Mara joins me to talk about his adventures in Argentina, and his thoughts on:

  • Geo arbitrage
  • Rules in theory, rules in practice
  • FX in Argentina
  • Bitcoin use in Argentina
  • Argentina‚Äôs property market
  • Where things are going with CBDCs

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Sponsors:

Stephan Livera links:

Podcast Transcripts:    

Stephan Livera 00:01:30  

Mara, welcome to the show. 

BowTiedMara 00:01:32  

Hi, Stephan. Nice to be here. 

Stephan Livera 00:01:35  

So, Mara, I’ve been following some of your work in terms of your writing as well as some of your Twitter commentary. And I thought it would be interesting to talk. I know you have a bit of a focus around Geo Arbitrage, mobility dealing with currency issues. Obviously as you’ve said that you’re in Argentina and I think that will be interesting for some listeners to talk about how that’s working with obviously with the local currency, with the blue dollar rate with Bitcoin and all of these things all together. So, do you want to just give us a little bit of a background on yourself and what your focus is? 

BowTiedMara 00:02:08 

Yeah. So, I’m originally from the Netherlands and I moved here in 2005 to Argentina and yeah, when I started out here, I really tried to, you know, be the normal immigrant in terms of, you know, trying to set up a local business, hire people, etc. And do everything in pesos. Of course, I was you know, in a very Dutch kind of mindset where I thought like Okay, this is going to work this way but then, after a few years of living here, I actually, you know, found out that wasn’t gonna work just because of the currency situation. So after a few years I switched the billing completely to the US. I made a lot of business trips, a lot of referral business, etc. And now I just only yeah, work with the US and maybe one or two European clients. But yeah, that way, you know, you’re able to live a lot better here on a dollar standard so to say versus you know, relying. On the local economy. 

Stephan Livera 00:03:12  

And as I read from some of your articles, you also talk a little bit about Bitcoin, also correct? 

BowTiedMara 00:03:17 

Yeah. Yeah, that’s correct. Yeah, I’ve been in you know following everything in Bitcoin from around 2017 and you know, I started out with the whole crypto kind of universe with a lot of the different coins, etc. But after a while, sort of distilled and I’m kind of like a big Bitcoin maxi in a way. I also see some value in in Monero, just as you know, digital form of cash. Maybe because it’s so much easier to have privacy on that chain but not really as a store of value compared to Bitcoin. So yeah, I’m pretty much a Bitcoin Max at this point. 

Stephan Livera 00:03:56  

Well, I mean, yeah, certainly I take a Bitcoin only focus and obviously my show is Bitcoin focused. But let’s talk a little bit about, I guess, broader where things are going, I think even you, the title of your blog. It’s actually also about Geo Arbitrage and mobility, but you’ve also been writing about this concept of coercive immobility. So, do you want to just expand a little bit? What are your views on what’s coming there? 

BowTiedMara 00:04:20  

So yeah, that’s an article that I wrote a few weeks ago, and basically my the idea of coercive mobility is that the state basically comes into communities and always jails or locks up the same people and that’s like they’re coerced to get out of that community and that’s basically an ongoing process and I inverted that theory or that idea to coercive immobility because what we’re seeing nowadays, and it started with COVID and maybe even before. So that is that the states are trying to make it more and more difficult for people to travel. You can see this in many multiple layers, like for example talking about the climate. People shouldn’t take planes that much like for example, when I talk to friends in Holland it’s really crazy that some of them actually cancelled their holiday trips just to, you know, not have as much emissions by taking a plane. So it’s really, yeah, the brainwashing is really up to that level already. And I think that will only intensify. And the climate is like a perfect excuse to install all kinds of measures and ways in which you know a central bank can limit your spending or basically determine what you can spend your money on, which is something that China is the pioneer in and you know, I think in Europe especially. China is seen as like this great technocracy that everyone should follow, like the big. Simple so I’m pretty sure that you know with the whole vaccine passport idea combined with the CBDC, it will be very easy in the upcoming future just to limit your movements, basically because in a cashless society, what’s going to happen is. You know everything is traceable way you spend. Money on there’s no anonymity anymore, which is so nice of cash, even though you know it might not be great store of value, it still gives you privacy, so they can’t really see authorities, can’t see what you spend your money on. Now with the CBDC, that’s completely different. And you know, basically you can get caps on. CO2 products, etc. So oh, you’re already at your CO2 limit and MasterCard is running trials with this other credit card providers. Also all for that we have the whole ESG narrative and I think that’s only gonna increase. And the worst thing is like, I think really think. I don’t think there’s some kind of conspiracy around this. I really think the majority of people think this is a good thing for the environment. Everybody’s really worried about it. And it’s just great way to install more control over the population in that sense. 

Stephan Livera 00:07:16  

Sadly, I think, and I’ve spoken about this publicly before, and I think maybe, well, I’m curious to hear what you think. But my view on this is that unfortunately most people they just want to fit in with the tribe, right? They don’t care even if it’s wrong. They would rather be with the tribe than be on their own and correct and sadly, what does that mean? It means a lot of people just go with the narrative, whether that’s COVID, whether it’s climate hysteria, whether it’s, you know, you name it, they’ll just go along with it. And so unfortunately, there will be a lot of people who are very much pro, whatever the propaganda is put in front of them. If the narrative is oh be very afraid, you need to lower your emissions. You need to eat less meat or whatever you know, don’t eat healthy food, you know, be a vegan. Eat the bugs. Whatever, you know, a lot of people will just go with that narrative. But then the question is for those people who do. You know whether they are libertarians by principle, or whether they just you know they’re Freedom loving person, whether that’s 10% of the population, we don’t know. I think what are the ways that those people will find a pathway forward? And I think part of that is what many people in this sort of Bitcoin and libertarian and sort of expat communities are, I guess, focused on. I’m curious if you have any reflections on that idea. 

