Here's What It Looks Like When Your Country's Economy Collapses

Tyler Durden's picture




 

Submitted by Adam Taggart of Peak Prosperity,

Argentina is a country re-entering crisis territory it knows too well. The country has defaulted on its sovereign debt three times in the past 32 years and looks poised to do so again soon.

Its currency, the peso, devalued by more than 20% in January alone. Inflation is currently running at 25%. Argentina's budget deficit is exploding, and, based on credit default swap rates, the market is placing an 85% chance of a sovereign default within the next five years.

Want to know what it's like living through a currency collapse? Argentina is providing us with a real-time window.

So, we've invited Fernando "FerFAL" Aguirre back onto the program to provide commentary on the events on the ground there. What is life like right now for the average Argentinian?

Aguirre began blogging during the hyperinflationary destruction of Argentina’s economy in 2001 and has since dedicated his professional career to educating the public about his experiences and observations of its lingering aftermath. He is the author of Surviving the Economic Collapse and sees many parallels between the path that led to Argentina's decline and the similar one most countries in the West, including the U.S., are currently on. Our 2011 interview with him "A Case Study in How An Economy Collapses" remains one of Peak Prosperity's most well-regarded.

Chris Martenson:  Okay. Bring us up to date. What is happening in Argentina right now with respect to its currency, the peso?

 

Fernando Aguirre:  Well, actually pretty recently, January 22, the peso lost 15% of its value. It has devalued quite a bit. It ended up losing 20% of its value that week, and it has been pretty crazy since then. Inflation has been rampant in some sectors, going up to 100% in food, grocery stores 20%, 30% in some cases. So it has been pretty complicated. Lots of stores don't want to be selling stuff until they get updated prices. Suppliers holding on, waiting to see how things go, which is something that we are familiar with because that happened back in 2001 when everything went down as we know it did.

 

Chris Martenson:  So 100%, 20% inflation; are those yearly numbers?

 

Fernando Aguirre:  Those are our numbers in a matter of days. In just one day, for example, cement in Balcarce, one of the towns in Southern Argentina, went up 100% overnight, doubling in price. Grocery stores in Córdoba, even in Buenos Aires, people are talking about increase of prices of 20, 30% just these days. I actually have family in Argentina that are telling me that they go to a hardware store and they aren't even able to buy stuff from there because stores want to hold on and see how prices unfold in the following days.

 

Chris Martenson:  Right. So this is one of those great mysteries of inflation. It is obviously 'flying money', so everyone is trying to get rid of their money. You would think that would actually increase commerce. But if you are on the other end of that transaction, if you happen to be the business owner, you have every incentive to withhold items for as long as possible. So one of the great ironies, I guess, is that even though money is flying around like crazy, goods start to disappear from the shelves. Is that what you are seeing?

 

Fernando Aguirre:  Absolutely. Shelves halfway empty. The government is always trying to muscle its way through these kind of problems, just trying to force companies to stock back products and such, but they just keep holding on. For example, gas has gone up 12% these last few days. And there is really nothing they can do about it. If they don't increase prices, companies just are not willing to sell. It is a pretty tricky situation to be in.

 

Chris Martenson:  Are there any sort of price controls going on right now? Has anything been mandated?

 

Fernando Aguirre:  As you know, price controls don't really work. I mean, they tried this before in Argentina. Actually, last year one of the big news stories was that the government was freezing prices on food and certain appliances. It didn't work. Just a few days later those supposedly "frozen" prices were going up. As soon as they officially released them, they would just double in price.

 

Chris Martenson:  Let me ask you this, then: How many people in Argentina actually still have money in Argentine banks in dollars? One of the features in 2001 was that people had money in dollars, in the banks. There was a banking holiday; a couple of weeks later, banks open up; Surprise, you have the same number in your account, only it's pesos, not dollars. It was an effective theft, if I could use that term. Is anybody keeping money in the banks at this point, or how is that working?

 

Fernando Aguirre:  Well, first of all, I would like to clarify for people listening: Those banks that did that are the same banks that are found all over the world. They are not like strange South American, Argentinean banks – they are the same banks. If they are willing to steal from people in one place, don't be surprised if they are willing to do it in other places as well.

Click the play button below to listen to Chris' interview with Fernando Aguirre (36m:42s):

 

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Sun, 02/09/2014 - 15:45 | 4417634 y3maxx
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...Time to annoint Obama and Moochelle as King and Queen of Argentina, then print EBTs for all its Citizens.

