Happy Sunday, everyone! I owe you guys another MONEY CLASS, since I short-changed you earlier this week, but since it's Sunday I thought to be more personal than usual—and instead describe my journey into monetary economics.

What’s so beautiful—and thankful—about studying money is that everybody has a relationship to it.

Everybody understands money at some practical level, even if they don’t have the faintest idea of how or why it works. We all live and operate in a monetary economy; we all have to make our way around, and so we quickly work out things by trial and error. In an economy with 30% inflation, let alone 300% inflation, you simply can’t hold cash for even pretty immediate future expenses.

My monetary awakening and life-long fascination for money/monetary economics began in the fall of 2012—though I didn’t know it at the time. I had fumbled about for a few years after high school: doing policy events for an NGO, volunteer work in Costa Rica, a year at an arts school, and some assortment of various jobs (manual labor, sales, ferry company).

In 2012, I excitedly packed my bags and hopped the Atlantic for a couple of months in Buenos Aires, primarily to study Spanish. I ended up staying in Argentina and Chile for upward of a year, looking as I was for some sort of adventure or guiding path; travelling, as a way to discover one’s inner self (alternative interpretation=postpone growing up).

Far from thinking about monetary systems, my mind was filled with ecological considerations and conjugation of Spanish verbs. I planted trees, rallied against capitalism, and mastered the Argentinian (ʃ/"sh"). The daily wielding of convoluted ways to turn my stash of Swedish and Norwegian currency into real-world goods and services halfway across the world were just an irrelevant nuisance—like getting dressed, brushing my teeth, or showering. Hopping through monetary obstacles is just what people do here; when in Rome, etc.

In hindsight, I should have paid more attention. 

Of the many countries that suffer from monetary mismanagement, Argentina is a classic culprit. As I later studied economics and trained as an economic historian, my professors would occasionally joke that there were four types of countries in the world: rich, poor, Japan, and Argentina ². The history of those two outliers have tended to defy the general pattern of things, especially in monetary matters. (In Argentina's case, “misbehaving” is putting it mildly.)

It seems cosmically poetic that as I think about this the President of Argentina is slashing his country’s mismanaged fiscal state and calls for a dollarization of the economy. The country has rarely had this much positive momentum. ³ (shout-out, @Undisciplined: #745721)

During the year I spent in this fascinating country, this monetary hooligan was doing well relatively speaking. Official inflation was "only" 30%, and black-market currency exchange rates were only a little above the official rate. For all Argentina’s monetary and fiscal sins, it seemed to be doing better than it had in a long time.

But Argentina suffered a problem of small change ⁴. This was still a time where contactless/card payments were novelties, so most transactions took place in cash. Banks and ATMs would give you nothing but 100-peso notes, a large-ish sum at the time. And Buenos Aires bus traffic operated on small coins—1-, 5-, and 10-peso coins. As shops couldn’t easily access small change from the central bank—which would have recycled the 100-peso notes back to where they came from—and customers who needed to ride the bus hoarded their small change, traders in shops across the city found themselves at an impasse. A customer had the funds to pay for the goods, and the seller wanted to sell them at agreeable prices, but doing so would mean accepting a 100-peso note and giving away what little change the merchant had. Either grocery store clerks denied the current customer in order to satisfy the next one, or accepted the current trade only to end up losing the next customer.

The life of retail in Buenos Aires as late as the 2010s was thus a constant haggle over small change. Plenty of mutually beneficial trades were left by the wayside, all because the money didn’t come to users in the way and form that they desired; it wasn’t divisible enough. The spheres of the real economy and the monetary economic clashed, with the money itself causing a drag on the real consumption and production decisions people had to make.

Peter McCormack would, years later in his many podcasts, say that every Argentinian he met told him they had two jobs: their day jobs, and their side-hustle as a money manager trying to get out of the peso in any way, shape, or form possible.

A decade before, many of my Argentinian friends and their families complained loudly over that same difficulty of saving and planning their finances. Holding physical dollars instead of pesos protected my friends’ families in two ways: first, the peso predictably fell in value in foreign exchange markets, which holding dollars protected against. Secondly, physical cash stashed under the mattress is hard for an overbearing government to confiscate in a pinch. Many of them used the opportunity of (semi-illegally) bringing back U.S. dollars whenever they travelled abroad. The same reason that made my Argentinian friends scramble for dollars—exiting a faulty money as quickly as possible—allowed me to financially benefit by holding outside monies.

I was pretty insulated from the local monetary madness in a way that powerfully resonates with me today (most of my social environment struggle under mismanaged money, but I have access to bitcoin, so once more I'm pretty well protected). Despite having no interest in economics back then, I noticed that the currency exchange rates were rapidly and predictably falling and I quickly worked out that I could get more things (albeit at higher peso numbers) by holding SEK and NOK in foreign banks and only withdraw pesos from local ATMs on the day of consumption. This minor way in which money was broken was staring me in the face, but it never occurred to me to investigate it, or ask the critical questions of why this was happening. Without understanding it, I was hedging my future peso expenditures by holding foreign currency which would offset the inflation or even appreciate in real value against the dismal peso. Hold the appreciating money: #738907

On my daily walks to Spanish class, I observed the sticker prices at the local pizza place shift numbers every other week. Odd, of course, because where I came from I almost never saw prices shifting—and for the next decade or so, policymakers and economists were arguing loudly over too low an inflation rate. It seemed that the troubles facing Argentina in the early 2010s were completely at odds with the major financial and economic debates in the part of the world I was familiar with.

Over the course of these months in a dysfunctional monetary economic environment, I began asking all the right questions that in hindsight seem so obvious:

I have lots more to say and opine on regarding those topics today than I did back then, but the confusion and astonishment at witnessing monetary madness in action was definitely a turning point for my intellectual development. It was the beginning of my interest in money and, by extension, bitcoin.

That's today's not-so-little money lesson. Peace, J