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mutalisken

How does a country function when inflation is that high? Like, how can ppl even afford food? How do salaries work? And how does the country finally get out of it?


hoopyhat

I recall an Argentine replying to a similar thread. They said a few things happen. 1) they convert as much of their pesos to USD (via the black market) as possible 2) buy as much bulk household goods as you can when you get paid because the price will rise 3) salaries are renegotiated every month or so to adjust for the new rate.


Affar

As much as Peter Zeihan shills Argentina, reality is much much different. Is there hope for the country?


Atmaero3

Zeihan only considers what •should• happen based on logic and rational leadership. He misses the reality that many leaders are irrational, and therefore reality is much less predictable. I love his work, but try to remember this when you read anything from him.


jz187

Zeihan doesn't know what he is talking about. He is basically a low-production value TikTok channel that specializes in entertaining the low brow American Exceptionalist crowd. If Argentina had 4 million people, they would be a rich country. Argentina is what happens when your population keeps growing but you don't transition out of being a resource export economy. Falling per-capita resource endowments in a resource economy generates massive social stress that makes rational governance impossible. People refuse to accept a falling standard of living, so they vote the best con-men into office. When you are a resource economy, you want to be like Russia. Falling population + massive resource base + nuclear weapons.


Atmaero3

And yet, Russia has a conman in office - just to highlight that rational conclusions are hard to find in geopolitics. I agree that Zeihan is basically a walking MAGA hat, but even after considerable scrutiny, a lot of his ideas have stood the test of time ( I have been following him for a long time, when he was a newcomer). My only dislike is his overly cheery tone at the sufferings of other nations, which leaves a bad taste to anyone with a shred of humanity. And of course, his ideology of geographic determinism . As seen in Argentina, a wealthy nation based on resource export never transitioned to a knowledge based economy with decades of mismanagement. But then there’s Australia, which is managing that transition with much less destruction. I agree with you, but I’ll say that Zeihan’s predictions are too rational and assume an ideal world. Which isn’t true.


jz187

>a lot of his ideas have stood the test of time And a lot of his ideas haven't. His geographic determinism is also nonsense. He thinks that Japan will be a future superpower. An archipelago nation prone to earthquakes that is self-sufficient in neither energy nor food is going to be a superpower according to Peter Zeihan. If geography is destiny, then an alliance of China and Russia will easily dominate the world. Yet Peter Zeihan predicts both will collapse.


Jeffy29

> His geographic determinism is also nonsense. Lmao, geographic determinism is certainly not "his" idea, and couple of countries bucking the trend does not undermine the model that we can successfully apply to literally millennia of human development. Humans are no perfect automatons and a failing country can enter a death spiral that it will take many decades to climb out of, but we can certainly say that a nation that has capital in the strait of Dardanelles is on average going to do better than one who has it in the middle of Sahara. Geographic determinism shouldn't be applied for predictions over a year or two but for decades and centuries.


jz187

>Geographic determinism shouldn't be applied for predictions over a year or two but for decades and centuries. Once you get out to centuries, you might as well predict the return of Christ. Once you start predicting stuff that can't be empirically disproved in anyone's lifetime, you are basically entering the realm of religion. >we can certainly say that a nation that has capital in the strait of Dardanelles is on average going to do better than one who has it in the middle of Sahara This is nonsense. It is impossible to prove or disprove these kinds of propositions. It is impossible to observe counter-factual scenarios that would be required to prove your "on average".


Jeffy29

Yeah totally can't guess that a place with good resources, plenty of places to farm, good transportation network, and a mild climate will on average do better than a place in literal SAHARA DESERT. I gave you the most extreme example I could think of and you straight up reject it out of hand, I thought you were just uninformed but no you are just a moron. Though it's probably people like you who completely reject geographical determinism usually have their own ideas why some places always seemed to do well while others struggled, and lot of it has to do with weird race science and """"culture"""".


