Argentina is one of the places where debilitating capital controls are the rule.
The government has its ‘official’ exchange rate, and they’ve outlawed unofficial transactions with foreign currency.
But like prohibition-era bootleggers, an entire cottage industry has emerged with legions of street dealers trading currency far beyond the law.
Capital controls are only the start. This government has tried just about everything—price controls, credit controls, even people controls.
They’ve nationalized private assets. They’ve thrown dissenting economists in jail.
Now they’re going around collecting everyone’s fingerprints. They’ve just added another 100 products to the list of controlled prices.
And yet, inflation still rages. People’s standards of living are being destroyed.
The pesos that they earn are buying less and less. Despite the controls, prices are still rising much faster than wages.
All of this has led to mass poverty returning in a big way. Beggars once again line the streets in Buenos Aires. There’s been a noticeable increase just since I was here two months ago.
This is a familiar story. Argentina has spent the last several decades stumbling from crisis to crisis.
Like many countries in the West, Argentina has had a long trend of political incompetence. This once-rich nation has been ruled by those who thought that universal economic laws simply did not apply.
They thought that Argentina could live beyond its means forever… that they could borrow money to pay interest on what they’ve already borrowed.
The Argentina of today shows that there are serious consequences for nations that follow this approach… and for people who do not heed the writing on the wall.
It’s easy to pretend like everything is OK. Sometimes we’re surrounded by grandeur and opulence, and it’s easy to mistake this veneer for wealth.
It’s not. Real wealth comes from freedom, production, savings, and technology… not debt, spending, and money printing."