Economy What Would Dollarization Mean for Expats?

[JerryNel]

I’ll just leave this here and then show myself out.

The amount of nonsense and vitriol I’m expecting is past the roof.

In June, I asked what I thought was an innocent question: “What Would Dollarization Mean for Expats?”

I got many great responses, but I also got idiotic responses that don’t come close to answering the question.

Answers such as these:



Now that Javier Milei apparently won the primary yesterday, let me ask again.

What Would Dollarization Mean for Expats?

 

[RichardOne]

Politicians claim if current salaries were converted to dollars , people's salaries would be too low! Someone retorted, that's the truth face it....!
My conserje believed since he makes $200,000 pesos his salary would be $200,000 dollars ...!!
One -to -one

 

[NikDJ]

The main implication is that many cost-sensitive expats who finance themselves with money from abroad would need to pay more to enjoy a similar quality of life they have been able to afford up until now. Remember, it's not just dolarization that impacts prices but also the loss of various subsidies right along the supply-chain that keep prices in Argentina artificially lower; subsidies that presumably will be done away with before an actual dolarization takes effect.

Like in other "dollarized" economies like Panama or Ecuador or Venezuela, lower prices for a lower standard of living will always be possible - as locals won't necessarily be earning any more money than they earn today - but for many expats that deletes the value proposition that Argentina currently offers (e.g. a similar or better standard of life as at "home" for a lower price) meaning I would expect to see less "digital nomads" and "pensionados" who come here in search of the good life unbeatable prices as a result.

But either way I think this shift in value proposition will happen with or without dolarization. Argentina in the 90s was definitely not known as a value for money destination and that can easily repeat itself.

 

[earlyretirement]

Dollarization will never happen. Honestly I think Milei would be a welcome change for Argentines. They FINALLY figured out that change won't happen without a drastic shift in government. Even if you hate Trump, if you look at his policies many of them were good and sound. Definitely better than Biden. I'd personally never vote for Trump but his policies were much better.

Truth of the matter is that Dollarization will never happen again. Sure, it's something that gets the average young person in Argentina excited but saying something and doing it are two different things.

I actually like many of Milei's policies and he is more pro-business. Still, unless Argentina totally blows up their employment law, labor laws, tax system, etc. etc. things won't change too much.

But many things have to change. I've never understood how a poor country like Argentina can allow all the nations in the Mercosur to come and attend University free. There will be a lot of changes that have to happen. But I wouldn't worry about dollarizing any time soon.

I actually don't know why anyone would want to be President of Argentina. It's going to be a tough tough job but I don't think he can do any worse than all the previous presidents ahead of him.

 

[QuiloBa]

I was a kid in the 90s, and hadn't visited Argentina yet, but here is an article from 2021 that has some prices in 1996, and their prices in 2021 at the blue rate. However, the article doesn't appear to have factored in US inflation between 1996 and 2021 which would mean the prices already expensive by today's terms would be even more so.

I think what people fail to appreciate (not here, but in the broader country) is that the minimum wage wouldn't dollarize at the current exchange rate, i.e. $112.5K ARS = $160 USD, it's more likely it would sink closer to $100 USD/month, while goods and services would drastically increase in real terms as they're dollarized, and even more so for those that are subsidized, i.e. no more 11¢ subte rides or 40¢ milk. Hell, look at the current cost of rent compared to a year ago, everything is dollarized and insane, $600 for a bachelor apt in a shitty building for example.

Long story short the outcome of dollarizing is the same imo for those with dollars and those without: prices rise, wages decrease, exports are more expensive, imports are cheaper, and high inflation in dollars occurs while the market and people adjust.

 

[CarliNeces]

Dollarization will never happen. Honestly I think Milei would be a welcome change for Argentines. They FINALLY figured out that change won't happen without a drastic shift in government. Even if you hate Trump, if you look at his policies many of them were good and sound. Definitely better than Biden. I'd personally never vote for Trump but his policies were much better.

Truth of the matter is that Dollarization will never happen again. Sure, it's something that gets the average young person in Argentina excited but saying something and doing it are two different things.

I actually like many of Milei's policies and he is more pro-business. Still, unless Argentina totally blows up their employment law, labor laws, tax system, etc. etc. things won't change too much.

But many things have to change. I've never understood how a poor country like Argentina can allow all the nations in the Mercosur to come and attend University free. There will be a lot of changes that have to happen. But I wouldn't worry about dollarizing any time soon.

