Do Milei’s New “Dollarisation” Plans Make Sense?

One of Milei's flagship policies is his plan to dollarise the Argentine economy and this week he announced the "second phase" of his economic program. So in this video, we'll explain what this actual involves and whether or not it's even a good idea.

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00:00 Introduction
01:09 What Does Dollarisation mean?
03:31 Why Milei is Keen On It
04:22 Is It a Good Idea?
07:58 Too Long

[cosmedelustrac]

This Coca-Cola anecdote is so weird but yet understandable.

[tatianastarcic]

In light of the ongoing global economic crisis, it is crucial for everyone to prioritize investing in diverse sources of income that are not reliant on the government. This includes exploring opportunities in stocks, gold, silver, and digital currencies. Despite the challenging economic situation, it remains a favorable time to consider these investments.

[johnsalchichon]

As an Ecuadorian the dollar has helped us not become like Venezuela. It has its drawbacks, but it has saved this country time and time again

[azahel]

This dude is absolutely nuts, and it feels like this is exactly what Argentina needs to get out of the hole they keep digging themselves in. I'm hoping for the best for my southern brethren.

[roberttheodoregeorge]

The dollar is literally being destroyed / debased / devalued. The best performing asset in the history of the world is BITCOIN. It is by far the best store of value. 10 years from now you’ll be thankful for every dollar you put into it.. My two cents.

[L_back]

I’m from Poland, we had a similar situation after the fall of communism. Poverty was sometimes being covered up, but then came people like Leszek Balcerowicz, an economist who announced the Balcerowicz plan. Basically, he (and some others) made a lot of reforms (including to the currency) which were pretty controversial at the time, especially for low-income households. But later on, the plan worked and the economy was stabilized and inflation dropped and now, people generally respect Balcerowicz (even those who firstly hated him). So yeah, fixing broken economies may take time and we still have to give Milei’s government a chance to fix Argentina’s economy.

[yuhanitar]

The pesos on the animation are from more than 40 years ago! 😂

[cxa]

We dollarized in El Salvador and it has saved our country. The slow growth of our economy since 2000 is a function of crime, violence, and corruption and has nothing to do with dollarization. However, dollarization has saved us from rampant inflation and monetary mismanagement, because over 1/3rd of Salvadorans live in the United States there is simply no way we could have a huge influx of dollars into our central bank to be converted into colones - it would have broken the back of the bank. Now that we have rebuilt from crime and violence we should be adopting the same banking laws as Delaware or South Dakota - literally take their laws and put them through Google translate - and invite every major US bank to open up into El Salvador making us more like another state or territory and more attractive to credit and investment

[StLouis-yuiz]

One of the most cited quotes in economics, originally written by Simon Kuznets, says that there are four types of countries: developed, underdeveloped, Japan, and Argentina.

[MrBrockHeinz]

I feel like every Milei idea is on the surface a terrible idea, until you contextualise Argentina's financial situation and then you're like "eh, it might be the best of a bad situation."

[ricardoguanipa]

The Venezuelan economy has been "unoficially" dollarized for years by now. Literally what helped the economy somewhat stabilized

[terryjf]

You should have mentioned that Argentina had a currency peg to the dollar for years.

They crashed out of it when politicians overspent and the currency board couldn’t come up with cash to keep the peg.

Totally eliminating the peso removes that risk.

[Helmet_Von_Moldy]

I don’t think the risk of default from dollarization is real. Argentina has defaulted 9 times in history, with at least 3 in the last 30 years

[napoleonfeanor]

I think the drastic changes have become necessary because of the complete inaction for such a long time. I'm no anarcho capitalist but I think the current system cannot work anymore.

[morejoacomapo]

Just wanted to let you guys know you’re using a picture of an old Argentinian peso, the “Peso Ley 18.188”, that was used from 1973 to 1983. Argentina has had 3 or 4 different currencies after that one depending on who you ask. The current peso of lowest denomination still being used is the $20 bill which has a Guanaco (animal similar to a llama), or a portrait of former governor of Buenos Aires Juan Manuel de Rosas depending on the year of issue.

[bex]

As an argentinian myself i can agree than me and every person i know has his savings in dolars, because you cant actualy save money in pesos if it gets devaluated so fast.

[bijoucassell]

Many countries have all but abandoned their own currencies for the us dollar, lebanon did and it's situation improved dramatically. It certainly couldn't hurt to dollarize the nation for a time, seek to repair the damage done to it's own currency, have the nation's best and brightest economic minds put together a plan and present it to the UN and the World Bank, take their time, and get it right policy wise, in the meantime have people use American currency or credit for the time being.

[Troggedemic]

Dollarisation as a threat to monetary sovereignty is only real for countries with weak exports who can't secure steady dollar income flows. Argentina has solid resource export potential, so while dollarisation might be a problem in the long term, as reindustrialisation happens, it won't be a big problem when your economic backbone consists of resource exports.

[АлишерОрынбек-бд]

He’s not doing anything crazy, all textbook stuff. One just needs guts

[baylorc]

Dollarization does not replace the Central bank. CB's do a lot more things than managing foreign exchange.