BowTiedMara 00:08:29  

Yeah, definitely. And that’s also where we come back to Bitcoin because basically that’s the only way where you can, you know, send or receive money without anybody interfering with it. And that’s how so powerful about the whole network and because It’s going to be very hard for state actor to do something about that. Which you know, that’s a factor that you don’t have with all the other coins that I’ve found as pre mines, etc. They’re just a lot easier to coerce and I think that is going to be a very important property of, well, I don’t want to call it, you know, black market money because then it already ties the sort of Illegality to it, but I do think that’s where we’re going. If cash is prohibited. At a certain point, or simply, you know, cash just dissolves because everybody wants to use digital payments, you know, no matter what it is because frankly, if you go to northern Europe, there’s already a lot of stores where you cannot even pay in cash and people have less and less cash on them. And oh, it’s so convenient to pay everything with your credit card. Your debit card and of course that’s true, but it comes with a caveat that you know you do lose control over your privacy and your spending, which makes it really easy for the ECB to afterwards. You know, implement something like a digital euro and just make sure that you’re spending your money on the right things that you know they think you should spend them on and not something else. 

Stephan Livera 00:10:04  

And I, yeah, I agree. I think we should try to fight the war on cash you know, for me personally, I try to earn and spend Bitcoin and lightning directly. But if I can’t use that, then my next priority, if I can, is physical cash and only after that’s not possible. That’s where I’ll look at. You know. Physical Fiat. You know cards and so on. So, but I think of it like we can stave off that CBDC future if more of us use cash, right? Because in some sense, we’re keeping it alive, right? But I’m curious, your idea there. What are you seeing there in terms of LATAM and you know, Latin America and cash usage? 

BowTiedMara 00:10:42  

So, so my perception of cash has changed dramatically since moving here because before I was kind of like in the in the mold of you know everything I’ll convenience, etc. But after living here for so long, it’s really clear that, you know, cash does have a very important use case and basically. I think about 40 or 50% of the whole Argentine economy functions on cash or. At least you know in the sort of gray sector where a lot of people, for example, will receive a certain salary and that’s why the stats you see in terms of, you know graphs, etc. are always like a bit off because. Everybody receives a certain salary on paper, and that’s what they use in those stats. But then on the side they will usually, you know, receive another 25% of 50%. And just under the table on top of that salary. And that’s just so companies don’t have to pay that much tax because taxes here are really insane. So, everybody tries to avoid taxes as much as possible. Of course, it’s not legal but you know that is what happens in practice. 

Stephan Livera 00:11:48  

And I mean, people hear about examples like this, even workers who receive tips and workers obviously love receiving tips in cash because, well, whether they disclose that or not is up to them. And I presume a lot of those types of workers are not declaring those on their government income taxes. So I guess cash is another thing that sort of keeps that alive. And so in terms of where things are going. You’ve also commented on this idea that when these CBDC environments are coming, it’s it’ll matter what environment you’re in, because if you’re in, let’s say, a very high compliance environment like the US or the EU compared to other environments it might be a different story. So can you? Explain your views on that or maybe elaborate a bit there. 

BowTiedMara 00:12:34  

Yes, So technically what Argentina for example has created and it lives a little bit in all of the Latin American countries the informality but especially here since there are so many tariffs, taxes and rules and regulations. For every rule That’s implemented or, you know, thrown upon the population by the politicians. There is somebody who finds a way around it, and basically the whole game here in society is. Trying to game the system as much as possible because a lot of people are just not in agreement with you know what those funds are used for, etc. And they really try to get around it as much as possible and you know with success. So, every single time there’s a new rate for example, because we have I think right now about $20 rates. It’s really insane. Every single time there’s a new rate. So for example, now they made a more favorable rate for Agro exports just so those Agro Producers start to liquidate their crops. Which is happening now, but because they were waiting for something like that, so they were just basically Okay, you’re going to get so much tariffs on our exports because Argentina has really high tariffs on those exports. So, it’s a lot of cash coming in for the central bank offers as well. That if you do. Not give us a better exchange rate, which is not going to liquidate those crops and we’re just going to sit on them. So, they finally did that, and now there was you know, record exports after that. So, there’s always like this game of cat and mouse being. Between producers, the governments and consumers, and basically for every rule, there’s an exception or a way to get around it and that creativity really you know, gave me another perspective on what government and the nation state actually means because you know from the outside, if you look from the outside into Argentina, you know it’s tax hell, it’s really bad, but when you’re actually in Argentina, you can see that nobody gives a …. 

Stephan Livera 00:14:52  

Right. And I think that’s an interesting point because certainly there are places where I think that’s there are other countries that have a similar thing like that from the outside it can look like there’s all these rules. But actually on the ground. It’s not really enforced or certain elements are just not acting like that. And so in some sense, this top down bureaucracy view they might have this idea about certain rules, laws, let regulations, etc., that they are pushing out into the world. But actually on the ground, very few people are obeying that. Or maybe that’s just not how it is in practice. So, while we before we get further into the dollar rates and all this I’m curious, could you just explain for us a little bit about why Argentina like, why you in Argentina as opposed to some other place or a low tax place or even just back in the EU, what was it, what appealed to you about Argentina? 

