Currency Chaos in Argentina (Summer School)

**SPEAKER_1** (0:01)
This is Planet Money, from NPR.

**Robert Smith** (0:17)
Welcome back, everyone, to Planet Money Summer School World Tour, the only international economics degree that studies the flows of capital, goods, and lost luggage. I'm Robert Smith. Every Wednesday this summer, we are visiting a different continent, listening to some classic Planet Money case studies, and figuring out the economic lessons we can bring back home. I hope you packed a sweater today, because where we're going, it is winter in August.
Argentina, where the tango is smooth, the soccer is aggressive, and the monetary policy is a cautionary tale. Nobel Prize-winning economist Simon Kuznets once said, there are four sorts of countries, developed, underdeveloped, Japan, and Argentina. The point of the observation is that there's nothing in world history quite like the rise and fall, and rise and fall and fall and rise of Argentina. In 1910, it was one of the richest countries on earth. The people there had more wealth per person than France or Germany. Argentina had natural resources, a cultural capital to rival Paris, and dreams of being a superpower. But it wasn't going to happen. Argentina became instead a country of lost hopes. As one government after another made economic and political choices that erased much of the wealth over the last 100 years. Entire books have been written about what happened to the Argentinian economy. Here's a quick and simplified recap in 35 seconds.
The challenges started with a military coup in 1930 That ushered in decades of political instability. There was another coup and one of the plotters, Juan Peron, was elected in 1946 as a populist. He empowered unions, manufacturing, nationalized the railroads, and started to spend away the money reserves of the country.
After another coup, Argentina fell into a cycle. Governments that would spend wildly, raising wages, creating inflation, and then came budget cutting, and recessions, and unemployment. The country was yo-yoing between crises, coups, debt defaults. And then, in 2001, the big one, the economy collapsed.
We'll talk about the economic lessons later in the show, but I wanted you to understand how traumatic this was for the people who live there. A personal story. NPR reporter Jasmine Garz grew up in Argentina during this time, 2001, and she watched the collapse happen as a young woman.
Here are a few minutes of Jasmine's story.

**Jasmine Garz** (2:50)
There's this one memory I have of my country coming apart. To this day, I think about it more often than I like to admit.
It's the memory of this young man. I saw him on TV. He was protesting outside the presidential palace, not far from where I used to live. This guy, he's a kid. He must have been like in his early 20s. And he's being dragged away by cops. And as they're taking him, he screams.
We're dying of starvation. They're starving us. And then he yells his name.
It was December 2001, and here, in a nutshell, is how the country reached its breaking point. A brutal dictatorship ruled over Argentina in the 70s and early 80s. During that time, foreign debt increased five-fold. Add to that decades of disastrous economic and monetary policies, rampant corruption in the 90s. That's just a few of the things that led to this totally unsustainable situation. People started going hungry. Hospitals started having shortages. It got so bad, groups of people started busting into supermarkets, grabbing whatever they could eat and running. The morning the government declared a state of siege, I was watching the news when the broadcast was interrupted by an official announcement from the president.
The president was basically saying some of our rights were no longer guaranteed. No moving freely in public spaces, no gathering in groups, you could be arrested without explanation and militarized police were deployed. And the response from the police was brutal.
They showed up and whipped people. They shot at them, elderly people, women, minors. It didn't matter. Eventually, protesters ran the president out of office. Over the next month or so, we would get four more presidents.

**Robert Smith** (5:07)
That was Jasmine Garz from her Planet Money episode and podcast, The Last Cup. Her family left Argentina soon after that 2001 crisis. The 25 years since have seen much of the same sort of political and economic troubles in Argentina.
Today on Summer School, we will focus on how economic turmoil, especially inflation, can affect everyday people. Just trying to save money, or work a job, or run a business. And there's a big lesson here to take home. One of the most important things you need in an economy is stability. The ability to plan what your money will buy tomorrow or next month. What are the rules for businesses? Without stability, well, we'll show you the lengths people go to just to survive.