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IPFS News Link • Argentina

One of the best pieces of advice I ever heard

• by Simon Black

Sure, Argentina's economy had been in a severe recession for three years, so life was difficult. But it was still normal.

By the end of the day, however, a major bank run had started in the country, and life changed forever.

For years, up to that point, Argentina had pegged its currency at a 1:1 rate to the US dollar; this meant that anyone holding local currency could freely convert their Argentine pesos to US dollars.

The government's goal behind this scheme was to reign in inflation and demonstrate that their currency was strong. And it worked for a few years.

But eventually the convertibility became unsustainable. As more and more businesses and individuals converted their pesos into dollars, the government started running out of dollars.

So they went into debt.

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