To Caesar, What Is Caesar’s, and to the Argentinians, the Dollar

Argentina must be one of the few places on the planet where, along with the time, temperature, and humidity, the radio stations report the price of the dollar every half hour. This exhausting concern for knowing the price of the U.S. currency originates in decades of monetary and economic disasters that have made Argentines choose it as a unit of account for their transactions in the market and a refuge of value when thinking about their future.

Just as there are individuals who admit they are not good at sports, mathematics, or poetry, the Argentine government should recognize its inability for more than eighty years—the Central Bank was created in May 1935—to offer society the service of a quality currency and, in an act of sincerity, allow society to use from now on the one it has spontaneously chosen for a long time: the American dollar.

What if we were to eliminate the exchange rate?

In order to put an end to this sort of exchange rate syndrome, we propose the elimination of the peso and the corresponding exchange of all stocks of said currency for dollars through the mechanisms deemed most appropriate and when such an exchange is feasible given the current context of a huge fiscal and quasi-fiscal deficit.

Thus, the resources, time, and energy involved in the endemic concern for the level of the green currency could be used to offer better goods and services, which would result in a higher standard of living for all. Prices would be expressed in a currency of common and voluntary acceptance in the market, the cyclical transfers of income between debtors and creditors would end, and imports and exports would be balanced according to the relationship between internal prices and external prices—no longer depending on monetary policies which, according to the bureaucrat in office, encourage some and discourage others—and in short, the citizens would have a useful means of exchange to plan their lives. 

We believe that the greatest resistance to a measure such as the one we propose here would come not so much from the ordinary people, whose main concern lies in preserving the purchasing power of their income, but from the so-called ruling class, which would thus lose the monetary tool, as they usually call it, as a means of financing their expenses, having to face the taxpayer every time they wish to make a new squandering.

Of course, there will be those who will argue that the elimination of the national currency would represent a humiliation for the country, a loss of national sovereignty, and an undermining of its identity and of the “national being,” as well as a submission to foreigners. These types of manifestations and hollow phrases, which not even their own speakers know well what they mean, denote an absolute ignorance of a currency’s role in society.

Money is a service that communities spontaneously began to provide themselves in order to get rid of all the inconveniences that the barter or direct exchange system represented. Like any other service, the worst thing that can happen to it is to become a state monopoly.

Currency is nothing more than a means of payment, allowing for agility in transactions and developing complex economies. It has nothing to do with national sovereignty. The only sovereignty that should concern us is that of each and every citizen from the front door inwards, which in this case would be guaranteed through the preservation of their patrimony and their purchasing power over time.

This would be a first step towards achieving that with time, once people observe that beyond the color, there is not a great difference between the U.S. paper currency and the national peso—except, of course, a greater moderation in the supply of the former—the market will be opened to monetary competition and we, the consumers, will be the ones to make our choice, remembering what Professor Hans F. Sennholz used to repeat on countless occasions “To entrust our money to government is like leaving our canary in trust with a hungry cat.” We already know what will happen to it!

This article was originally published in Spanish on the “Voces de Libertad” blog and has been translated into English. You can read the original here

Gabriel Gasave is a Research Fellow and Director of at the Independent Institute.
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