy is wiser than most of the current leaders, and I admire him for it

Dollarization will never solve all problems running a central bank honestly. It may mean less people losing their wealth compared to past but anyways American fiat money also has inflation and it also loses paper value too. Probably its losing lot more than past even nowadays. But bitcoin friendly politician is always good for us all. He can at least soften limitations enforced around Bitcoin and probably encourage Blockchain or Bitcoin related investments more. It may benefit Argentina.

I agree, that's the point. In the 1990s, while there were some structural reforms they were aimed at the wrong problems, and thus, Argentine economy didn't gain but lose competitivity due to the "quasi-dollarization" move.

Corruption is a very important point. Argentine society needs to really wake up in this regard. While I personally haven't experienced things like bribery, persons I trust do have. For example, it's a popular "sport" of Argentine politicians to pay higher prices to external services providers than what they require (so-called sobreprecio), and then agree with the provider to steal a part of that money. I guess that corruption could boost Argentine's state services' productivity at least 10% - and that's approximately what their ("real") fiscal deficit per year ist.

Then there are economic sectors which have low competitiveness because they always get selected by the political leaders for services (bribery is suspected sometimes, of course), for example in the construction sector.

About Bitcoin: I think making it legal tender is indeed not something that would currently help to stabilize the countries' finances. Bitcoin isn't stable enough still. However, a good regulation framework could help to attract investments in this sector. Argentina fares quite well in the software sector already, but becoming a global blockchain/crypto-assets-services player (e.g. taking some market away from the US) could of course improve the situation even more. Two of the main presidential candidates (Milei and Massa) are Bitcoin-friendly, and the third (Bullrich) comes from a party which historically has had a pro-Bitcoin stance. I have thus some expectation the general situation regarding Bitcoin in the country can improve, regardless of who wins.

It is an interesting development that change in Political leadership, such as Javier Mile winning the presidential elections, could impact the adoption and perception of Bitcoin in Argentina. Political leaders can in deed influence the policies that promote or hinder the growth of cryptocurrencies in the country. It is also crucial to note that political leaders often encounter challenges in translating their political agenda into action, particularly within the complex framework of well established democratic nation. Achieving consensus among diverse group of legislators is a formidable task, that demands skillful negotiations to navigate different viewpoints effectively.

I don't know how politics in Argentina is, but for where I came from politician will say anything to get themself elected. With the 114% annual inflation, moving to a bitcoin will be popular promise, though I would argue that those policy alone wouldn't instantly make the economy could recover, but at least the candidate will get the vote, that's all they want. It would be good for market if Argentina will actually get rid of centralbank and move to bitcoin, but if it's not even after the candidate who was promising those is elected, I wouldn't be so surprise.

It's a bit of an odd position to be in, a potential leader. Bitcoin is cool of course - but it doesn't stabilize the economy. Dollarization, with the replacement of domestic currency with the U.S. dollar - well, we can allow it as a solution, for some stabilization period. But it does not solve the essence - the problems in the economy. Probably it is necessary to reform the economy, fight corruption, develop high margin sectors of the economy, and similar actions aimed at solving the problem. But do not emphasize solutions that "hide" the problems.... Moreover, everyone understands perfectly well that they will only temporarily hide the problems. It is like trying to treat a disease by hiding the manifestations of the disease, instead of treating the cause of the disease itself.

Why should it work with dollarization and not with an unified South American currency?
Again, in the 1990s it worked.

I wrote that already. The countries, mainly Argentina of course, would have to be well prepared and coordinate their policy a lot for such a move. But in 2018-22, there was also the hurdle of an ideologically-related "cooling down" of relation between these two countries, so that eliminated all possibilities of a coordination. There was Covid, too. As of 2023, Brazil of course wouldn't take further steps in the short term if they don't know who wins this year's election. If Bullrich or Massa win (together their parties have ~60% of the vote, even if they're ideologically strongly opposed, at least when they're campaigning ), however, I'd expect further steps in this direction, as both want to strengthen Mercosur.

In supermarkets, prices are displayed in pesos in Argentina. 100-150% inflation doesn't mean that prices change every day, but every couple of weeks you can expect a 10-20% increase. In some sectors, mainly real estate and upper-class tourist accomodation (hotels, cabins ...) you may find prices in dollars.
However, dollarized prices were much more common in the early 2000s. For example, when MercadoLibre started, they had the option to use prices in dollars, and electronics were almost all priced in USD. I don't know if this was forbidden but now it's much less common, even if inflation was much lower then.

