Topic: Would You want to See a Corralón Type Economic Measure in Your Country? (Read 228 times)

This is surely a corrective measure for countries that have been long dependent on US dollar to run their country. Countries who have stood with their local fiat currency have not had it tough like those who depend on dollar so it is evident that such exchange is a wake up call to all those countries making use of the dollar for exchange and transaction.

If an economic is jettisoning their local currency then they are only causing their fiat to be depreciating in value while the dependent currency keep appreciating because before you transact or exchange in import or export you then need to convert first and moreover, investors and politicians would prefer to hodl and hord the foreign currency and causing it to be scarce and that will push it exchange for local currency higher.

No one in their right mind will want a corralon or corralito in their country, because even if it is of those who supposedly benefit from it, the indebted, as the OP says, the result is misery everywhere and an increasingly generalised impoverishment of the population. Such measures are only taken by populist and short-term politicians, leaving the country ruined for decades.

And even that supposed benefit probably does not even exist as then the banks can hike the interest rates you have to pay on your loan and make it impossible to pay anyway, and without a doubt the consequences will be huge for any governments and financial system putting this into practice, something that we know is completely true as Argentina has suffered from all kind of economic crises during the last decades and the citizens no longer trust the government in turn to do the right thing, and that is why they are using alternatives to their local currency so they can avoid being scammed by their own government again.

Well, it depends on the true & subsequent value of the Argentine currency (peso?) vs the dollar when the forced exchange was implemented. If the value against the USD was 1.4, then those in debt probably gained, and they gained more if the peso devalued afterwards.

But it should not have happened in the first place. Things like that should have been done in civilized manner (maybe with good incentives) rather than like what is heard of in unfair societies where powers are easily abused/misused. I would say the leadership had too much power which normally can only be used against depositors who committed crime.     If the depositors had withdrawn their deposits to physical dollars, how would the leadership be able to find & forcefully exchange them to local currency? This is why people should be more careful leaving funds in banks of tyrannical, unfair, less developed societies as they can easily be misused/abused. Physical paper currencies are even "quite often" redesigned in such societies to render old designs (probably hidden longterm by people, like they hide gold in old times from criminals) useless

Many years down the road, it looks like the national currency has massively lost value against the dollar. Those who still had their funds in dollar became richers than those in the Argentine currency. While those that had their deposits forcefully converted to local currency would have been better off if they were left alone.

Imagine that people were looking helplessly as their savings were wiped out. Even though the idea behind such a policy seems good for people who are in debt, it smells like a desperate and short-sighted attempt to fix a complicated economic problem. People would never trust the banks again

The so-called reward for people who are in debt is just a band-aid over the real problem, which is bad money management and hard times financially. Such policies could probably make people not trust the financial system in the long run and could even cause capital to leave the country. Instead of taking such harsh actions, it's important to look at and suggest complete, well-thought-out plans

Sure, a desperate measure taken by a country that became the first in GDP more than 100 years ago and whose disastrous Peronist (communist-like) policies have led to extreme poverty, massive emigration and very high inflation for decades has to be the example to be followed by the rest of the countries of the world.


Yes, together with the idea that if money is needed, the right thing to do is to print more, much more.


Of course not. A government that steals so blatantly the only thing it achieves is to drive capital and talent out of the country, sinking it deeper into misery. It was precisely after this that a massive exodus of Argentines took place.

If my government implements such rules, then most of the middle class and poor people will be doomed because they are the majority of people who use local banks to store their funds, whether the funds are small or not. The rich and upper-class people do not store their funds in local banks because they know local banks are only for making trades if they are making any deals, buying groceries, or when they need local currency.

Other than this, they try to hold their assets in deflationary things, which could provide a hedge against inflation. BTC is the first thing that came to mind in terms of a hedge against inflation, but those who don't prefer it go after gold or US dollars. So they don't have to be afraid of such acts.

To my knowledge, not a single act has been reported in my country till now. But let's just hope things don't go dirty like they did in Argentina. I read this topic a while ago but did not give my reply, so today I was replying to another topic where I could use this topic as a fact, so I searched it. And I came to know that I hadn't even posted my opinion here.