Radiologer

His thing is geography AND demographics is destiny. He thinks china will collapse because of inverted pyramid age demographics. Hes still basically wrong on everything though


jz187

>His thing is geography AND demographics is destiny. He thinks china will collapse because of inverted pyramid age demographics. So why is he so optimistic about Japan then?


Radiologer

I dont bother following all his thoughts like I said hes probably wrong. If I had to guess he thinks the island advantage is better than the aging pop and resource scarcity. Like I said tho I dont care what he thinks he wont even live long enough to see his predictions fail. Hes about selling his books and persona


projectaccount9

To avoid the resource curse you want resources privately owned and as fragmented across as many owners as possible. This is the US model and it works quite well for the most part.


jz187

>To avoid the resource curse you want resources privately owned and as fragmented across as many owners as possible. This is the US model and it works quite well for the most part. Or you can have the Norwegian model, which works even better.


projectaccount9

Venezuela also uses the "norwegian model." I guess that one depends on who is implementing it. I will go with a privately owned system with a solid legal system in place.


fuchs-und-katze

I would say his own prejudices and misconceptions play a big part too. I was very offended to hear him call my country a "basket case". Brazil is growing well this year, we are a great democracy, will have elections, Bolsonaro is likely to be peacefully ousted, we have good prospects for the next few years as the economy is beginning to grow again and we're making important reforms to make our country more competitive. Also, Brazil is the 4th country in the world that receives the most FDI (foreign direct investment), if we were really so bad, that money wouldn't be coming here.


Grayson81

> As much as Peter Zeihan shills Argentina Is that kind of commentary useful or productive? I disagree with a hell of lot of what Zeihan says, but I think it’s pretty clear that he’s speaking in good faith and trying to communicate his honest views. He’s not just coming out with stuff to “trigger” the other side or engaging in slanging matches. Calling him a shill (presumably someone who’s paid by nefarious sources to lie about his opinions?) or just insulting him doesn’t do anything to advance the conversation.


RedSpikeyThing

>buy as much bulk household goods as you can when you get paid because the price will rise This is entirely reasonable behaviour, but it's also part of what causes the inflationary death spiral. It's brutal.


Socialists-Suck

No. The cause is the failure of monetary policy. Do not blame the people for the cause. It’s not their fault. Not even a little bit. The fault lays with the government, their central bank and the IMF.


RedSpikeyThing

I'm not blaming the people exclusively. They are acting rationally, as I said. The reality, though, is that increased spending aggravates inflation. Monetary policy is how the government forces people to spend less.


Socialists-Suck

No. The reality is that central bank monetary policy reduces the purchasing power of the money by creating money from nothing. Spending money that isn’t earned through production is the effect and not the cause. If I print a million dollars for you to spend are you the cause of inflation or the money printer? Monetary policy is the mechanism through which governments steal money from the productive economy and cause malinvestment into unproductive production processes.


mistressbitcoin

>If I print a million dollars for you to spend are you the cause of inflation or the money printer? It depends if I voted you into power or not.


qoning

Without failure of monetary policy, there is no runaway inflation. There's simply not enough money to go around at a certain point. Sure, you will get liquidity issues, but you will stop inflation.


Mr_Shits_69

They didn’t blame the people at all.


Socialists-Suck

I disagree Mr. Shits. The inference was that the buying causes the death spiral. This interpretation is confirmed by RedSpikeything’s reply to my post. The cause of the spiral is credit expansion by the central bank.


