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Author Topic: Argentina, on the verge of a new currency collapse  (Read 10620 times)
muyuu
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May 17, 2012, 09:11:53 PM
 #61

Is there any easy way to send dollars/euros/pounds to Argentina outside of government control?

I don't know outside of control. You can do it on traditional ways (WU and MG) which AFAIK are working fine to receive funds (not to send). But I think they're going to convert the funds to ARS on paying...

If they convert them then it's not very useful... what about possession of gold and silver, how does that work there?

Looks pretty obvious that a devaluation is going to happen one way or the other. If they're not careful it may end up in hyperinflation. They just don't want a clearly visible GDP drop that would destroy the illusion of progress... same as they are falsifying inflation data.

I wonder what are the real reserves they are holding right now. They seem really desperate to keep ahold of every dollar, well as I said when I opened this thread, the alarm signs are increasingly more obvious.

In any case Cristina F.K. and her authoritarian model cannot possibly last. They've built such a circle of lies it's only a matter of time the whole thing collapses. I hope it's soon so Argentinian society and productive structure doesn't degenerate much more.

What's coming next? Macri? cannot see that happening. So what else is there? maybe there is a divide big enough within the peronistas so that some of them can be considered an alternative by the population.

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May 18, 2012, 01:45:30 AM
 #62

So what else is there? maybe there is a divide big enough within the peronistas so that some of them can be considered an alternative by the population.

That's exactly what will happen, IMHO. Although it doesn't matter the political party: everyone will do exactly the same, and the pendulum will continue. First recession, unemployment, blood in the streets... then they will change discourse. ¿And what next? privatization, of course (I mean re-privatization), crony capitalism, excessive borrowing, default...

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May 18, 2012, 07:57:31 AM
 #63

So what else is there? maybe there is a divide big enough within the peronistas so that some of them can be considered an alternative by the population.

That's exactly what will happen, IMHO. Although it doesn't matter the political party: everyone will do exactly the same, and the pendulum will continue. First recession, unemployment, blood in the streets... then they will change discourse. ¿And what next? privatization, of course (I mean re-privatization), crony capitalism, excessive borrowing, default...

Who's going to invest big in Argentina this time? who will they borrow from? they seem to be running out of credit in both senses of the word. Oil reserves are drying up too - shale oil will require a big investor, who's it going to be? They just blatantly stole the dividend cash reserve out of YPF. Who in his right mind would invest a dollar there?

Wow... another lost generation. How do you get out of this cycle?

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May 19, 2012, 06:11:21 AM
 #64

Who's going to invest big in Argentina this time?

Those who are granted a monopoly.

who will they borrow from?

Those who get the money at gunpoint, basically.

Wow... another lost generation. How do you get out of this cycle?

Good question. I think not much can be done to remove the religion of statism (at least in the short run).

What you can do is understand the mechanism, prepare yourself for the inevitable and then try to stay calm while blood runs through the streets, like those people that made big fortunes during the collapse of 2001/2002.

Stupidity on a massive scale is like a force of nature: You learn to take advantage of it or it will destroy you.

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May 20, 2012, 08:07:15 AM
 #65

From another thread:

http://www.youtube.com/watch?v=Ys0B0TFFVbw&feature=g-all-u


Seems like de ja vu all over again. The calendar says 2012 but it feels very much like 2002. Anyone who knows any Argentines should talk bitcoin Ad nauseam.

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May 20, 2012, 05:01:09 PM
 #66

Do most people there have savings, and would lose money if the currency drops, or have loans, and would benefit?

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May 20, 2012, 07:33:39 PM
 #67

Do most people there have savings, and would lose money if the currency drops, or have loans, and would benefit?

They do, Argentina still keeps a middle class. They count on the currency dropping, and what they'd usually do is investing in Real Estate or buying foreign currency (US$ mainly). But Cristina Fernandez Kirchner's government is trying to lock them up to AR$ and closing in tighter controls and simply refusing exchange. This has been going on for a while... I'd say their reserves must be lower than advertised. I opened this thread earlier this year as measures starting to look markedly more worrying. Something is going on.

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May 22, 2012, 01:57:58 PM
 #68

I think it's possible that Argentina could be ripe for a Bitcoin related tipping point.  There is a decent tech community in Argentina.  Around the time of their last currency collapse (early 2000's) I worked on an open source project where there was a sizable number of Argentinian's involved.  They were offering to do software development work for very cheap prices due to the currency devaluation.  Given that this currency event is such a recent memory and given there is a decent tech community, Bitcoin might have a chance there.  However, I think a few things need to be in place ahead of the event.  