I actually don't know why anyone would want to be President of Argentina. It's going to be a tough tough job but I don't think he can do any worse than all the previous presidents ahead of him.

i wish someone could explain me this one.

I was a kid in the 90s, and hadn't visited Argentina yet, but here is an article from 2021 that has some prices in 1996, and their prices in 2021 at the blue rate. However, the article doesn't appear to have factored in US inflation between 1996 and 2021 which would mean the prices already expensive by today's terms would be even more so.

I think what people fail to appreciate (not here, but in the broader country) is that the minimum wage wouldn't dollarize at the current exchange rate, i.e. $112.5K ARS = $160 USD, it's more likely it would sink closer to $100 USD/month, while goods and services would drastically increase in real terms as they're dollarized, and even more so for those that are subsidized, i.e. no more 11¢ subte rides or 40¢ milk. Hell, look at the current cost of rent compared to a year ago, everything is dollarized and insane, $600 for a bachelor apt in a shitty building for example.

Long story short the outcome of dollarizing is the same imo for those with dollars and those without: prices rise, wages decrease, exports are more expensive, imports are cheaper, and high inflation in dollars occurs while the market and people adjust.

true story.

 

[OscarDisc]

true story.

Why has rent gone up so much? I've been planning to pay 400-500 to live in BA, but now I'm hearing a lot higher numbers on this site.

 

[RichardOne]

Why has rent gone up so much? I've been planning to pay 400-500 to live in BA, but now I'm hearing a lot higher numbers on this site.

Studios and 1 bdr.rentals in pesos almost no supply. Landlords want protection against 120% annual inflation. Airbnb rentals raise rental rates.

 

[OscarDisc]

Studios and 1 bdr.rentals in pesos almost no supply. Landlords want protection against 120% annual inflation. Airbnb rentals raise rental rates.

Can you get a good price if you pay in dollars?

 

[RichardOne]

Can you get a good price if you pay in dollars?

Maybe the only alternative, fewer landlords receiving pesos these days.

 

[earlyretirement]

Why has rent gone up so much? I've been planning to pay 400-500 to live in BA, but now I'm hearing a lot higher numbers on this site.

During COVID the government changed the law so that they required owners to do 3 YEAR leases and they could only raise the amount slightly each year. Many of these were signed in 2020. They are coming off these 3 year leases and NONE of them want to renew those leases again and get locked into a long term lease in pesos.

Many are just sitting empty as they would rather them sit empty than get stuck with one of these long term leases in pesos as they know the peso will keep getting more worthless.

Many have shifted to Airbnb. I think if you can find a $400 to $500 a month place to take it ASAP. That seems like a good deal to me. My in-law studying medical school here is in a shithole and she is paying $450/month but she complains all the time what a dump it is.

Someone posted that 4Rental is still in business so try them -https://www.4rentargentina.com/

By the end of this year and especially Q1 2024 there are going to be a real crunch of apartment rentals.

 

[SerchMinm]

During COVID the government changed the law so that they required owners to do 3 YEAR leases and they could only raise the amount slightly each year. Many of these were signed in 2020. They are coming off these 3 year leases and NONE of them want to renew those leases again and get locked into a long term lease in pesos.

Many are just sitting empty as they would rather them sit empty than get stuck with one of these long term leases in pesos as they know the peso will keep getting more worthless.

Many have shifted to Airbnb. I think if you can find a $400 to $500 a month place to take it ASAP. That seems like a good deal to me. My in-law studying medical school here is in a shithole and she is paying $450/month but she complains all the time what a dump it is.

Someone posted that 4Rental is still in business so try them -https://www.4rentargentina.com/

By the end of this year and especially Q1 2024 there are going to be a real crunch of apartment rentals.

This is the sort of business-hostile policy that has crippled the economy.

 

[earlyretirement]

This is the sort of business-hostile policy that has crippled the economy.

Exactly! That's the problem with Argentina. It rushes to make laws or policies without thinking them through. And it's always more difficult and takes forever to change things back. Milei is very pro-business and he is talking about some serious reforms that will be much better for Argentina. Some of the things he is saying like "blowing up Argentina Central Bank" will never happen. It would be impossible.

But the youth are frustrated and want change. Employment law reform excites me if they can really get away with changing things. It's what is needed as well as getting rid of many governmental programs.

 

[BraianHere]

Eh, its impossible to do business in argentina.

The corruption/organized crime in your supply chain to pay for protection.
Your employees are unfireable if hired legally
If hired illegally, they can sue you whenever to get a big pay day
Taxes are high if you want to hire employees legally.

