The One Strategy That Always Wins Against Money Debasement
Why Argentina’s Inflation Secrets Could Change Your Wallet Forever
My barber is Argentinian. He had to flee his country in search of a better future. Like most Argentinians, he loves football and could talk about it all day. However, I always prefer asking him about the reasons that made him leave his country and how Argentina's economy is doing.
For the past few months, whenever I ask him, he says that the economy seems to have calmed down a bit. The rampant inflation has stabilized and is now growing at a more manageable rate.
He also mentioned that, in the past, even football players in Argentina's top division were paid in pesos, but their salaries were tied to the dollar. Nowadays, however, new signings no longer have their salaries pegged to the dollar.
This problem, which he sees as something so normal, is hard to grasp for people living in developed countries. Most of us take for granted that our currency is stable and doesn’t fluctuate drastically over time. However, when prices rise, it’s not because products are more expensive but because the currency loses its value.
This phenomenon, known as money debasement, happens when the money supply increases uncontrollably, eroding its purchasing power. Simply put, the currency loses value because too much money is chasing a limited amount of goods and services.
This not only leads to inflation but also creates a sense of instability, driving people to seek refuge in stronger currencies like the dollar, as seen in Argentina.
However, something seems to be changing in Argentina. Under Milei’s recent measures, the country has started tackling the issue at its root. One of his first actions was to limit money printing, reducing the fiscal deficit that had been financed by printing pesos for decades.
Although these measures are painful in the short term, they’ve sent signals of stability to the markets and started restoring confidence in the local currency. Additionally, the partial dollarization of certain sectors and the removal of barriers to free currency exchange have had a positive impact. Companies and citizens now operate with less uncertainty, which in turn fosters investment and long-term planning.
While there’s still a long way to go, these policies have helped stabilize inflation and prevent the alarming spikes seen in previous months.
My barber, like many Argentinians who had to emigrate, watches these changes with a mix of hope and caution. “I just hope it’s not a temporary fix,” he told me. And that’s the key lesson from Argentina’s economic history: superficial solutions are not sustainable.
If we want to protect ourselves—or even benefit from such changes—there’s only one strategy that has always worked: