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Tyler Durden's picture


Submitted by Simon Black of Sovereign Man


Two bright white eyes looked at me inquisitively through the small hatch in the nondescript metal door.

I quickly glanced around the dark, empty streets of the Palermo district in Buenos Aires and whispered the password.

The door clanked open, revealing a small antechamber and a phone booth. I picked up the receiver and punched in a 4-digit code, and a second door opened.

Now I could begin to see the interior of “Frank’s”.

It was lit with elaborate chandeliers and accented with ornate leather seats, and Sidney Bechet was in full swing on his saxophone.

It was amazing, it looked just like a New York City speakeasy from the 1920s back in the days of prohibition and bootleg moonshine.

And that’s exactly what the proprietor intended—a nod to a time when an entire population was constantly having to outsmart destructive government policy.

Just to do something as simple as having a beer, people had to come up with elaborate schemes, passwords, and secret locations on nondescript streets.

Coincidentally, Frank’s is the perfect illustration, not only of New York in the 1920s, but of all of Argentina today.

Argentina is one of the places where debilitating capital controls are the rule.

The government has its ‘official’ exchange rate, and they’ve outlawed unofficial transactions with foreign currency.

But like prohibition-era bootleggers, an entire cottage industry has emerged with legions of street dealers trading currency far beyond the law.

Capital controls are only the start. This government has tried just about everything—price controls, credit controls, even people controls.

They’ve nationalized private assets. They’ve thrown dissenting economists in jail.

Now they’re going around collecting everyone’s fingerprints. They’ve just added another 100 products to the list of controlled prices.

And yet, inflation still rages. People’s standards of living are being destroyed.

The pesos that they earn are buying less and less. Despite the controls, prices are still rising much faster than wages.

All of this has led to mass poverty returning in a big way. Beggars once again line the streets in Buenos Aires. There’s been a noticeable increase just since I was here two months ago.

This is a familiar story. Argentina has spent the last several decades stumbling from crisis to crisis.

Like many countries in the West, Argentina has had a long trend of political incompetence. This once-rich nation has been ruled by those who thought that universal economic laws simply did not apply.

They thought that Argentina could live beyond its means forever… that they could borrow money to pay interest on what they’ve already borrowed.

The Argentina of today shows that there are serious consequences for nations that follow this approach… and for people who do not heed the writing on the wall.

It’s easy to pretend like everything is OK. Sometimes we’re surrounded by grandeur and opulence, and it’s easy to mistake this veneer for wealth.

It’s not. Real wealth comes from freedom, production, savings, and technology… not debt, spending, and money printing.

And though even I got lost in all the splendor of Frank’s speakeasy, I was immediately thrust back into reality when they refused to accept my credit card to settle the bill.

The difference between the official rate and black market rate is so vast, in fact, that many establishments are now refusing to accept credit card payments altogether.

The staff apologized to me profusely, embarrassed at what their country had become.

We joked about it as I pulled out a wad of cash I had recently procured from a street broker—

  • Cocktails: 175 pesos
  • Appetizers: 210 pesos
  • Capital controls: Priceless

It turns out there really are some things money can’t buy. Especially in worthless currency.

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Mon, 04/14/2014 - 15:17 | 4657800 SMG
SMG's picture

America 2016

Mon, 04/14/2014 - 15:20 | 4657807 oklaboy
oklaboy's picture


Mon, 04/14/2014 - 15:25 | 4657829 ArkansasAngie
ArkansasAngie's picture


there is plenty of time left in the year

fingers crossed

Mon, 04/14/2014 - 15:31 | 4657851 DoChenRollingBearing
DoChenRollingBearing's picture

This tale from Argentina rings true to me.  Argentina has chosen very poorly so many times.  This is one reason why (getting around capital controls) that I, a big believer in gold, like having a position in Bitcoin.  A real, even if small, position.

Bitcoin is getting popular in Argentina my local BTC merchant tells me.  He goes there often...

Mon, 04/14/2014 - 15:33 | 4657876 kaiserhoff
kaiserhoff's picture

Que pasa, DoChen?

Looks like 8 to 1 pesos to the dollar officially.

Do you have a read on the street value?


Mon, 04/14/2014 - 15:40 | 4657903 DoChenRollingBearing
DoChenRollingBearing's picture

Nada mucho, kaiserhoff, menos que se venden bien nuestros rodajes en el Peru.

