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You were way ahead of the curve in what you perceived in the coming collapse of Argentina. I just read this and you came to mind. I thought I would share the article.E-
Hi, I’ve been receiving lots
of email about this article.
Remember that scene from the
movie “Braveheart”, where Mel Gibson says he’s William Wallace and one of the
guys says that cant be because William Wallace is seven feet tall and has arms
as wide as tree trunks or something along those lines? This somewhat reminds me
of that. I’m sure that the person that wrote it didn’t mean anything by it but
there are several inaccuracies that I’d like to address. We all make mistakes
of course and as time goes by memories tend to blur a bit, happens to me all
the time. But I believe its important to stay as accurate as possible so that
any lessons gained from these events are also truthful.
First, about the people
doing battle with the police. Anyone doing battle with the police at any time before
or after the fall of President Fernando DelaRua’s government was either rioting or looting. The original “cacerolazo” of December 19th in
Plaza de Mayo was a peaceful demonstration against a president that had lost touch
with reality, but that had nothing to do with those destroying private property
and looting. It is true that some innocent people died, caught between the
looters and the police, and that cop got “trigger happy”, yet its hard to believe
that everyone that got shot right in the middle of a mass looting in a
supermarket just happened to be there looking for his son, his uncle or the
neighbor’s dog. If you are in the middle of a violent looting and cops trying
to stop it bad things can happen to you. Normal, by this I mean law abiding citizens didn’t
do battle with the police. The country was falling apart, and the last thing we
needed was another roadblock, another “imperialist” McDonald being trashed or
another looted supermarket.
While bank accounts where
frozen, you could still use credit and debit cards. The problem was that many
stores, especially smaller ones, didn’t accept them any more in Argentina.
For some time it was only big chain store accepting them in the country. Still, if you were abroad, say in the United States, you could use your credit
card without a problem. I know this well
because we went Aspen, Colorado, for a week on January 2002, a couple months before I got married.
My folks had invited us all and there was no point in canceling the holidays. The
“corralito” was an attempt to stop the flight of capital from the banking system, money leaving banks
and going either abroad or under people’s mattresses. In fact, as an incentive for people to do this, they would
give you back 5% from taxes if you paid with debit cards. I remember this well
too because I would deposit the money I would use for making the monthly
grocery purchases just the day before going to the store, so as to take
advantage of the discount yet not leave money sitting there given the obvious
instability. That plus another 15% discount you got from the store when paying
with debit or credit card which the big chains were still accepting made for a
much appreciated 20% discount.
While it is true that electricity
went off often, its not true that stores run low on food. Sometimes there wasn’t
quick resupply of certain products. Sometimes rationing was imposed so as to
avoid hoarding and you could take maybe 1 pack of sugar per day or 3liters of
milk per day per family group, and even this you could avoid by going to
another store and buying there too. But other than the supermarket itself being
closed because of recent looting, as long as you had the money, cash or money
in the bank for some of the big stores that accepted credit cards, you could
buy as much food as you wanted. Don’t get me wrong, people did
starve to death and they still do, but because they cant afford the food, not because
there isn’t any.
An important point, food never became a medium of exchange. This simply never happened. This
I want to clarify because if not people may be lead to believe that it could be
a possible scenario. At least during the economic collapse that took place in
Argentina I can assure you that food never replaced currency. The closest to
that was coupons used in some of the various barter clubs, Clubs del Trueque,
which did become popular but never did it replace the local defaulted peso,
even less, a much sought after shiny US dollar bill. Even gold, which became sought after for selling
in some of the “We buy Gold” stores that sprouted everywhere within days, even
then it didn’t become an alternative currency used by people.
People did accept the local
currency, the peso, but they would do so at whatever exchange rate it had that
day with the US dollar, so within days the peso had devaluated to one third of
its value. Still, in spite of that, if you have the cash and enough of it, you
bought as much food, gas, or any other goods and service as you wanted.
About leaving the country
with cash, back in those days it wasn’t nearly as hard as it is now, at least
hard when doing it legally. Especially if the cash you had could be fitted in
your pants, it was really not a problem at all to just keep it there, walk through
customs and security and board a plane that would take you abroad. The crazy restrictions and extra control regarding
ordinary people traveling maybe with a bit too much cash started after the
reelection of Cristina Kirchner in 2011, not in 2001.
The more accurate the
accounts, the better the lessons we learn from these events. Again, I’m not
saying any of this to discredit anyone and I know that as time goes by many of these details are harder to remember.
