So the moment they announce this, everyone in Argentina has no money (except USD they're already holding)? Who would trade a single dollar for any amount of pesos?

> Why do they need reserves? Abolish all federal obligations

this would result in the country having no money to pay for a proper functioning goverment.

who is going to pay all govermental employees? the police, the army etc if the country has no reserve currency?

Once you cut of all the non essential expenses and handouts you'd be surprised at just how little money is needed to run a state

This is how you end up with bands of military and police extracting "road tax" as they see fit. Iraq circa 2004 is not a good model.

See the Mad Max trilogy for a study in cut-down government expenses.

The top 3 expenses of any modern contemporary state are:

1. Retirements funds 2. Health care 3. Education

No program that seriously contemplates cost reductions can do without cutting back with these. Guess who the beneficiaries of these expenses are.

Like I said, unnecessary expenses.

A possibly good example to look at is Indian in 2016. In 2016, India abolished bank notes of certain denominations that formed the majority of value of bank notes in circulation.

Note, India has its own currency and was able to print alternative notes. However, because the government, against all the advice from its economists decided to do this in secret, it did not have enough of the new notes to replace the old notes for at least a few months after making this decision.

This simple act, which only involved replacing old notes with new ones, in a currency that the Indian government controlled, led conservatively to tens of thousands of deaths, arrested economic growth in a fast growing country immediately, destroyed hundreds of thousands of businesses, and set the economy back conservatively by 5-10 years, although the significantly reduced growth in the subsequent years since (at least until the pandemic...it's likely the pandemic where India enforced amongst the strictest lockdowns in the world would have reset the economies in both cases) probably has a continued compounding effect on economic growth.

Of course, a large part of the damage to India was a result of the massive size of the informal sector relative to most other countries in the world and Argentine may not be anything like that, but I think it's a very relative comparison as to how easily such a transition can go bad if not handled extremely carefully.

> This simple act, which only involved replacing old notes with new ones, in a currency that the Indian government controlled, led conservatively to tens of thousands of deaths, arrested economic growth in a fast growing country immediately, destroyed hundreds of thousands of businesses, and set the economy back conservatively by 5-10 years, although the significantly reduced growth in the subsequent years since (at least until the pandemic...

Yet Modi is still in office. Amazing.

Argentina has different exchange rates for locals and foreigners. There is also a black market rate. Locals who have access to the black market want tourists to pay in dollars as it is the best deal.

If Argentina actually had honest exchange rates they would have about the right reserves. However they are using a false rate for most and so switching will force them to use the real rates which would devalue specific things. (They have export restrictions on many products because they can't control the exchange rate)