Quote from: Knarf on Jan 25, 2024, 05:13 AMSo perhaps a better way to think about money is not as a constant, stable entity, but as a dynamic tool that facilitates the exchange of real resources and goods. In other words, money should be seen as a means to an end, rather than an end in itself.

That is definitely a more realistic view, the problem is that people want it to also be a repository of saved wealth.  If they hold off buying a 50 lb bag of rice the day after they get paid until the end of the month, they want the pesos to still buy the bag on the 31st.  In Argentina right now, that's not happening.  200% inflation makes your money worthless really fast.  I lived in Brazil during a period of 1000% inflation.  Barter and alternative currency got you by for commerce.  Your paycheck you spent the day it was issued.  The average Brazilian couldn't save at all, rich Brazilians were paid in dollars.

With good responsible banking practices, inflation and deflation can usually be controlled to tolerable levels, Da Fed generally targets 2% and as long as the physical economy it represents is matching that, it works OK.  Problem is 1st bankers aren't always good responsible people.  LIAR and NINJA loans are a good example of irresponsible banking.  CMBS and CDOs also are easily abused and often mispriced.

Even if financial products aren't abused, there are long term problems which build up systemically, like the mispricing of large asset classes.  This happens often in stocks, where companies stock is valued way higher than the P/E ratio justifies.  In real estate it happens during periods of easy money when mortgages come cheap.  This happens because Bankers are trying to control the opposite problem of deflation.

In any case, when large economies get into deep debt problems, that's when TSHTF.  When a country like Argentina looks like it's not going to meet it's bond payments and default, big investors know it immediately.  Everybody who owns these bonds tries to unload them, and instead of trading atface value, they drop to say 10 cents on the dollar.   Argentinian currency issued on those bonds now takes 10X as many to buy a dollars worth of goods priced in dollars, which is most stuff.  Instant 1000% hyperinflation!  POOF! Havoc in the streets.

So, Javier campaigns on the promise to "dollarize" the economy and use the nice semi-stable FSoA dollar as their local currency.  The problem of course is Argentina doesn't HAVE enough dollars in the central bank safe to sprinkle out and start using.  Nor can he print dollars, nor will anybody give him $100B or so to get going with this.  Will somebody LOAN him this pile of dollars?  He already can't pay the $100sB he owes to the banks that loaned him money in the first place.  So right now he can't live up to his campaign promise.  I gave him 2 years max before he was deposed, J6P Pedro got out on the street in 45 days.  Unless the military props him up, cut his time down to weeks.

Of course, the FSoA can't  pay it's $37T debt either, but there is no danger of default since they keep issuing new debt which the banks keep buying, because if they don't the whole global economy would crash, not just a little pipsqueak country like Argentina.  We don't have hyperinflation yet either because all this new money isn't making it out into the real economy, for the most part.  It is driving up the price of some asset classes though, like housing and stocks.  When at some indeterminate point confidence is lost, people will try to liquidate and then you'll get a crash.    Don't know when, but it has to happen eventually.

Until then, you can just be glad you don't live in Argentina.

RE