The ‘Coldplay Dollar’, ‘Qatar Dollar’, and Argentina’s Bizarre Finances
The government’s refusal to admit reality has led to some pretty incredible scenarios.
Explaining Argentina’s economy and politics to people who don’t live here is always a challenge, but the last couple of years have truly been wild.
And now, we’re living in the most confusing time in recent memory. Nobody knows what anything costs, and no salary is enough to live on.
Right around the time we’re heading for triple-digit inflation and everyone is suffering, the government insists that the peso hasn’t experienced a massive devaluation.
That leads to some impressive rhetorical magic tricks on part of the economists in the government.
Restrictions to Deny Reality
Denying devaluation, a fact that’s clear as day to anyone with eyes and ears, is a strategy introduced by the governments of Cristina Fernández de Kirchner (2007–2015).
As the peso lost its real value with inflation, people began saving money in a more reliable currency: the dollar.
The problem was that before long, people were buying way too many dollars and burying them under their mattress or in overseas bank accounts, or simply using them to buy goods and services not available in Argentina.
The government needed to control the leaking of dollars out of the banking system, so they… stopped it, but didn’t really tell anyone. I found out one January after crossing the border to Uruguay for a beach vacation and finding out I couldn’t use a debit card to get cash.
It’s a great surprise to get when you’re abroad.
The government later came out with the scheme and its purpose, and began an all-out war on people buying anything imported.
These restrictions were called the cepo, and they were supposedly a limit to buying foreign currency beyond your means. In reality, it limited the purchase of foreign currency altogether, as well as many imported goods.
You could not buy an iPhone in an official store in Argentina for years. Only Argentinian phones.