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    Argentina: A Case Study in How An Economy Collapses

    by Adam Taggart

    Friday, June 10, 2011, 5:10 AM

“When you ask any Argentinean person what concerns them the most, the first thing they’re going to be telling you is the crime problem. And the second one is the financial problem. Those are by far the top concerns the average Argentinean person has, and I think that eventually it will happen in the U.S.A., as well. I think that five years from now or so, you’re going to be talking to people, and the thing that’s going to be concerning them is that Joe down the street suffered a home invasion and got beaten up, maybe even got killed. All kinds of crime that didn’t used to happen in the good parts of town. It’s going to be one of the greatest concerns people will have, eventually.

And, of course, the financial situation as well. If you look into what people are worried about right now they’re worried about losing their jobs not being able to put food on the table the next month. They see that if they lose their jobs it’s not as easy as it used to be to find another one as well. That’s terrible, because it’s very cold when you look at it in numbers, but it’s—I’m telling you—it’s so much different when it happens on a social level and you see that on the street . When you see the people picking up garbage on the streets to eat.”

Hyperinflation survivor Fernando “FerFAL” Aguirre shares his observations of life during and after Argentina’s currency collapse in 2001. He notes that the decline initally began slowly, with most of the populace slow to wake to the danger. But when the eventual collapse occured, it happened practiclly overnight – catching the country by surprise. In the wake of the collapse, dealing with poverty and violent crime became the dominant themes.

Worth our attention is his observation that he now sees the sames signs in the US and other major developed nations that he saw leading up to Argentina’s collapse. In fact, he foresees a similar endgame as all but inevitable.

Click the play button below to listen to Part 1 of Chris’ interview with FerFAL (runtime 31m:43s):

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Or start reading the transcript below:

Chris Martenson: Welcome to another ChrisMartenson.com podcast. I am Chris Martenson, your host today, as usual. Today we’re speaking with Fernando “FerFAL” Aguirre, author of Surviving the Economic Collapse (Self-published, 2009. ISBN 978-9870563457). FerFAL experienced the hyperinflationary destruction of Argentina’s economy in 2001 and has since dedicated his professional career, like I have, to educating the public about his experiences and observations of its lingering aftermath. Given the rising concerns that we all have today about the future of fiat currencies, our listeners are increasingly asking to hear from voices that have firsthand experience with extreme currency devaluation, what it means, how it actually feels, how it plays out. So we’re very fortunate that FerFAL is able to join us today from his home in Argentina. We’re going to be discussing the signs that preceded the collapse in his country and what has defined the society since, including smart moves to take if worried about a similar fate happened in one’s own country and how would you know where you are in the story as it unfolds. So FerFAL, we’re so glad to have you with us today.

FerFAL: Hi Chris. Thanks for having me here.

Chris Martenson: So take us back to that period leading up to the currency collapse that you witnessed living in Argentina in 2001. You know: What were the signs, what were people’s perceptions at the time about how dire the situation could get, and what was the government saying and doing?

FerFAL: Well, the government as always says that nothing is going on and that everything is fine. As you can come to expect by now, just a few hours later you see the entire country go down. And you will be seeing high amounts of an unemployment, and there’s going to be a good amount of social unrest. Unfortunately, many of these things are already happening in the United States. So you are seeing many of these signs right now.

Chris Martenson: What sort of signs? 

FerFAL: Having the people living on the streets where it didn’t happen before. Inflation slowly going up. There’s small details. I was talking with a friend yesterday of mine from the U.S.A. He was telling me that something I had mentioned a few years ago about sizes of items and products shrinking and changing the design. It’s all very well-campaigned with good marketing and such. It’s like we’re offering this new improved product, but that new improved product happens to be just a bit smaller than it used to be, at a slightly higher price. So all those little things, the way in which they hide the inflation, they slowly creep it into your life.

Chris Martenson: So did the Argentinean government—how were they hiding inflation?—through the official statistics claiming it was lower than what people were experiencing? Or how did that play out?