Re street value of pesos in Argentina (and all matters Argentine), no, I do not have a good feel for current conditions.  We have been there, and I have read a fair amount on Argentina.  My guess is that Buenos Airies is cheap now, good steaks at good prices, my wife is interested again in visiting...

Mon, 04/14/2014 - 15:47 | 4657928 sleigher
sleigher's picture

DCRB, why won't a gold dealer (ie goldsilverbitcoin.com) allow gold to be purchased with tumbled bitcoin?  Or shared send coin?

Mon, 04/14/2014 - 16:14 | 4658054 DoChenRollingBearing
DoChenRollingBearing's picture

Hmm!  I cannot answer your question.  I bought once from goldsilverbitcoin.com and had no problems other than a slight delay (but he sent me a Silver Maple to compensate).

That seems unusual to me, I would think a bitcoin is a bitcoin.  They have to ship the gold to soemwhere after all, so it's not like using tumbled or shared alt-coin is something super-secret after all.

Mon, 04/14/2014 - 16:20 | 4658081 seek
seek's picture

I'm not DCRM, but this probably is just individual policy due to know-your-customer laws in the US.

Tumbled coin is usually used for laundering money, and the dealer might be afraid of legal implications of accepting provably tumbled coin, and shared coin is anonymous, which probably triggers KYC legal provisions as well.

Your best bet in the US is to convert to cash on localbitcoin and then pay cash at a local coin store. Even with cash the dealer will have pretty low limits on what he can sell. Blame the laws, not the coin dealer.

Here's an article going into the bullshit a US coin dealer has to cope with.

Mon, 04/14/2014 - 17:10 | 4658313 sleigher
sleigher's picture

Thanks to you both.

Mon, 04/14/2014 - 17:23 | 4658344 DoChenRollingBearing
DoChenRollingBearing's picture

@ seek

The last time I bought PMs I bought a 1 oz Pt Eagle, and 1.35 oz of (mixed sizes) Gold Eagles.  That came out to about $3600 (total cost, cash payment), the Dealer asked me no questions, and I did not ask for an Invoice.

FYI, the Pt Eagle I got was a MS-70 slabbed 1999 Pt Eagle for $1600.  It seems like I got a good deal.

Mon, 04/14/2014 - 20:24 | 4658940 seek
seek's picture

I'm guessing things may have changed.

I don't remember this freaking encyclopedia being on their site the last time I checked:


It's also interesting that the "order process" link is now broken as well. My guess is the Feds visited them.

Mon, 04/14/2014 - 20:50 | 4659022 DoChenRollingBearing
DoChenRollingBearing's picture



The noose gets tighter...


A n00b of some sort ("OROBTC") just mentioned this topic at bitcointalk, and said that is was under discussion here at ZH.  I wonder what the BTC-talkers will say?



That last purchase I mentioned above (Pt and Au) was from an LCS, not goldsilverbitcoin.

Mon, 04/14/2014 - 21:11 | 4659083 seek
seek's picture

$3,600 at a LCS (assuming you haven't done two other transactions that size in the past year) will sail through without any issues, unless you look sketchy enough to file a SAR (and even then that's more of a bank thing.)

I think it's just a fact of life that as bitcoin integrates into the normal financial world, it's going to absorb the same KYC crap the banks have, which is more or less expected.

Mon, 04/14/2014 - 17:03 | 4658290 what's that smell
what's that smell's picture

why do you hate america so much?

Mon, 04/14/2014 - 15:25 | 4657830 SumTing Wong
SumTing Wong's picture

Second half of 2014...well, maybe the first half...

Mon, 04/14/2014 - 15:41 | 4657911 jimijon
jimijon's picture


Mon, 04/14/2014 - 15:20 | 4657808 cifo
cifo's picture

How much are the hookers?

Mon, 04/14/2014 - 15:36 | 4657855 sixsigma cygnus...
sixsigma cygnusatratus's picture

How much are the hookers?  Depends.  I think Argentina has elections every four years as well.  At least in Italy, they are more honest about this sort of thing.


Mon, 04/14/2014 - 16:26 | 4658115 seek
seek's picture

This is always an interesting economic metric to look at.

I just did a quick google, the top of the pyramid is 600 pesos/hour, or about $75 USD. That's about 20-25% of the US.

Mon, 04/14/2014 - 15:24 | 4657828 SumTing Wong
SumTing Wong's picture

Have you read "The Dying of Money"? 

