Sunday, January 29, 2012

Sniffing out the capital flows - use the dogs

Recent news story suggests that Argentina is using ink sniffing dogs, golden retrievers to stop a dollar outflow by the wealthy. You have to do what you can to impose capital controls. The purpose is to keep dollars from leaving the country and cause a depreciation of the Argentine peso. The history of Argentina has been closely linked to the dollar when there was convertibility to stop inflation. Many have dollars held in safety deposit boxes and many exports of commodities are paid in dollars. 

This is just another form of financial repression which will continue as governments try and control wealth flows to pay for their deficits.

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