Argentina's Leading Presidential Candidate Vows To Shut Down "Thieving" Central Bank
Milei, a radical libertarian, told Bloomberg News his bold fiscal adjustment would boost Argentina’s reputation and credit profile, making a default unnecessary.
After sending local capital markets into a tailspin and triggering a currency devaluation with his shock win in Sunday's country's presidential primary, Argentina's leading presidential candidate Javier Milei - a self-described anarcho-capitalist - added to the shock factor on Wednesday when he pledged to close the nation’s central bank while saying he would make every effort to avoid a default on the country’s sovereign debt if he wins the October vote.
Milei, a radical libertarian, told Bloomberg News his bold fiscal adjustment would boost Argentina’s reputation and credit profile, making a default unnecessary.
His plan includes slashing spending by at least 13% of GDP before mid-2025 by dramatically downsizing public works, reducing the number of ministries, removing subsidies and capital restrictions that would allow businesses to transact in US dollars. More drastically, he also plans to shutter the central bank which he said has "no reason to exist", and dollarize the $640 billion economy.
“I will make every effort to avoid a default, obviously,” Milei said in a two-hour-long interview in Buenos Aires Wednesday. “If you do the fiscal adjustment that’s needed, the financing will be there.”
Milei triggered a market shock when the presidential candidate - largely viewed as an outsider without serious chances for the position until now - came out ahead in the primary, seen as a barometer for presidential elections in a country where polls are notoriously unreliable. The slump forced the government to devalue its tightly controlled official exchange rate by 18% when markets opened Monday.
In the first interview to foreign media after his unexpected win, Milei spoke to Bloomberg and detailed his plan to scrap the Argentine peso for the US dollar as a way to bring down inflation that’s running at 113%, and upped his criticism of the central bank, which he called “the worst garbage that exists on this Earth.”
“Central banks are divided in four categories: the bad ones, like the Federal Reserve, the very bad ones, like the ones in Latin America, the horribly bad ones, and the Central Bank of Argentina,” he said.
If Milei wins the presidency, he plans to hand over the keys to the central bank to economist Emilio Ocampo, his informal adviser on the dollarization program, so that he can shut it down. Ocampo will also help in negotiations with the International Monetary Fund, which has a $44 billion program with the South American nation. The candidate says he has no plans to ask the IMF for more money.
“A fiscal deficit is immoral,” Milei said.
“If you live continually with a fiscal deficit, you’re going to be insolvent.”
Just don't tell that to the US which has had like four annual surpluses in the past 50 years.
Milei said he’s already developed a plan to dollarize the economy, a move he vows would be among his first in case he wins the Oct. 22 election. Argentina would follow El Salvador’s model, allowing people voluntarily choose between currencies.
Once two-thirds of the monetary base is converted, the economy would become fully dollarized, he said.
“If nobody wants to have pesos in Argentina, the question is how much are pesos worth in real terms? Nobody wants them, we’re not talking about water in the middle of the desert. We’re talking about something nobody wants,” Milei said.
Manuel Garcia Gojon writes, at The Mises Institute, that Milei's full plan - which he laid out in some detail on August 2nd, is nothing if not pragmatic from an anarchist point of view.
The first measure consists of an organizational reform of the government, going from 18 to 8 ministries. The ministries to be included are interior, foreign relations, defense, economy, justice, security, infrastructure, and human capital. No career bureaucrats are to be fired initially, but they will be reassigned. The political appointees will not be renewed and will be kept to a minimum. All government employee privileges, such as bodyguards and drivers, will be eliminated, except in the cases in which they are absolutely necessary for security reasons. This measure also includes initiating the privatization or closure process of all state-owned companies.
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Thanks for bringing this to my attention, great news for Voluntaryists!
Having lived in Chile and having many S.A. friends, including from Argentina, I will be watching this.
Stay free and safe.
“A fiscal deficit is immoral,” Milei said. “If you live continually with a fiscal deficit, you’re going to be insolvent.”
Precisely, your nation is going to become insolvent: I call it the "Keynesian debt-trap". Its the point when the national debt is > 90% of the GDP. Presently the US federal government's debt has surpassed 125% of GDP. With the continuation of rising interest rates to protect the US dollar globally; many credible economic analysists project in FY2024 over $1trillion in interest will be due on the servicing the $32.55 trillion in US government debt. Because no one (China, India, Japan, et.al) are buying federal treasuries anymore, that means the Fed must use QE and the other sorcerer banking shell-games (REPOS/DERIVATIVES) to sojourn-up the $1trilliion in interest payments on the $32.5trillion debt.
Think about that for a moment: Over one trillion US dollars in interest payments, created virtually out of blue sky in defiance of gravity, but flooding the economy with newly created dollars. Its a "doom loop" that will result in the hyper-inflation as foretold by the Angel riding the black horse and holding the scales, and proclaiming: "A day's wages for a loaf of bread". Revelation 6:5.