BowTiedMara 00:15:41  

So yeah, my major is in Spanish literature, so I was always like attracted to Spanish to language and to Latin America in particular. So, after I finished, I just started traveling around. I was also doing a Portuguese course on the side. That’s where I met My first wife she was studying in Buenos Aires she is actually Brazilian, but she was studying here in Argentina because a lot of Brazilian study here, because everything is free. So public universities are free, even if you’re a foreigner. The same with healthcare. It doesn’t matter. And that’s also I mean one of the reasons why Argentina has issues paying the bills because you know, if everything is free, somebody’s paying for that eventually. And that money has to come from somewhere so you can see here in certain universities, there’s like 60% is Brazilian because in Brazil there’s a quota for example for something like medicine and he does not, and everybody can just go in. And in Brazil they will be forced to if they’re not. If they don’t fit in the quota, they would have to go to private university and pay tuition but here, you know, they can come here and do the medicine and then they leave so also in terms of. Value for Argentina, they’re basically just educating a lot of people here and sending them off right after, so there’s not a lot of value that sticks in Argentina in that sense so yeah, then I moved here right after I finished studying in Netherlands, and then that was around 2004, 2005. And after a while we separated and I just stayed here, you know, trying to. To make a living. Locally and then afterwards switching to something else. So, I came here basically with literature which doesn’t really pay the bills. I tried to, you know, get a position here at the university. But I you know, I saw the salaries and stuff that well, I’m not going to survive here if I want to do this so eventually I completely shifted and started learning programming and digital marketing and I got a job in that worked for a while for company and then afterwards I decided to create my own company and I’ve been doing that ever since. So, at first here just locally and then afterwards I just focused on. The international market and mainly the US. 

Stephan Livera 00:18:13  

Yeah, right. And I think that’s a common theme that we see with Argentina is people doing Geo Arbitrage. This idea of earning from wealthier countries, from customers who are paying them in the wealthier countries but living in countries where let’s say, the cost of living is a bit cheaper. So, I guess you’re interested in that, and you’re focused on that case. 

BowTiedMara 00:18:35  

Yeah, so for me it was kind of a natural way of going around things because I was actually forced to do that. Otherwise, I would have probably moved back to Europe. You know, or maybe try the US because it’s really, really hard to live on a peso standard here. Plus, there’s, you know, a, a plethora of other difficulties that you come into touch with. If you start a local company, hire local people. So, one thing that happened is you know we have employees here and. Here there’s really like a suing culture. So, every single time you fire an employee, they will basically start a lawsuit and bleed you dry and the justice system is all geared towards the employee. They’re always right. So, it doesn’t really matter. What you do, but you’re gonna have to pay something and after a while that was just like, you know, we had to leave the office, we had to. We basically lost most of the company savings and you know then I sat down and had a real hard thing. It’s like, yeah, this is not going to work here locally. So, you know, then I just set up an international company and started working from abroad. 

Stephan Livera 00:19:40  

So, in a way, it reminds me. Of this idea that you can pick and choose from the different countries around the world as opposed to just. Going to one place and doing everything there that you could be having staff that you’re paying other overseas and not necessarily having to deal with Argentinian well not having to deal with Argentinian labor laws as much, right? 

BowTiedMara 00:20:03  

Yeah, exactly. So that and that has become more and more easy. And I think that’s also one of the main theses in the sovereign individual. That book for example is. That you can really pick and choose your jurisdictions and it’s going to make it harder and harder for nation states to be able to, you know, tax you, control you, etc. And the counterpoint to that is that’s why I also think. That they will. Start to push harder with CBDC’s with movement control, etc. So, it’s sort of like a two-way system. That is working against each other because at this point I think we’re at the peak of how. Easy it is. Because for example, I have a US client and they work with about 35 people that are all based here in Argentina. They don’t have a local company and they do everything through deal now and their contract is on deal, so they need to provide sort of the their tax ID’s etc. locally to deal and the rest of the taxes and all that those labor related issues is on them. I see maybe in the future that things like that are gonna be more complicated, but right now. It’s very easy. To do such things. And as a company internationally, you don’t have to worry about any of those local laws, etcetera. So that’s really positive but you know, whenever I see big supernational organizations talking about, you know, worldwide taxation, etc., I sort of see that, you know, they want to do something about it. And one of the things that I also focus on a lot is investment migration. With my company, and basically what we’re seeing there is that. They’re trying especially. The EU is. Really cracking down on citizenship by investment programs. Even if they’re not within the EU So, lately they’ve been putting pressure on Caribbean and islands that all for CBDC’s basically saying if you don’t up the price, we’re going to take away your Schengen visa free access, etc. And Saint Kitts, already so came to that. And they basically said, Okay, we’re going to double the price. To maintain that shaken access. this and the EU’s doing that same thing within Europe, really trying to get rid of all the golden visa programs, while at the same time, you know, they allow hordes of illegal immigrants basically to come in. So, it’s kind of a weird policy, but that’s what I see. Like, you know, they’re trying to make it harder for capital to move together with the people. And that’s I think a global phenomenon, I think that. That will only increase. 