Sun, 02/09/2014 - 15:47 | 4417639 fonestar
fonestar's picture

People can suffer and suffer more until they accept Satoshi into their lives.

Sun, 02/09/2014 - 15:49 | 4417646 Dan The Man
Dan The Man's picture

Totally agree.  Had some Satoshi for lunch with wasabe...awesome!

Sun, 02/09/2014 - 15:51 | 4417651 fonestar
fonestar's picture

Try with some ginger too.

Sun, 02/09/2014 - 16:31 | 4417698 TruthInSunshine
TruthInSunshine's picture

There needs to be a world wide, coordinated effort, to burn down & destroy too-big-to-fail and other government subsidized (i.e. Reliant on taxpayer blood) banks (and boot out the politicians that they have bought), before they spread their malignant, free enterprise suffocating, "real"'work & manufacturing suppressing, taxpayer robbing, statist cancerous tumors even further.

If Keynes were alive today, he'd declare Paul Krugman to be, and I quote, "batshit crazy," and sue him for slander/libel.

“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth."

"As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

 --J.M. Keynes on inflation in The Economic Consequences of the Peace (p. 235-6)

Inflation/currency debasement, bitches! Even Keynes thought it was EVIL done by kleptocrats.

Sun, 02/09/2014 - 17:07 | 4417845 JLee2027
JLee2027's picture

Mob destruction is still a couple years away. Won't happen until it all collapses and everyone goes broke at once. 

Sun, 02/09/2014 - 17:11 | 4417850 Looney
Looney's picture

Is that Maradona on the pic?

Looney

Sun, 02/09/2014 - 17:14 | 4417859 CoonT
CoonT's picture

Got 7.62?

Sun, 02/09/2014 - 18:20 | 4418028 22winmag
22winmag's picture

Prefer 7.92 actually.

Sun, 02/09/2014 - 19:35 | 4418243 neidermeyer
neidermeyer's picture

I've got plenty of slightly corrosive 1950's 7.92 (aka 8mm) ,,, bought back when it was $0.08/rd

Mon, 02/10/2014 - 03:44 | 4419160 Supernova Born
Supernova Born's picture

The Argentines had at least some faith in the US dollar during the 2001 crisis.

What will Americans (and those who previously relied on the dollar) turn to when the US dollar itself is the currency in crisis?

 

Mon, 02/10/2014 - 04:04 | 4419182 manofthenorth
manofthenorth's picture

If the last 5000 years is to be accepted as any indication of future events , I bet Gold and Silver !!!!!!!!!

Mon, 02/10/2014 - 19:45 | 4421795 Theosebes Goodfellow
Theosebes Goodfellow's picture

~"What will Americans (and those who previously relied on the dollar) turn to when the US dollar itself is the currency in crisis?"~

 

That Supernova is the 3 Saint Gaudens Double Eagle, 4 Liberty Gold Dollar question.

Mon, 02/10/2014 - 04:17 | 4419195 OldPhart
OldPhart's picture

No, none...

but have thousands of .45 and .30 carbine

Mon, 02/10/2014 - 09:25 | 4419457 weburke
weburke's picture

plenty of people with weapons, but who do you shot? who are the rulers? They are hidden, and the visible are actors. I suppose the hungry that come your way are the real recipients of those bullets !

Mon, 02/10/2014 - 12:07 | 4419975 limit_less
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Would a "riot" be called a "riot" in Kentucky?

 

1. Kentucky
Total background checks: 2,542,796
Population: 4,369,356
Background checks per 100,000 residents: 58,196

http://www.thedailybeast.com/articles/2012/12/15/states-with-the-most-le...

Sun, 02/09/2014 - 18:12 | 4418010 lasvegaspersona
lasvegaspersona's picture

TIS

May I suggest you instead make an effort to change human nature.

Getting a majority of people to say no to free shit is quite an effort.

I suggest at times like these you are better off assessing the situation an positioning yourself for the inevitible. Politicians and banks respond to the wants and needs of the majority. If your needs are out of line with theirs better trim your sails and set a different course. You cannot fight the tide, only use it.

I'm not saying that cowadrice is right but there are times when you are just not going to win a battle.

Sun, 02/09/2014 - 21:14 | 4418507 jbvtme
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lvp...do you know if android has introduced its "come in out of the rain" app?

