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Argentines Are Hoarding 1 Of Every 15 Cash Dollars In The World

Tyler Durden's picture





 

With the shadow (or blue) market for Argentina Pesos already devalued by an incredible 50%, it is little surprise that the population is bidding for any store of value. Demand for luxury cars is soaring (BMW sales up 30% in the last 20 months) and Bitcoin activity is often discussed as the population transfer increasingly worthless Pesos into a fungible "currency" or domestic CPI protection; but it is USD that are the most-cherished item (despite a ban on buying USD) as hyperinflation hedges. But as Bloomberg Businessweek reports, a lot of US Dollar bills are tucked away somewhere in Argentina (in stacks of $100 bills since the number in circulation has risen from 58% of the total to 62% since 2008). One table is a 2012 Fed paper on demand abroad for US currency shows net inflows to Russia and Argentina has increased by 500% since 2006 (compared to US demand up around 10%). In fact, demand for large dollar transfers to Argentina since 2006 has outstripped demand for dollar cash overall in the world. It is safe to surmise from the data (that is relatively well guarded by the government) that over $50bn is being hoarded in Argentina (or well over one in every fifteen dollars). It is little wonder that the government is furiously digging at the country's undeclared (stashed under the mattress) wealth.

Blue (black market currency) versus green (official) exchange rate

 

Buying cars as CPI protection (via Bloomberg):

...

 

Argentines are buying more BMWs, Jaguars and other luxury cars as a store of value as inflation decimates their deposits and pummels the nation’s bonds.

 

Purchases of cars from Germany’s Bayerische Motoren Werke AG (BMW) and Jaguar Land Rover Automotive Plc, owned by India’s Tata Motors Ltd. (TTMT), jumped the most in April among brands sold in Argentina. The sales were part of a 30 percent surge in car sales from a year earlier that was the biggest increase in 20 months, according to the Argentine Car Producers Association. While used-car prices rose in line with inflation last year, or about 25 percent, peso bonds tied to consumer prices fell 13 percent. The drop was the biggest in emerging markets.

 

...

Hoarding USD Bills (via Bloomberg):

...estimated that in the early 1990s Argentines held $20 billion in cash, a number that by 2006 had grown to “perhaps $50 billion or more.” That year there was a total of about $768 billion worth of dollar-denominated cash in the world, which means that someone in Argentina held at least one out of every 15 cash dollars.

 

...

 

The Fed is chary with its data releases. One table in a 2012 Fed paper on demand abroad for U.S. currency tells us that the annual net inflow of commercial shipments of bills denominated in dollars to Argentina and the former Soviet Union has increased since 2006 by 500 percent. In 2011, that growth rate stood at 48 percent, while total demand for U.S. currency, in America and abroad, has increased only about 10 percent. It’s unlikely that all of that growth came from the former Soviet Union alone; otherwise, why include Argentina at all? Demand for large dollar cash transfers to Argentina since 2006, then, has outstripped demand for dollar cash overall in the world.

 

...

 

That is, the number of dollars has grown faster than growth in the U.S. economy and inflation would suggest, which means the dollars are going elsewhere.

 

...

 

...foreign use of U.S. dollars is tied not to average inflation over time, but a specific generational memory of hyperinflation.

 

...

 

We know that the number of hundreds in foreign circulation rose from 58 percent to 62 percent between 2008 and 2011. We do not have an estimate of where they went. The Fed does. It’s a good bet Cristina Kirchner does, too.

Charts: La Nacion

 


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Wed, 05/15/2013 - 10:38 | Link to Comment LawsofPhysics
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"Winning" - Can't wait for those dollars to start flowing back to the U.S. < sarc off >

Wed, 05/15/2013 - 10:47 | Link to Comment Tortfeasor
Tortfeasor's picture

Not happening. Ferfal took them all to Ireland when he escaped.

Wed, 05/15/2013 - 10:48 | Link to Comment francis_sawyer
francis_sawyer's picture