At the contrary, several US politicians and also IMF functionaries have already expressed they oppose that move, see this La Nación article.

When your country has been going through several years of crippling inflation, eventually people start to replace their positive feelings and patriotism with negative feelings and seek to protect their capital with other currencies. I am from Venezuela, so I know what I am talking about, all of it comes to a point where people is willing to give up part of their culture in order not to be always checking the price of the pesos against the USD.

Venezuelan economy is already dollarized in many levels, expect salaries. We ask for prices in malls and stores and we get the price in USD, not local currency. It must be the same in Argentina

El Salvador changed its national currency to $ 20+ years ago, and as a country that is much smaller than Argentina, I don't see that this change has transformed the country economically (for the better), although we can rightly wonder what would have happened if that they didn't do it.

Maybe the size of the country really makes a difference, although it seems to me that regardless of the fact that Argentina is one of the largest countries in the world, their problems are far more complex than which currency they would choose. In other words, if you don't have smart politicians who work for the good of the country, everything else is in vain.

How are you going to get rid of centralized Banking and at the same time switch to the US Dollar as your local currency? Yes, it will help them to have a more stable economy and much less volatility, but they will be a slave to the West again. (The US Dollar and the US economy are one of the most complex economies in the world, with a lot of manipulation going on in the back rooms) 

The adoption of Bitcoin will not go well, with the US Dollar being used as a replacement for the Peso... citizens have a lot of sentimental feelings towards their local currency. 

That's oxymoron!

It seems Javier Milei is another puppet of America. Otherwise, no good country will ever want to replace their own currency and adopt currency from another country. That's definitely a negative but if he has won the presidential primary, that means a lot of stupid people support this fellow.

Replacing currency with USD may work for smaller countries but when it comes to a country which ranks 23rd in global list, might bring disaster.

I make topics mostly to see what others think and to enjoy myself, If I see zero interest then I realize what people are interested in and how much they either care or know about something, still calling it good research. I have another bunch ready in the last few days and this is all I can do sitting 12 hours in the sun but it's a pain in the ass to get images and copy the text on a tablet for more detailed topics! 


I still believe that you can't screw a country more like this, and 100 years...we didn't have half of the countries currently in Europe! 
Things come and go, and as you said, subsidies and freebies and gifts to keep the masses happy is one bulletproof way to make them go away.


Hm, honestly, no idea! I think just the next step is too complicated thinking what will happen after this with two "if" it's out of my league.


So you're saying no politicians should accuse the former leaders of corruption just because he is also a politician?
If you start from the idea that they're all corrupt and they should shut up then basically you're admitting no change will ever happen and everyone that goes voting is just empowering corruption.


Remind me why is Argentina in this mess in the first place. And you expect them to magically do the right thing after half of century of proving they are unwilling to do so? Wishful thinking!

[/quote]

No, it's no ideology it's basic financial stuff.
Brazil doesn't want to get paid in a currency that devaluates by the week and that no one else wants, they have a positive trade so they end with one billion worth of pesos, oh wait it's 900m, by the time you read the topic is 700million  and Argentina can't afford to buy reals as it would be the same as buying in USD, so it makes no sense. It's a copy-paste thing of what Russia and India got through and they solved it by using the UEA dirham, which, is pegged to the dollar! The irony, right?

But are the countries (Brazil, Europe) you mention in a "crisis"? No. They're doing quite well. So is Argentina - in terms of employment. In terms of inflation it's completely another story. Here Argentina is a disaster.
Basically what I want to say is that in Argentina there is a financial crisis, not so much an economic crisis. Companies are in general doing well.
There's a retroalimentation between inflation and consumption. Consumption is driving inflation, and inflation is driving consumption (and capital flight).

I almost expected that answer

But both states would need to increase fiscal discipline if they bound their currencies together. That's the main benefit of the idea. There probably would have to be criteria like the Copenhagen requirements for the Eurozone to join this area. By the way, Argentina's peso is the only currency in the region that suffered such a big devaluation in the last decade. The real is doing well (has lost 30% of its value against the dollar since 2003, most of it in two crisis including COVID, but that's not bad at all), as is the boliviano (its value has even increased in the last 20 years, it could hold well a floating peg to USD), the peso uruguayo (lost approx. 30% since 2003), and the Guaraní (lost 20% since 2003).

