Argentina Tied Its Currency to the Dollar. Why Did It Still Crash?

Argentina tied its currency to the dollar by law in 1991. Ten years later it stopped paying more than $80 billion of its debt. Why? This video walks through the recurring pattern economists describe, the 1991 fix and what it cost, and the three explanations economists still argue about. All figures as of 3 October 2026 unless dated otherwise. Where sources disagree, the video says so. Educational content, not financial or investment advice. CHAPTERS 0:00 The contradiction 1:47 The loop 3:17 1989: the loop at full speed 3:45 The 1991 fix 5:09 The first test (1995) 5:40 The missing shock absorber 7:11 Three explanations 9:44 Where things stand today 10:37 The short version SOURCES Income per person, c.1910 (estimates): Maddison Project Database 2023 via Our World in Data, https://ourworldindata.org/data-insights/a... When the slide began: Katz and Levy Yeyati, "When did Argentina lose its mojo?", VoxEU, https://cepr.org/voxeu/columns/when-did-ar... Inflation by decade, 1989-1994 inflation, growth, reserves (INDEC data): Domingo Cavallo, "Lessons From the Stabilization Process in Argentina, 1990-1996", Federal Reserve Bank of Kansas City, https://www.kansascityfed.org/Research/doc... Deficits 1970-2023: Sandleris, Ballester and Filippini, Economia 25(1), 2026, https://economia.lse.ac.uk/articles/10.313... Capital controls and currency rationing: OECD Ecoscope, "Argentina: Consolidating the economic recovery", 7 July 2025, https://oecdecoscope.blog/2025/07/07/argen... Price durations in 1989: Alvarez, Beraja, Gonzalez-Rozada and Neumeyer, "From Hyperinflation to Stable Prices", Quarterly Journal of Economics 134(1), 2019, https://econpapers.repec.org/RePEc:oup:qje.... Convertibility Law 23.928 (1991): https://servicios.infoleg.gob.ar IMF Independent Evaluation Office, "The IMF and Argentina, 1991-2001", 2004: https://cdi.mecon.gob.ar/bases/docelec/mm2... Default size and 2001-02 events: Congressional Research Service, RL32637, https://www.everycrsreport.com/files/20060... Poverty 2001-02: INDEC, https://www.indec.gob.ar Three schools: Kaminsky, Mati and Choueiri, NBER Working Paper 15478, https://www.nber.org/papers/w15478 ; Gerchunoff and Rapetti, El Trimestre Economico 83(330), 2016, https://eltrimestreeconomico.com.mx/index.... ; Campos, Karanasos and Tan, "From Riches to Rags, and Back?", https://www.iza.org/publications/dp/8654/f... Bond swaps and the 2014-2016 litigation: Jones Day, "Sovereign Debt Update", June 2016, https://www.jonesday.com/en/insights/2016/... IMF 2018 program: Press Release 18/395, https://www.imf.org/en/news/articles/2018/... 2020 restructuring: US State Department, 2021 Investment Climate Statement for Argentina; Al Jazeera, 4 August 2020 IMF 2025 program: Press Release 25/101, https://www.imf.org/en/news/articles/2025/... ; amount released: IMF Press Release 26/165 (21 May 2026) Inflation 2023-2026 and poverty H1 2026: INDEC releases, as reported by Infobae and Bloomberg Linea, September 2026 #Argentina #EconomicHistory #HowMoneyWorks #AgrentinaCrisis