Stephan Livera 00:22:52  

I see and I think I agree. That’s definitely the direction we see some of these large, you know, EU style government organizations going. But on the counter side, there are still other countries who are competing for people. And so, I think it’s an interesting dynamic to see that because in some ways you have some countries who are trying to compete. And trying to attract people there and then on the other hand, you have, let’s say, the EU trying to make it hard for people to do that. So, do you just see more and more countries trying to compete or do you see more companies or countries rather just going? Okay. We’ll go with the global minimum tax, or we’ll go with, etc.. Whatever bureaucracy you want, EU. 

BowTiedMara 00:23:36 

So yeah, I think there’s a divide there because what you basically see in South America is that they will remain neutral. For example, in a conflict that we have right now with Russia and Ukraine, Brazil, Argentina, like most countries here, they’re sort of like, Okay, it’s not our problem you guys fight it out and we’re not going to take a stance on this because you know, it’s not our issue, which I think is very wise and they do that with a lot of stuff. So, for example, Argentina still has visa free access for Russians. So does Brazil and of course, they have birthright citizenship here. So, a lot. Of Russian migration, you know, upper middle class have come here with, you know, pregnancies and just started to have kids in Argentina. The estimates are that it’s about 15,000 so far that I’ve done this and about half of those people actually stay in Argentina because once you have a child here, the child is automatically Argentine and then after one year, more or less, the parents can also get citizenship. So of course, you know, if you’re on a Russian passport or Belarus for that matter, cause they also have visa free access still. It’s very compelling because then afterwards you can actually use that those Argentine passports to travel around, and Argentina has the best passport in terms of visa free access of South America. The only one that you know could potentially be better is the is Chile because they have. Esta visas for the US, but they don’t actually have more visa free countries. That’s Argentina’s number one there. So yeah, having that versus a Russian or a Belarusian passport is, of course, phenomenal. So that’s happening a lot. And Argentina is not trying to stop that either because. In terms of freedom of entry, freedom of living in Argentina, the Constitution is really phenomenal, in my opinion. Once you are on Argentine soil, even if you’re a tourist, you’re considered an inhabitant and the inhabitant has the same rights as a citizen or residents? It doesn’t matter. So, once you’re on the soil, you basically get the same rights. That’s also why it’s so hard for them to charge in public hospitals or public universities. For foreigners, because basically they can’t do that because. That would create. A distinction which doesn’t exist in the Constitution. 

Stephan Livera 00:27:48  

Yeah, that’s an interesting point. I wasn’t aware of that. I am aware that the Argentinian citizenship cannot be renounced, though that’s an interesting one, isn’t it? So, what do you think about that? 

BowTiedMara 00:27:57  

Yeah, that’s always one of the things that Twitter brings and brings up a lot. Like all the passport brows on Twitter, as I was like, yeah, but you can’t renounce the passport, man. And it’s like, yeah, of course. Right now, in the world, there are only two citizenships that charge based on your citizenship, and that’s the US and Eritrea. So, if you have one of those two passports, you’re going to be taxed worldwide no matter where you live and of course you can renounce those, and you can’t renounce the Argentine passport, but at the same time, how many Eritreans are paying that tax like? And that’s the question you need to ask with Argentina is like if they would ever implement something that nobody’s going to pay taxes. Like, seriously, all the Argentines just. Yeah. Okay nice story bro. It’s like because that what already happening right now in the country If with actual residents you know a lot of things, they’re just going around it, and especially if they’re living in another country. And is this going to be oh, and I can’t renounce? Okay, well I’m not gonna pay tax either. So, I don’t think that’s much of an issue to be honest, because I also think like if they would ever do citizenship-based taxation then that they would have to adjust that law that you would actually be able to renounce because it would otherwise. It’s kind of like a lock in. That you know they have you forever so. 

Stephan Livera 00:29:18  

Yeah, and I mean, as I’m sure you’re familiar with the sovereign individual, they might well look for ways to try to, let’s say, trap people into their tax net or to their, you know, to stop people from leaving. You know that like we’ve seen that historically that’s happened. So, I guess maybe that’s where some of the concern is coming from, but I mean certainly I agree with you that while the stated law written on paper might be one thing, what happens in practice is another and that scenario, well, if you’re if you have an Argentinian passport and you’re overseas working somewhere else. Well, what are the possibility that the Argentinian Government would go after you? It’s kind of unlikely, right? 

BowTiedMara 00:29:57  

Yeah, exactly. I mean, the enforcement is already so hard locally just in the country, you know, it’s almost well. I wouldn’t say it felt safe because a lot of things do work very well compared to, you know, real failed states. But like, there’s no real enforcement from the state, and it’s really weird that, you know, in a country that has so many rules and regulations. On paper. And that’s why in terms of economic freedom, it’s always like in the, you know, the bottom part. Compared to Europe or the US, I’ve never felt more free in terms of not having the state breathe down my neck here versus Europe, for example, in Europe, I was constantly aware of, you know, that state control would be with cameras or you know what, everything is being tracked all the time. And of course, yeah, you know, I’m. I wasn’t doing anything illegal. So, in that sense, like I could use the excuse. Yeah, but you know, I’m not doing anything illegal, so I don’t care. But I did care because I just don’t like that. You know? I just. I want to live my life without, you know, state breathing down my neck all the time, and that’s basically something that doesn’t happen here at all you are here in a huge country because it’s really huge. With not a lot. Of people and. You know you left to your own devices. Go do whatever and see how to how you survive. And that’s something that I really like about Argentina. 

