Dickhead's Treatise on the Argentine Peso

Money is designed to perform three functions: A means of exchange, a unit of account, and a store of purchasing power. The Argentine peso is suboptimal as a means of exchange, because no one really wants it. It is suboptimal as a unit of account because the government is lying about everything pertaining to the accounts based on it. And, of course, it is terrible as a store of purchasing power since the inflation is so bad.

Money has several desireable characteristics: divisibility, portability, durability, and uniformity, among others. The peso fails the divisibility test since there is never any fucking cambio. It is starting to fail the portability test since the 100 peso note, worth well under $20 US in the real world, is the largest denomination and it is getting to the point where you need to walk around with a huge wad of them. Kinda reminds me of the Weimar Republic at this point. Durability is obviously lacking as anyone who has gotten a taped up five peso note in change at the Carrefour, only to have the very same bill refused at the very same place the very next day, can testify. Now they have even fucked up the uniformity by introducing the two peso coin, which no one wants either, and which can't be used on the buses.

Fixing the official exchange rate at an inflated level is a really bad idea from several economic standpoints. Can these idiots not remember that fixing it at 1:1 was a major cause of the collapse that occurred just eleven years ago? Apparently not. Fixing an exchange rate at an artificially high level works exactly like a tariff. A tariff works like a tax and causes a deadweight loss in the economy. Even worse, limiting Argie's access to dollars works like a quota. A quota is even worse than a tariff because it produces an even greater deadweight loss, because it turns the supply curve into a vertical line. This maximizes the area of the deadweight loss by maximizing the area of the deadweight triangle (because the base is a straight line). The US dollar is superior for several reasons. First, the printing press is under the control of the executive branch rather than the legislative branch like it is in Argentina and most or maybe all other Latin countries, there are significant impediments to its abuse at the hands of the executive branch. To with, the Fed is not dependent on federal appropriations (it funds itself by the fees it charges banks and by the profit it makes on its security holdings) , the Fed members'terms are staggered such that only two members can be appointed in one presidential term, and the members cannot be dismissed due to philosophical differences.

Hey Cristina, if you are listening, I am mongering in Panamá right now. They use the US dollar and beer is $3. 23 a six pack including the 10% sales tax. I just went through Chile and if you have dollars, Chileans are more than happy to take them. AND instead of trying to fuck gringos in the ass, they waive the sales tax on hotels for foreigners. Now there is a concept: allow people from comparatively wealthy countries to come to your country and spend money. Gee, doesn't that provide a source of hard foreign currency to facilitate international trade? Yes, it certainly does. And does effectively lowering the price by almost 17% stimulate demand for hotels? I am thinking the answer is again yes. Or, you could effectively raise prices by about 25% (the difference between Cristina's 4. 50 and the Xoom rate).

Let's review. What happens when supply is held constant and price goes up by 25% Ummm demand goes down by 20, ceteris paribus. But Cristina probably thinks Ceteris Paribus is a Uruguayan salsa singer and wouldn't know Adam Smith from John Quincy Adams.