Financial Crisis in Argentina Caused By People Forgetting To Think

Last night, we watched a documentary film about the financial crisis in Argentina. It was the sort of polemic that might have been made by Michael Moore – arguing that Argentina’s financial woes of 2001-2002 were caused by rich international investors and globalised companies, rather than by the Argentines themselves.

What a wonderful medium the documentary is. Show a photo of a poor starving child; then show a photo of a rich, fat man, eating in a fancy restaurant. You have made your argument; and the spectator gets to take your point without ever having to put two and two together. That is the beauty of the documentary; it doesn’t require any thinking on the part of the viewer.

(As an aside, we’re trying our hand at the medium ourselves… we’ve have been working with the makers of the hit documentary, Wordplay…about the NY Times crossword puzzle. “We didn’t think it was possible to find a more boring subject than crosswords,” says the director Patrick Creadon “but now we’re making one about debt.”)

If you really wanted to understand what happened in Argentina…and why a financial crisis struck the country in the early 21st century…you would have to do a lot of thinking. Like the rest of life, the facts are infinitely complex and nuanced. But neither investors, nor voters, nor soldiers can stand ambiguity. They need a simple narrative that turns them into saints, heroes, and geniuses…and leads them right to the gates of Hell.

The neo-Peronist, Carlos Menem – with the help of American economists – had pegged the Argentine peso to the U.S. dollar. This had the expected effect – it stopped inflation. But once the danger of Argentine-style inflation was passed, the coast was clear for the big banks to lend money on a grand scale. Argentina’s foreign debts soared. Meanwhile, the relatively strong new peso made it difficult for Argentina’s exporters to stay in business. Because of the one-to-one exchange rate, Argentine products were expensive to the rest of the world. Industries closed. Unemployment rose.

And then, people took to the streets. They had a narrative of their own. They thought the problems were all caused by a small elite of evil bankers, corrupt politicians, and greedy international businessmen. “Out with them all,” they chanted, banging pots. “Thieves!” they shouted.

All narratives have some truth in them. This one had a measure of it. But whatever truth there is soon becomes lost in the vanity and mindlessness of it all. People come to believe only the most cartoon-like version of the narrative…and forget to think.

Bill Bonner
Markets and Money

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.

Leave a Reply

3 Comments on "Financial Crisis in Argentina Caused By People Forgetting To Think"

Notify of
Sort by:   newest | oldest | most voted
Gordon Pasha
Hello You do not mention which documentary about Argentina you watched, but what you claim rings true of many of them. Your explanation of things, however, is also simplistic and off the mark. There is no evidence that the peg of the peso to the dollar harmed exports. Exports rose at a 3% yearly rate during the 1990’s. Argentina’s economy didn’t rely heavily on exports anyway (they accounted for about 5% of GDP). There were a couple of foreign induced investment crises (Brazil, Russia) that buffetted the argentine economy in the second half of the 1990’s. One of these crises… Read more »

Thinking sucks. Listen to your broker. Mutual Funds. Yeah. Growth Funds. Yeah, Yeah. Listen to Congress. Fair Trade. Trade sanctions. Yeah. Price gouging for big oil. Yeah, Yeah. That’s the ticket. Speculate. China stocks. Buy high. Sell higher. Yeah. Soft landing. Yeah, Yeah. Cut interest rates. Yeah. Taste great; less filling. Yeah. Get rich; don’t think.


I find it hilarious that this review was posted only months before the *global* financial crisis started, one that is widely accepted to have been the fault of rich international investors and globalised companies

Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.
If you would prefer to email the editor, you can do so by sending an email to