I wrote back then:
Two women have taken control of Argentina's central bank and are about to use it as if they are on a weekend shopping spree.. Cry for ArgentinaMy worst fears are developing. Argentina's inflation rate is at 23%. According to Businessweek, it is the second highest in the world (Only Venezuela has a higher rate).
The soaring inflation is causing a flight out of the currency, which, you guessed it, is causing the government to put currency controls on, preventing Argentinians from exchanging their pesos for dollars. From Businessweek:
Argentine lawyer Julio Cesar Duran wanted to exchange a pocketful of pesos for $10 to give as a gift to his two grandsons. With the government clamping down on dollar purchases, the tax agency rejected his request.
President Cristina Fernandez de Kirchner’s tightening oversight of the foreign currency market is hitting international companies as well as average Argentines, who have traditionally bought dollars to protect their savings in a country with a history of devaluations and hyperinflation. In the unregulated market, the dollar costs about 40 percent more than the official rate of 4.47 pesos, a record gap.
“I wanted to buy $10, not $10 million, and the tax agency says I can’t,” Duran, 59, said in a telephone interview from Mar del Plata, a seaside town in Buenos Aires province, where he tried to buy the dollars at an exchange house last week. “I didn’t intend to do something that would destabilize the country’s finances.”...
The purchase of dollars by individuals and companies drains central bank reserves. With $21.5 billion being pulled out of South America’s second-biggest economy last year, up from $11.4 billion in 2010, Fernandez decided to staunch the losses following her October re-election...
Within days of winning a second four-year term, Fernandez ordered mining companies including Xstrata Plc (XTA) to keep export revenue in the country, told insurance companies to repatriate investments and gave the tax agency the mandate for limiting dollar sales. The government said the moves were needed to limit money laundering and terrorist financing. In April, Fernandez banned Argentines from using their ATM cards to withdraw dollars abroad from peso-denominated accounts.
Bottom line: The latest actions of the Argentinian government point to what Ludwig von Mises warned about. There is no half way method between free markets and central planning. One step on the road to central planning leads to another. In this case, the central bank money printing is now leading to currency controls.
There's also a second lesson here. If you live in a country that is becoming more totalitarian, get your money out of the country well before the draconian currency laws come in that will prohibit you from moving funds outside the country.