The Argentinization of the world

Hey there, time traveller!
This article was published 11/09/2025 (226 days ago), so information in it may no longer be current.

A few days ago, Argentinean businessman Eduardo Elsztain (a key figure in the Argentinean business circles in the 1990s) told a business audience that the world is “Argentinizing.” He wasn’t talking about tango or soccer or steaks. He was referring to currency — or more precisely, the destruction of it. Holding up an 1881 Argentinean gold coin, once a symbol of stability, he reminded listeners that Argentina has since erased 13 zeros from its currency. “We’re the world champions of printing,” he said, “but now, others are catching up.”

A century ago, Argentina wasn’t a cautionary tale. It was a rival to Canada. In 1913, Argentina’s GDP per capita ranked among the world’s top 10, ahead of France and Italy, and close to Canada’s. Both were resource-rich, immigrant-driven economies supplying the world with food, timber, and minerals. Buenos Aires was the “Paris of South America.” The two countries looked like peers on a shared path to prosperity.

Then came the split. After the Second World War, Canada doubled down on stability, embedding itself in NATO, the Bretton Woods system, and a rules-based global order. Its Central Bank earned credibility, its welfare state grew responsibly, and its banks remained cautious. Argentina chose another route. Perón’s populism promised redistribution, nationalization, and easy money. The printing press became the government’s crutch. Inflation, debt crises, and currency collapses followed.

Elsztain’s warning stings because the world now looks more Argentinean. Since 2008, advanced economies have embraced massive monetary expansion. The pandemic erased the line between fiscal and monetary policy. Debt exploded. Inflation, long thought dead, returned. What once seemed an Argentinean peculiarity — financing deficits with freshly printed money — is now global orthodoxy.

In Argentina, people spend pesos quickly and hoard U.S. dollars. Juan Carlos de Pablo, an Argentinean economist, has what he calls “the Noah’s Ark theory.” He says that for Argentineans, the U.S. Dollar is like Noah’s Ark. Whenever there’s a storm — meaning political or economic instability, inflation, or fear of crisis — people rush to the Ark (the U.S. dollar) to protect their savings and survive. When the waters are calm, some may step off the ark and use pesos for transactions, investments, or consumption.

But deep down, everyone knows that the Ark (the U.S. dollar) will always be there as the ultimate refuge.

Over time, the local currency becomes a mere transactional token while real savings flee to perceived harder assets. That same dynamic, once confined to Argentina, now echoes globally as investors rush into gold and even cryptocurrencies to protect themselves from governments that debase their currencies.

History shows the political dangers, too. Hyperinflation doesn’t just wipe out savings; it destroys faith in democracy. The Weimar Republic of the 1920s is the starkest example. As wheelbarrows of banknotes lost value by the hour, ordinary Germans lost confidence not only in money but in the institutions meant to safeguard it.

According to many historians, out of that despair rose Adolf Hitler, who rode the anger of ruined citizens and the instability of collapsing currency into power, first with a coalition of extremists and ultimately as dictator. The real danger isn’t only the money printing. It’s the erosion of Central Bank independence.

Argentina lost that decades ago. Now, the United States flirts with the same mistake. Donald Trump’s repeated attacks on the Federal Reserve — demanding lower rates, threatening to replace its leadership, hinting he would bend monetary policy to political ends — are straight from the Argentinean playbook.

Once the guardians of money become servants of politics, credibility unravels quickly.

The lesson is clear. When trust in money erodes, it doesn’t return easily. Argentina’s peso once carried the weight of gold; today, no Argentinean saves in pesos. That credibility gap is the true cost of “Argentinization.”

Canada should pay careful attention to this most of all. A century ago, it mirrored Argentina’s promise. Today, it toys with deficits as permanent policy, carries one of the highest household debt burdens in the developed world, and risks sliding down the same slope.

The “Argentinization of the world” is not a destiny. It’s a warning shot. Nations can still choose stability over populism. But history’s message is unforgiving: once politicians bully their central banks, ignore Gresham’s Law, and allow inflation to spiral, the cost is not only economic collapse, it can also be political and societal catastrophe.

Martin Wayngarten is a chartered financial analyst stablishing proud new(er) Manitoban roots.