Stephan Livera 00:31:16  

Excellent, and I guess what on the topic of survival in Argentina, can you share any insight for people on, let’s say security in Argentina like crime rates and things like this? Is that a problem for people like petty crime or is that like presumably you Obviously, you find it acceptable. 

BowTiedMara 00:31:33  

Yeah, so that’s always one of the arguments that people come up with to not travel to Argentina, for example, or South America for that matter, because the crime rates in South America are higher than, you know, most countries in Asia for example, but at the same time in Argentina, crime rates are very low compared to other countries in the region. You know, it’s not like. In Brazil, where? You know people. Will hold you up with maybe a gun or something and try to rob you. There is a lot of petty crime here in the city in terms of, you know. snatching your phone or if you’re not paying attention, maybe snatching a wallet. But it’s the same thing in any big city. In that sense, it’s not that different if you just pay attention and you’re not flashing. Around your wealth. Or your latest iPhone, then there shouldn’t be an issue at all I have, you know, knock on wood, but I’ve never had. Any issues here? With security, and especially in the city. You’re not going to have many problems with, you know, hold-ups of robberies and that kind of stuff that happens on the peripheries. Like in the more you know working class neighborhood. So that’s the stuff that you see on the news and that’s why most Argentines they have this feeling that you know, oh the country so unsafe and insecure because that’s the thing that is portrayed on news and social media like all day. If one thing happens. You will see that on loop the whole day and just that one thing so that. Already indicates to me. You know that it’s not really that much of an issue because it’s always like you know, and it can be a really small case that you know in the US would never get as much attention, for example. And here it’s like, you know, and everybody’s talking about it and it’s the only thing that they talk about for a Day and in the interior it’s even less so if you go to other Cities or, you know, just small towns, etcetera, it’s really super chill so. I’ve also lived in Brazil for a while and you know, Brazil is definitely a different animal in that in that sense, I lived in Sao Paulo where, you know, if you would just not pay attention and go from one really classy neighborhood and just walk down the wrong corner, it was just like, oh, all of a sudden. And like a semi favela with junkies fighting over the next shot basically, and I need to run now. That happened a couple of times and you know that kind of situation doesn’t happen here at all. Like there are some, you know many slums here and there. But you know, normally you don’t come there, especially not if you’re a tourist, so you won’t really notice. Anything of that nature. 

Stephan Livera 00:34:31 

Great, Okay let’s talk a little bit about the US dollar. The Argentine peso, Bitcoin and where it all interacts. As you were saying, there are multiple rates for the Argentine peso and so the typical thing I’ve heard like in not just Argentina but in other countries in general is that there’s often a government rate. But that rate is not realistic, and actually the real true rate is, you know, is worse than or is, you know, higher than that. But the government doesn’t want to make it look bad, so they’ll have a set rate at a particular level. So, can you explain a little bit about how that’s working in Argentina? 

BowTiedMara 00:35:06  

Yeah, so from the central bank, they basically set a fictitious rate that, you know, nobody follows because there’s caps on buying dollars. So as soon as they install those caps with a limit of $200.00 a month that you know you can buy at that rate. The parallel market emerged and basically that’s the blue rate, which is double the official rate because the demand for dollars is just so high. So, everybody just buys dollars on that secondary market, which is, you know, technically illegal. But nobody does anything about it and the official rate is used for some importers and other services, but because dollars are so scarce right now, like seriously, the liquid reserves are minus, I think, $14 billion right now. It takes a long time even for imports to clear now. So, they have a 60-day window. For the government to say Okay, you can get dollars. At that price. And while at the same time, you know, for politicians and their families, they can buy dollars at that price without any issues. That’s also in the small print of the covenant, so that we’re seeing the catalogue system like in real time here in Argentina where they get, you know anything that’s coming from the printer. They get it the quickest. They get access to dollar They know when a devaluation is going to happen, and sometimes it’s so blatant with, you know, bond purchases and selling directly from the government in volume that you know, oh, there’s going to be devaluation or. You know, sort of like you could see all the graphs like this is 

Stephan Livera 00:36:45  

Right, they know something’s coming. 

BowTiedMara 00:36:46  

Exactly, this is not normal behavior 

Stephan Livera 00:36:51  

One quick question on this. So, on this official government right, If you let’s say a foreigner comes to the country and they’ve got their debit card or credit card and they tap and pay, are they getting the official government rate there or are they, you know, what rate is being used at that point? It’s not the mid-market, right? 

BowTiedMara 00:37:07  

So yeah, at I think from last year onwards or starting this year they. Changed that rate. Because basically they weren’t capturing any of those inbound dollars that way because all the tourists that came here, we’re just going to swap on the black market to get a better rate, where as if they would pay with their credit card It would be twice as expensive because they were paying. Official rate. So, they changed that, and they now apply a it which is called the MEP rate which. Is just like. A 10% below the blue rate. Right. So, you’re getting a lot a lot better rate, it’s still not exactly the blue rate, but it’s very close. So, you know if you. Don’t want to. Carry huge amounts of cash with you. All the time. And then that’s a good option. I would say, you know, it’s still worth the exchanging on the black market just because a lot of businesses do not accept credit cards or they will give a cash discount, etc.. So, it’s still worth it to at least when you visit, you know, bring a decent amount of dollars with you to exchange on the black market, one thing that you do have to keep in the account is that those dollars need to be as crisp as possible. It’s called the blue rate because of the blue stripes in those new $100 bills. 

