Milei of Argentina
The results of Argentina’s recent election are interesting, to say the least:
[Argentina] has just elected a radical free-market economics professor named Javier Milei as its new president …
… Milei’s landslide win over an entrenched left-wing political machine Juan and Evita Peron founded in the 1940s (immortalized in the Andrew Lloyd Webber musical “Evita”) is significant on many levels.
… Milei has called China an “assassin” regime, and while still allowing [Argentinian] trade with it, he will strictly limit official ties.
Argentina will also drop out of attempts by nations such as Russia and Brazil to create a new unit of account as an alternative to the US dollar.
Indeed, Milei wants to put a brake on Argentina’s 143% annual inflation rate by adopting the dollar as its de facto currency.
The local peso has lost about 90% of its value against the dollar on the black market in the last four years.
Other US allies will benefit from Milei taking office.
He recently waved an Israeli flag in solidarity with the Jewish state and has pledged to move the Argentine embassy to Jerusalem.
Not only that, he has a lot of supporters among young voters.
Piece of trivia: he used to be a singer in a Rolling Stones tribute band.
More:
After recent left-wing victories in Brazil and Colombia, Argentina now joins Chile, Paraguay, Ecuador and Uruguay in successfully countering the left-wing tide.
Hope it spreads here in 2024.
Time will tell. It appeared that Argentina had beaten the hyperinflation “virus” 30 years ago, but it reappeared this year with 140% inflation. In the early 1990s Peronista President Menem killed inflation by getting rid of many government-owned companies that ran perpetual deficits. And the Peronistas brought inflation back thirty years later.
I have seen a number of his video performances. I like the way he pulls no punches against the “zurdos de mierda.” (sh*** lefties) Big (Peronista) government over the last 8 decades has failed Argentina, and he has no hesitation in saying so. Maybe, just maybe, this will start the death knell of the Peronistas.
(Talk about country caught between a rock and a hard place, Argentina in the 1970s: the Peronistas versus the guerrillas versus the military)
Can he get rid of those gvt. departments he has proposed doing? It will be a grand battle.
I hope it spreads here, too.
Tablet Mag, Martin Sivak, “Argentina’s Would-Be Jewish Trump”: https://www.tabletmag.com/sections/news/articles/argentina-jewish-trump-javier-milei
“Milei’s landslide win over an entrenched left-wing political machine…”
Anyone who imagines that Argentina’s “entrenched left-wing political machine” is going to peacefully accept the changes and reforms Milei plans to make is engaging in wishful thinking. He’ll be lucky if he’s simply deposed.
Leftists fully agree with Erdogan’s view of democracy; “Democracy is like a streetcar. When you come to your stop, you get off.”
Hopefully Brazilian voters see the light.
I believe that would help the value of the American Dollar, or at least slow down it’s decline. Of course, all the excess government spending will continue to hurt it.
In the early 1990s Peronista President Menem killed inflation by getting rid of many government-owned companies that ran perpetual deficits.
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Such a program might have been salutary, but it does nothing contra inflation. You stop inflation by controlling the growth of monetary aggregates. Argentina IIRC instituted an updated version of the gold standard called a ‘currency board’. That later proved disastrous.
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Balance your budget or keep your deficits modest enough that you can borrow from the domestic capital markets at non-usurious rates. Do not finance your deficits by having the central bank purchase debt issues in the primary or secondary market. Arrange your discount rate, the rate you pay on reserves on deposit, and the growth rate of the monetary base so the annual growth rate in prices is kept to under 2%.
Per Milei to lower inflation, “it could take two years”: https://news.yahoo.com/milei-says-could-two-years-165015564.html
And that’s if he gets enough cooperation. I hope he does.