the JOKE is on them...

~~~

Would you like some "wine" to go with your cheesepopebux?

Wed, 05/15/2013 - 10:55 | Link to Comment French Frog
French Frog's picture

I knew that there had to be at least 1 positive somewhere in the world from TheBernank throwing $100 bills out of his helicopter

;-)

Wed, 05/15/2013 - 11:57 | Link to Comment WakeUpPeeeeeople
WakeUpPeeeeeople's picture

Has anyone heard what the going rate is for a dating/girlfriend experience in BA  (in USD, of course)? Might as well take advantage of the strong dollar while the taking is good.

Wed, 05/15/2013 - 13:16 | Link to Comment SafelyGraze
SafelyGraze's picture

1 out of 15 units of M1 withheld from circulation/velocityOfMoney

price-deflationary, at a rate of 6.7 percent

and the effect on the larger measures of money supply?

multiply by 5? 10?

of course, somewhere there is someone dis-hoarding M1 at a similar rate

at least, for the moment

Wed, 05/15/2013 - 22:13 | Link to Comment Jon Bong Jovi
Jon Bong Jovi's picture

I like your thinking. 

Wed, 05/15/2013 - 13:10 | Link to Comment Offthebeach
Offthebeach's picture

It's tough on the green shoot chewing sheeple. One minute you are discussing the latest Kardashian tramp ass, then you get crushed by a crate of falling Benjamins,shoved out the ramp of a unmarked Chinook with a bearded crew chief.

Wed, 05/15/2013 - 13:20 | Link to Comment Freddie
Freddie's picture

LOL!  +1

Wed, 05/15/2013 - 10:53 | Link to Comment Salah
Salah's picture

Remember when Argentina came 'this close' to full dollarization? but their little crooked Prez Carlos Menem queer'd the deal

http://www.cato.org/pubs/fpbriefs/fpb-052es.html

If things get bad enough with the looney-tunes running the place....they'll go all the way this time.

Wed, 05/15/2013 - 11:11 | Link to Comment TeamDepends
TeamDepends's picture

They had better cash those chips in real soon because the Big Winne Ponzi Casino  Royale (no spelling error) is about to go belly up.

Wed, 05/15/2013 - 11:11 | Link to Comment DeadFred
DeadFred's picture

The Argentines get the award for the country that has screwed the most given the rich resources they were blessed with. It's like they've had Obama for president for over a century... Sad

Wed, 05/15/2013 - 13:23 | Link to Comment Freddie
Freddie's picture

+1

These people are some of the most corrupt and clueless f**ks ever. Natural resources, plentiful food and these people practically created Detroit on the Pamapas.   Fools. They are corrupt frauds like that dope head loser and cheat Mardonna.  Fat idiot.

Wed, 05/15/2013 - 14:28 | Link to Comment putaipan
putaipan's picture

freddie your hollywood/reality displexia is showing again....

Wed, 05/15/2013 - 11:34 | Link to Comment caconhma
caconhma's picture

Luxury cars as a store of value? WOW! How stupid people can be?

Then, it is the US$ as a store of value. Somehow I do not feel sorry for these idiots.

Well, Argentina has a democratically elected president and a larger Jewish population. This is a perfect combination for an economic catastrophe (unless it is Israel who milks its American colony high and dry).

Is Argentina something we shall be looking to in a not too distant future?

 

 

 

Wed, 05/15/2013 - 13:18 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

Whats crazy to me is...  The solution is right there, in the name of their country!

Wed, 05/15/2013 - 12:48 | Link to Comment Weisshaupt
Weisshaupt's picture

Argentina is a wonderful place for Americans to move to in order to esacpe the comming collapse and police state.  When the dollar collpases the people there will just LOVE American refugees. You know, as long as they can pass for natives and never mention once they are originally from America. 

Wed, 05/15/2013 - 13:29 | Link to Comment Freddie
Freddie's picture

Yeah Doug Casey and Simon Black keep telling us that.  I worry that I might get "disappeared" on the back nine of Doug's golf course.  I would never make it back to my N Argentona mcmansion hacienda Doug designed for the expats.

My posting on ZH has probably screwed any chance of me getting into Switzerland because the Tylers mysterious war with the Swiss.  F them!  Some of us posters are Team America - so you better watch out Switzerland.  America F Yeah!

http://www.youtube.com/watch?v=DOEIruwzf54

F the Swiss and their censorship.  America or really Al Gore invested the Internet.

Matt Damon

http://www.youtube.com/watch?v=BUa5oHgYV2k

Wed, 05/15/2013 - 10:39 | Link to Comment Schlomo Bergstein
Schlomo Bergstein's picture

So that's where all the inflation went.

Wed, 05/15/2013 - 10:40 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Cleanest dirty toilet paper?

Wed, 05/15/2013 - 10:40 | Link to Comment venturen
venturen's picture

Wow they are picking the wrong currency!

Wed, 05/15/2013 - 10:41 | Link to Comment El Hosel
El Hosel's picture

