- Ref:: Washington Post, Hacker News
- Title:: Worried about inflation? In Argentina, it’s a way of life
- Author:: David Feliba
- Year of publication:: 2022
- Category:: News
Notes from reading
Note to self: Vietnam might be on the same boat, though still not such bad like Argentina et al. What do we need to change systematically? Democracy is simply not enough.
A few ways to fight inflation is buying dollars and selling them later: our inflation index goes hand to hand with our USD:ARS, even even below that (intuitively it may be a problem). So it makes no sense to buy things to store later. What we do is buy stuff such as electronics in installments payments, even if the interest rate is high. Quick example: If I buy a computer in cash, its price is 100. If I have to pay 12 installments, each installment is 20 (240 in total). However, in one year, due to inflation, 20 may be nothing compared to what i earn (salaries are also raised to try to keep up with inflation)
Argentina defaulted 9 times during 200 years, Bloomberg
Argentina, Corporate tax rate is recently down from an outrageous 35% to a slightly less outrageous 25%. Personal tax is 35%, Sales tax at 21%. So a total tax burden of easily well over 80%. Argentinian people work for the government at least 80% of the year. Does the government provide 80% back in services and goods? I highly doubt that very much
As I read on Twitter the other day: this is the country where you buy home appliances in 24 monthly payments (without interests) but you buy a house in one payment, cash (USD) only.
in Argentina salaries get adjusted by inflation all the time, however house prices are in USD (because the peso is worthless), and we are talking over 60K usd for an old 1bed in a not really nice part of buenos aires city, and buying property for locals is impossible. You have to also consider that, last time I checked was late 2019, now it's probably worst, ~90% of argentinians earn less than 300 usd a month, and since there is no credit, buying something is almost impossible without the aid of your parents. A lot of people my age (31) +/- 10 years, middle class, professionals, are leaving the country in droves to Europe, Canada, USA and other LATAM countries as we realize there is no hope things will get better, as it's the same story our parents and grandparents went through.
In Belarus, where there is no high inflation, but just periodic (once in 3-7 years) sudden devaluations of the local currency, people always think in dollars, and many employers set salaries in dollars too. Even government sets rent on government property and some taxes in dollars or euros just to avoid the hassle of recalculating it too often. After a while, people got used to it and it's not a problem at all - no one but government employees who get salaries in local currency, is even worried about the exchange rate (and those employees can't survive on salaries anyway - they are dependent on bribes as salaries are laughable - and bribes are in USD)