Sun, 02/09/2014 - 21:35 | 4418565 TruthInSunshine
TruthInSunshine's picture

lasvegaspersona said: "Politicians and banks respond to the wants and needs of the majority. "

lvp, may I suggest that this is bullshit on an epic scale, and that our current system is structured in such a way whereby as many as 50% of banks, including (or maybe especially) the too-big-to-fail Big 14, only because banks have deeply captured "representatives," legislators & regulators who funnel money subsidies from the productive to the banking & financial'sector?

And seriously, you're TRULY going to argue that politicians "respond to the wants and needs of the majority," rather than paying rhetorical lip service to doing such a thing?

Mon, 02/10/2014 - 00:43 | 4418974 Wayne Jett
Wayne Jett's picture

Please take note that Keynes wrote that analysis while he remained a classical economist, teaching classical theory at Cambridge University. Unfortunately for the world, Keynes moved to the dark side by writing The General Theory in 1936 and throwing his support to mercantilism - the system by which the ruling elite leveraged their power and wealth through control of government policies and laws. In return, the ruling elite made Keynes the economist of the century and still use his ideas to loot the capital of the productive people through manipulation of economies, markets and currencies. See my book, The Fruits of Graft.

Tue, 02/11/2014 - 13:26 | 4424168 Crawdaddy
Crawdaddy's picture

I enjoy reading your views Wayne. I bought a few extra copies of your book and gave them away, asking only they give them to a friend once they had read it.

Sun, 02/09/2014 - 21:48 | 4418589 DoChenRollingBearing
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A guy I know from was recently at some meeting in Argentina about BTC.  I bought some BTC from him.

He said that BTC is catching on in a big way down there.  He knows the country well.

Sun, 02/09/2014 - 22:36 | 4418696 TheReplacement
TheReplacement's picture

These 2 bit countries will be a good test for BTC and a learning excercise for the NSA, Treasury, and IRS...  If they can own the backbone then you will pass your btc through their control eventually. 

Mon, 02/10/2014 - 01:58 | 4419068 jeebuswept
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The ginger is there as a palate cleanser between different flavours.

Mon, 02/10/2014 - 20:27 | 4421938 Henry Chinaski
Henry Chinaski's picture

Try with some ginger too.

I prefer Maryanne.

Sun, 02/09/2014 - 20:47 | 4418412 nightshiftsucks
nightshiftsucks's picture

Satoshi,the man,the mouth behind the glory hole.

Sun, 02/09/2014 - 22:32 | 4418683 TheReplacement
TheReplacement's picture

So, a shit?

Sun, 02/09/2014 - 15:46 | 4417641 Arius
Arius's picture

bring warren buffet to fix it!

Sun, 02/09/2014 - 16:16 | 4417669 wee-weed up
wee-weed up's picture

 

 

Too bad Argentina is not in the EU...

They would be saved!

/sarc

*** cue the inevitable "Fuck the EU!" in 3... 2... 1...

Sun, 02/09/2014 - 16:04 | 4417692 Landrew
Landrew's picture

I would have to say, that is one of the dumbest comments ever written here. What a waste of time, there was very important information written in that article. Having friends living in Argentina now, it isn't funny that AMERICAN banks and the FED are doing this to the citizens.

Sun, 02/09/2014 - 16:16 | 4417720 Rukeysers Ghost
Rukeysers Ghost's picture

Right. This is Americas fault. This disaster in Argentina has nothing to do with that incompetent cunt Kirchner and her irresponsible “victorious decade” policies. 

Sun, 02/09/2014 - 16:38 | 4417771 yatikto
yatikto's picture

who's fault is it?

government living beyond its means ends up screwing everyone in the end.

but the value of everything is out of whack. and that is america's fault.

 

 

 

Sun, 02/09/2014 - 16:50 | 4417798 Accounting101
Accounting101's picture

For Christ's sake!!! Stop being intellectually lazy. The 2008 depression didn't start because the government was living beyond its means.

My god man! How will anything get better if we have no idea why we are here?

Sun, 02/09/2014 - 19:05 | 4418160 SilverFish
SilverFish's picture

People were making stupid bets and investments tied to all these housing loans, based on the idea that the government would "back it all up" if something should go wrong, which was inevitable since they were giving home loans for 250k to guys that work on a maccaroni & cheese production line making 13/hr. So yeah, in a sense, it was goverment living beyond its means and encouraging these stupid loans in the first place.

 

Do I BLAME the government for this mess? No, absolutely not. I blame everyone for allowing governments and banks to control the issuance of the currency in the first place.

 

If you allow the fox in the hen house and shit goes wrong........it's your own fucking fault.

