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A Brief History of Inflation in Argentina


In 1913, Buenos Aires was a city where dreams danced in the air like the autumn leaves in its wide boulevards. It was a time of Argentinian exceptionalism, a period when the country, rich and thriving, was rapidly growing, its future glistening with promise. Walking down the bustling streets of Buenos Aires, one could feel the palpable energy of a nation on the rise. The grandiose architecture, blending European elegance with local flair, spoke of wealth and sophistication. The aroma of freshly brewed coffee from the cafés mingled with the scents of empanadas and asado, creating an olfactory tapestry as rich and diverse as the city itself.

People moved with a sense of purpose, their conversations a blend of hope and excitement about the future. There was talk of innovation, of Argentina taking its rightful place on the world stage. The streets were lined with luxurious cars and fashionable pedestrians, showcasing the nation’s prosperity. The air was filled with the sounds of tango music, a rhythmic expression of the Argentine soul, echoing from the dance halls and bars. It was a golden age, where the hope for a brighter, prosperous future was as certain as the sun setting over the Rio de la Plata.

In 1913, Argentina stood shoulder-to-shoulder with the wealthiest nations in the world. Its GDP per capita was comparable to that of Germany and France, and significantly higher than Italy and Japan. By the late 19th century, Argentina had reached an economic status comparable to that of the United States, and by 1913, its per capita income was on par with Western Europe, surpassing Italy, Spain, and Portugal significantly. Entering the 20th century, Argentina was considered a wealthy nation, with a notion of it becoming underdeveloped deemed absurd.

This economic might was reflected in Buenos Aires' grandeur, rivaling Europe's great capitals. The country's wealth was largely driven by its booming agricultural exports, particularly in beef and wheat, making it an agricultural powerhouse on the global stage. Argentina's position in the early 20th century was not just one of regional dominance but of global significance, a beacon of prosperity and progress.

Rambla de Mar del Plata, Argentina. Built in 1913 and demolished in 1940 :  r/Lost_Architecture


In the 1930s, the Infamous Decade, the Concordancia, a conservative coalition, maintained its grip on power through electoral fraud. The Supreme Court's validation of the military regime and its disregard for the habitual electoral misconduct, along with the redistributive leanings of the 1912 Sáenz Peña Law, laid the groundwork for the rise of populist policies and the institutional changes brought by Peronism. These Peronist reforms entrenched a system of favoritism supported by the government towards influential groups, fostering an environment rife with rent-seeking and hindering productive economic pursuits. Peronist economic strategies laid a shaky foundation for policy and institutional instability by channeling resources to the elite and organized interest groups, entrapping Argentina in a cycle of stagnant productivity and lackluster economic performance.

This level of corruption encouraged a level of corruption that wasn't seen previously and weakened institutions that protected private property and business enterprise.


In 1966, Argentina experienced a military coup that initiated a series of military-led governments, signaling a definitive shift toward an authoritarian and bureaucratic regime. The prosecution of dissenters, the displacement of Supreme Court justices, the Supreme Court's subordination to the Ministry of Interior through a mere decree, and the negation of the 1853 Constitution all underscored the ongoing erosion of institutional integrity. These actions coincided with a staunchly protectionist economic approach that was characterized by governmental partiality. Juan Perón made a comeback from exile in 1973, winning the presidential election with his third wife, Isabel Martínez de Perón, as his vice president.

In contemporary terms, these historical episodes highlight a legacy of political instability and interventionist economic policies that continue to influence Argentina's political and economic landscape. The pattern of institutional fragility and protectionism from the past resonates with current challenges in establishing enduring democratic institutions and fostering a climate of economic liberalism and growth. His focus on social transfers and income redistribution lowered the living standards of Argentines because production did not accompany that redistribution. The echoes of these tumultuous times can be seen in the country's ongoing struggles with political factionalism, economic volatility, and the delicate balance between state intervention and market freedom.