First and foremost, there need to be local bitcoin exchanges.  With capital controls in place, foreign exchanges won't do them much good.  It could be readily apparent to everyone that Bitcoin has value on mtgox, but if you can't sell your Bitcoins on mtgox and transfer it back into Argentina, mtgox is of no use to them.  And capital controls will only get more restricted as the event nears.

Second, there needs to be a decent and visible amount of people willing to accept Bitcoin in exchange for goods and services domestically.  The basics (food, shelter, clothing) are essential items that need to be readily obtained with Bitcoin.  This will give people the confidence that if they hold some Bitcoins, they'll be able to spend them to obtain these necessities.  It's of little use to people in Argentina to be able to purchase mining rigs with Bitcoin when their primary concern during a currency crisis it putting food on the table.

Third, there need to be a critical mass of people in Argentina that hold Bitcoin in advance of the currency devaluation.  If very few people in Argentina have Bitcoins, then to obtain Bitcoin, it may be necessary to market and sell goods or services to international buyers that have Bitcoin.  That might be challenging.  Also, if only a very tiny portion of people have Bitcoin, those few holders of Bitcoin would command a very disproportionately large percentage of purchasing power present in the country.  This might cause others to be reluctant to use it for a currency as opposed to something like silver coins or the remaining physical USD in circulation.  The people that have Bitcoins now would actually do better with their investment if they tried to spread some of it around to other people.

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May 22, 2012, 07:00:38 PM
 #69

I was in Argentina last week hunting. Had no problems exchanging my money back to USD prior to re-entering the country. Either way if they do transition to BTC that would be incredibly exciting! Smiley
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May 23, 2012, 04:28:34 AM
 #70

Also, if only a very tiny portion of people have Bitcoin, those few holders of Bitcoin would command a very disproportionately large percentage of purchasing power present in the country.  This might cause others to be reluctant to use it for a currency as opposed to something like silver coins or the remaining physical USD in circulation.

People use the argentine peso as currency; what is missing is a store of value. The problem with Bitcoin is that an exchange in Argentina would have to operate clandestinely (nobody will want to stick the head). But hey, buying dollars, gold and silver is virtually prohibited, and people are pretty comfortable with the black market. So it doesn´t seem unreasonable to think that many people may start to look at Bitcoin as a good alternative.

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May 23, 2012, 08:48:36 AM
 #71

An exchange is 100% necessary.  Bootstrapping from an existing currency is only one way of getting bitcoins into an economy.  Admittedly it's the easiest -- but perhaps "easiest" becomes a less accurate term in less free countries like Argentina.

If Argentinians started earning bitcoins directly, then no exchange would be necessary.  The exchange would not be for dollars, but would be for "goods and services".  The hardest part is finding something that some foreign owner of bitcoins wants to buy.  However, it could also be that a foreign owner of dollars, who is already buying from Argentina can be persuaded to settle bills in bitcoin.

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May 23, 2012, 09:07:14 AM
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An exchange is 100% necessary.  Bootstrapping from an existing currency is only one way of getting bitcoins into an economy.  Admittedly it's the easiest -- but perhaps "easiest" becomes a less accurate term in less free countries like Argentina.

If Argentinians started earning bitcoins directly, then no exchange would be necessary.  The exchange would not be for dollars, but would be for "goods and services".  The hardest part is finding something that some foreign owner of bitcoins wants to buy.  However, it could also be that a foreign owner of dollars, who is already buying from Argentina can be persuaded to settle bills in bitcoin.

Without that bootstrapping there's little you can do there. The current government restricts not just the purchase of foreign currencies and precious metals, but also imports. For mining, you need equipment that effectively is a lot more expensive than elsewhere, you cannot easily import mining equipment. If they decided to start buying and selling products and services they'd be very strictly limited to services since they cannot reliably buy outside.

Maybe web designers, programmers, etc can offer their services directly in BTC and then use it for complementary services, as a complement to their main salary typically in AR$/US$. It's limited, but it's something.

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May 23, 2012, 10:35:55 AM
 #73

An exchange is 100% necessary.  Bootstrapping from an existing currency is only one way of getting bitcoins into an economy.  Admittedly it's the easiest -- but perhaps "easiest" becomes a less accurate term in less free countries like Argentina.

