Argentina Inflation and Black Market Money: A Report From The GroundSubmitted by Marc Clair on Fri, 02/22/2013 - 11:54
I recently returned from several weeks traipsing around Argentina and Uruguay. I make a point to leave the country several times a year, and I always meet interesting people and see amazing things. In the case of my visit to Argentina, the economics and liberty geek in me was also very interested in the effects of the current Argentine government’s socialist spending programs and its central bank’s corresponding inflationary policies.
One thing is clear about Argentines, at least the ones I encountered: they are largely an intelligent and informed people, with a healthy mistrust of banks and of government. Despite her popular re-election in 2011, the government of Cristina Ferandez de Kirchner is a largely unpopular one if my non-scientific surveys of people on the ground were any indication. People are very aware of the inflation occurring, and luckily they are equally aware that it is the policies of the Kirchner government that are responsible for it.
Since the economic collapse in 2002, the Argentinian economy has officially “recovered”, but much like the Bernanke-manipulated “recovery” in the United States, Argentina’s rebound has been driven largely by government spending and currency inflation. In the past couple of years this has been kicked into overdrive. In 2012 the Argentine congress passed a rule change which would no longer require the
monetary base to be backed up by international reserves and kept out of government control. Now the central bank is headed by Mercedes Marcó del Pont, the Female Argentinian Ben Bernanke on Steroids. She and Kirchner have embarked on a spending binge that would make the Housewives of Orange County jealous.
The Argentine government’s official inflation figures, much like those in the United States and presumably with just about every other government in the world, are completely manipulated. Currently the government says that the annual inflation rate is 11.1%, while most independent analyses put it at around 26%. So what did two weeks on the ground in Argentina tell me? Continue Reading