If anyone has any questions or
would like to add anything feel free to comment below or send me an email.
Take care people.
FerFAL
7 comments:
If the US economy collapses, I wonder what currency Americans will hoard when the dollar becomes worthless?
1) Re what currency Americans will hoard if the dollar becomes worthless, I think the sporting goods stores currently show the answer: lead
Have you tried to buy ammo recently? heh heh
2) Both EU and China/Japan trade a lot with the USA --which has the largest GDP in the world, although the combined GDP of all of the EU slightly exceeds the US GDP.
So if the USA goes down, I think it will pull the rest of the world with it.
The US Midwest feeds much of northern Africa and the Middle East -- and if those grain supplies are cut off, I think Europe will be overwhelmed with a
Völkerwanderung.
http://en.wikipedia.org/wiki/V%C3%B6lkerwanderung#Climatic_factors
3) If, perchance, China breaks its trade link with the USA and prospers on its own by trade with the rest of the Pacific Rim, then obviously its currency would have value. However, the Chinese government does not allow its
renminbi to be used much outside of China.
In the past decade, a useful substitute has been the currencies of countries with metal ores of great value to China--the currencies of Canada and Australia.
In the past decade, the US dollar had gone from being worth 1.60 Australian dollars to 0.90 Australian dollars.
http://www.xe.com/currencycharts/?from=USD&to=AUD&view=10Y
4) Note, however, that the value of the dollar spiked upward for 1.5 years in 2008 when the economic crisis hit.
Note also that Australia's 20 million people have 3 BILLION Asians just to the north. Australia would be toast if the US Navy ever withdrew.
People don't realize the enormous power of the US Navy --
http://www.strategypage.com/fyeo/howtomakewar/databases/navy/navalforcesoftheworld.asp
US Navy: 302 China: 16 Japan:26
Russia: 45
5) Global trade depends upon the US Navy keeping the sea lanes peaceful and secure. If the US economy could not support the Navy, then global trade would collapse in the same way that ancient Rome's global trade/economy collapsed when the legions could no longer be supported -- a cascading collapse caused by a smallpox pandemic.
http://en.wikipedia.org/wiki/Crisis_of_the_Third_Century
(note especially section titled Economic Impact )
So to answer Anon, if the US economy collapses then Americans will hoard whatever currency their local feudal lord values.
However, serfs usually don't have that much spare change.
Anonymous 7:07:
I read many comments in survival forums like "US will become like Argentina when its economy collapses etc. etc."
Cool down my friend.
When Greece, Portugal, Spain, and Italy will become like Argentina, THEN the US will look like not like Argentina, but like Greece today.
Don't get me wrong, US is still a relatively healthy economy, plus its size, plus its 6000 nuclear warheads, plus 5-6 air carriers.
Nobody can treat US like EU treated Cyprus, even if its sovereign debt reaches 250% of GDP.
US is also still it the top twenty "corruption free" countries, Greece is 94th (out of 174) and Argentina scores 102.
You have a long way ahead!
Now to answer your question, Germany has decided a strong Euro policy, even if this ruins all other eurozone countries.
Its a risky policy since many weak countries may wish to exit but Germans bet they won't.
I wonder: When the Argentinian economy "collapsed", what effect did it have on global commerce and banking in general. What is that you say? Little to none?
Comparing the collapse of the Argentinian economy to the potential effects of the collapse of the American economy, and with it the reserve currency of the world banking system is akin to comparing dolphins to oranges. Not even the same genus, let alone species.
How many trillions of Argentinian pesos were tied up in the derivatives markets, globally? How much oil, again globally, is bought and sold in pesos? How many trillions (or quadrillions) of pesos are (or were) tied up in foreign countries or banks as an investment in the form of "treasury" type vehicles?
Like I said...comparing dolphins to oranges.
Indeed, it seems that in the US people tend to paint a possible economic collapse as worse than those that history has registered.
The difference is that while generations of Americans have lived with the Bretton Woods dollar, in other countries economic and currency collapses are still living memories. In this sense, the American people is potentially less resilient to deal with them psychologically, which perhaps explains exaggerations about them as typically goes around the Internet, reflecting more their heightened anxiety about them than their dynamics.
Thank you for this article. To me, it is uplifting after reading many doom and gloom articles. Not everyone is able to move to the American redoubt. Our culture has lost its moral compass, and the percentage of adults who cannot or will not do for themselves is increasing, but, by the Grace of God, we will have the fortitude to prepare and go forward.
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