But the advantage compared to simply adopting the dollar is if there is a regional crisis, e.g. caused by a drought or oil prices, then the currency can temporarily become weaker, to later strengthen again if relative conditions with respect to the US are more favorable. In contrast, if the US enters a crisis, it allows the countries to strengthen their currency, like it occurred to the Brazilian real in the late 2000s/early 2010s, when the BRL became itself overvalued reaching 0.6 USD (coming from 0.3) and then falling down again to 0.3 and after COVID to 0.2.

The problem is that there is not enough coordination. The plans to "skip" the dollar were renewed in May 2023 but Brazil is obviously currently the one trying to slow down. The problem is also that when there are ideological differences between both governments these initiatives can come to a complete halt. That's definitely something which has to be improved.

That's a very simplified point of view (although Milei is trying to install it in the discussion).
First, Argentina had almost no population in 1900 (few millions). There was also practically no industry. The "business model" of the country in this era was to be an almost pure pure agrarian state (heavy industry appeared only in the 1920s/30s). This would be unsustainable today, as the agrarian sector needs not much labour force.
Second, the big problem of Argentina is that it never sustained policies over more than 10 years. This led to a weak industrial sector. Peronist governments had its share of this problem as they often created and sustained uncompetitive economic areas, but also the military dictatorships trying to establish the pre-1930s model again in the 70s, and they failed completely.

The debt crisis in the early 80s in the last years of the military government was the reason for the general Argentine debt problem which started to become massive in the 90s and then led to the collapse in 2001. But this debt problem is still the background of the current crisis: Argentina had always problems in the last decades to get external financing, so it had to very high interest rates. This led to the current situation where the central bank prints money to finance the country's fiscal deficit, and this boosts inflation. I could write entire books about this (as you suspect, I have "first hand" knowledge of the situation in AR) but let's end here

I don't see it as a "mindfuck moment". Bitcoin isn't suitable to become an actual currency. BTC is more of a financial asset(digital gold) than a real currency for daily use.
Ditching completely a weak currency like the Argentinian peso for the US dollar seems like a reasonable move. The US dollar has it's flaws, but it's way more stable in comparison to the Argentinian peso(even though the peso was pegged to the US dollar).
Having no national central bank might be better than having an irresponsible central bank.
Being pro-USD and pro-Bitcoin at the same time isn't so absurd as you think. Unfortunately, most of the Bitcoin maximalists live in a "black and white" type of world, where the US dollar is seen as the root of all evil, while Bitcoin being viewed is the solution to all problems.

Undoubtedly, this candidate is on the wave of hype and skillfully uses it, but still, he makes a good advertisement for bitcoin, not only in Argentina, but throughout the world, because this news somehow appears in the media of other countries. Whatever happens, it's all good as long as it doesn't harm the bitcoin.

Question: how does this presidential candidate plan to use \ integrate btc into the economy of his country? Does he have any program on this subject, or is his love for bitcoin only empty statements about it? For everything good (bitcoin) and against everything bad (central banks) - such are his loud statements?

This sounds funny:
Javier Milei himself is the same politician as those whom he accuses.

Internal problems a country faces can only be solved by internal changes which improves the economy. Being pro Bitcoin cannot improve the standard of living of citizens or generate more jobs or improve international trade if the country does not have exports. Same way dollarization does not boost an economy.

Best case scenario it is indicative of the willingness of the candidate to adapt to moedern solutions and could mean they can equally take drastic decisions in other areas of affairs which will have telling impact on the economy.

It can also be a way of telling people what you think they want to hear. I have not followed the election long enough to know the precedent of the candidate but sometimes or everytime politicians play a psychological game to convince people they are the best man for the job..it's less of what you plan to do and more of what you've already done.

Let's see what happens in October, as you said, and what are the real changes he proposes if he eventually wins. In my country (Spain) he is being very criticised both because he is an extremist and also because he resembles Trump in some ways. Taking into account how little Trump did for crypto (even if we know now that he holds more than 2 million in Ethereum alone, according to the latest news) we still have to see how he implements the proposed changes in Argentina.

The bad thing I see with this thread is that since it is a serious one in which you have to have some knowledge to comment, it has not received many responses and will probably die for lack of them in a short time. I don't know if d5000 knows first hand the situation in Argentina or South America in general, as I see that he posts on the German and Spanish local boards.

