We all know what an incredibly efficient, well-functioning, and freshly oiled machine the EU is. The only one it doesn't always work out for is the people they govern.
Well, what if I told you that a couple of South American nations saw that hot mess and said, "yeah, we'll have what they're having." For Brazil and Argentina, this could soon be their reality.
According to the FT, leadership from the nations of Brazil and Argentina are set to announce plans to launch a joint currency, or "common currency," if you want to sound slightly smarter.
To be clear, this ain't exactly like the EU. The European Union was established "officially" in 1957, but it wasn't even called the EU until 1993. The groundwork for the Union was set in 1952 when 6 nations created the "European Coal and Steel Community" (ECSC). After bumbling around a few iterations over the decades, the lucky people of 27 European nations were blessed with this overlord-ing government.
Now, Brazil and Argentina are chartering what looks like it may be a similar path for South/Latin America. Later this week, they'll announce a game plan to launch a shared currency between the two while inviting other South American nations to participate. Its name? Well, they really got the creative juices flowing so far, with Brazil suggesting the brilliant and original "sur" (south).
The sur will likely take years, potentially decades, to launch. The euro took 35 years before it began thrilling the lives of foreign exchange traders, but given we're only talking about two countries here, we might be able to speed things up.
Launching a joint currency between the two friendly nations has been a floated idea for a while now. But, a little guy named Jair Bolsonaro, former Brazilian President, had a bit of a nationalist bend to him and wasn't exactly down for the idea.
With the re-election of current President Lula, both Argentina and Brazil are under left-leaning control and vibing with the idea a lot harder.
On the one hand, it's a sweet deal for Argentina. Its government has decided to shun basic economics and recently began legitimately just printing money to fund government projects.
And I don't mean like JPow and the Fed printing money in the form of higher bank reserves; I literally mean they just create more dollar bills and hand it over to various government projects. As a result, the country's currency (the Argentine Peso) has been on a tear, putting up nearly 100% inflation last month.
Further, not even Michael Milken would buy Argentina's national debt. Calling it garbage would be a compliment, as the country defaulted in 2020.
Brazil, on the other hand, doesn't have as clear a benefit as Argentina. The motivation appears to be strengthening the economic power of the region as the announcement will conveniently come the same week as a meeting between the 33 countries in the Caribbean as well as South and Central America. Not to mention the fact that Argentine President Alberto Fernandez is beefing with the EU over a recently penned trade agreement between the bloc and the continent.
The interesting part is that just as the world is trending towards de-globalization and borderline nationalism, these nations have decided to team up to kick global trade's a**. It'll help, but maybe not endlessly printing money and actually paying back your debts would help too. Just an idea.