In such an inflationary environment the best thing that you can do, economically, is to borrow every (dollar, for instance) that you can possibly borrow and then to buy tangible items, whether gold or guns or bricks or arable farmland. Make the minimal payments each month and then pay everything off when the hyperinflation has truly set in.

And, yes, hyperinflation is always a political event rather than an economic one. We've got the right cards set up here in the US of A. 

Mon, 04/14/2014 - 15:32 | 4657866 Herd Redirectio...
Herd Redirection Committee's picture

During the Soviet privatization/inflationmania, those who 'sold on consignment' (esp. cars) did well.  Because they had liabilities in 'old Rubles' and earned revenues in hyperinflated rubles.

Looks like Walmart will survive...  Unless there is widespread looting.  That could never happen, though...

Mon, 04/14/2014 - 19:37 | 4658758 813kml
813kml's picture

Most of the items at Walmart aren't worth stealing.

Mon, 04/14/2014 - 16:10 | 4658035 Kirk2NCC1701
Kirk2NCC1701's picture

I sink zat sumting is wong in your title.  I sink you mean "The Death of Money", by Jim Rickards?

See http://jimrickards.blogspot.com/

Mon, 04/14/2014 - 16:17 | 4658069 Not My Real Name
Not My Real Name's picture

No, he means "Dying of Money" by Jens O. Parsson.

Mon, 04/14/2014 - 17:11 | 4658317 Winston of Oceania
Winston of Oceania's picture

The treasury has to first wrest the currency from the central planners er banksters who won't be taking any losses via hyper-inflation.

Mon, 04/14/2014 - 16:10 | 4658037 doctor10
doctor10's picture

The US Constitution with the Bill of Rights, enforced by the rule of law-is what made the USA the most fertile place in the world for 200 years to sow capital.


Capital in the USA is worthless today. After licenses, insurance, regulation and taxation-all in a degraded currency-there is nothing

Mon, 04/14/2014 - 15:21 | 4657816 EvlTheCat
EvlTheCat's picture

Man, ZH is taking it in the head from a lead pipe with the contributor postings today.

Mon, 04/14/2014 - 15:25 | 4657832 Big Corked Boots
Big Corked Boots's picture

Looks like Tyler picked the wrong week to do a Simon Black travelogue.

Mon, 04/14/2014 - 15:28 | 4657846 El Diablo Rojo
El Diablo Rojo's picture

Logged on to say thank you for the laugh EvlTheCat.

Mon, 04/14/2014 - 15:30 | 4657861 The man with po...
The man with pointy horns's picture

That is all part of Tyler's plan.

Mon, 04/14/2014 - 16:28 | 4658123 AchtungAffen
AchtungAffen's picture

His evil plant of substituting Zero Hedge for a Fox News affiliate.

Mon, 04/14/2014 - 15:22 | 4657820 y3maxx
y3maxx's picture



Mon, 04/14/2014 - 15:24 | 4657827 nelsonmandella
nelsonmandella's picture

bitcoin anyone

Mon, 04/14/2014 - 15:28 | 4657844 TheReplacement
TheReplacement's picture

That is sarcasm, isn't it?

Mon, 04/14/2014 - 15:26 | 4657836 TheReplacement
TheReplacement's picture

Better get buying 5.45x39 since the US Gov has banned importation of said Russian poison darts.

Mon, 04/14/2014 - 16:30 | 4658130 seek
seek's picture

And (seemingly) banned production/importation of .22LR as well, even if it's not Russian.

I'm sure the USG will use this conflict for all manner of agendas.

Mon, 04/14/2014 - 15:26 | 4657837 smacker
smacker's picture

Simon, last week I borrowed enough money to pay off all my debts. Not bad eh ;-)

Mon, 04/14/2014 - 15:41 | 4657909 brunoaa
brunoaa's picture

Not so sure that they did not accept the credit card because of the exchange rate difference between the blue and official rate as they charge in Pesos, will bill the CC in Pesos and will receive Pesos (albeit after a month so there will be an inflation impact but not so big, something like 2.5% at the current inflation rate). The real reason is probably simpler, nobody likes to pay taxes so cash is better than CC.

