this post was submitted on 20 Nov 2023
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[–] [email protected] 6 points 1 year ago (11 children)

What is the rationale behind switching to the US dollar? I sort of get why US libertarians are opposed to fiat currency (they don't want the Fed to have the power to interfere in markets), but Milei just wants to switch to a fiat currency that someone else controls? What makes him think that would end well for Argentina?

[–] cyd 20 points 1 year ago (7 children)

Argentina's runaway inflation is caused by the central bank printing money (to finance the government's out of control spending). The rationale for dollarization is to remove the ability for the government to do this. It's not an inherently crazy idea, since (i) there are smaller Latin American countries that use the dollar, and (ii) the dollar is already used de facto for many purposes in Argentina because of how debased the peso has been. But there are lots of practical problems; notably, Argentina simply does not own enough dollars in the entire country to keep the economy running normally if they switch (whatever "normally" means for an economy like theirs).

[–] ABCDE 1 points 1 year ago (1 children)

Which other countries use it in Latin America? There are places which have used it relatively successfully, and de facto usage at least gives people more confidence.

[–] cyd 10 points 1 year ago

Ecuador, El Salvador, and Panama.

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