The Greatest Wealth Transfer in History


Last night, we went out to dinner in Salta. There were six of us…at one of the nicest restaurants in town. We ordered two bottles of Laborum’s cabernet sauvignon. We had beef steaks, dessert and coffee. The bill came to 1,058 pesos.

Was that a lot…or a little?

It depends. If you traded your money at the official rate, the meal would have been priced at around $200. Very reasonable.

But if you had traded your money at the rate quoted yesterday, on the black market, the dinner would have been even more reasonable – barely more than $100.

Driving into Buenos Aires this morning, the cab ride from the airport was 50 pesos. Again, at the official rate… that’s about $9. At the ‘blue’ rate…the free market rate…the ride cost only $5.

The alert shopper can save a lot of money. The dull one gets ripped off.

All governments engage in larceny and fraud, using their power to transfer wealth and power from the outsiders to the insiders. But the clever government does so by deception… while the clumsy one does so with no pretence or excuses.

In America, for example, the feds deny savers any financial return from their economies under the pretence of ‘economic stimulus’. Wage earners get nothing, while bankers, speculators and zombie grifters are rewarded with ultra low-cost financing, capital gains, bail-outs and giveaways.

The scale of this wealth transfer is the greatest in all in of history. Trillions of dollars are changing hands… But not one voter in 1,000 understands what is happening to him. Tyler Durden:

Curious where the always elusive "wealth effect" is going? It’s going here:


The typical American is not buying a Porsche. Relatively, he’s getting poorer. But his brain has gone soft, shrunken by TV news, elections and deadhead commentaries. He actually believes Hilary Clinton when she says, ‘the government is all of us’.

He thinks the Federal Reserve really is bringing a ‘recovery’. And he imagines that an economy can get richer when it prints more money and gives it to other people.

Here on the pampas, on the other hand, the Argentinians know better. Their brains have been sharpened by adversity and enlarged by necessity.

Every day it is a struggle to keep up with it,’ says a friend in Salta who runs a small business. ‘You have to figure out what the peso is worth…and you have to decide if you’ll do a deal in pesos or dollars. And if you do it in pesos, you have to figure out how to trade dollars for pesos…or vice versa.’

This week, the peso dropped to nearly ten to the dollar. Officially the rate is only 5.5 to the dollar. Big difference.

We needed to buy a new hay baler. The price is quoted in dollars – about $50,000. You pay in pesos at the official rate…so that’s about 250,000 pesos. But wait, if you have dollars and can trade your money on the black market, you will save $25,000.

‘The trouble is, the government is watching,’ says our informant. ‘They’ll want to know where you got the 250,000 pesos… it can get very nasty if you don’t have your paperwork in order.

‘But there are ways.’

The Argentinians know they’re getting ripped off by the government. They find ways to protect themselves.

‘There are invoices… and there are invoices. You can get an invoice at the official rate… or one at the unofficial rate. Or one that is not at any rate at all. A, B, or C. The government rigs the system to cheat us. We rig it right back. You just have to make sure you have the right invoice for the right transaction. At the end of the year, people buy and sell invoices…

‘I bought a new truck recently. But I made a bargain with the dealer. He delivered a new truck to me. But then he waited eight months to write up an invoice. By then, he was able to call it a used truck… and cut the invoiced price by half. It looked like I was paying full price for a used truck… I was actually paying full price for a new truck, but with money traded at the unofficial rate.

‘Everybody’s got a trick or two. You have to. Otherwise, you’re a sap.’

The Argentinians know they can’t trust their money…or their government. In comparison, Americans are saps. They don’t know who to trust.

But we’ll make a prediction: Americans will be a lot less sappy…and a lot less wealthy… when they finally realise what the feds are doing to them.


Bill Bonner
for The Daily Reckoning Australia

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From the Archives…

The US Federal Reserve: What a Humiliating Failure!
3-05-13 – Bill Bonner

The End of the Road
2-05-13 – Bill Bonner

Why Apple’s Advantage is Gone
1-05-13 ­– Dan Denning

The Kamikaze Rally That Could Drive Stocks Higher
30-04-13 – Dan Denning

Australian Deficit: Where Did the Money Go?
29-04-13 – Dan Denning

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.


  1. the only question is about being less sappy.
    we are already a lot less wealthy.

    maybe the less sappy have gone onto food stamps.
    that would be encouraging! (snicker + snort)= #L0L x 3

    speaking of being more or less wealthy/sappy, any thoughts on Zionism?

    slewie the pi-rat
    May 8, 2013
  2. Hey slewie! You give your zionism a capital Z when you don’t give your capitalism a capital C. Why is that? Is it because you get a red squiggly line under it as punishment if you don’t use a capital Z? Tell us your opinions on your capital Z zionism and what it means to you? If someone were to oppose it, would that make them a something or other?

  3. hey, ross!
    good stuff!

    the reason i used the big Z-ion, is b/c of the ‘state’ aspects (izrael).

    this is YHWH’s chosen peeps and they have broken the master CONTROL dial on zee Z-ion-ism and can’t figure out how to turn it down! it’s stuck!
    even prez0 feels this…
    …and maybe would like to give bibi a little kiss for supporting the freaking mormon, a few months ago?
    even i would like to figure out how the heck Putin managed THAT!
    [all i know for sure is that bilary and deMitry “club” medvedev were rumored to have been snorting together like a lily tomlin duet, over it, while stamping their feet like khrushchev.] true.

    so YHWH is the “opposition”!
    and if anyone can get the Izzies to turn it down, S/HE can!

    i have started a contest, blogging with the afro muslims and arabs: YHWH will send these Z-ion-ists into the iraqi desert for: _____ (U Pik-Em) years.

    you would not believe the action i am getting on this prop bet ‘sweepstakes’, ross!
    i may go with spiderman towels soon, too, for new “accounts”.

    since you seem interested, FYI, i’ve already started a “name game” pari-mutuel field based on the Nobel Peace Prize Committee: who will they think has blown up the most “stuff” this year?

    the EU got it for blowing libya to smithereens!
    who is next for the “Ka-BOOM! of Peace” award?

    if there is anything the Nobels are into, it is blowing stuff sky-high!

    will the paradigm hold true?
    and: how to best play this question?
    buy a piece of the winner, here!

    again, this will be a “pari-mutuel” field and if nobody gets it right, i get to keep all the money! so you should get involved! US $20 and increments of same.

    right now the money is spread between syria, turkey, the libyan militias, israel, the FBI-DHS combine, and… pi-rats!

    there are some derivative plays, like buying turkey and then going into the shadow betting market for the syria/turkey, “off-pari-mutuel balance sheet” insurance plays. but that is just banksters trying to “co-opt” my action.

    then, about when my “clients” figure they can control the risks of gambling?
    Ka-BOOM! the award will be given!

    i was considering one on the “economics” prize winner, but i figured that would be too easy.

    i would do one on the # of squiggly red lines in this “answer” but anyone could just paste my b.s. into the comment box and see…
    … that “pi-rats” is no longer getting a red squiggly line…

    is this evolution-airy?
    or what?
    and who is responsible by law for this revolutionary grammaticalism, maynard?

    banksters is still getting the red squiggly and pi-rats is clear.
    i might kid you, but would i bernank you?

    slewie the pi-rat
    May 8, 2013
  4. 0.m.G! i forgot da sala^fists.

    slewie the pi-rat
    May 8, 2013
  5. In little girl talk OMG Slewie! I didn’t mean to excite you so. Bands of not-so-merry-men though, all those ‘ists, from all those bloody ‘isms.


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