Just look at the economic situation of Argentina right now and you have your answer, it has not got better - in fact has arguably got worse - since this policy was enacted. Politicians are very fickle characters who often only have fairly short careers in the highest positions of government. They might rightly try to enact policies that seek to arrest the decline of a countries economy, but they often take the wrong choices because they can be guided by popular opinion which seeks an easy route out as opposed to a harder route which uses fact based evidence. The idea seems to have been to seize US dollars and force the local currency to be used as well, maybe entwined with a claim that US dollars have lost value - but the Argentine peso has done a lot worse in comparison, so it's misguided from that perception.

This is just another example of a government trying to square a circle, when the fiat currency of a country gets weak they ban and confiscate foreign currencies to try to force the citizens to use their useless fiat in hopes of stabilizing their economy, but no person in their right mind will allow for their government to openly steal from them in this manner, and such measures are a clear sign an economic collapse is imminent at that country.

This will increase the financial equality difference further and again rich people will get richer cause they are the one who has more debts as well as more assets, they never have a huge amount of funds as cash so these kinds of economic policies will affect the middle-class people and can bring the chaotic situation to the demand and supply chain.

What I really want to see is an increase in corporate and direct taxes so rich people will pay more taxes while decreasing the taxes that apply on fuel, food supplies, and indirect taxes.

I don't think this is something people really "want" but more like something that happens to people. I am not saying that its not going to end up being good or bad because that's not the point of it, this is something that government does to its people, so its not really a choice matter. If they want to, they take your money and that's it and there is absolutely nothing you can do about it. It used to happen in our nation as well but for the last few decades it hasn't happened at all, no matter how worse the economy gets, government doesn't take out money. I believe this is not something anyone would want to ever see, they take your money, why would anyone want something like that?

I wouldn't want to experience such measures in my country, although I suspect in Argentina they had to choose the lesser of two evils. Such unpopular measures are being used in extreme situations, like saving a country's economy from a default.

This type of thing "could" happen in poor nations but as long as you do not handle mismanagement of the taxes and the corruption then it doesn't mean anything. I would be 100% in support of this if it meant that everyone would be able to pay their debt, there is no more financial trouble in the nation for decades, and every tax cent is going back to the citizens for their benefit.

But, we all know that every single nation in the world taxes you, and then uses that money for something other than what should be spent, and mainly getting stolen by the politicians.

When that's the case, what good does this type of measure does? It just more money in the pockets of the politicians and nothing more, and I am sorry but I rather not make the politicians richer. Just because they wanted to steal our money and screwed the nations economy because of it, doesn't mean that we need to help them recover it neither, we could just ignore it all together if we want to.

Are there any other advantages to this type of economic measure aside from stabilization and its benefits to debtors? What about the savers? Its favorability and overall benefits should be considered.

For me, I wouldn't want to see this in our country, I think it's a bad idea. If the government were to implement something like this, I'm sure many, especially those in the middle class, would oppose it.

Limited sources mean that I can't fully understand Corralón. But in simple terms, if we look at Argentina's economic growth, has it experienced a good cycle and been able to overcome economic problems in the long term? If not, it means that there are still many things that are not suitable to be implemented, because if one method is not correlated with the financial condition of the country, especially the economic markets of developing countries, in which case the sources of income are diverse, it will make implementation difficult.

Because this is being implemented in Argentina, it means we will make a concrete example of the country's economic conditions 20 years ago. And based on my search, the results were quite surprising, especially after the Covid-19 pandemic, when high inflation was hit by global economic turmoil, Russia's invasion of Ukraine.

I don't think this will go well with present economy that almost every nation is struggling. Even in the Argentina, the Corralón era was actually a difficult time for many people in Argentina. The forced conversion of dollar deposits and debts into local currency at an unfavorable rate left many people feeling like they had lost their savings. The bank run and economic turmoil caused a lot of stress and hardship. The Corralón had some negative consequences for Argentina including a rise in inflation and economic instability. It's hard to say for sure what the consequences would be if my government implemented a similar policy but there's no doubt that it could potentially lead to similar economic problems. I think it's better to consider all of the potential impacts before implementing any major policy changes like that of Argentina.

Nobody would want to see such type of economic measures in his country. The government basically tries to steal the stable currency from the people and gives them shitty national currency in return. This is done only for the sake stabilizing the national currency, which totally failed and the people's savings in Argentinian pesos were destroyed by inflation. This is government theft and it will ruin the economy of any country. I don't know what's wrong with the politicians in Argentina. Most of them don't understand basic stuff about economics and finance and most of them support stupid experiments with the economy.