Sun, 02/09/2014 - 19:08 | 4418180 Leaf of Tree
Leaf of Tree's picture

It wasn't the government that sold those loans you fucker

Sun, 02/09/2014 - 20:09 | 4418366 Raging Debate
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Leaf - No it want government selling those loans but it is was the government that deregulated the market to enable them.

Mon, 02/10/2014 - 09:37 | 4419498 artless
artless's picture

@ Raging Debate

"No it want government selling those loans but it is was the government that deregulated the market to enable them"

Wrong, Wrong., Wrong., Wrong., Wrong., Wrong. ph and WRONG.

Deregulation had nothing to do with any of this shit. It was the government inetrvention (call it regulation, GSE, whatever) that CAUSED the whole damn mess. Ever heard of Fannir? Freddie? FHA? HUD? How about the previous bailouts of Long Term? How about that whole 15 year nightmare called FDR whoes policies continue to wreak havoc on the whole financial and banking structure of our lovely nea-fascist police/bank state.

If financial institutions were left out to dry if and when they made poor investments and choices (LIKE FINANCING THE US FEDGOV and it's warfare/welfare state) then the risk associated with such activity would naturally impact thed decisions.

As it is criminla enitties like The JP Morgue, Goldman, etc "borrow" from the money printer at large at ZIRP then loan it abck to WASH DC at 3% to FUND THE PARASITE FREE SHIT ARMY of Soc Sec, Medicare, Welfare and of course the continued mass murder and warmongering for which we so worship those in the military.

Yeah, you're right. It's just deregulation. Theat $17 trillion in DEBT is irrelevant. Thae FED has NOTHING to do ith it. TARP, The Porkulus Bill of 2009 for another cool Trillion-nope, nothing to do with it. The UNFUNDED liabilities of just our welfare state of Soc Sec, Medicare, etc of nearly $200 Trillion? Nope, that has nothing to do with it either. And the billions upon billions of shit mortages bought up by Fannie, Freddie (Ummm, those guys would be your wonderful GOVERNMENT) and bundles into bigger pieces of shit then sold as AAA rated securities on the market (and in to some pension funds, overseas funds, etc) while guys like CEO FRanklin Raines made huge bonuses directly tied to that activity-NOPE nothing ot do with it.

Yeah, it was all Glass Steagal and the lack of SEC funding. Not that those guys were watching porn 24/7 or that the agency's budget increased something like 150% just under Shrub's two terms. Nope you can ignore that as well.

You migh try reading every once in a while. Or at least read something other than the state controlled mouth piece of propaganda the New York Times.

Sun, 02/09/2014 - 21:06 | 4418498 SilverFish
SilverFish's picture

Correct, but they enabled it. If banks had to rely on account holders deposits to make loans, like it would be in any correctly run universe, the loans would never have been made in the first place.

Sun, 02/09/2014 - 19:39 | 4418257 neidermeyer
neidermeyer's picture

I wasn't alive 101 years ago when the gov't got into bed with the banksters... and I certainly wasn't on the banking comittee anytime in the last 30 years... it ain't my fault silverfish ,,, I've been on team "kick the bastards out and send them to prison" for a VERY long time.

Sun, 02/09/2014 - 21:17 | 4418520 SilverFish
SilverFish's picture

Right, we weren't there when it all got started, but we're all to blame for allowing it to continue further. If we had any balls (which we don't) we'd all be out in en masse, physically monkey hammering these pricks with any tools available to us. I include myself in the "we". I haven't done anything to stop it either.

 

I just we'll all just keep on taking it.....right up until the moment we don't anmore.

Mon, 02/10/2014 - 00:17 | 4418923 Tall Tom
Tall Tom's picture

Are you buying Physical Gold and Silver?

Are you refusing to enter into any Debt Obligations?

Have you minimized your purchasing habits to bare essentials?

Do you refuse to play the Financial Markets?

Have you withdrawn most of your Capital away from the Banks?

Have you closed your business?

Have you minimized your income so that you do not pay or owe Taxes?

Have you shreded your Credit Cards?

Have you minimized purchases from Multinational Corporations?

Have you sold your Government Bonds?

Have you sold your House so that you do not pay Property Taxes?

 

WHO IS WE?

 

People can cause the end, a Financial Collapse with the subsequent end of the Ponzi, through OPTING OUT and REFUSING TO PARTICIPATE.

 

This needs not be violent.

 

Far too many seek to GAIN as they have GREED.

 

Do you apply PRINCIPLES above that of PROFITS?

