Argentina’s Peso Collapse Shows Governments Shouldn’t Control Money

Whenever experiences a sharp drop or volatility, mainstream media analysts jump to declare that cryptocurrency isn’t stable enough to be considered money. The double-digit crash of the peso in one day, simply due to an election in the country, can be said to prove the same about fiat.
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Vote Sends Peso Into Free Fall
On Monday Argentina’s peso currency dropped over 30% in value to a low of 65 pesos per 1 U.S. dollar. The country’s central bank intervened in the foreign exchange market, using its reserves to prop up the peso, but it still ended the day around 15% down. At the same time, the Argentine equity were doing even worse, with the country’s benchmark S&P Merval Index losing almost half its value in dollar terms. This was the worst daily performance by any stock market in the world for the past three decades and only the second worst in the last 70 years.
In case you missed the news, don’t worry, no foreign power has declared war on Argentina, nor has Buenos Aires been hit by a giant meteor. Instead, the event that triggered such a major financial crisis, with people seeing so much of their life’s savings vanishing into thin air overnight, was just a routine election. On Sunday there was a primary vote that signaled that the current politician in charge of the government might be replaced by another one in a few months, which was enough to send the tumbling in historic proportions.
Eva Peron’s portrait on the Argentine 100 peso bill
Looking at the details of the elections that spooked the and led to the collapse of the Argentine peso shows that there is room for some concern. The current of the country, Mauricio Macri, is at least perceived to have tried to fix some of the structural problems of the local economy, even if his detractors can say that he has failed in doing so. His opposition, on the other hand, the Peronist Alberto Fernández and former president Cristina Fernández de Kirchner, are considered to be left wing populists who could set the country back with disastrous policies that will wreck Argentina’s economy once more. Regardless of whether these perceptions are true, the fact is that enough investors hold the news that the opposition might assume control of the government from Macri to be a serious threat to stability.
Here We Go Again
It is important to note that Argentina is not some small and inconsequential banana republic. In fact, it is the second largest economy in and even a member in the G20 group of major economies. It also inhabits a vast land rich in natural resources. Unfortunately, Argentina is also a common example in economic textbooks on how government mismanagement can destroy economies as it was once one of the richest countries in the world in terms of GDP per capita, at the start of the previous century, but has

This post was syndicated from https://news..com/argentinas-peso-collapse-shows-governments-shouldnt-control-money/ and originally written by our friends Avi Mizrahi at https://news..com/feed/
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