How can I survive the economic crisis I see will hit Argentina soon?

Question

I'm from Argentina, where the shit is about to hit the fan just like 2001. We are going to have a crisis similar to Greece in recent times (or us 17 years ago): all debt related.

I'm not an economic expert nor do I have more than the average citizen knowledge. For what I read, we are in great debt with the world (private owners and global institutions like FMI, etc...) and the clock is ticking and i don't know how this is gonna last. We are an economy entirely dependent on the dollar, and in less than 2 years we jumped from a U$D1/$10 (pesos) to U$D1/$24. That's just the beginning.

I want to know how I can protect myself and my family from the economic disaster that is coming so when it's here we won't have it so rough. I've a secure job, so does my wife, but you never know. I have 2 kids, food prices are getting higher and higher and the same with the services (they increased more than 1000% public services).

I'm taking savings out of banks (search for corralito 2001), buying dollars and maybe even buying some gold.

What else should I consider?

Answer 1

On a day where the Peso is spiking and your government is having talks with IMF and especially in a country that has had 8 defaults in the last 200 years I understand it may be hard to take the following advice, but I really urge you to take a little time consider your next moves carefully. I'm not sure if it helps but, even with the recent developments, most experts outside Argentina feel that the odds of a truly catastrophic event in the very near term (<1 year) to still be rather small so you have some time.

I think it is a very good idea to diversify your savings outside of Argentina but even with the jumps today it is a very good idea not do so too quickly. The big problem is that people take advantage of big moves like this to give people bad deals on exchange rates and fees when they really need to move money out of a country. You can lose just as much if not more money on bad trades as you can in a spikes in exchange rates.

I don't recommend gold in large amounts as it can move as wildly as the Peso and is a frightening place to put your life savings. Major world currencies (Dollar, Euro) and even better (if you can buy reasonably) bonds or even bond indexes from major world countries can be very good stores of wealth from a country in crisis. Just a few things to remember:

• It's may seem like you need to rush but it worth taking some time to make sure you are getting a good price.
• Even though it is a good idea to invest your money outside of your country it can be tough to get that money back into your country until a crisis has settled down.
• Make sure you have enough hard currencies and Pesos in country to feed you family in hard times (dollars, euros) but not too much as that can be very expensive and you are prone to theft. Money sitting around is not working for you.
• Finally, you are in a great position to talk to other people that survived past crisis well and ask what they did. Just remember extreme methods may have worked best during a particular crisis but each crisis is different so having a few good methods is key.

Answer 2

I suggest reading people's experience who've lived through hyperinflation. Many Westerners have never lived through this experience and it's hard for them to give advice because most of it is bunk when you actually look at it practically (ie: survival). Some common themes I've seen for people living through this experience:

• Money moves from legal tender to actual possessions. Cigarettes in many of these areas command high prices compared to legal tender.
• Never waste anything physical. Coat hangers, plastic bottles, all of this stuff we throw away holds value over the digital and paper money.
• Knowledge of how to get first access to resources becomes key. Industrial businesses thrive during hyperinflation because they directly produce physical resources. Whether you own one, or do direct business with one, this can be useful for your family.
• Blue collar skills become very valuable. Plumbing, welding, and other blue collar skills become valuable.

Crime becomes rampant - even in formerly rich areas, so you better be able to protect your family (you have 2 kids!).

Answer 3

I'm not entirely familiar with the situation, but you're describing hyperinflation (or the start thereof).

The obvious thing to do when money rapidly loses value is to not have money. Investing in the US Dollar is going to be one of the easier ways to defend your savings. As with everything else, you should diversify so that you're not reliant on a single item. If you're just looking at foreign currencies you should probably look into the Euro and maybe the Chinese and Japanese currencies.

I would prefer to invest in something that actually grows your money instead of just trying to hold steady, though. There are many bonds that are (almost) completely safe and if you invest in the indices of a few different countries (say US, Germany, China, Japan, maybe a few others) you're going to do well in almost all cases short of another global financial crisis (In which case I'm really not sure what the strategy would be).