The long-term decline of Argentine wealth


From 1946 to 1990, inflation became entrenched in Argentina's institutional fabric, a trend that can be traced back, in part, to the economic and political strategies of Juan Perón's presidency. Perón's tenure, which began in 1946, was marked by profound political polarization and economic policies that often clashed with the interests of the wealthy. He implemented a strong pro-union stance, with union membership swelling dramatically, up to 45.5% of all workers. He nationalized key industries, and pursued protectionist policies, all while steering clear of global economic agreements like the General Agreement on Tariffs and Trade. The lack of production in the economy from competitive industries led to a higher redistribution rate, exacerbating monetary inflation while reducing real production, thus eroding the quality of life.

This era of intense nationalization and protectionism, coupled with the government's repeated defaults on public debt—occurring under various political systems in 1890, 1982, and 2001—eroded trust in the economic rule of law and contributed to a volatile economic environment. These defaults, indicative of Argentina's economic governance, became a historical pattern, shaking confidence in contracts and financial stability, regardless of whether the government was constitutional, military, or democratic. As we see in all other economies around the world, the increase in the money supply (M2) has a direct affect on consumer price inflation. More money without more production equals crippling inflation (source: St. Louis Fed).

Today, Argentina continues to grapple with persistent inflation, a challenge deeply rooted in its economic history. The country's past, with its political divisiveness and economic isolationism, resonates in the present, where similar issues of trust, economic policy, and institutional robustness impact its financial landscape. Inflationary pressures persist, reflecting not only current policy decisions but also the legacy of past actions that have shaped the nation's economic trajectory.


Fast forward to 2023, and the picture is starkly different. The once bright future has been dimmed by years of economic turmoil. High inflation in Argentina (recent figures have inflation at 142% year over year), a persistent challenge, has its roots in a series of complex factors, including chronic overspending, poor fiscal policies, and external economic pressures. Over the decades, successive governments have struggled to control inflation, leading to repeated cycles of economic crisis. The policies implemented often proved to be short-term fixes, failing to address the underlying structural issues.

Debt levels have also skyrocketed, exacerbated by recurrent economic crises and a reliance on external borrowing. The government's struggle to manage this debt has led to complex negotiations with international creditors, further complicating the economic landscape. High levels of public debt limit the government's ability to invest in critical areas and contribute to the country's financial instability. Large deficits and overspending cause more debt to be issued.

Argentina's Milei Would Cut Government Spending by 14% of GDP. Here's How -  Bloomberg

Furthermore, Argentina faces a challenging employment scenario. High unemployment rates, especially among the youth, reflect a struggling economy unable to provide sufficient job opportunities. This lack of employment is both a cause and effect of the economic downturn, leading to reduced consumer spending and lower overall economic growth- excess money printing then is the veil that covers the lack of productivity and growth. The situation is a far cry from the bustling streets of Buenos Aires in 1913, where opportunity seemed abundant and the future bright.

The result has been a steady erosion of the purchasing power of the Argentine peso, affecting the daily lives of its citizens. Savings have diminished, and the cost of living has skyrocketed, making essentials like food and housing increasingly unaffordable for many. The public’s confidence in the economy has waned, leading to a sense of uncertainty and disillusionment. The contrast with the optimism of 1913 could not be more profound.


The story of Argentina's economic journey from 1913 to 2023 is a cautionary tale of how a nation, once at the pinnacle of economic success, can be led astray by a combination of internal mismanagement and external vulnerabilities. It underscores the importance of prudent economic policies and the challenges of maintaining long-term economic stability in a rapidly changing global landscape.

While there is a confluence of factors that influenced the long-history, corruption, money printing, and lack of real production led to a decrease in wealth over time. More money does not equal more wealth. This is a key idea.

Further Reading

If you are interested, I relied on two fantastic pieces of research to write this article. Please read if you are interested in diving deeper into this fascinating history:

The Rise and Fall of Argentina

Introduction to Argentine Exceptionalism