Currency Massacre In Emerging Markets

Seeking Alpha ^ | 1-24-2014

[blam]

Currency Massacre In Emerging Markets

Jan. 24, 2014 12:40 PM ET
Seeking Alpha

Both Venezuela (socialist worker's paradise) and Argentina (nationalist socialist paradise) have a problem with their foreign exchange reserves. In both cases it stems from trying to keep up the pretense that their currencies are worth more than they really are. The central banks of both countries are (and have been for some time) printing money like crazy, and inflation is galloping with gay abandon. Their governments publish misleading economic statistics, that inter alia attempt to hide the true extent of the monetary debasement – in short, their inflation statistics are even more bogus than those of other governments (we are leaving aside here that the mythical "general price level" cannot really be measured anyway).

Since they have maintained artificial exchange rates – coupled with capital controls, price controls and other coercive and self-defeating economic policies – people have of course felt it necessary to get their money out any way they can. This includes making use of every loophole that presents itself, so that e.g. in Venezuela, so-called "dollar tourism" has developed, whereby citizens travel abroad for the express purpose of using their credit cards to withdraw the allowed limit in dollars at the official exchange rate (and buy some toilet paper while they have a chance to grab a few rolls).

Now the governments of both Venezuela and Argentina have reacted – the former by introducing a "second bolivar exchange rate" for certain types of exchanges, the latter by stopping to defend the peso's value in the markets by means of central bank interventions.

(snip)

[b4its2late]

George Soreass is lurking close by.

[blam]

How the Paper Money Experiment Will End

"So will money printing be a constant with interest rates close to zero until people lose their confidence in the paper currencies? Can the paper money system be maintained or will we necessarily get a hyperinflation sooner or later?"

[rhinohunter]

galloping with gay abandon

You homophobe!

[ZX12R]

Obama is doing his best to catch us up to them.

[Red Badger]

Replace the word ‘Argentina’ with ‘the United States’ and it would still be TRUE...................

[Beagle8U]

In the mid to late 90’s Canada had a pretty screwed up monetary system. The Canadian dollar was worth less than 70 cents.

A week on the lake in a furnished private cottage with everything included, even a boat, was less than $300 USD.

[tbw2]

These are the cases where buying Bitcoin with devaluing currency is a good idea, especially when capital controls make shifting to standardized currency harder.

[Moltke]

Their governments publish misleading economic statistics, that inter alia attempt to hide the true extent of the monetary debasement – in short, their inflation statistics are even more bogus than those of other governments

Reminds me of the PIGS joining the euro, aided and abetted by Wall Street powerhouses. Of course, *that* particular SNAFU is also proof of the incompetence of the Brussels (=EU) technocrats.

[familyop]

We’re the ones being massacred by a currency that’s been artificially propped too high. Granted, some benefit from it for a short while. But even they will pay, when manufacturing on U.S. soil has been pushed low enough. Money doesn’t grow on trees or in the minds of propagandists. It’s earned only by those who make or harvest useful products—and the harvesting is not nearly enough without the making (see Venezuela, others with economies running on energy and agriculture alone).