....  And somebody's pulling the Gold finger.   http://www.youtube.com/watch?v=51Wg6k9cWhM

Wed, 05/15/2013 - 10:44 | Link to Comment syntaxterror
syntaxterror's picture

The IRS is our national health care provider now. Nothing to see here! move along!

Wed, 05/15/2013 - 15:15 | Link to Comment Offthebeach
Offthebeach's picture

Free IRS dentistry for selected critics of Dear Leader.

" Is it safe?"
"Safe?"
"Is. It. Safe?"

Wed, 05/15/2013 - 10:47 | Link to Comment freewolf7
freewolf7's picture

CA judges vs. IRS.

This'll be good.

Wed, 05/15/2013 - 10:49 | Link to Comment francis_sawyer
francis_sawyer's picture

"all hilarity will ensue" [in parlance]

Wed, 05/15/2013 - 10:52 | Link to Comment Son of Loki
Son of Loki's picture

EMR (electronic medical records) = end of any hint of privacy

Wed, 05/15/2013 - 10:41 | Link to Comment Stuck on Zero
Stuck on Zero's picture

Gresham's Law at work.

 

Wed, 05/15/2013 - 10:43 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Ben must be sending the Argentinians cart loads of soccer balls every day as a "thank you" for keeping all those clownbux out of the US.

Wed, 05/15/2013 - 10:50 | Link to Comment francis_sawyer
francis_sawyer's picture

Soccer balls?... Come on man!... You know that Diego Maradona needs 'something' to toot coke up his nose...

Wed, 05/15/2013 - 10:42 | Link to Comment syntaxterror
syntaxterror's picture

Good to hear somebody still wants dollars. Guess they haven't heard the news.

Wed, 05/15/2013 - 10:43 | Link to Comment Dr. Engali
Dr. Engali's picture

I'm glad the people of Argentina are dumb enough to take our inflation for us. That gives me more time to stack and stock up.

Wed, 05/15/2013 - 11:14 | Link to Comment Harbanger
Harbanger's picture

Don't laugh, capital controls are coming to the US soon. In Argentina's socialist war on economic reality, President Cristina has banned dollars in an attempt to stop capital flight out of the country. In the last three years, Argentina's government has seized private pensions to pay for all it's social welfare programs and raised government spending to 38% of GDP. Just like the Obama administration, they're lying about inflation and unemployment statistics and are now printing money like crazy.

Wed, 05/15/2013 - 11:49 | Link to Comment Dr. Engali
Dr. Engali's picture

I'm not laughing at any of this. the whole thing pisses me off. I know capital controls and more theft is coming. I've been preparing for just that. But the fact still remains that every U.S. dollar the people of Argentina hold is one less dollar's worth of inflation we have to deal with.

Wed, 05/15/2013 - 11:57 | Link to Comment Harbanger
Harbanger's picture

I know what you mean.  I just don't think it makes much difference to our inflation.  We're printing much faster than they're hoarding.

Wed, 05/15/2013 - 12:58 | Link to Comment mick_richfield
mick_richfield's picture

 

But the fact still remains that every U.S. dollar the people of Argentina hold is one less dollar's worth of inflation we have to deal with.

Unless they ... um .. you know ... are printing their own.

 

 

 

Wed, 05/15/2013 - 10:46 | Link to Comment Yen Cross
Yen Cross's picture

     Argentina should bundle luxury cars into paper contracts, and sell it like MBS. /s  Go for the Gusto you commie SOBs...

Wed, 05/15/2013 - 10:47 | Link to Comment the black arrow
the black arrow's picture

We are headed down to BA second week of June, any advice on bring us cash into the country? 100s 50s 20s 10s???
Thanks

Wed, 05/15/2013 - 11:02 | Link to Comment jstalin
jstalin's picture

Use xoom.com to transfer $ into pesos at the blue rate. Everything will be 40% off.

Wed, 05/15/2013 - 11:47 | Link to Comment Harbanger
Harbanger's picture

The point is to bring cash dollars and trade them there, not convert to pesos at a better rate.  The people there don't want pesos, they're being forced to use them.  Think of it as bringing blue jeans into the former soviet bloc, guaranteed to get you laid.

Wed, 05/15/2013 - 12:24 | Link to Comment the black arrow
the black arrow's picture

We plan on bringing cash, 100s easier to carry, but would 10s and 20s be easier to trans act with? Going for a week. Was fixin to bring 2000.00 US.

Wed, 05/15/2013 - 12:56 | Link to Comment Harbanger
Harbanger's picture

I was there 10 yrs ago.  $2000 for a week is a ton of cash there and that was before the capital controls.  Dinner for 2 in top restaurants with wine and dessert was never over $50.  as far as transactions they'll take any denomination but prices are cheap so you may want some change ;) also don't let people there know you have too much cash on you, deperate people will do desperate things.

Wed, 05/15/2013 - 13:33 | Link to Comment Freddie
Freddie's picture

How are the senoritas there?

Wed, 05/15/2013 - 14:27 | Link to Comment Harbanger
Harbanger's picture

Nice and friendly.

Wed, 05/15/2013 - 15:08 | Link to Comment machineh
machineh's picture

