WHY would they want to change to the US Dollar instead of another currency closer to Argentina??? We are in recession, and not that close to the Country of Argentina, or are we??? Hey what does anyone know about this??

This is really a strange situation...I would think that if they defaulted on their debts they would have more cash than ever (I know I would have more cash if I defaulted on mine).

I've long been intrigued by Argentina.

Several countries have pegged their currency to the dollar, which is the "gold standard" of paper money. No currency nearer to Argentina is any where as close to as stable as the dollar.

What's so funny is that the dollar used to be the "gold standard," but now it's the "Federal Debt standard" - look at the financial reports from the San Francisco Federal Reserve bank, for instance. Every dollar of Federal Reserve Notes in circulation from this bank is backed by "assets" of the bank.

You will note, nowever, on page 4 of the linked file above, that only 1.9% of these assets are gold certificates, while just over 90% are "US Government and Federal Agency Securities."

Now, I don't know about you, but when the government prints a new $1 billion bond on their LaserJet and gives it to the Federal Reserve System, and the Federal Reserve creates a $1 billion book entry with a few keystrokes, and then pays the Bureau of Engraving and Printing 2.3 cents per note to print up a new batch of Federal Reserve Notes to go with their new book entry, I'm not entirely convinced that the FRB has an "asset" or what they've produced is "money."

If every dollar in your pocket is one small piece of the national debt, how are we ever supposed to pay it off?

For another perspective on this, see NORFED. They're producing a 100% value-backed (silver and gold) currency that is designed to circulate on par with Federal Reserve Notes.

It seemed to me that the best thing would have been to simply convert outright to dollar use (like ecuador recently did) rather than leave the argentine govt with the ability to modify their currency again when they pegged the peso in the first place. People there are right to get their money in dollars as soon as they can out of banks. I did the math somewhere and 1 convertible 1992 peso (= 1USD) was worth like 10 trillion 1968 pesos after like 5 currency changes in the interim.

In any event, my understanding is that a lot of argentinas current problems (their breathtakingly corrupt government and huge foreign debt aside) is that the brazilian real has been devalued to the point that imports from brazil are killing argentine domestic industry.

jan 1970: 1 "Peso Ley 18188" = 100 "pesos moneda nacional".

june 1983: 1 Peso Argentino = 10000 pesos ley 18188.

june 1985: 1 austral = 1000 pesos argentinos.

jan 1992 1 peso = 1 USD = 10000 australes.....

Paper money systems and inflation is just another way for government to steal money from its citizens, and in most cases, most people don't even realize what's going on. Plus it saves a lot of paperwork - no forms to fill out, no checks to write, your bank account just slowly vanishes into thin air without ever changing its balance. The present-day debt-backed US dollar has about 2c worth of 1920 purchasing power.

-Michael Pelletier.

Several countries have pegged their currency to the dollar, which is the "gold standard" of paper money. No currency nearer to Argentina is any where as close to as stable as the dollar.

I think this is part of the problem. As the USD has appreciated against the other currencies, Argentinian exports have become too high priced, leading to a drop in trade. The problem is particularly bad with respect to trade with Brazil, whose currency is not pegged to the dollar. There was discussion several months back about pegging the Argentinian currency to the Euro or a mix of USD and Euro, which would seem to have been a wise move to have made.

pegging to the euro would not make a huge difference in peso value, and would in itself create a confidence crisis as it would be perceived(presumably correctly) as a camel's nose in the tent of devaluation, fluxuation(usd/xeu) is fairly low, and as long as brazil devalues its reais at will it will make the peso too strong by comparison. these folks have some problems and the people in power are not the ones i would want running my account...

the debt cycle they are in isnt going to be paid back, it is just a matter of them paying off other governments to 'forgive' them and get more loans to meet their interest payments.

I agree fully, and would greatly rather work on an asset-based system (i.e. gold coin), but within the context of the world we are in today, the way argentina set it up must have allowed lots of extra theft because it makes almost no sense otherwise. their unwillingness to simply be content with stealing through the usual mechanisms and just make the u.s. paper money THE currency is going to cause a huge problem there very soon. their economy is so dolarized now that i can't see how they are going to ever get back to a floating currency system (well, i guess forced conversions of all accounts to newpesos would do it...)

I guess i am quite impressed the peso convertible lasted as long as it did.

The issue here is that most if not all latin american governments, at some point, experience/allow/create breathtakingly huge inflation, with the effect of cutting the value of their currency by 3 digit percentages over short periods of time; the u.s. dollar (and the canadian dollar, i guess) are the currencies in the western hemisphere least likely to have a future government allow things to get this out of hand. .

If they pegged to, say, the brazilian real, the mexican peso, the chilean peso, or whatever, they run the very real risk of having their pegged currency experience one or more of those wonderful 1000% inflation years at some time in the next 10 years., which is, of course, what argentina itself was doing on and off until they pegged at parity to the dollar. The dollar being chosen versus swiss franc or euro or british pound (that would be quite amusing politically, as the argentine government still does their rabblerousing over the falklands every year) undoubtably had a lot to do with the fact that no euro existed in 1992... and there was really no conceivable reason to peg to switzerland or germany or whoever versus the u.s.