 

Or do you sell your soul to the devil?

 

It is YOUR CHOICE.

 

As for me I OPT OUT as much as I can. Anything else is HYPOCRISY.

 

My bet is that you will not as you enjoy your COMPLICITY into the Fraud. My wager is that what I will read is a slew of justifications for bad behavior.

 

You need not justify yourself to me. Who am I ? But can you lie to yourself?

 

This IS NOT A STATEMENT OF BLAME. If you take it in that way then YOU OWN IT.

 

You are responsible for YOUR OWN EMOTIONS.

 

THIS IS A STATEMENT OF THE FACTS.

 

Please downvote the inconvenient truth.

 

Mon, 02/10/2014 - 02:49 | 4419114 InjectTheVenom
InjectTheVenom's picture

civil. disobedience.

Mon, 02/10/2014 - 05:17 | 4419235 Supernova Born
Supernova Born's picture

"Closing your business"?

Nope, cannot agree with that one.

Mon, 02/10/2014 - 05:54 | 4419248 CultiVader
CultiVader's picture

He meant go black market

Mon, 02/10/2014 - 09:28 | 4419461 Free Wary
Free Wary's picture

Or he could mean to go galt, you know, moving your business to a decent place. Let me ask, if you are paying 60% of your income to various taxing authorities- whose business is it anyway? If the taxing authorities claim over half the profit- let them take the care and risk for operating the business.

Mon, 02/10/2014 - 14:20 | 4420397 The_Dude
The_Dude's picture

Project Mayhem anyone?

Mon, 02/10/2014 - 04:12 | 4419190 manofthenorth
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No downvote , I am with you 100% on your conclusion as I have come to the same. Starve the beast if you can not just kill it !!!!!

Mon, 02/10/2014 - 08:47 | 4419381 pazmaker
pazmaker's picture

Well said Tall Tom!  Great Post!

Mon, 02/10/2014 - 09:22 | 4419448 Free Wary
Free Wary's picture

Yes to many things you said. I used to be deep in debt and very much a slave of the system.  I have cleared over 150k of my debts in the past two years. I am sleeping so much better at night and every time I pay off another debt- less of my productive energy is getting siphoned off to the banks. Soon I will be 100% debt free then I'm going to save up and buy a farm with no mortgage.

I would also add to your suggestions to teach children. I have helped my own kids and a few kids at my church learn about being self-sufficient, and am also working on building up the local community where I live.

Also, home canning food is another great idea. Learn about your food, how to store and rotate it. Buy 200lbs at a time direct from growers and learn to preserve it. Use a pressure canner to preserve soup.

By the way I am not a conspiracy, feaful person living in a cave.  I live in the middle of a bustling city and take my kids to local attractions and events almost every Saturday. I think the US economy will keep sputtering along for another year or two at least, perhaps even another 20 years, but I have many contingency plans in place if it doesn't- flexibility.

 

Mon, 02/10/2014 - 09:48 | 4419544 artless
artless's picture

Are you buying Physical Gold and Silver? wish I could buy more too broke

Are you refusing to enter into any Debt Obligations? buy a house or car? are you insane? but private debt is fine

Have you minimized your purchasing habits to bare essentials? YES

Do you refuse to play the Financial Markets? YES

Have you withdrawn most of your Capital away from the Banks? YES

Have you closed your business? Do Not have a business that makes any $

Have you minimized your income so that you do not pay or owe Taxes? YES. Unlike the late comers to the party I realized this shit a long, long time ago and went "on strike" in the early 90's-welcome to the show

Have you shreded your Credit Cards? NO. Fuck the banks and use their policies against them. 0% interest? Why thank you Mr. Dimon I think I'll take you up on that. The JP Morgue has lost money having me as a client

Have you minimized purchases from Multinational Corporations? Multinationals are not necessarily the problem. WHOLE FOODS anyone? I'll walk over dead children to purchase food from John Mackey. And I purposely go to Exxon stations. But buy a lightbulb from GE? NO FUCKING WAY. By a car made by GM? NEVER.

Have you sold your Government Bonds? What evil, piece of shit would ever buy or own a gov bond of The United States? You might as well just load the fucking gun, hand it to the soldier and TELL him to shoot the baby in some far away land populated by mostly harmless, poor, brown-skinned people.

Have you sold your House so that you do not pay Property Taxes? I do not own nor have not ever "owned" a house.

 

We all do what we gotta do.

Do NOT follow this link or you will be banned from the site!