Economists attribute the [increase in travel] to a loophole that allows Argentines with credit cards to access attractive exchange rates abroad. “It’s not like a debit card,” explains Daniel Marx, who runs an economic consultancy called Quantum Finanzas. “You don’t need to have dollars in your account in order to pay for dollar-priced goods outside the country.” When an Argentine travelling abroad makes a credit-card purchase, the payment is converted at the official exchange rate—a rate virtually impossible to access in Argentina. Even though the payments are then hit by a 20% tax, the spread is much smaller than that between the official rate of 5.23 pesos per dollar and the black-market rate that recently spiked to 10.45.
This is only one of the bizarre economic policies wreaking havoc on Argentina. The quack economists now running the country into the ground will continue to try one eccentric experiment after another until the money eventually runs out.Amazingly, Venezuela and Argentina have every abundant natural resource needed to make them two of the most prosperous places on earth. It’s almost as if socialism tends to end in poverty and misery, no matter how rich the soil at its disposal.[Argentine and Venezuelan flag image courtesy of Shutterstock]