Stephan Livera 00:38:22  

Ah yeah, I didn’t know that 

BowTiedMara 00:38:25  

Yeah, so that’s why it’s called the Blu-ray and if you have what’s called the small heads, $100 bills with the smaller Benjamins, those are worth 5% less on the market. So, nobody wants them because apparently, they’re More easily forgeable etc. So. They get a discount and frankly nowadays nobody wants to touch those. So, it’s nice when I go to the US, I just tell my quaver, hey, give me all the small heads and at a discount and then I spend them. In the US, because they’re nobody cares. 

Stephan Livera 00:39:00  

Right, so you get a little Arbitrage there as well. Okay, interesting. So, do you want to tell us a little bit about how this works in terms of people using these markets and of course, if you know, Bitcoin and maybe some of the stable coins, not that I promote stable coins, but just to understand, you know what’s happening? On the ground. 

BowTiedMara 00:39:18 

So there’s most cleavers, which is basically the money exchanges on the black market. What they will do is they will exchange cash dollars for pesos at that black market rate or vice versa. They also if you want to get money. Into the country. Let’s say I want $5000, bringing that to Argentina from an account. Offshore, of course, you’re not going to send that through the banking system because of all the issues with holdings, etc. So, what they will do is they will say, Okay, you need $5000 here. I will match you with a local that wants $5000 offshored. You transferred to that account and. You get the dollars here -4%, which is their fee, and you can have that either in cash dollars or cash pesos. And of course, you’re not gonna. Say pesos you just. Swap dollars overtime to pesos as you need them. Just because they depreciate so. So that is one way through the traditional banking system, which is kind of like a triangle. And then there’s some younger Cuevas or, you know, with younger people, more millennials that are also familiar with Crypto, the most traditional quarters don’t handle crypto or Bitcoin. And there I’ve swapped a couple of times with Bitcoin. The problem with that is that there’s because of the volatility in the in the settlement times. If you don’t do it through lightning, and most of these go really on chain, so it takes a while for it to clear. The price can, you know, fluctuate. So, most Cuevas, they will rather prefer a stable point just because of that, because otherwise you know you agree to a price and then it’s harder to stick to that price because they might lose out or you might lose out if you use Bitcoin so most of those. Transactions are used. With USDT and then funnily enough, and I love this because you know everything is always about, yeah, decentralization, etc. and here, just everybody uses USDT from exchange to exchange over the Trump network. Which is the. Only use case for Trump in this world is because it’s cheaper transaction fees. So that’s the only thing that counts. 

Stephan Livera 00:41:42  

I mean, at the end of the day, decentralization just became a theater, and it’s just kind of like regulatory arbitrage. I mean, they might as well not be using a blockchain at that point, right? It may just literally be a spreadsheet on Excel somewhere, but because it’s a blockchain and because you know, I guess that’s what people believe, right and if that’s what allows this kind of fiction to proceed, then that’s what they’re doing now. I guess the way I’m seeing it is. The US dollar demand is different to Bitcoin demand, right? Like if you are a Bitcoin Hodler, that’s a different thing because you actually want to save. And Hoddle, Bitcoin, you know, I get some people who I see some people kind of complaining online that oh see, look there’s all there’s this big use that Bitcoin is not solving but. At the end of the day, if a person doesn’t want Bitcoin exposure, you know I’m not putting them down or something, but maybe they’re just not ready for it yet. Maybe they are not in the economic position to be saving with Bitcoin. At least that’s how I’m thinking about. Of course, I earn and spend Bitcoin and I would love to see more people do that, but I think I’m also trying to be realistic about what is the unique selling point of Bitcoin and what are the cases where. Look, if someone wants USD exposure, well then they’re gonna do whatever the cheapest and fastest thing for that is, right? 

BowTiedMara 00:43:02  

Yeah, exactly. I think you’re spot on that because what happens is there’s a lot of people that, you know, younger people that do save in Bitcoin and they just don’t touch that at all. And the reason why they use so much stable coins and dollars is just because that is. All you know. Month to month kind of transactional. Payments that they need to swap back to peso. So those dollars always need to be on the on the go and ready for them to change it to pesos whenever they need it. So, it’s really more of a practical issue and those aren’t really savings. So, you know, if people really want to save. They will either have dollars in cash or you know if they’re already up to, you know, Bitcoin huddle mode, then they will save in Bitcoin. And I know quite a few people because the Bitcoin community here is pretty big. There are quite a few people that do that. And of course, those need to be savings that you don’t need. At all. And you know that can be tough here in this economic environment where you know most people just live month to month, and they will need all the money that comes in. 

Stephan Livera 00:44:13  

And I know also actually Muun wallet. I know the Muun wallet team are Argentinian as well. So, I guess there’s a lot of Muun users there. 

BowTiedMara 00:44:20  

Yeah, I actually used their wallet. It’s really nice. Yeah, and the Bitcoin foundation here is really big. They do a lot of mining courses and yeah, it’s a great community. You know, some big events also around Bitcoin. And I think it was around five years ago. That there was still some, you know, really diehard Bitcoiners here. You know, one that I personally know. And well, he left from Mexico now, but he was seriously doing all of his finances on Bitcoin. He didn’t spend any Fiat. And he was just living on a Bitcoin coin standard for everything and. I think he still. Does that even in you know travelling around etc. 

Stephan Livera 00:45:05  

Yeah, and so out of curiosity, for someone who wanted to go to Argentina and spend Bitcoin and try to do that, how feasible is that? Or is it more like you basically need to sell for cash and spend cash mainly? 