'But would 10s and 20s be easier to trans act with?'

No. What they want is hundreds. 

Blue market dealers will take 10s and 20s, but at a slight discount to the better rate on hundreds.

Wed, 05/15/2013 - 15:40 | Link to Comment the black arrow
the black arrow's picture

Thanks for the intel, this could be the value trip of the year. Any idea if hotels will take US cash at a better rate than the"official" rate?

Wed, 05/15/2013 - 17:12 | Link to Comment machineh
machineh's picture

If you're paying in dollars, you're likely to be paying tourist prices.

Hotels are highly visible businesses. They don't want to get dinged by AFIP (the local IRS) for illegal forex dealing.

Change dollars to pesos at the blue market rate, then pay for everything in cheap pesos at local prices.

Wed, 05/15/2013 - 10:47 | Link to Comment BeaverFever
BeaverFever's picture

Obama is a dictaster. He doesn't want dollars shoved down his throat, as he prefers the Oscar Meyer.

Wed, 05/15/2013 - 10:53 | Link to Comment ZeroPoint
ZeroPoint's picture

Another effect of hyperinflation. Peope desperate to unload their pesos buy ANYTHING that has perceived value. In turn, this further worsens the inflation on goods for sale as the demand is boosted.

 

Wed, 05/15/2013 - 10:54 | Link to Comment timbo_em
timbo_em's picture

One man's trash is another man's treasure. Can't BernanQE move to Argentina?

Wed, 05/15/2013 - 11:01 | Link to Comment kchrisc
kchrisc's picture

Argentina is PROOF that history does not repeat, government does. hujel

Wed, 05/15/2013 - 11:04 | Link to Comment vamoose1
vamoose1's picture

  g7  this  weekend   massssive  euro   qe   or  a  reset   maybe

Wed, 05/15/2013 - 11:06 | Link to Comment F22
F22's picture

How much of that 50Bn in $100's does Kirchner have in her vault?

Wed, 05/15/2013 - 11:23 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

It's a good bet that a nice chunk of those $100 bills have passed through Christina Kirchner's hands (figuratively speaking) on the way to the Caymans, Switzerland, etc.

Wed, 05/15/2013 - 11:33 | Link to Comment no2foreclosures
no2foreclosures's picture

It is not the Argentinean people who are whoring for the USD, although they are the ones feeling the effects in terms of the high inflation rate.

It's the 5-10% rich business owners, mostly living in Buenos Aires and vacationing every so often in Miami, who are the ones doing so, just like those in Caracas and all the city state capitals throughout South America.

When the USD goes tits up, so will these hoards.

Wed, 05/15/2013 - 11:33 | Link to Comment Aegelis
Aegelis's picture

Hey Argentina, join the list baby: Panama, Ecuador, El Salvador, East Timor, Palau, Micronesia, Marshall Islands, the British Virgin Islands, the Turks and Caicos Islands, Zimbabwe, Peru, Uruguay, Cambodia, Afghanistan, southern Canada and northern Mexico.

Wed, 05/15/2013 - 12:54 | Link to Comment Weisshaupt
Weisshaupt's picture

That is why the reserve currency is so valuable - you can export your inflation all over the world. Of course, that means it has world wide effects when you do it, leading eventualkly to collpase, wars and major geo-political shifts.  Just ask the UK how that works out in the end. 

Wed, 05/15/2013 - 13:46 | Link to Comment jimmytorpedo
jimmytorpedo's picture

",...southern Canada,.."

HA! it's all southern canada you twit

60 miles north (100km for the rest of the world) and its only trees and beaver

until you get to the eaters of raw meat

they trade in frozen seal eyeballs

and no, we don't take no US fiat now that both worthess pieces of paper are equally worhtless

Wed, 05/15/2013 - 13:13 | Link to Comment 3blenders
3blenders's picture

People who hedge their little or big whealth behind the dollar are either very smart or very stupid. They must know something that non of us ever thought of or has ever grasped. The dollar is about to drown in its on printing ink and these people .... well, I guess their own peso must then really be in trouble big time... again. Just imagine, these poor suckers, when they wake up one of these days and find that the dollar has lost its value....which it is doing every day. The dollar is apparently still a good currency compared to some serious toilettry out there.

And putting money into cars ....? wow, it beats me. when gasoline is hard to come by, cars are very nice to sit in and look at, while they rust. I don't believe it that people in Argentina hedge with cars.

Wed, 05/15/2013 - 12:32 | Link to Comment rustymason
rustymason's picture

I wonder if the bank is going to confiscate my hoardings.

Wed, 05/15/2013 - 12:43 | Link to Comment redux2redux
redux2redux's picture

Hoarding $1 of every $15, no problem we can print more...

Wed, 05/15/2013 - 16:07 | Link to Comment Rudini
Rudini's picture

And that's why Mr. Gutenberg can print 7% more paper.

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