Hyperinflation & Powers of Ten

A series of Argentine bank notes from the 1960s to the present day. Inspired by the Charles and Ray Eames video, Powers of Ten:




From the 1960s until the early 1990s experienced high inflation often running into the triple digits and occasionally venturing into hyperinflation territory such as in 1989 when, in July, inflation reached 200% in just a single month [an event that was accompanied by riots and the resignation of then president Raul Alfonsin].

A few years ago at the antique coin and stamps fair in Parque Rivadavia I picked up a nearly complete set of Argentine banknotes from this period which I recently photographed.

I'm presenting only notes that are powers of ten as I think it illustrates better the rapid escalation of prices over the period. I find it interesting to notice how the portrait styles and choices vary over the period [San Martin, Belgrano, San Martin again and onwards]. There were five different currencies during this time. Every few years they would chop off a few zeros and relaunch the currency, usually tied to a new economic plan which, usually, eventually, failed. The currencies are the Peso Nacional, Peso Ley, Peso Argentino, the Austral, and Peso Convertible.

One Peso Convertible is worth 10,000 Australes which is worth 1000 Pesos Argentinos which is worth 10,000 Pesos Ley which is worth 100 Pesos Nacionales. The current Argentine Peso is then worth 10 trillion Pesos Nacionales. Argentina at least had the good sense to reset the clock every few years, unlike Zimbabawe and their current hyperinflation with their 100 billion dollar notes.

In 1991, following the final collapse of the Austral, the finance minister, Domingo Cavallo, introduced the current peso which was tied to the dollar at a 1-to-1 ratio.



This brought a decade of price stability and for the first few years anyway, a boom in consumption and construction as people were able to buy things on credit and get mortgages for housing. This made Cavallo so popular that he even had a credible shot at becoming president. He ran for in 1999 and finished 3rd behind De La rua and Dualde. The photo above is a take off of a famous photo by Aldo Sessa showing Cavallo holding a 1 peso note along with a dollar which he used as an election poster.

Of course by 1999 Argentina was already into a 3 year recession which lead to their crisis in 2001/2002 in which they defaulted on their debt and devalued the peso. In the months leading up to the default, which happened in December of 2001, provinces, which were broke and couldn't pay their employees salaries, started issuing scrip. Those issued by the province of Buenos Aires were known as Patacones. They circulated as currency although they were a bit like food stamps in that only certain places excepted them and, until the devaluation, there was a secondary market in Patacon laundering that valued them at about 80 cents on the dollar [which is, nevertheless, a lot more than where Argentina's bonds were trading at the time]. Here's a picture of one that I picked up in 2002:




Following the 2001 crisis, the value of the peso collapsed to 4 to the dollar although it eventually recovered a bit to 3 to the dollar. As I write this post the financial newspaper Ambito Financiero is quoting the value of the dollar at 3.48 pesos. It's gone down about 10% vs. the dollar recently but there's a lot of speculation that it will continue to fall as Brazil has devalued more and inflation has become a serious problem again in the last few years.

The one peso note picture above was retired in the mid 1990s and replaced by a bimetallic coin which currently circulates. Coins are a real bitch to get in Buenos Aires but, that's a whole other story.