Leases are too strong in tenant's favor. Its safer and more profitable to simply not lease a property than to end up taking a loss.

And to add it all in, the Peso is too weak a currency to do anything meaningful with it. It affects social mobility to an insane degree. There is no amount of (legal) work you can do as someone who is underprivileged to become wealthy. If you are poor. You are designed to stay poor.

But hey, i'm keeping an eye on property i could pick up for a discount.

 

[earlyretirement]

Eh, its impossible to do business in argentina.

The corruption/organized crime in your supply chain to pay for protection.
Your employees are unfireable if hired legally
If hired illegally, they can sue you whenever to get a big pay day
Taxes are high if you want to hire employees legally.

Leases are too strong in tenant's favor. Its safer and more profitable to simply not lease a property than to end up taking a loss.

And to add it all in, the Peso is too weak a currency to do anything meaningful with it. It affects social mobility to an insane degree. There is no amount of (legal) work you can do as someone who is underprivileged to become wealthy. If you are poor. You are designed to stay poor.

But hey, i'm keeping an eye on property i could pick up for a discount.

You sound like you too have experience dealing and living in Argentina! Hell, even if you hired them legally you can get sued. Basically as an employer you can NOT win. Even if you pay them all the legal fees you have to pay them it doesn't stop some from suing you.

I can tell you story after story from owning companies or being on the Board of Directors of companies there in Argentina. I've had friends that had employees that got drunk and crashed company vehicles and literally were wasted and they still had to pay. They were all 100% in white and doesn't stop employees from getting blood sucking lawyers. Even if you eventually win you have to pay legal fees.

I've had employees that we caught stealing on camera and we fired. Still ending up paying them some fees.

Also, don't even talk about the crazy labor laws. I once had an employee that got pregnant and we had to pay various salaries while she was out. Then she claimed to get sick and we had to keep paying. Then she got pregnant again. Then she got sick again (she claimed) then had another baby. It went on for years in an endless loop. Crazy!

I think this is the sort of thing Milei acknowledges and wants to change. Without changing these underlying laws/policies it doesn't matter what you do... Things won't function.

The rich get richer and the poor get poorer in Argentina and the middle class has disappeared.

 

[SerchMinm]

You sound like you too have experience dealing and living in Argentina! Hell, even if you hired them legally you can get sued. Basically as an employer you can NOT win. Even if you pay them all the legal fees you have to pay them it doesn't stop some from suing you.

I can tell you story after story from owning companies or being on the Board of Directors of companies there in Argentina. I've had friends that had employees that got drunk and crashed company vehicles and literally were wasted and they still had to pay. They were all 100% in white and doesn't stop employees from getting blood sucking lawyers. Even if you eventually win you have to pay legal fees.

I've had employees that we caught stealing on camera and we fired. Still ending up paying them some fees.

Also, don't even talk about the crazy labor laws. I once had an employee that got pregnant and we had to pay various salaries while she was out. Then she claimed to get sick and we had to keep paying. Then she got pregnant again. Then she got sick again (she claimed) then had another baby. It went on for years in an endless loop. Crazy!

I think this is the sort of thing Milei acknowledges and wants to change. Without changing these underlying laws/policies it doesn't matter what you do... Things won't function.

The rich get richer and the poor get poorer in Argentina and the middle class has disappeared.

Milei is an eccentric but what matters is not what he says about selling body parts (which was apparently taken out of context anyway) or other trivia that makes amusing headlines but how he would actually govern on important matters. If elected he'd have to deal with Congress, unions, piqueteros and many others. Dollarization seems to be his core idea. I am not clear about how he could put the Central Bank out of business but maybe what he is really saying is that he wants to end currency manipulation. Wall Street and international bankers are wary of Milei (see the Wells Fargo reports someone posted in this thread) which strikes me as a good thing -- since when are these people interested in the welfare of Argentina and not just maintaining a status quo convenient for investors? I very much doubt that Milei could be elected but the fact that he got so many votes reveals the extent of anger at the current government, especially among youth who see little future.

 

[SerchMinm]

Any sane person knows that the status quo cannot be sustained in Argentina. This forum has had countless posts complaining about the Kirchners and the current President. I get the impression that Milei is being dismissed without any interest in knowing what he would actually do as President. At the moment Milei is basking in the glow of his victory. If he is a crank with no good ideas whatsoever, what then is the answer? What do readers of this site propose?

