Trego's Mountain Ear

Argentina is considering abandoning their own inflated currency and moving to the Yankee Dollar.    Countries Using the US Dollar provides this list of countries where the US dollar is the currency:

Countries Where the US Dollar is the Official Currency
US Territory or Foreign Country	Relationship with United States	Geographic Location	Population (2020)	Gross Domestic Product  (2020)
United States of America	Federal Republic	North America	331,501.08 Thousand	$20.95 Trillion
Commonwealth of Puerto Rico	Unincorporated territory of the U.S.	Northeastern Caribbean	3,281.54 Thousand	$103.14 Billion
Ecuador	Independent country	Northwestern South America	17,643.06 Thousand	$98.81 Billion
Republic of El Salvador	Independent country	Central America	6,486.20 Thousand	$24.63 Billion
Republic of Zimbabwe	Independent country	Southeast Africa	14,862.93 Thousand	$18.05 Billion
Guam	Unincorporated territory of the U.S.	Western Pacific Ocean	168.78 Thousand	$5.84 Billion
The Virgin Islands of the United States	Insular area territory of the U.S.	Caribbean	106.29 Thousand	$4.07 Billion (2019)
The British Virgin Islands	British Overseas Territory	Caribbean	30.24 Thousand	Not Available
Democratic Republic of Timor-Leste	Independent country	Maritime Southeast Asia	1,318.44 Thousand	$1.90 Billion
Bonaire	Kingdom of Netherlands Municipality	Caribbean	20.10 Thousand (2019)	$553 Million (2020)
American Samoa	Unincorporated territory of the U.S.	South Pacific Ocean	55.20 Thousand	$709 Million
Commonwealth of the Northern Mariana Islands	Unincorporated territory of the U.S.	Western Pacific Ocean	57.56 Thousand	$1.18 Billion (2019)
Federated States of Micronesia	Six Sovereign Countries	Subregion of Oceania	115.02 Thousand	$410.08 Million
Republic of Palau	Island Country	Western Pacific Ocean	18.09 Thousand	$257.70 Million
Marshall Islands	Island Country	Near Equator in the Pacific Ocean	59.19 Thousand	$244.46 Million
Panama	Independent Country	Central America	4,314.77 Thousand	$53.98 Billion
Turks and Caicos	British Overseas Territory	Caribbean	38.72 Thousand	$924.58 Million

It’s an interesting solution for a nation that hasn’t had the discipline not to keep printing money and spend beyond its means.  Essentially, the countries that have adopted the US dollar as their currency have outsourced their financial policy to Washington DC – which is a definite statement about how bad their politicians must be.

The Grumpy Economist: Pro Dollarization  covers the topic in better detail than I – click the link now, or read a couple of teasers before you go to it.

“Precommitment is, I think,  the most powerful argument for dollarization (as for euorization of, say, Greece): A country that dollarizes cannot print money to spend more than it receives in taxes. A country that dollarizes must also borrow entirely in dollars, and must endure costly default rather than relatively less costly inflation if it doesn’t want to repay debts.”

“Dollarization is no panacea. It will work if it is accompanied by fiscal and microeconomic reform. It will be of limited value otherwise. I’ll declare a motto: All successful inflation stabilizations have come from a combination of fiscal, monetary and microeconomic reform.

Dollarization does not magically solve intractable budget deficits. Under dollarization, if the government cannot repay debt or borrow, it must default.  And Argentina has plenty of experience with sovereign default. Argentina already borrows abroad in dollars, because nobody abroad wants peso debt, and has repeatedly defaulted on dollar debt.”

Hopefully these teasing paragraphs have you ready to click the link.  I follow Professor Cochrane’s blog every week or so, and his articles are worth your time.

Years ago, in South America, I learned that tipping with crisp George Washington greenbacks early in my stay bought better service for the duration.  It looks like the Argentine politicians may be becoming as smart as the waiters and waitresses were then.