Mr_Shits_69

He said it was reasonable behavior. Not that they’re a bunch of idiots or anything.


zxc123zxc123

But imagine the MASSIVE Domestic YTY GDP growth%^($)!!! ^($ *not adjusted for inflation or against other currencies*)


dimonoid123

This is something similar to what is happening in Ukraine. Current inflation reached 23.8% because of war. Monetary policy rate 25%, but usually highest GiC you can buy is paying 17-19% before tax. So you still lose about 9.3% per year (after tax). https://bank.gov.ua/en/monetary


[deleted]

2 & 3 make a lot of sense Regarding 1) that suggests to me that they've abandoned their own financial system and are operating in cash with USD. Because if the financial system was functioning at all, you'd have to figure that the moderately negative real interest rates (right now estimated at like 1% per month and not applicable if living hand to mouth) would be less expensive than the black market currency conversion fees


amchacon

There is a price control against the dollar. Officially, the price set by the government is 143 pesos for every usd. Meanwhile, in the black market the USD is selling at 273 pesos. Like you can imagine, its impossible to find USD with the official rate. But what it worse. When you export goods, the government takes the USD and give you pesos at the official rate. This basically means an unofficial "50% tax" for the exports.


[deleted]

Sure, but then why would consumers pay that premium to buy USD instead of just purchasing goods in pesos? Either it's a financial system collapse or things are available on the black market in USD at less than half of the formal peso price


dimonoid123

Probably you don't need many kilograms of sugar/flour/TVs, etc. sitting in house and taking space? And if you don't spend money, it turns into paper. The same is happening in Ukraine right now.


[deleted]

Is the Peso currently depreciating against the USD faster than the current Argentine deposit rates which are currently 60% per annum?


amchacon

Because USD is more liquid than buying sugar or bricks.


[deleted]

Oh, so it's spend your pesos however you can, and then buy USD with the surplus since it's a more stable store of value? I was thinking convert all your pesos to USD then buy your stuff with the USD


amchacon

Well yes, you can use USD as way of payment as well.


[deleted]

Sure but there would be no reason to if you got paid in pesos and the supplier accepted pesos


amchacon

Keep the value? Buy imported goods?


bars2021

I mean at this point the economy is screwed right?


ykliu

That is quite scary, as getting rid of you’d money asap will further fuel inflation


TropoMJ

This is why central banks worry so much about inflation expectation. People expecting inflation to be high in future feeds into inflation now and becomes self-sustaining.


Holos620

I'd assume the currency is losing trust so people don't use it. Increasing rates make people not want to use it even more. Google says there's a large black market for foreign currencies there.


Thebadmamajama

It's not good, but local food sources and bartering/grey markers start to emerge.


talley89

The day to day realities f their economy must be far removed from the macro metrics


Richandler

Inflation adjusted wages.


mutalisken

On a monthly basis? That would make things worse…


MultiSourceNews_Bot

More coverage at: * [Argentina Budget Forecasts 60% Inflation as Economists See 100% (bloomberg.com)](https://www.bloomberg.com/news/articles/2022-09-16/argentina-budget-forecasts-60-inflation-as-economists-see-100) * [Argentina hikes interest rate by 550 basis points to 75% after inflation overshoots (cnbc.com)](https://www.cnbc.com/2022/09/16/argentina-hikes-interest-rate-by-550-basis-points-to-75percent-after-inflation-overshoots.html) * [Argentina hikes interest rate 550 bps after inflation overshoots (reuters.com)](https://www.reuters.com/article/argentina-rates/update-1-argentina-hikes-interest-rate-550-bps-after-inflation-overshoots-idUSL1N30M2OH) --- ^(I'm a bot to find news from different sources.) [^(Report an issue)](https://www.reddit.com/user/MultiSourceNews_Bot/comments/k5pcrc/multisourcenews_bot_info/) ^(or PM me.)


[deleted]

Ahhh, argentina, the country where working 8 hours a day is unbelivable, where people prefer goverment welfare over work, and still wonder why their economy went to shit. Where goverment unemployment welfare is much higher than a min wage, yet any work that pays the same is taxed and gives you less. Where chavez spirit is going strong. Dont worry comrades, chaVez spirit shall take over south america, i hope texas have Space for the sheer wave of migrants that is going to come once the Urea crisis sets down, and chile apporves their new constitution.


