The US turning Argentine

Who do these Argentinians think they are…French?

We wandered the streets. Here in the Palermo Soho section of Buenos Aires, there were thousands of people window shopping, eating in restaurants, having a drink in an outdoor café.

Inflation is running at about 30% a year. The government is proposing to use citizens’ pension funds to pay off its creditors. You get 50% more for your money if you trade your dollars for pesos on the black market. And experts are predicting another big devaluation of the peso after the October elections.

‘The Argentine economy has been supported by strong farm sector prices,’ reports the local paper. ‘High agricultural prices should help support the peso and the Kirchner government.’

People on the streets seem to have money to spend. And they are eager to spend it.

‘Are you kidding,’ said an Argentinian friend. ‘Nobody wants to save pesos. You get them. You spend them.’

‘I’ve seen this show before,’ said another friend. ‘I was here in Argentina in the ‘80s — when we had inflation of 1,000% per month. And I was in Moscow when the Soviet Union fell apart. Inflation hit about 800% in 1993. I see signs of a big take-off in inflation again. Watch out.’

So far, the quality of life here must be among the highest in the world. There are dozens of restaurants within a five-minute walk. You can sit outside. The weather is nice. And prices are cheap, if you convert your money on the black market.

But the quality of life is more than just sitting in outdoor cafés drinking café con leche. Being able to work is important too…and so is being able to keep your money. You need to be able to save money…and then, you’ll have enough money to be able to hang out in outdoor cafés!

The world is a rich place. It is so rich that it can afford more and more people who don’t have to work, and more and more people — like Ben Bernanke — whose work actually reduces standards of living for practically everyone.

The waiter who brings your morning coffee is providing a valuable service. The plumber who makes sure your water flows is also giving you something of value. So is the autoworker who welded together your automobile. All increase the real wealth of the planet.

But Bernanke? Is there any evidence than any central banker from the beginning of time until 2 April 2013, added a centime or a farthing to the wealth of the world? Not that we know of!

Instead, Ben Bernanke fiddles the money supply…jiggles interest rates…and generally diddles the economy. You might say that if it weren’t for his jiggling and diddling and so on, the crisis would be worse or even that we would have had a depression. But you might also say that if he hadn’t been diddling and fiddling with it, we wouldn’t have had a financial crisis in the first place.

How about Nancy Pelosi or Graham Lindsey? Do they provide a useful service? Do they make the world richer…or better…in any way at all? Are they productive members of society, or blood-sucking parasites?

It seems obvious here: Argentinian politicians do not add value. They subtract it. They spend money that is not theirs, wealth they never created. They drain away the real wealth of the world by transferring money from those who earn it to those who consume it. Then, it is gone.

Is it any different in North America?

‘You get what you pay for,’ said Milton Friedman. You pay for zombies; you get all you want — and then some.

What about tax lawyers? People on disability? Defence contractors?

Ah ha…you will say that defence contractors provide a useful service. Without their work, the US would be attacked and invaded.

In the 1930s, major industrial nations were on the march…and there was at least some remote danger that they could march against the USA. Japan did bomb Pearl Harbor, but never posed much of a threat to the continental US. Germany couldn’t even conquer Britain, let alone America.

The US spent 1% of GDP on defence, which was probably more than enough.

Today, the Pentagon consumes nearly five times as much. There are no hostile, aggressive nations endangering the peace of the world — as far as we know.

So, for our purposes, we assume that the Pentagon wastes an amount equivalent to about 4% of GDP. That is, it takes wealth from the productive sector and destroys it. Maybe worse. By overspending on ‘security’, the US armed forces may actually make Americans less secure.

But wait…we’re not going to spend our time complaining about the zombies.
Instead, we’re going to come to the point…

…which is, that no matter how rich a place is, it can always be impoverished by careful government planning!

Argentina is a rich country. It has boomed in spite of itself. Thanks to a very productive agricultural sector, it earns enough revenue to keep the economy functioning and keep the government supplied with pay-off loot.

But as revenues rise, so do the number of people who want to be paid off. Unions, the poor, the rich…No matter how much they get, the authorities will find ways to spend more. This is how they caused a disaster in the ‘80s…and again at the end of the ‘90s. Is Argentina ready for another financial crisis? Maybe.

The US is an even richer country…but not so rich that a determined government cannot ruin it. Maybe it already has.

Stay tuned.


Bill Bonner
for 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 MoneyDice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill's daily reckonings from more than a decade: 1999-2010. 

To have Bill's reckonings delivered straight to your inbox subscribe to Markets and Money for free here.

Read more

Bill Bonner

Latest posts by Bill Bonner (see all)

Leave a Reply

4 Comments on "The US turning Argentine"

newest oldest most voted
Notify of
slewie the pi-rat

Space Station Collects Clues on Universe’s Dark Matter []

[} The European Organization for Nuclear Research said it has data that could signal the presence of dark matter, an elusive unseen target that physicists believe makes up as much as a quarter of the universe. {]

unable to waste anything except myself, i turned an old bong into a reflecting telescope and it appears this dark matter stuff is nothing other than trans-galactic bad debts.



“here are no hostile, aggressive nations endangering the peace of the world — as far as we know.”

Bill, I disagree. I have searched the world and have decided we are they! Regards from The US, Clay

James G

They called Greenspan Maestro, because he gracefully kept the economy out of recession for 20 years. Bernanke inherited a perfect situation from Greenspan in 2006, all he had to do was lower rates and the economy would have slowed just enough to keep things buzzing. Instead Bernanke increased rates and kept them high well into the obvious start of a downturn. Has anyone ever thought to call Bernanke Maestro?


” Argentina is a rich country. It has boomed in spite of itself. Thanks to a very productive agricultural sector, it earns enough revenue to keep the economy functioning and keep the government supplied with pay-off loot. “”

Dunno, all this sounds like a tourists view, when not two years ago the reality was very different. Though, thanks to a thinking government, they are now making a fist of agriculture – Whereas here in Australia the land is being sold off at a truly alarming rate to foreign interests

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