Name: Argentina’s Economy Is Collapsing, And Its Far Worse Than You Expect
Uploaded: 2025-10-13T07:50:17.000Z
Duration: 16 min 56 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

The United States had to bail out Argentina before it turns into a disaster.

Adverbs of degree

The United States government just spent $20 billion saving Argentina.

But it's not going to help because the situation is going to get a lot worse.

Argentina not that long ago was one of the richest countries in the world.

But the moment the government intervened in the economy, it turned into a disaster.

And this is where Argentina is right now, when the US had to step in and bail out the government.

Unfortunately, the United States is on the exact same trajectory where the US Government is intervening in the economy more and more.

Every single time that the government tries to take the money from the rich people and distribute it and give it to the poor people, it ends up destroying the entire economy, where it's not just going to destroy the lives of the rich people, but

it's going to make the lives of the poor people and even poor.

So let's try to figure out what exactly is happening to Argentina and why Donald Trump decided to give Argentina $20 billion.

The Argentinian economy has been on a roller coaster.

Sometimes it's growing tremendously and then there are times when it's collapsing dramatically.

However, the real tragedy was recently where the Argentinian economy, since early 2000s was growing tremendously, but

However, it recovered since then, but it seems like it is on a trajectory to completely collapse.

The situation gets even worse when you look at the inflation data.

The average inflation before the current crisis was about 50% in the U.S.

everybody is complaining about an inflation rate of 2.9%.

This is what a real catastrophe looks like.

When the United States was going through an inflation of almost 9% in 2022, Argentina was having an inflation rate of 300%.

This is by far one of the highest inflation all across the globe.

Just by looking at these numbers, you can say that Argentina is in a very serious crisis.

However, they have solved a lot of their problems and inflation has cooled down to 36%.

That is 12 to 13 times the inflation rate of the United States.

This is the kind of inflation that does not allow anybody to do business.

Can you actually live in a country where inflation is 36% or 300% in some cases?

The central bank of Argentina reacted by increasing the interest rates to 126%.

Everybody is complaining that interest rates in The United States are 4% and that's too high.

We need at least 3% to do business in Argentina.

But because they have fixed inflation and brought it down to 36%.

And this number is not going to come down anytime soon.

And Argentinian government, like any other government, borrows a lot of money.

Imagine at what interest rate the Argentinian government had to refinance its debt debts when the interest rate in Argentina were about 126%.

This is when you know that the Argentinian government was in huge trouble and they have hundreds of billions of dollars of debt.

At this point, the Argentinian economy is entirely broken.

They simply destroyed the entire economy.

Argentina over the last 50 to 70 years was one of the economies where the government intervened and provided a lot of benefits to its citizens.

The government is taking care of the average citizen.

But look at what's happening to Argentina today.

Now, to understand what exactly is happening to the economy and how exactly to fix it, and

why Donald Trump decided to give $20 billion to Argentina, we have to understand how currencies work.

A currency is an artificially created commodity by the government to make it easier for business to trade, to make it easier for people to do business and buy stuff.

Because a currency is a medium of an exchange, the currency by itself does not have any intrinsic value like gold has, so its value is created through demand and supply.

The central bank of the country has full control over the supply of this commodity.

So the more it supplies the market with pesos, the less its value is going to be.

The more there is demand for the peso and less the supply for this currency, then the more valuable the currency is going to become.

One of the things that determines the value of the currency is how much the country is buying and how much the country is selling.

Argentina buys a lot of things from outside, especially when it comes to cars and electronics.

So when Argentina buys cars from Germany or from the United States, they cannot pay the US Company with pesos.

So the Argentinian people are going to buy US Dollars.

So the demand for the dollars is rising, and

the supply of the pesos in the market is rising, and

the demand for the pesos is falling, and that weakens the currency.

On the other side, when Argentina is exporting products to the rest of the world, let's say corn, then that company or that country, let's say the United States, that is buying corn from Argentina, the US Company will have to pay pesos in the open markets, and

that increases the demand for the pesos, which strengthen the pesos.

And Argentina is one of the richest countries in the world when it comes to land.

And it has some of the best land in the world where it grows wheat, corn, soybeans and a lot more.

But when it comes to manufacturing stuff, Argentina is a very poor nation.

And up until recently, Argentina was actually running a trade deficit where Argentina was buying a lot more than it's selling to the rest of the world.

So the demand for the Argentinian pesos over the years has been going down and down and down.

And where do you think the government has taken all of those money that it cannot possibly afford?

It kept printing that money, which increased the supply of pesos in the market.

Even though that Argentina is now producing far more than it's actually importing.

It has another fundamental, serious problem.

It has $305 billion worth of foreign debt.

And when Argentina has to pay interest on that debt, it has to pay in US dollars.

So even though that Argentina is making a lot of money by exporting things to the rest of the world, it has to pay the debt.

So it has to take all of these pesos and buy foreign currencies such as the US dollar.

So it is increasing the supply of pesos in the market and decreasing the demand for the pesos in the market.

So even though they fixed a trade balance, it still poses a threat.

In fact, the current inflation is a government created inflation, because over the last 15 years, the government of Argentina has been running persistent deficit because the government of Argentina promised so many benefits to the average citizens.

But the government is not making that much money from taxes.

Where else do you think the government is going to take that money from?

it's not earning that much money from taxes, then the government either going to borrow that money from somewhere or it's going to print that money.

Whenever you are printing money or even borrowing money, you're increasing the supply of pesos, which is devaluing the currency, which is why investors lost faith in the peso.

So imagine you are a business person in Argentina and you are making a lot of money.

Are you going to sit on a hundred million pesos knowing that the Argentinian government every single year is printing so much money and devaluing the currency?

You are going to go and convert your pesos into dollars, euros, or any other currency that does not devalues this fast.

Which is why the Argentinian government has put capital controls.

So you cannot possibly exchange your 100 million pesos into the dollars, because the government is trying to create artificial demand for the pesos and prevent the people from buying the US Dollars.

But it doesn't work, because as long as you know that you are losing money, you are going to find a way to do that.

Which is why there is a huge black market in Argentina where people simply exchange their pesos back to the dollars for which is why the peso has been losing most of its value.

Despite the fact that the government has been trying to control the currency, the current president of Argentina tried to peg the peso to the dollar.

So, because we cannot fix the problem because we have lost control of our currency, let's simply peg the peso to the dollar.

However the dollar moves, the peso is going to move.

And because we know that the peso is overvalued, since we have created so much money and we have printed so much money over the last 20 to 30 years, let's devalue the peso by 2% monthly.

So you are going to devalue it, but not instantly.

Because if we're going to instantly devalue the peso, there is going to be an economic shock.

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Argentina’s Economy Is Collapsing, And Its Far Worse Than You Expect

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