FerFAL: Yes, at first, hiding inflation as products get smaller, but soon enough that’s just not enough either. So it starts going up as well, noticeably so, and people see that their shopping cart just isn’t filling as much as it used to. You’re just buying half of what you used to with the same amount of money, but in the official statistics they’re saying that everything is fine because they changed the way they measure inflation so as to fit what they want to show you. So, if for example, take meat, it has gone up 20 percent, they will just take into account specific type of meat that is only found in one particular location, so it’s not very real, that statistic, but that’s what they stick to.

Chris Martenson: Right, so a beef tongue in the outer reaches seems to be cheaper today, so we’ll go with that—something like that. So it sounds like a pretty common story here, which is the governments obviously don’t want to admit that inflation is high, because that’s either a fiscal or a monetary failing, or most likely both. So they don’t like to admit that, plus there’s a lot of reasons why you want to keep inflation low in terms of being able to say your economic growth is higher and keeping your pension payments lower. There are a lot of reasons for that. So you’re saying that in the United States if we look around, we can already see early signs that parallel what you saw in Argentina? We have rising prices, shrinking packaging for certain things, maybe more people on food stamps, historical records, maybe more people homeless…

FerFAL: More people on social welfare—all those things we saw as well, and it’s happening in U.S.A. as well, unfortunately. It’s an already-written story. We know what ends up happening. It may have different variations, and it may end up in an economic collapse, or not. That’s something that I personally prefer not to be the one spreading that kind of—you know what happens? Its fear. It’s not productive for people in general when preparing, so I’m not going to be saying that the economy in the U.S. is going to be collapsed. All I’m going to be saying is that it’s going to be much worse than it already is right now, and people need to adjust to that different lifestyle. 

Chris Martenson: Absolutely, and I want to get to that really important point about how fear can be demotivating. Let’s get to that later. Let’s track this now. So how quickly did the collapse happen? You know, what is a boiling frog situation and people woke up one day and said “whoa, how did we get here?” Or did it feel somehow like the world changed overnight?

FerFAL: It’s a bit of both. These things don’t happen overnight. You see them coming for years. As you see it in U.S.A., as well, we saw it here as well, and that’s the reason why some of the richest, most powerful elite manage to leave the country with more than enough time. Some happen to do it more in a rush, but most of these guys that have the inside information manage to avoid having their bank accounts frozen, as we saw. So there are signs, and it is a bit of a boiling frog situation. The thing is, eventually when it cracks down, it does so all of a sudden. All of a sudden, you know, when the banks close, that’s when people go absolutely ballistic, because that’s when they realize that their money has been stolen from them – or when inflation turns to hyperinflation one day to the next. That’s when people see that even though you didn’t steal their money directly, as it happened here with the banks, you’re stealing it through inflation as well. So they just bought half of what they used to with the same amount of money. It’s, in a way, stealing their labor, their savings.

The rest of the transcript to Part 1 can be read here.

Click here to access Part 2 of the interview, which focuses on smart steps individuals can take in preparation before an economic collapse.


Fernando “FerFAL” Aguirre experienced the hyperinflationary destruction of Argentina’s economy in 2001 and continues to blog about his experiences and observations of its lingering aftermath. His website (www.themodernsurvivalist.com) and his book Surviving the Economic Collapse (Self-published, 2009. ISBN 978-9870563457) offer windows into the probable outcomes to expect during a collapsing economy. Note: Our site’s What Should I Do? Guide offers specific guidance relevant to a number of the risks FerFAL mentions in the interview.


This What Should I Do? blog series is intended to surface knowledge and perspective useful to preparing for a future defined by Peak Oil.  The content is written by ChrisMartenson.com readers and is based in their own experiences in putting into practice many of the ideas exchanged on this site.  If there are topics you’d like to see featured here, or if you have interest in contributing a post in a relevant area of your expertise, please indicate so in our What Should I Do? series feedback forum.

If you have not yet seen the other articles in this series, you can find them here:

This series is a companion to this site’s free What Should I Do? Guide, which provides guidance from Chris and the ChrisMartenson.com staff on specific strategies, products, and services that individuals should consider in their preparations.  

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