Menems budget cutting was undercut by provincial spending and the whole thing by greenspans rate hikes for 99-01
Which ballooned their foreign debt
Gringo
Art Deco in reply:
Argentina had 100%+ annual inflation for nearly 20 years. From the World Bank
What happened in 1991? In April 1991, a Currency Board was instituted. The Monetary and Fiscal History of Argentina, 1960 2017. From Page 16:
*April 1991, when the Currency Board was instituted.
The hyperinflation in Allende’s Chile was primarily caused by the nationalized companies running in the “red,” shall we say, and the government’s printing money to offset their deficits. Ditto Argentina: telecom, airlines, railroads, petroleum, all government-owned.
Art Deco
No disagreement from me on that point. But breaking the back of hyperinflation was primarily the result of privatizing the deficit-ridden government enterprises.
Argentina IIRC instituted an updated version of the gold standard called a ‘currency board’. That later proved disastrous.
Not really a version of the gold standard, they simply pegged the peso to the dollar. It worked for a few years to give Argentina’s economic policy credibility and discipline, of which they had zero. The problem later was that, they started running deficits again, and the dollar appreciated relative to the currencies of Argentina’s trading partners, making their exports (and dollar-denominated debt) more expensive. They could have modified the peg gradually to alleviate that problem, but instead they just stuck with it and then abandoned it cold turkey, and the peso collapsed.
“Hope it spreads here in 2024.”
Unfortunately, that’s only possible in nations with a valid electoral system. In third world Banana Republics like ours, the elections are rigged and the legal system is corrupted to ensure the leftist wannabe dictators can maintain their power.
As bad as some of those inflation figures were for Argentina that’s far from the worst in that part of the world. I remember getting ready to go on a business trip to South America back in the mid 1980s and was very surprised I could not buy several local currencies at the currency exchange houses in the L.A. area. Once I got there, I understood: Bolivia at the time had a 20,000% inflation rate. As a result, almost all local business was conducted in U.S. dollars in cash. I was amused that even the nuns who ran the parochial school where one of my colleagues had his kids attending insisted on being paid that way.
But breaking the back of hyperinflation was primarily the result of privatizing the deficit-ridden government enterprises.
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Inflation is a monetary phenomenon and selling off state enterprises does nothing to address defective monetary policy.
Neo,
All things pass, all things. It’s the things that keep returning that bother me. For instance Leftist ( Socialist) ideology is extremely potent on the front end( it’s when you get to the end do realize it’s mistakes). Socialism is one of those that will always return, go away and return.
“………….adopting the dollar as its de facto currency.”
Might rethink that. I would choose the Swiss Franc. It’s tied to Gold.
Interesting. The left has long promoted the belief that Latin Americans were all leftists and up in arms about US capitalism. It’s nice to know that’s not true. Argentina was a country with two left-wing parties (Peronists and Socialist anti-Peronists), and it’s good if that’s changing as well.
Years ago, I got messages from an Argentinian student who got stuck back home by the hyperinflation and wanted me to intercede with his professors. It didn’t go that well. I was just the person answering the phone, not someone professors would listen to. Writing this now, I realize I probably should have suggested that he talk with a dean or something. Anyway, I’m surprised there wasn’t a reaction to the economic mess a lot sooner.
the problem is the peronists still have the majority of seats, macri a romney type was in charge for a while, but then Cristina spanish hillary crawled back in
Argentina is such a prominent case of how socialism/Marxism/statism can ruin a country which would otherwise be economically well off. Argentina has fertile farmlands, excellent ranch lands, a deepwater port, sufficient timber, a diversified geography, attractive tourist spots (Iguazu Falls, ski resorts, world class trout fishing, to notch mountain climbing, etc.), and deposits of shale gas. In other words, all the resources to be an economic success.
What they haven’t had is a free-market economy and a government that encourages private businesses.
Inflation has been such an ongoing problem that when we visited there in 2009, the locals we talked with said they considered the American dollar (imagine that) and real estate as the only places to put their money.
I wish Senor Milei all the best.
Viva Argentina, a nation of great promise. However, the Peronistas will not go easily.