In any case, if Milei wins, he intends to turn the country upside down, a country that had the highest GDP per capita in the world more than a century ago, a country where people emigrated in search of opportunities and a better life. By handing out subsidies and creating large layers of the population dependent on them has ended up in the disaster it is today. It is the result of Peronism.

I understand that taking the power of the printer away from Argentine politicians would force them to have to balance income and expenses because they could not simply print more, but I wonder: supposing Milei won in October and carried this out, would it cost much for an incoming Peronist president after Milei to re-create a local currency? I don't think so.

Replace Argentina with Brazil in that chart and you see the same post-COVID trend in employment, switch to Salvador and you have the same growth we can go to any other country and depending how long ago they've opened their economy the same happened, Europe is breaking records over records in this metric.

As for consumption, of course, there is consumption, because with the money you get on the 1st you can get 100 pizzas and by the 31st you can get only 80. It's private consumption driven out of fear, not out of how good things are and how much money they have.

Spend now, worry later: no point saving in inflation-stricken Argentina
Exactly what you were saying:

So, trying to peg your useless currency to other currencies that might be just as bad and that have continuously lost ground against the USD could be better...
You know Argentina and Brazil tried to drop the dollar in 2009, right? Why do they still carry plans on making the trade in peso and reals and other currency somewhere in the middle then?   Because just as Russia realized when it got paid in rupees that when you get paid in shitcoins there is nobody else wanting you shitcoins!

These agreements are just like a bounty campaign here!
They can't afford to pay their users in BTC so they pay them in their shitty tokens they can print endlessly, and once the payments are made they drop like a fly as everyone receiving those shitcoins runs to the exchange to convert them into either BTC or USDT. Just how people in Argentina are doing now with their peso or Indians with their rupees or Rusian with their ruble!  

I've already mentioned unemployment. In the last years, believe it or not, employment improved a lot, even compared with pre-COVID times (and it's not only due to the State growing, it's primarily private employment). Private consumption is also quite high currently (see this New York Times article about restaurants being always packed). Also, sanitary conditions have improved continuously in the last decades, like we can see with child mortality.

So yeah, it could be much worse. The situation is a bit paradoxical, but only at the first glance: The high consumption may have been one of the main reasons (apart from delayed effects of COVID subsidies and its M1 explosion) which propelled the inflation from a mere 25-40% to 120%+.

In the 1990s currency board Argentina, unemployment initially got better, but from 1995 on (impact Tequila crisis) rates above 10-15% were common. In 2001 the "convertibilidad" regime collapsed with 18% unemployment.

I still think such a regime can work (as in Bulgaria and the Eurozone in general) but taking its time and giving the industry time and measures to adapt. However, I think the US dollar isn't perhaps the best currency for Argentina to peg its currency to, as its main trade partner is Brazil, the US is third (if taking EU countries as separate entities).

My personal "advice" (if I had any power or legitimacy to do that ) to Argentina's government would instead to be to advance with a Mercosur monetary union (with Brazil, Uruguay, Paraguay and Bolivia). There were some very timid steps towards a creation of an Argentina/Brazil "unit of account" (like the ECU was in Europe) but almost nothing. A dollarization could close that door, which would benefit potentially all of South America, for a long time.

About the GDP per capital: that graph if any shows how overvalued Argentina's currency was in the 1990s due to the still relatively high inflation rate. If any currency board/external currency adoption steps are taken then this effect would have to be avoided.

Pegging the currency of a nearly failed state that is heavily in debt to a stable one is not really the miraculous solution and is secondary and more importantly, Argentina didn't really peg the peso all the way to the dollar, that's one of the reasons for the failure as they allowed preferential rates for exports which obviously made the state lose money, and the second one was the government didn't stop printing peso and didn't stop getting in debt in us dollars.
If the country is ok with no fundamental issues plaguing the economy you can peg our currency to the us or euro with no problem, even the Bulgarians are managing to use the leva with euro parity and let's not even talk about the Danish krone.

Anyhow, here we're talking about completely abandoning the peso, which means the country won't have to balance the national currency to keep with the us dollar, all they will have to do si adjust their economy to match one of the other fifty states  . And, to be honest right now, how it could be worse than what they have now?


