15 Comments

Hmmm...sounds like a lead up to a one-world currency?

Expand full comment

It’s politically savvy to dollarize rather than go straight to non-fiat alternatives imo. Baby steps to leaving fiat entirely

Expand full comment

I like your way of explaining things, clear and concise! Im from buenos aires, and the photo you choose is not the central bank, is the National Bank. Almost ;)

Thank you for your work.

Expand full comment

Never happen with a Klaus Schwab disciple at the helm

Expand full comment
Dec 12, 2023·edited Dec 12, 2023

If Argentina manages to dollarize, does inflation fall in the US? Assuming no more dollars are printed, wouldn't prices have to fall in the US as a new country, and its population, use the same currency? Does the dollar become more valuable and do prices fall?

Expand full comment

"Will Argentinians be carrying around a pocketful of greenbacks or — better yet — gold coins while unemployed bankers shine shoes?" We can only hope. You have done a decent job in explaining the history of central banks over several articles now. Javier, get that chainsaw out and revved up. And, when you're done with Argentina's Central Bank, bring it over to the good old USA and show them how it could be done here, as well. I'd be happy to give that model man of US banking, Jamie Dimon, a nice tip for shining my shoes. 😎

Expand full comment

1. Switch to the US dollar. 2. Enable crypto currencies to exist and be used for payments. 3. Move to a crypto only system.

Expand full comment

An article by the Bank of England published in 2014 by Michael McLeay et al. showed that private banks issuing loans create money all by themselves. They simply increase their own deposits and do the necessary accounting on the equity and asset side. No central bank involved, if I understand correctly. In fact, the BoE explained that this is how the majority of money is created. However, ultimately you're right, the central banks can and do control the amount of money through interest rates but note that taxes also do take money out of the economy. The low interest rates do produce a lot of private debt. Also as you write, central banks can increase deposits directly, for example, through QE. In the US and many other (Western) countries they have done this a lot after 2008. Indeed, they have pumped a lot of money in the banking sector but that hasn't caused a lot of inflation because banks sat on that money much more than expected. However, they have also pumped a lot of money into the Non-Bank Financial Institution (NBFI's), in other words: Wall Street. This produced huge asset inflation. Of course, asset inflation is not so noticeable by normal people. That is, until you wanna buy a house.

Still this makes adopting the dollar by those who advocate for a hard currency not the strongest argument. Sure it is a good idea but mostly because the dollar is the world's reserve currency. Most of the countries having massive CPI-inflation have weak currencies and, usually, debt in foreign currencies, which is really the big problem. Printing your way out of that gets out of hand quickly. The dollar, on the other hand, doesn't have that problem so much. And that's not really because it's not printed a lot, because it is.

Expand full comment

I'm beginning to understand, after following you for awhile, that economists have a really hard job because of all the variables. Two plus two equals four but then you must weave-in social factors (wars, corruption, pandemics, etc.) and how governments choose to react.

Is it safe to say, in the history of the world, if governments never printed money they didn't have, the whole of civilization would be in a much better place?

One the other hand, if another country attacks you and you need more guns but don't have the money to pay for them, if you don't print more money your country may cease to exist.

Maybe it all boils down to being kinder to one another. Like that will ever happen. We're doomed.

Expand full comment

Jeff Booth has very interesting thoughts on these issues. Could you review his thoughts for us? https://youtu.be/QTlG6a5GI3s?si=uPE0_VD7lrS7EDTd

Expand full comment