BUENOS AIRES, ARGENTINA – NOVEMBER 19: Newly elected President of Argentina Javier Milei of La Libertad Avanza speaks after the polls closed in the presidential runoff on November 19, 2023 in Buenos Aires, Argentina. According to official results, Javier Milei of La Libertad Avanza reached 55,69% of the votes and Sergio Massa of Union Por La Patria 44,30%, with 99,25 of the votes counted. The presidential election runoff to succeed Alberto Fernandez comes as Argentinians have been hard hit by an annual 142,7% inflation. (Photo by Tomas Cuesta/Getty Images)
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“You deserve happiness.” How many times have readers heard the latter? It’s accepted wisdom, but also nonsensical.
Happiness is hard. The founding fathers knew this. They decreed a right to pursue happiness, but not the state of happiness itself. That’s like decreeing prosperity. Impossible.
It’s worth thinking about as Argentina’s president Javier Milei endures persistent critique for his alleged failure to “dollarize.” Supposedly just decreeing the dollar legal tender in Argentina will solve all manner of the country’s economic problems. The frequently monetarist critics of Milei are putting the monetary cart before the economic activity horse.
The simple truth is that decreeing the dollar legal tender is the equivalent of Milei decreeing happiness. No doubt it will feel and sound good, but it won’t alter the reality that dollars are ruthless. Dollars in circulation, like happiness, are an effect of hard, productive work, not government decrees.
Contemplate perpetually poor Pueblo, a city in Colorado. It’s already dollarized as part of being a U.S. city, but there aren’t a lot of dollars there. That’s because money is an effect, not the instigator. It’s everywhere productive economic activity can be found, and scarce where productivity is scarce.
Contra the monetarist view of the world, money lacks any purpose without goods, services and labor to circulate. Which means that so-called “money supply” drops into Pueblo would exit the impoverished city almost as soon as they arrived, and would if anything escalate Pueblo’s poverty for financing the exit of more than a few of Pueblo’s more ambitious residents.
Back to Argentina, the experts keep telling us that Argentina can yet again solve a host of economic ills with dollarization, that contracts and tax payments must quickly be refereed in dollars, etc. Supposedly hedge funds profit from the dollar/peso “carry trade,” and are pushing against the fix. Oh dear. No. They couldn’t even if they wanted to.
More realistically, the dollar is already the currency of business and individual life in Argentina. If readers doubt this, they need only visit Buenos Aires with dollars in the left pocket and pesos in the right. They’ll return with an empty left pocket every single time.
While the peso isn’t even the preferred currency of Argentine businesses, the dollar is accepted globally. Argentines eagerly accept dollars locally, and business owners are similarly known to trust dollar holders to defer payment ahead of depositing dollars in their U.S. bank accounts. Yes, producers decide what money circulates, not governments. And the latter explains the folly of the “dollarization” expert chorus stateside.
Their conceit can be found in the dollar’s broad circulation not just in Argentina, but in places where it’s illegal like Pyongyang. The essential, beautiful market truth is that as the world’s currency, U.S. dollars can be found everywhere in the world that there’s production not by government decree, but because for all its demerits rooted in the absence of U.S. Treasury policy that is “benign neglect,” the dollar is the most money currency on earth. Which means it doesn’t circulate in the U.S. because it’s legal tender, but because some of the world’s most productive people live and work in the U.S.
Say it repeatedly that circulating dollars are an economic effect, not a policy choice. Just as Milei can’t force the peso into circulation, he can’t require the dollar to replace the peso. Which means dollarization is largely performative.
Abundant production is the only way to dollarize Argentina, or for that matter any country. Like happiness, dollars don’t just show up. They follow people doing productive things, and no government decree can overcome this truth.
Source: https://www.forbes.com/sites/johntamny/2025/10/19/milei-can-no-more-dollarize-argentina-than-he-can-decree-happiness/