Growth can be misleading, it depends on what that growth is based on



Ignore the last two years in Argentina's case as there is a note there that the data uses the official currency rate and not the black market one.
In 2000 when one was preparing to adopt and one to renounce the peg Argentina had a 4:1 advantage in GDP per capita, now it's more like 1.2 :1.

I talked about it in another thread. A bit paradoxical that he is pro-Bitcoin and wants to put himself in the hands of the Fed. He could do like in El Salvador they have both USD and Bitcoin as legal tender but no, it seems that he only wants to use the USD which puts him in the hands of the FED and it is not a panacea either as d5000 explains.

Anyway, he has been given a lot of hype but we will have to see if he wins the October elections.

Argentina had already a period (1991-2001) when there was a de-facto dollarization during the Menem government via a currency board, an 1:1 peg to the US dollar.
The problem is that this period hadn't the expected outcome.

Triple digit inflation went away, but there were several years with double digit inflation, which made Argentine goods very expensive, and this led to the general Argentine crisis of 2001.
If Argentina adopts a similar policy again, this will probably be similar. Above all the industrial sector will suffer, there will be higher unemployment (now it's modest with ~7%).

Here a graph showing Argentina and Ecuador's economic growth 1984-today:



(Source: World Bank)

You can see that in both cases, Argentina and Ecuador, there was an initial boom after dollarization/currency board introduction. In Argentina, 1991, and in Ecuador, 2000. But then the growth went increasingly bumpy. Dollarization creates a higher dependency on external commerce and international financial events and gives in generall less flexibility. It's a gamble, you could have favourable outcome or not, depending on your economical structure. Argentina's post-currency-board history coincides with Ecuador's dollarization (~2000-2002) and after these years there is no clear "winner" between both if you look at economic growth.

With cryptos emerging as an alternative, a dollarized country could try to introduce altcoins as a way to stimulate growth if it thinks it needs to increase money supply. I'm less thinking about an independent currency (like ETH or LTC) but more of a kind of utility token. This could give the country flexibility again, so I'm currently a bit less against dollarization than I'd have been in 1992 or 2000.

I guess in Argentina BTC adoption is clearly benefitting from the current high-inflation scenario. It is already used more as an investment than as a currency, but has also the function to act as an intermediate step between the Peso and external currencies like the US dollar, as US dollar acquisition is restricted.

If the country was already dollarized, I think BTC adoption will grow slower. The country could go the way of El Salvador though, trying to force Bitcoin adoption to become at least a little bit less dependant on the USD cycles (at the cost obviously to have to support the high BTC volatility).

This news is already having a positive impact on the bitcoin market in Argentina. The high inflation in the country is making people turn to Bitcoin as a hedge. Adopting the dollar is a sound economic strategy to gain monetary stability but it comes with a price. Dollarization helped reduced corruption and stabilized the economy of Ecuador and Zimbabwe. One problem is that the Argentina monetary system will now depend on the monetary policy of the US central bank for monetary policy. And the US central bank might not consider Argentina when making its policies. The US will make policies that suit its economy.

If Javier Milei wins the presidential election on 22 October this year, Bitcoin might get the needed boast in Argentina.
I don't think Bitcoin will easily regain its traditional status as currency. If the price keeps accelerating more people will keep it as an investment because it will become more precious.

Ok, the tile of the link sounds stupid right now:

Bitcoin soars in Argentina as Javier Milei wins presidential primary
https://cointelegraph.com/news/bitcoin-hits-record-highs-in-argentina-as-javier-milei-wins-primary
but it's the other text that matters:


So, this is going to be a really mindfuck moment for a lot of users
- he likes Bitcoin
- wants to get rid of the central bank
- want to fully adopt the usd dollar, so ditching completely the pesos

Of course, there are some other bits about abortion and climate change and the fact that has already sent a big f word to China and her Brics but the whole thing is about on one side getting rid of the central bank and on the other of fully adopting the USD is really interesting as It would be the largest economy that has done this after Ecuador and it will just rise the number of countries that are either using the dollar directly or a currency pegged to it. So, that much for the so-called de-dollarization some nutcases still think it's happening.

The first impact will be clear, double and triple-digit inflation will go away, of course there will be some bad things happening as there will be no more money printing so the government will not be able to hand over the traditional socialist gifts that come to bite you in the ass 2 years later to get elected, but more importantly, how would this affect the perception of Bitcoin.
It's obviously seen as a way to escape spiraling inflation but with a real hard currency would it stop losing its currency flavor and be seen as more of an investment?