BowTiedMara 00:45:18  

Yeah, you’re gonna have to swap for cash because most you know businesses, they don’t even have a Bitcoin wallet, or they wouldn’t know. How it works? So, they would become suspicious that, oh, maybe it’s a scam because there’s been. There have been so many scams here with Crypto specifically. And I don’t know if you read, but like last week’s A guy got dismembered, he was also like a Crypto trader, but basically was scamming over. Yeah, tons of people. And he ended badly. That case is still ongoing, but like the stigma of that kind of, you know. Scamming Crypto sphere is around anything related to Crypto even Bitcoin that you know people will perceive it that way so. It’s not that easy to spend Bitcoin here, and frankly, not even easy to spend dollars because you know the businesses just won’t have the change or you know, it will be very hard for them to justify it in their administration because what rate are they going to apply, you know, because technically they would have to do. Use the official so, nobody wants to use those for day-to-day transactions here. So, you just, you know everything gets swapped to pesos and then you pay in pesos. 

Stephan Livera 00:46:36  

Interesting, because I’ve noticed in some other countries, you know, again not insulting Argentina or something, but other countries I’ve seen some of them will do. It where you can pay with USD, but they’ll give you change back in their local currency, but that does require having you know relatively liquid and stable exchange rates. And as you said in Argentina, that’s not a given of course with the 20 different rates and you know maybe people would fight over what rate should be applying, they should be you know, because obviously the customer will say no, I want the blue rate and the merchant might say no I want to give you a lower rate. So, I can you know so, you know there’s obviously going to be arguments around that too. 

BowTiedMara 00:47:12  

For bigger items, for example, they’re all priced in dollars. So, if you want to buy property here or a, you know, a car, the base is always in dollars. And for property, it’s actually very rare that you can pay in pesos, or it will have. Like a very high rate tied to that, but most secondhand homes or used homes, they will always be traded in dollars. So, if you want to buy an apartment or whatever, it’s always going to be dollars. It can be a bag of cash or, you know, just a wire. Most people also have U.S bank accounts, so. What happens a lot of times is that the owner will just say, Okay I just deposit the funds into my US account. It doesn’t even touch Argentina you just pay the local taxes here based on the contract and that’s that. 

Stephan Livera 00:48:05 

Okay so yeah, it’s just like the transaction was just not even done inside the Argentinian banking system at all like it’s just all happening outside. Okay, great. Yeah, of course we would love to. You know, I would love to see a future where everyone just does everything natively with Bitcoin, but of course, I understand we’re not there yet and we have to, we have to kind of grow the. Based of Bitcoin users and grow the you know win. We have to win hearts and minds in some sense and so. I guess let’s talk a little bit about some of the property market in Argentina, because you’ve written about this also and you’ve been speaking about it, you’ve been talking about how they use U.S. dollars for pricing. They have different markets in terms of already existing properties and then off plan or I forgot the exact term for that. But if you could maybe spell out a little bit of your thoughts around? How the property market works there for people who are, you know, thinking about, you know, thinking about that. And so yeah, one other question, can you buy property as a non-resident of Argentina? 

BowTiedMara 00:49:03  

Yes, you can. There’s no limitations. The only limit there is for buying property as a foreigner is even as like a foreign resident is agricultural property, and the limit is that there can only be a Max of 15% per province in the hands of foreigners, and right now none of the provinces is even close to that. I think you know the highest is about 6%, so you know you can still buy whatever you want here. There’s no limits there and that only goes for rural property. So, you know a lot of acreage etcetera, but you know apartments, you know don’t even fit that profile. So, you can just buy. Whatever city property you feel like. 

Stephan Livera 00:49:53  

Yeah, and when it comes to getting residency rights in Argentina, do you need to buy a property above a certain threshold like other countries have? That is there a threshold here? Or how does that work? 

BowTiedMara 00:50:04  

So Argentina does not have a golden visa where if you buy property you automatically get residency. So you will have to get residency through other means. And one of the most. Popular visa is the Rentista visa, which is basically a pensioner or a passive income visa. They recently upped the amounts according to the official rate. It should be around $2000 a month that you need to show that you can sustain yourself income, but that can be $1000. 

Stephan Livera 00:50:31  

Like income, yeah. 

BowTiedMara 00:50:35  

Depending on you know what kind of exchanges you use. So basically, I know some people that use Western Union they send because Western Union. Uses the blue market rate. Which is kind of funny. So, they use Western Union, they get in all those pesos, they then afterwards deposit them on their bank account to show the government. Hey, look I. Made you know $2000 this month and then afterwards they swap it back to dollars and. They basically only. Had 1000 Dollars per month instead of 2000. Which is on paper. So, I mean, there’s a lot of ways around that, but that’s the most the. 

Stephan Livera 00:51:14  

A common way, yeah. 

BowTiedMara 00:51:14  

Most popular one. Yeah, after two years of, you know, showing that you have a tie, the ties to the country, you can already apply for citizenship. If you wanted to. So, it’s also one of the fastest routes to citizenship if you actually live. In the country. And it’s, you know, a pretty decent passport. 

Stephan Livera 00:51:30  

Yeah, interesting. As you said, if you are having giving birth in the country as well, that’s another way. 

BowTiedMara 00:51:36  

Yeah. Yeah, exactly. 