Credit card were such a fun in hyperinflationnary Brazil (we are not yet there in Argentina) , we used to walk around with three or four different CC each with a different maturity and would choose the longest maturity at the time of the purchase. We would normally be billed by the CC operator 30/40 days after the purchase, with a monthly inflation rate 30 %, nice discount!!!

After a while of course, nobody accepted CC anymore except for some strange reason the best Japanese restaurant of Sao Paulo.

Mon, 04/14/2014 - 15:47 | 4657929 kchrisc
kchrisc's picture

Government, being a criminal syndicate, can only "produce" three things: poverty, misery and death. All evidence to the contrary is temporary.

"Hi, I'm with the guillotines, and I'm here to help."

Mon, 04/14/2014 - 17:53 | 4658445 grekko
grekko's picture

Yo!  You forgot overburdensome taxes of every kind imaginable, but I do like the guillotines part, and you should do as Jethro Tull said in Locomotive Breath, "Charlie stole the handle, no way now way to slow down!".

Mon, 04/14/2014 - 15:52 | 4657952 Stormtower
Stormtower's picture

Reminds me of my time in the Phillipines in the early 80's....when Marcos was at the height of power. 

Mon, 04/14/2014 - 18:25 | 4658519 FLHRS
FLHRS's picture

Magsaysay Street, Olangapo.  Hookers, drinking San Miguel beer and mojos, burn a little Filipino weed and eat some barbequed monkey meat (I don't think that's what it was, but that's what we called it) lumpia and pancit.  A sailor needed the 12:00 am curfew to keep from killing himself.



Mon, 04/14/2014 - 16:26 | 4658114 AchtungAffen
AchtungAffen's picture

Simon, could you please deflate a little on the bullshit part? You sound like a frightened little girl, seeing ghosts and demons (and the sickle and hammer) even in the soup.

"They’ve thrown dissenting economists in jail". False. They tried but couldn't do that.

"Now they’re going around collecting everyone’s fingerprints.". Ever since there's been a national ID card (DNI) they collected fingerprints, because those cards used (and the newer version too) digital prints. And there's been a DNI for ages now.

"This once-rich nation has been ruled by those who thought that universal economic laws simply did not apply." - First, you gotta be specially dumb to believe in "universal economic laws" as economics are not a hard science. And then, when Argentina had MeXem, he did everything by the "book" (the Washington Consensus book), and the consequences were dire.

"They thought that Argentina could live beyond its means forever… that they could borrow money to pay interest on what they’ve already borrowed." Erhm, Argentina has been ostracized from capital markets since 2001... what debt you talking about mate?

"I was immediately thrust back into reality when they refused to accept my credit card to settle the bill.

The difference between the official rate and black market rate is so vast, in fact, that many establishments are now refusing to accept credit card payments altogether." What the hell you talking about here? If the bill was in USD it might be, but that's prohibited, so I doubt they presented you the bill in USD. And the arbitrage in exchange rates only works when doing money conversion. And the bar would have nothing to lose, unless they gave you a price in USD and wanted the best price (the "blue" one).


Lovely how someone talks about "reality" at Frank's. Next time you want to talk about Argie reality, why don't do it from a polo court in San Isidro? Tibu gui na'a boloo. 

Mon, 04/14/2014 - 16:30 | 4658120 Gromit
Gromit's picture

Peso ARS 10.39 to the dollar today....


Up from 13 in early February. Of course nobody talks about the Peso appreciating -

-local joke

"Why are Argentines different from terrorists?

Terrorists have sympathizers!"

Mon, 04/14/2014 - 16:30 | 4658133 Yancey Ward
Yancey Ward's picture

Clearly, the Argentinian government has failed to borrow and spend enough.

Mon, 04/14/2014 - 16:33 | 4658147 Ban KKiller
Ban KKiller's picture

How is life in Grenada, the island country? Besides the mafia trying to take over, I mean. Seems like an interesting place if you wanted to live cheaply...

Mon, 04/14/2014 - 22:15 | 4659285 AdvancingTime
AdvancingTime's picture

Worthless currency is an interesting subject. The modern economy that has evolved over the last several decades is loaded with interwoven contracts reeking of contagion. I contend that if faith drops in these intangible "promises" and money suddenly flows into tangible goods seeking a safe haven inflation will soar.

In a recent article I wrote "never before has mankind diverted such a large percentage of wealth into intangible products or goods" this is the primary reason that inflation has not raised its ugly head or become a major economic issue in recent years. More on this subject in the article below.


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