 

[earlyretirement]

Any sane person knows that the status quo cannot be sustained in Argentina. This forum has had countless posts complaining about the Kirchners and the current President. I get the impression that Milei is being dismissed without any interest in knowing what he would actually do as President. At the moment Milei is basking in the glow of his victory. If he is a crank with no good ideas whatsoever, what then is the answer? What do readers of this site propose?

I'd be willing to give Milei a chance as let's be honest the previous presidents have horrible. However, much like Trump... the more he talks the more I'm getting turned off. There is such a thing as talking too much non-sense. Trump could have appealed to 50% of his base no matter what he say/does. But if he only wasn't an egomaniac and narcissist he could have appealed to more people. Instead, he fell too in love with himself. I'm getting the sense that Milei might be like that too.

Trump actually had really good policies. Saying Trump destroyed the US economy is WAY off base. It's Biden and his party that has made things how they are. Look at the states like California where all hell has broken loose. All left wing nuts.

Much of what Milei says doesn't make ANY sense at all. Dollarization can't and won't happen. I mean, let's be realistic, where will all the US dollars come from?? IMF? USA? China? Ha, ha. Nope.

Today when he said he has a blanket refusal to do any kind of business with socialists and lumped Communist China in the same category. Do you realize China is the 2nd largest buyer of Argentine exports in the world?! It provides $18 BILLION swap line with the central bank (that he is going to blow up). They use that to pay the IMF!!

So Milei fans have to be a little concerned with what he is saying and acting like. Watch his Tik Tok's. The guy is falling in love with himself which is a dangerous thing.

I do agree with some things like pulling out of Mercosur. Can anyone tell me one benefit that Argentina really gets by letting all the other South American countries send their population to study free here?

 

[RealLit]

I'd be willing to give Milei a chance as let's be honest the previous presidents have horrible. However, much like Trump... the more he talks the more I'm getting turned off. There is such a thing as talking too much non-sense. Trump could have appealed to 50% of his base no matter what he say/does. But if he only wasn't an egomaniac and narcissist he could have appealed to more people. Instead, he fell too in love with himself. I'm getting the sense that Milei might be like that too.

Trump actually had really good policies. Saying Trump destroyed the US economy is WAY off base. It's Biden and his party that has made things how they are. Look at the states like California where all hell has broken loose. All left wing nuts.

Much of what Milei says doesn't make ANY sense at all. Dollarization can't and won't happen. I mean, let's be realistic, where will all the US dollars come from?? IMF? USA? China? Ha, ha. Nope.

Today when he said he has a blanket refusal to do any kind of business with socialists and lumped Communist China in the same category. Do you realize China is the 2nd largest buyer of Argentine exports in the world?! It provides $18 BILLION swap line with the central bank (that he is going to blow up). They use that to pay the IMF!!

So Milei fans have to be a little concerned with what he is saying and acting like. Watch his Tik Tok's. The guy is falling in love with himself which is a dangerous thing.

I do agree with some things like pulling out of Mercosur. Can anyone tell me one benefit that Argentina really gets by letting all the other South American countries send their population to study free here?

Seriously? If you're equating Mercosur with that idiot policy of giving free education to all those foreigners, that's a major false equivalency. The other countries in Mercosur don't do that.

That is stark raving lunacy. The man is an idiot, like some wannabe James Dean rebel without a cause. When he said that he wanted to dynamite the Banco Central, we all took it as allegory. So the next day he doubled down on stupid, and tweeted that, no, he meant it literally. That's perilously close to...nah. Not gonna go full Godwin here, but you know I'm thinking it.

 

[earlyretirement]

Seriously? If you're equating Mercosur with that idiot policy of giving free education to all those foreigners, that's a major false equivalency. The other countries in Mercosur don't do that.

That is stark raving lunacy. The man is an idiot, like some wannabe James Dean rebel without a cause. When he said that he wanted to dynamite the Banco Central, we all took it as allegory. So the next day he doubled down on stupid, and tweeted that, no, he meant it literally. That's perilously close to...nah. Not gonna go full Godwin here, but you know I'm thinking it.

But that's my point. What does Argentines get from other Mercosur countries? Most of them don't have good Universities like Argentina has. I get they could go and live in those countries but most of those countries are hellholes that most wouldn't want to live in.

Argentina is dead ass broke so a lot of things needs to change including giving free education to all of those countries. That is just wrong.

I'm genuinely interested what the main benefits for staying in it. I get why they started it - https://www.cfr.org/backgrounder/mercosur-south-americas-fractious-trade-bloc