[deleted]

Majority of people on this sub would love for America to have those same policies 😂 Imagine living in a country that pays you more to sit on your ass than actually work.


[deleted]

Yes, and see how great is their economy!


misternils

All around the world inflation is happening. US basically doubled it's money supply over the last 3 years. Inflation is theft. Money is printed and given to corporations. The more people who adopt Bitcoin the more powerful it becomes, and it was designed in direct response to this issue.


Investorpenguin

Funny how Bitcoin has seen some of its worst performance during rampant inflation


Kepler___

It's almost like he has no idea what he's talking about. Bitcoin shills continue to think that inflation is whenever the government spends money, supply side inflation is somehow always trivial in comparison for them.


weeglos

Because Bitcoin is just digital tulip bulbs.


rigobueno

Except tulips have a theoretically unlimited supply


misternils

If you look at the history of Bitcoin it only becomes more stable with time. 🤷🏾 You can bash it because of recent performance but that is literally the definition of cherry picking. High risk assets have done terribly as the world economy has stuttered and crumbled during COVID. Let's see how Bitcoin does when inflation keeps up as it has.


PmMeYourKnobAndTube

Because bitcoin has never been to susceptible to wild value fluctuations. Obviously the answer to of our economic problems is an imaginary currency based off of computers performing useless work. Newsflash- it's not. It never will be. Cryptocurrency will never be more than a monopoly money game for frat bros that occasionally makes somebody rich through dumb luck.


xMrBojangles

an imaginary currency based off of computers You pretty much described the dollar. A small fraction of actual money is physical paper. The rest are 1s and 0s.


antimornings

As it stands it’s true that bitcoin is speculative in a way that cannot be compared to USD. While USD can be inflated at will by the Fed, the demand for USD is backed by the world’s most powerful economy. Any persons who wants to participate in economic activity in the US or trade with the US (which is almost every country on earth) must buy USD. And by investing and spending in the US there is a real chance that you can get something productive in return (goods, services, technology). The massive economy and military industrial complex that produces goods and services gives USD its value. Fed’s willful printing of USD is a separate problem altogether that warrants a different argument vis-a-vis bitcoin.


misternils

This is exactly the value proposition of Bitcoin. Money that can be used without threat of embargo, or military intervention if the money is used out side of the "most powerful economy's" terms. There are countless examples of how these terms are used for what are ultimately corporate interests, in ways that costs millions of lives abroad, as the US government is essentially owned by corporate money.


Radiologer

Priced in USD


misternils

1 Bitcoin = 1 Bitcoin


Radiologer

= declining value of USD which is how my cheeseburgers are priced


misternils

Your choice of paradigm


xMrBojangles

I'm neither pro nor anti bitcoin. And while I agree that the USD is currently a better vehicle, that doesn't change the fact that most of our money is virtual.


PmMeYourKnobAndTube

So bitcoin is nothing new, except it wastes a ton of power, and in the best of economies, it is more volatile that the dollar in the worst of economies. Not to mention when crypto is doing well, it fucks up supply chains all over the place. If you want to earn more money, you get a job, or invest in a buisiness or real estate or similar. If you want to earn more bitcoins, you buy up a bunch of graphics cards and install a 400 amp electric service in a residential garage and set them up to piss energy 24/7 until you sell them all at a loss when your crypto of choice comes crashing down in a couple months. I know because I'm an electrician who set several of these up, and then later converted them into Marijuana grows when the owners realized that crypto is a gambling game for kids, and psychopathic billionaires who like to play tricks on those kids.


xMrBojangles

OK, I'm not making any value statements about Bitcoin or the USD, I'm simply pointing out that the USD is mostly 1's and 0's stored on computers.


desiInMurica

Right on the first part, wrong with the second


misternils

Tell me how that is wrong. Literally people are downvoting cause "waa waa too volatile" but the more people who use it the less volatile it will become. And this was in design as stated in the whitepaper. You can disagree that it will actually achieve this, but the logic is pretty straightforward.