As far as some of the comments on repegged to the euro or mixed euro/dollar, to me the same issue is that it would NOT fix the brazil problem and the overall % change in currency value would be only a few % i would think over a year maybe, but it would create a real confidence issue (just bringing it up in march/april created a fair amount of concern of what they were up to)

That would be bad, a collapse I mean. Although I'm not sure I trust anything the Independent says.

The cash they have comes from IMF loan/grant disbursements. If they default, the IMF cash stops. God help these people, they are in for a rocky ride, a la Weimar Germany 1923-4.

See #5.

For another perspective on this, see NORFED . They're producing a 100% value-backed (silver and gold) currency that is designed to circulate on par with Federal Reserve Notes. That is not a very cool thing to be recommending to your fellow Freepers. That place is a scam. Did you read the fine print? For ten dollars, you can buy a Ten Dollar Silver Certificate. Down in the corner, the certificate says "$10 base." That means that the certificate is 100% backed by enough silver to equal ten dollars at the price of ten dollars per ounce. So here's what happens when you buy one: You send them ten dollars They buy and warehouse 1 ounce of silver, the amount it would take to back a ten dollar certificate at the price of ten dollars per ounce They write a check to the silver broker for $4.18, which was the closing price today, 12/3/2001. They pocket $5.82. They thank you for your stupidity. You get a piece of paper in the mail that says you can redeem it for ten dollars worth of silver, at the price of $10 per ounce. You now have your money tied up in a non-interest bearing account with a firm that may or may not be here next year to redeem your fancy piece of paper. This is a horrible thing to recommend to people.

Remember that North and South America are supposed to erase their borders and form one economic zone with the dollar as the currency. These events you see are part of the forced globalization we are experiencing.

See the world bank and IMF for details.

$4.18 is the price of a 5000 ounce ingot of silver in New York. Try offering $4.18 for one ounce of silver at your local pawn or coin shop and you'll be laughed out of the joint. Go ahead, try it sometime.

Exchanging money through NORFED isn't a way to buy and hold silver -- like they say, if you want to do that, go buy silver bullion. It's a way to use the free-market commodity of silver as currency in your day to day economic transactions, in such a way that allows it to circulate in an economy dominated by Federal Reserve Notes, and allows the bookkeeper to balance his books at the end of the day without trying to figure out what the price of silver should be on that particular day.

No?

$4.18 is the price of a 5000 ounce ingot of silver in New York. Try offering $4.18 for one ounce of silver at your local pawn or coin shop and you'll be laughed out of the joint. Go ahead, try it sometime. I just did. I found I could order a one-ounce coin for $4.50, a ten ounce bar for $45.00, and a hundred-ounce bar for $450. I could do that here. Other places were as high as $5.19. None of those numbers is ten dollars. I don't care what you call it, the people doing this are wrapping $4 pieces of paper in a bunch of bogus flag rhetoric and selling them for $10. You say a person can use them in day-to-day transactions. Who the hell even knows what they are? What dry cleaner or gas station attendant is going to go, "Oh, OK" when I hand him a "warehouse receipt" with the Statue of Liberty on it? Somebody has to be pretty far into Kookland before they will proudly say, "Yep, I pay ten dollars for my $5 bills, and I do that so I won't have to use those worthless Federal Reserve Notes." Especially when the next thing they have to say is, "What's that? You don't take these? I'll have you know I paid $10 for this $5 bill. No dice, eh? Yeah, I got a Mastercard here... wait a minute."

Okay, so what you propose here is paying US$6.50 plus shipping for a one ounce silver coin from the US Mint with a legal tender face value of US$1, or the equvalent of CAD$10.21 for a silver coin from the Royal Canadian Mint with a legal tender face value of CAD$5.

For gold, you could pay US$73.71 for a legal tender US 1/4 gold coin with a face value of US$10 (I have one in my pocket that my wife gave me for my birthday), or $290.75 for a 1oz coin with a face value of $50. From the Canadian Mint, you could pay CAD$456.82 for a one ounce Gold Maple Leaf with CAD$50 face value (US$31.82).

You could use any of these coins at their legal tender face values to buy groceries (provided the grocer will accept them as payment, of course -- just because it's legal tender doesn't obligate a merchant to accept it, eg. paying with a $100 bill at a gas station or fast food joint), either in the US or Canada respectively, but you'd be an even bigger fool than you'd consider someone using ALD to be.

The face value of the ALD Silver Liberty has a 1:1 exchange ratio to FRN, unlike the 6.5:1 ratio for Silver Eagles, or the 9.14:1 ratio of the Canadian $50 Maple Leaf.

By the way, why does this look like a $5 bill to you?