Economic crises in Argentina have become a regular occurrence. But they can be equally as devastating. They can be the cause of drastic reductions in family savings, employment and life/retirement plans.
Argentina is almost always recovering or bracing for an economic crisis and it seems that people are fed up with it, too. That is evident when they voted out of Peronist (Juan Peron style principles and policies) bloc headed by Cristina Fernandez de Kirchner to the more business friendly Mauricio Macri, the former conservative mayor of Buenos Aires. Even though Kirchner’s policies may have improved her approval (50%) at the time she left office, the economy is still in trouble. Annual inflation is 25% and the fiscal deficit this year also amounts to 6% of the country’s GDP this year.
Problems have worsened over time
The government had been very divisive under Kirchner’s regime. While it spent heavily on social welfare, it had very bad reputation with businesses because of its state controlled policies. Macri has vowed to help jolt the regulated economy back into reality, which is governed by the market. It’s no wonder he’s viewed as market-friendly in this light.
Governments that claim to represent the people don’t fully understand the mathematical repercussions of their actions until the money starts to run out, i.e. it’s too late. They have no choice but to be creative in their accounting to maintain the trust of people. We can see this in the case of Argentina when their currency has deflated due to two main factors. They only realized it when it was too late.
This happened back in 2001 when the government decided one fine day that it was fine to freeze all money except for that on household necessities in the bank. This devastated the economy as there was understandably nothing more to spend on.
This was the exchange control that was implemented by Cristina Kirchner a decade after Corralito was implemented and that started the crisis. Symbols of hyperinflation started popping up all around popular tourist areas. Some of them were “arbolitos” (money changers offering exchange rates in black) and corner “cuevas” (stores) in Argentina, offering almost a double exchange rate to the dollar that the government was offering at that time. This led to devaluation of the currency and the country has been in crisis ever since.
Where Bitcoin Comes In
Bitcoin, with its decentralization and deregulation, could definitely keep the Argentines aloft when things are looking down. The Argentines were not happy with their currency, and were suffering from the effects of cepomonetary policies. They have all the more reason to look favorably upon bitcoin and they are. Their adoption rate of Bitcoins is higher in comparison to other South African countries including Brazil.
While many people on Wall Street say that Bitcoin might be a bubble, from their polished and upscale penthouses in Manhattan, they might not know the full impact of a decentralized digital currency. Bitcoin may actually be successful in the long-term for South African countries despite it being looked down upon.