This is the first time I heard about Corralón too. And I doubt that it will work in our country. It would be normal for people to react and feel scared especially if it is something new.  But I think it is unfair that those in debt will benefit. Being in debt during hard times is still super stressful. Job uncertainty and financial instability make it tough, even with these potential benefits. So while there might be a few silver linings the struggle is definitely still real for them.

 I think a lot of us would be seriously frustrated in our country . Imagine waking up one day and finding out a big chunk of your savings isn't worth as much anymore. People would definitely be talking about it everywhere – in coffee shops, at family dinners, and all over social media. It would be a major topic of conversation, and many of us would be pretty worried about what the future holds financially.
I also doubt that the capitalists in our country will allow this to happen haha capitalists and big investors wouldn't be happy at all if something like this happened. They would probably do everything they could to stop it like talking to politicians using their influence and maybe even moving their money elsewhere if things got really bad.

I have not heard of Corralón, and I will read about it later to learn more, but copying and pasting or repeating economic solutions will not lead to good results. Every country has a unique economy and economic problems, and repeating the appropriate solution does not mean that it is the appropriate solution for all countries or similar situations.

The world is changing rapidly, and the solutions must differ accordingly. I do not think that my country will repeat the same solutions, but the economic crises have become much deeper, which makes the cost of fighting hyperinflation and taking any solutions to them a priority, no matter how harsh.

Perhaps one of the most idiotic ideas to "save the economy" is to take away people's PERSONAL savings in the currency that stabilized the economy....
Instead of a thousand words, history and facts:
In the early 1990s, the government pegged the national currency to the U.S. dollar, which kept inflation in check. Many state-owned enterprises were transferred to private ownership, and privatization proceeds were partially used to pay off the national debt.

And then began experiments, which, although they gave temporary relief, because a huge amount of private funds was withdrawn, and they were able to temporarily "plug the hole in the budget", but it did not solve the essence of the problem, and now we see what we see.... Private property - be it savings, cars, real estate, or other - is INCREDIBLE! This is what the entire Western, developed world is built on. Yes, there are exceptions - illegally or criminally earned assets, but this is a separate topic

Short term they didn't. they've lost almost 30% because normal deposits were exchanged at a rate of 1.4 and debt at 1. They only made a "profit" in the long term, because this drastic measure did not help the peso.

What do I think about this? This is nothing new. When the mark collapsed in the Weimar Republic (Germany after WW1), citizens were forced to use the local currency to such an extent that the police went to pubs and looked into people's wallets to check whether they only had marks. Foreign currencies were confiscated. And both in the Weimar Republic and in Argentina, such efforts did not achieve anything, because it is impossible to force people to use and take seriously a currency that loses most of its value within one year.

What is wrong with the normal exchange rate that we are using with the conversion os our local currency with the USD, it makes nothing different and a country like mine may not as well like to give adoption for this kind of economy exchange, this may be a perfect way of running the economy in Argentina by it's law makers but other countries also have their own way of making their economy a stable one without following same pattern others take, so in my country, this is not going to be an acceptable one when they are trying to work on balancing the economy.

I've read the article, but it's really short, and I couldn't find much beside it online to deepen my understanding of the matter. I haven't heard of this before, but I don't have debt, so I don't think I'd benefit from such a measure. What I find lacking from the article is the information about broad effects of the measure. Did that help stabilize the national currency, did that contribute to improvement of any economical features? Is it, in hindsight, considered a mistake or an effective move? Who lost the most from this practice, and what was it meant to achieve in the first place?

That is something new to me, I was not aware of it, I mean, that's a trap from banks, why would they do it, and why did the people of Argentina bore it, why did they not protest, why it still implemented after protests? This really sucks. I mean, they even set the withdrawal limit to $250 per week. Useless policies for the customers but not for the banks. Where did the profit go? Which they made out of this.

I believe this is the 2nd best example I have found to teach someone or give an example of why BTC is better than Banks, in terms of holding. Like, those if they were had holdings in BTC, would be saved now, but they trusted banks and banks fucked them. (sorry for the lingu).

We don't have the facility to store dollars in Banks, even if we have, (of which I am not aware of), I don't think if anyone would care to save their dollars in the local or national banks. People prefer to hold them in person, and recently in an operation more than 900 million dollars were caught, which was not in the books of our governments, which means they were smuggled into the country without paying tax.

What are your thoughts on the quote above if your government implemented such economic measures? One thing is certain: those in debt would likely benefit, especially in times of economic hardship.