Mas Money

I have written in the past about the moneda situation (since resolved) here in Buenos Aires. That is not the only problem. Money in general is a huge problem – especially if you are of the peso earning persuasion.

For those who earn pesos, they have to manage a couple of things, most importantly the exchange rate between the dollar and the peso. You wonder why people in Argentina have to worry about a currency that is legal tender 5,000 miles away? Well, because things like houses are priced in dollars. So this means that if you want to buy a house here, you have to borrow dollars. But you earn pesos. Oh and did I mention that the peso is constantly losing value against the dollar? When I first arrived here, the exchange rate was 3.50 pesos to the dollar. And now, 15 months later, it is 3.85 to the dollar. For me, this is seemingly a good deal. But for the peso peeps, it kinda sucks.

While this all may seem like a great deal for me, it really isn’t as lovely as it sounds. Inflation eats everyone alive here, regardless of one’s currency status. Last month, inflation was eight percent. As for last year, there’s some debate - the government of Krazy Kristina (aka Presidenta Cristina Kirchner) says it was eight percent, private economist say more like 15-18 percent. What does that mean for real? It means that every time I go buy something, it costs more. For me, with my dollar driven life, it’s like a pinch of salt. But if your money is worth less and less every month, it’s like a shovelful of shit.

The reasons why are complex and I would never profess to being an economist: It has to do with the Argentine government keeping the peso low to encourage investment by foreigners. It has to do with trying to keep the cost of exports low so someone will buy them. It has to do with the huge amounts of foreign currency the government needs to pay its huge debts. It has to do with the amount of money the government prints. It has to do with a taxation system that is insane, antiquated and easy to avoid. Whatever the reasons, the result is the same: it is harder and harder for everyone but the very rich to afford life in Argentina.

For many people, this roller coaster economy is better than it was. There is a deep history of economic instability and inflation insanity here. During the economic crisis, the rates of inflation were so outrageous that the prices in the grocery stores used to change every hour. Fellow blogger Buenos Aires Photographer has a beautiful posting (with photos) that can give you some of the backstory.

So while my friends freezing their tuchases off up north may be bitching about things, it’s for sure not as wacked as here … if that’s any consolation.

Photo from: http://upload.wikimedia.org/wikipedia/en/c/ce/5pesos.jpg