Stephan Livera 00:51:38  

Yeah, interesting. So, I guess in terms of where things are? Going more broadly. You know, if we zoom out a little bit and we think about, you know, where things are going with CBDC’s, right? Do you have any views there? I think you’ve mentioned that you believe around 2030. They’re going to be commonplace. So, do you want to expand a little bit on your views there? 

BowTiedMara 00:51:59  

Yeah. So the trials that we’re seeing around CBDC’s and you know multiple countries, they’re Pending you can see fed now in the US, which technically is not a CBC, but it’s like the road to CBC. ECB is running trials that are already, you know, ready to launch like they did in China a few years back when they launched the first CBDC. That’s probably going to happen towards the end of the year and the EU is particularly, you know, scary in that sense that they also have one of the best in quotes, ID digital ID programs. That is the program that the UN wants to use for vaccine passports, etc.. If they would come around you know, that’s the model that they would use that’s already been decided. That’s also one of the reasons why I believe in the US it was. The New York that had, like a similar vaccine passport program that was terminated because of that, because that’s basically going to be the blueprint. Now, of course, nobody knows if that will actually come to fruition. But I do think that in Europe specifically, they will start tying your digital ID to the CBDC eventually and I already see it within the Netherlands. For example, if I want to do anything government related, it’s all digital ID. You can only log in with. Your digital ID, and you know it’s tied to an app on your phone. You need to be physically there. It’s it doesn’t use biometrics, but it’s really I lost my access once and. It’s hell to get it back. That was a few years ago. So, you know I still have it. I need it for some things that you know, admin stuff that I need to do in Holland from that from time to time and you know I can see that completely being woven into your bank account, your financial data. And everything is already so intertwined in Europe that, you know, won’t be that hard to roll all these things out. Like for example, I opened up a Greek bank account a few years. back and that already appeared on my Dutch tax system like almost instantly. So it’s already all connected, no matter what country in the. EU, you’re in. Like all that, data is being shared and. Will pop up. You know where. So yeah, that’s something to lookout for. And in that sense, you know, I’m happy to live here where, you know, majority still uses cash I don’t see CBDC coming anytime soon. They might try and the nice thing then is like they can try and I’m pretty sure that within a week we have a similar. Black market parallel market situation where just everybody starts, you know, buying stuff with Bitcoin or whatever. It would actually launch a Bitcoin standard way quicker. I think if countries like Argentina try to outlaw. And tried to install like a CBDC because they’re so used to cash. So, I think that would be very interesting. And the IMF, actually one of their pinpoints for Argentina, which is the country with the biggest loan, I think it’s almost 60% of the whole IMF portfolio is Argentina. That’s why it’s too big to fail one of their points was that they should. Really crack down on Crypto. So, we I’ve been seeing that with local exchanges already that you know the requirements are more and more complicated in terms of, you know, data sharing etc. So they’re trying to go after it, but at the same time they’re failing because, you know, people still use it a lot so. 

Stephan Livera 00:56:09  

Yeah, and as we saw with El Salvador, obviously the IMF, we’re going against them on Bitcoin also. So, it may be a related thing or for similar reasons that they were doing that but think coming back to that broader thing we were mentioning is that some of these big bureaucratic governments and states are trying to either increase the taxes or make it hard for people to leave. But then at the same time there are other options around the world, and I think people can just open their eyes and, you know, be a little bit more open-minded. Two options that are out there. 

BowTiedMara 00:56:45 

Yeah, definitely. But you know, people are really rooted in their communities and find it very hard to leave you know which is understandable as well. And of course, everybody’s also or not everybody. But I would say the bell curve is real in terms of the Bell curve meme that is a real thing. You know that like you, you said like they everybody goes and stands behind the current thing and that is really what is happening. So, you know, if your government says that, oh, you know, these countries are very dangerous, then you know, 80% of the people will probably think, oh, yeah, I shouldn’t go there, you know. So the people that look for alternatives are always in the minority, I think and everybody the you know 80% will just accept the situation as is and try to go along with that. 

Stephan Livera 00:57:37  

Yeah, but I do believe Bitcoin will drive a shift longer term. I believe that even if it is a minority, even if it is like this intransigent minority. Of 10% let’s say I think that 10% will drive a broader shift in society like to the rest of the world. But it’s gonna take some time to get there. It’s not gonna happen tomorrow. So, I think until then, You have to sort of learn to play the game and do a little bit of, you know, for some people that’s doing the Geo Arbitrage game and just being a little open minded to. Different options that are out there, so Mara, it’s been a great chat with you. Do you have any, I guess, closing thoughts, any final pieces of advice for people? Maybe if somebody is thinking about going to Argentina, do you have any advice for somebody who’s considering? 

BowTiedMara 00:58:21 

So yeah, I have I’m pretty active on Twitter and you can see my pin tweet has a lot of recommendations for Argentina and it goes from, you know currency to restaurants etc. in Buenos Aires. So yeah, if. You need, you know, additional advice or whatever. You can always DM me on Twitter and I’ll see it. And of course, you know, if you want to read more about Argentina’s history, currency issues, etc. I also have a blog. So, you can also. Uh, read more on that blog, and yeah, I think if you have any questions, just hook me up on Twitter and I’ll respond. 

Stephan Livera 00:59:07  

Excellent. Well, thank you. 

BowTiedMara 00:59:08  

Yep. Thanks. 

Stephan Livera 00:59:10  

Show notes are available at stephanlivera.com Thanks, and I’ll see you in the Citadels. 

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