If Argentinians started earning bitcoins directly, then no exchange would be necessary.  The exchange would not be for dollars, but would be for "goods and services".  The hardest part is finding something that some foreign owner of bitcoins wants to buy.  However, it could also be that a foreign owner of dollars, who is already buying from Argentina can be persuaded to settle bills in bitcoin.

Without that bootstrapping there's little you can do there. The current government restricts not just the purchase of foreign currencies and precious metals, but also imports.

I'm talking about exports though.  People in Argentina selling goods and services to foreigners is exporting.  I'd very surprised if cash-strapped Argentina banned exports.

For mining, you need equipment that effectively is a lot more expensive than elsewhere, you cannot easily import mining equipment. If they decided to start buying and selling products and services they'd be very strictly limited to services since they cannot reliably buy outside.

Argentina must export more than fossil fuels?  What about the agricultural sector?  But services too would be possible.

Maybe web designers, programmers, etc can offer their services directly in BTC and then use it for complementary services, as a complement to their main salary typically in AR$/US$. It's limited, but it's something.

Exchange rates sort everything out.  If only people could be persuaded to use bitcoins within Argentina, then the demand within Argentina would rise, and the few that were entering the country via service providers/farmers would be enough to run an economy (remember there are eight decimal places of divisibility).  The more valuable BTC became within Argentina, the more attractive the export business would become.

The ARS/BTC rate would sky rocket, just as the ARS/USD rate is going/has done anyway.  At some point, ARS would only be useful for paying taxes, but you'd be able to buy so many for a few BTC that it wouldn't matter in the slightest.   Importantly: BTC would allow a capital-control free existence.  The stupidity of the government wouldn't be passed on to the people, rather the stupidity of the government would be visited on the government.

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May 23, 2012, 10:58:04 AM
 #74

An exchange is 100% necessary.  Bootstrapping from an existing currency is only one way of getting bitcoins into an economy.  Admittedly it's the easiest -- but perhaps "easiest" becomes a less accurate term in less free countries like Argentina.

If Argentinians started earning bitcoins directly, then no exchange would be necessary.  The exchange would not be for dollars, but would be for "goods and services".  The hardest part is finding something that some foreign owner of bitcoins wants to buy.  However, it could also be that a foreign owner of dollars, who is already buying from Argentina can be persuaded to settle bills in bitcoin.

Without that bootstrapping there's little you can do there. The current government restricts not just the purchase of foreign currencies and precious metals, but also imports.

I'm talking about exports though.  People in Argentina selling goods and services to foreigners is exporting.  I'd very surprised if cash-strapped Argentina banned exports.

For mining, you need equipment that effectively is a lot more expensive than elsewhere, you cannot easily import mining equipment. If they decided to start buying and selling products and services they'd be very strictly limited to services since they cannot reliably buy outside.

Argentina must export more than fossil fuels?  What about the agricultural sector?  But services too would be possible.

Maybe web designers, programmers, etc can offer their services directly in BTC and then use it for complementary services, as a complement to their main salary typically in AR$/US$. It's limited, but it's something.

Exchange rates sort everything out.  If only people could be persuaded to use bitcoins within Argentina, then the demand within Argentina would rise, and the few that were entering the country via service providers/farmers would be enough to run an economy (remember there are eight decimal places of divisibility).  The more valuable BTC became within Argentina, the more attractive the export business would become.

The ARS/BTC rate would sky rocket, just as the ARS/USD rate is going/has done anyway.  At some point, ARS would only be useful for paying taxes, but you'd be able to buy so many for a few BTC that it wouldn't matter in the slightest.   Importantly: BTC would allow a capital-control free existence.  The stupidity of the government wouldn't be passed on to the people, rather the stupidity of the government would be visited on the government.


Exports are under tight control too. You'd need to show the money for them. They'd want tax, and the foreign currency for them to keep - giving you AR$.

Argentina is not remotely a free market economy at the moment.

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May 23, 2012, 11:16:32 AM
 #75

Exports are under tight control too. You'd need to show the money for them. They'd want tax, and the foreign currency for them to keep - giving you AR$.

Argentina is not remotely a free market economy at the moment.

They're more insane than I thought.

Okay.  Bitcoin isn't going to practically help them.

