I experienced some of it during some recent travel that included Argentina. The country has been experiencing high levels of inflation for a number of years which has deemed it a hyper inflationary economy. This has enormous implications for those living there but also for those transacting as minor approaches have large financial impacts as I experienced. The latest report locally while I was there was demonstrating an over 50% annualized inflation rate.
I experienced a number of transactions that made me think that we in the United States really have no idea what can happen if inflation is not controlled. I came back from my travel humbled by the adversity of the people of Argentina and the challenges they have to live with these realities. I was lucky to have friends from there and living there that provided me some recommendations which surely helped while I was there.
First, there is an official FX rate for the peso which is around 130 per USD. This is controlled by the government as it is not a free market as any USD purchase must go through them. However, this has created a secondary market known as the blue dollar market which would enable people to exchange USD at a higher 215 rate. The limits for locals are so strict as they are only allowed to exchanged $200 (USD) worth of pesos a month with additional restrictions such as credit any USD payment made to the exterior. For example, if you subscribe to Netflix, those dollars paid are used against your $200 (USD) monthly limit.
Knowing this, I was able to setup an exchange when I arrived as anything I would purchase with my credit card would be at the official rate which increases my USD cost at the end of the day. In an effort to limit this impact, I exchanged about $1,000 when I arrived. It was amazing to see that the largest denomination they offer is 1,000 pesos which made me literally carry a bag of cash once I made the exchange. The locals say that the government does not issue a higher 10k bill as it would signal a victory to inflation.
My time in Argentina was amazing as I enjoyed the people and the city very well. The food was amazing and plentiful with quality being the best I think I have tasted. An amazing example of inflation happened to me as I experienced an increased price in my daily coffee from the same place twice while I was there! Shopping went a little too well as we came back with bottles of great wine and leather goods for the family. This put me in a situation on my last day as I ran out of local pesos to pay my hotel which forced me to divide my bill between cash and credit card payment. I was able to pay half my bill in cash at about $100 USD per night but my credit card was charge $200 USD per night for the other half. Amazing! Definitely something to consider given what we are living now worldwide!
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