“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.”
~ Ernest Hemingway, “Notes on the Next War,” Esquire magazine, September 1935
Joel Bowman with today’s Note From the End of the World: Buenos Aires, Argentina...
What a change a season makes…
A year ago, the long-suffering Argentine people stood at the crossroads of an historic election. Naturally skeptical, voters saw standing before them two candidates from the ghost of their country’s past, a couple of “known knowns.”
On the “left” stood the serpentine incumbent, then Minister of the Economy Sergio Massa, who had carefully overseen the near obliteration of his people’s money, the peso.
On the “right” was Patricia Bullrich, a stalwart of the conservative team, despised by pointy-headed liberals and tolerated by her own embattled party, mostly for want of a better option.
Then there was the imminently unelectable Sr. Motosierra, Javier Milei, a lunatic with a chainsaw who promised to disembowel the Leviathan, burn the central bank to the ground, and generally unleash anarchy upon the End of the World...
For many Argentines (including apparently slow-witted exiles who stubbornly call the place home), the elections looked by all accounts like another lost cause.
Indeed, even when the most unlikely of candidates prevailed, in una tormenta of sound and fury, many dismissed him as a “would be dictator,” a “fake libertarian,” or a “wolf in sheep’s clothing.”
Yet, the season was about to turn. Not even one year on from those dark and depressing days and spring has sprung here on las Pampas.
Dólar Blues
News this week shows the long-embattled peso continuing to rally against foreign currencies, including the USD. The “dólar blue” (that is, the unofficial or real exchange rate... the free market rate at which you actually exchange on the street), is at its strongest levels since May.
Back in June, in the gray depths of southern winter, a single US dollar bought you just on 1,500 pesos. Had you taken a modest fold of Benjamins to your local cueva (unofficial exchange “cave”) this mild spring morning, you would have noticed that the very same dollar now buys you a little less than 1,200 pesos.
Wealthy Argentines, meanwhile, are putting their money where their mouth is and, in a surefire vote of confidence, are onshoring billions in US dollars held abroad under a special “tax amnesty” program initiated by the Milei administration. Currently, private citizens can repatriate up to $100,000 tax free from overseas accounts, “no questions asked.”
Indeed, it’s almost as if... it’s their own, private money!
And Argentine’s are not the only ones bullish on the country’s future. The riesgo pais, the nation’s “country risk index,” an indicator closely monitored by investors looking to deploy capital in listed Argentine companies, continues to fall.
(The lower the number, the less perceived risk there is for foreign investors, including funds that are restricted from investing in assets, including foreign countries, that carry significant risk.)
This week, that risk index crashed through the 1,300 point barrier. Today it sits at 1,258, down 15% in the past 30 days alone.
And finally (for this pithy Note, anyway), the “sneaky tax,” commonly known as inflation, is fast disappearing into that good night, too...and fare-the-well!
This time last year, the Argentine peso was well along the all-too-familiar path to hyperinflation. Coupled with other too-stupid-to-abandon socialist policies – see: price controls – the impact of accelerating currency debasement led where it always leads: false price signals, broken markets... and empty shelves.
“Dear client, we apologize for not having the product you are looking for...”
So read the ubiquitous signs taped to supermarket shelves around the country a year ago, as reported in the local paper El Día, below (The headline reads: “Why are the supermarket shelves empty and what products are in short supply?”)...
Fast forward to today, and the story is vastly different. From an eye-watering high of 25.5% inflation per month in December, Milei and his team have managed to drag that figure back from a certain death spiral.
For Argentines struggling to makes ends meet, nowhere is slowing inflation more welcomed than in basic food and beverages at the supermarket. The National Institute for Statistics tracks the weekly price movements for a basket of goods. Back in December, prices at the store were rocketing up by 11.5% every week.
By last week, that rate had fallen to just 0.2%, the fifth consecutive week of declines and the fifth straight week under the 1% mark. See for yourself (from consultancy LCG)...
Hmm... a stabilizing currency, clear and reliable price signals, something approaching a functional market... what might be the consequences of such “lunatic” economics, we wonder?
Your editor snapped the short video clip above while picking up a few items at our local supermarket yesterday. As you can see, many items are 35... 40... 70% off, not to mention the “super oferta” (buy two; take three) special on all wines and spirits.
From bare shelves and evaporating money... to stores stocked with goods and deep discounts on popular products... all within 9 months.
It’s astounding what free(r) markets, free(r) minds and free(r) people can achieve in such a short time. Now to see if they can hold on to it here... and embrace it elsewhere. Here’s hopin’...
And now for your Notes From the End of the Week…
Final Notes…
Happily for liberty lovers (and woefully for central planners), freedom is in the ascendency in many places around the world.
It seems like barely a day goes by down here at the End of the World where some nonsensical, collectivist weed is not uprooted. And slowly but surely, people are catching on, thanks in large part to independent reporting.
Right here on Substack, for instance, tens of thousands of independent authors, journalists, investigators and opinion columnists are sharing their own perspectives on everything from politics to economics, financial markets to crypto investing, corporatist malfeasance and individual triumphs alike.
We may be small… but we are legion. And we are bringing down the mainstream narrative… one brick at a time.
As always, we are especially grateful to our generous Notes members, whose dues allow us to pursue this humble publication. If you would like to join our growing Notes community and help support the ideas of free markets, free minds and free people, please consider becoming a member today…
Stay tuned for more Notes From the End of the World…
Cheers,
Joel Bowman
Disinflation on the Pampas