What about setting up an alternate chain?  Argencoin.  That can be issued and used within Argentina fairly easily -- then, since Bitcoin-technology-Argencoins can't be prevented from being transferred, set up a BTC/AGC exchange anywhere you like outside of Argentina's control?

AGC/ARS exchange should be possible because it's internal.
AGC/BTC exchange is possible because it can't be stopped.


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May 23, 2012, 03:53:16 PM
 #76

Okay.  Bitcoin isn't going to practically help them.

Bitcoin IS helping anyway. Freedom will be implemented, like it or not...

What about setting up an alternate chain?  Argencoin.  That can be issued and used within Argentina fairly easily -- then, since Bitcoin-technology-Argencoins can't be prevented from being transferred, set up a BTC/AGC exchange anywhere you like outside of Argentina's control?

AGC/ARS exchange should be possible because it's internal.
AGC/BTC exchange is possible because it can't be stopped.



Hey, do you read my mind?

By the way... Little (almost none) work has been done yet, but if somebody's interested, help is more than welcome (and needed)...
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May 23, 2012, 04:00:53 PM
 #77

Okay.  Bitcoin isn't going to practically help them.

Bitcoin IS helping anyway. Freedom will be implemented, like it or not...

True enough.

What about setting up an alternate chain?  Argencoin.  That can be issued and used within...

Hey, do you read my mind?

HA!  Awesome.

I do think, that when an idea's time has come, multiple people get it at the same moment.  It's obviously destined to be done.


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May 23, 2012, 04:32:52 PM
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Well, that's interesting but wouldn't that coin be very tied to their economy? I think they'd rather have BTC at a premium rather than going that way and having to deal with the massive fluctuations. If you make a crypto-currency to trade it mainly in AR$, it's going to be just as "bad currency" as the AR$.

They could, for instance, sell stuff online partly in US$/€/£ and partly in BTC, declare the non-BTC part and be reasonably safe. But then again, they will have a hard time selling or using these BTC over US$. In Argentina, dealing with currencies outside of their central bank is outlawed! and a lot of people think that's normal and even supported. I'm amazed Argentina still manages to function reasonably well considering all the measures put in place.

Paradoxically, I think one of the reasons for them not to have more BTC activity is that the US$ they have are more valuable for them than they are outside of Argentina! they just don't want to get rid of them, as finding more becomes increasingly hard.

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May 23, 2012, 06:06:59 PM
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Well, that's interesting but wouldn't that coin be very tied to their economy? I think they'd rather have BTC at a premium rather than going that way and having to deal with the massive fluctuations. If you make a crypto-currency to trade it mainly in AR$, it's going to be just as "bad currency" as the AR$.

As "bad" as ARS except without the capital controls, export restrictions and ability to be debased by the government.  There's nothing wrong with the Argentinian economy that the removal of their economically inept government wouldn't fix.  Which is exactly what such a currency would do.

They could, for instance, sell stuff online partly in US$/€/£ and partly in BTC, declare the non-BTC part and be reasonably safe. But then again, they will have a hard time selling or using these BTC over US$. In Argentina, dealing with currencies outside of their central bank is outlawed! and a lot of people think that's normal and even supported. I'm amazed Argentina still manages to function reasonably well considering all the measures put in place.

Well yes, isn't this where the Argencoin idea that you're rejecting comes in?

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May 23, 2012, 06:19:02 PM
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Well, that's interesting but wouldn't that coin be very tied to their economy? I think they'd rather have BTC at a premium rather than going that way and having to deal with the massive fluctuations. If you make a crypto-currency to trade it mainly in AR$, it's going to be just as "bad currency" as the AR$.

As "bad" as ARS except without the capital controls, export restrictions and ability to be debased by the government.  There's nothing wrong with the Argentinian economy that the removal of their economically inept government wouldn't fix.  Which is exactly what such a currency would do.


There is something very wrong with the Argentinian economy: monetary policy. You cannot possibly trade a cryptocurrency mainly and AR$ and isolate it from their monetary policy.


They could, for instance, sell stuff online partly in US$/€/£ and partly in BTC, declare the non-BTC part and be reasonably safe. But then again, they will have a hard time selling or using these BTC over US$. In Argentina, dealing with currencies outside of their central bank is outlawed! and a lot of people think that's normal and even supported. I'm amazed Argentina still manages to function reasonably well considering all the measures put in place.

Well yes, isn't this where the Argencoin idea that you're rejecting comes in?

Except with Bitcoin instead? or at least something global.

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