It makes a nice change to read scathing critiques of Milei’s disastrous economic program from the right as well as the left.
Argentina is scheduled to hold mid-term elections in a few weeks’ time, and Javier Milei’s government is once again in the spotlight for all the wrong reasons. As we reported a few weeks ago, the economy is back in crisis mode just months after receiving the first instalments of a $42 billion bailout package from the IMF, World Bank and Inter-American Development Bank — a bailout over which high-ranking IMF officials resigned or were fired for refusing to greenlight.
In July, the Argentine peso posted its worst month since Milei devalued it in December 2023. In recent days, JP Morgan Chase has cut its 2025 growth forecast for the Argentine economy for 2025 from 5.3% to 4.7%. That came on the heels of a slowdown in the second quarter of this year. The latest reports suggest that economic activity shrank in July (on a month-by month basis) for the fifth consecutive month.
Another Looming Default?
Ten days ago, the government tried to roll over bonds by offering investors what should have been a mouth watering 69% interest rate, yet only succeeded in rolling over 61% of them. As the Palestinian-Jordanian libertarian economist and prominent Bitcoin advocate Saifedean Ammous notes, the fact that “even a 69% annual interest rate isn’t enough to tempt investors to risk lending to the Milei ponzi… means they either expect a default very soon, or they expect price inflation to exceed 69% over the next year.”
If the peso continues to plunge, inflation could once against surge (it’s still at 36% annually). Meanwhile, unemployment is at a four-year high. Car sales continue to slide while industrial production shows no sign of recovering from Milei’s chainsaw austerity, with output levels at their lowest since 2007.
A new study by the Faculty of Economic Sciences of the University of Buenos Aires suggests Argentina has “lost its lure” among multinational companies and foreign investors. For all the promises of foreign money pouring into the country, the reality has been quite the opposite. Now that the government has lifted capital controls, at the IMF’s insistence, the money is flowing the other way.
Perhaps unsurprisingly, distrust in the government is on the rise, reports Perfíl. According to one survey, almost seven out of 10 (67%) Argentines say they do not believe that the government’s official inflation figures reflect their true cost of living.
Ripping Off the Disabled
That distrust is almost certain to have grown in recent days with the eruption of yet another sordid scandal involving senior Milei officials. Last week, audio recordings leaked to local media purporting to show Diego Spagnuolo, President Milei’s personal lawyer and the head of the country’s disability agency, describing a kickback scheme tied to government health contracts for the disabled that funnelled money to top officials, including Milei’s own sister, Karina.
Other alleged participants in the scheme include Eduardo and Martín Menem, two nephews of the former President Carlos Menem who both hold senior roles in Milei’s government. As readers may recall, Carlos Menem was the man whose neo-liberalisation of the Argentine economy and hairbrained one-to-one peg of the Argentine peso to the dollar helped pave the way for Argentina’s 2001 default and resulting IMF bailout.
That, in turn, set the stage for bank runs, the subsequent harsh restrictions placed on bank account withdrawals (in dollars) — the so-called “corralito” — and the inevitable devaluation that ended up wiping out the savings of millions of Argentines. Of course, before the restrictions came into effect, foreign investors, political insiders and Argentina’s business elite were tipped off, allowing them to get their money out of dodge.
It is not hard to see the same happening in the coming months, probably shortly after the mid-term elections. All the pieces are certainly in place. Once again, an IMF bailout will be used to subsidise capital flight so that Argentina’s wealthiest businesses and citizens can yank their money out of the country before the currency collapses — all on the government’s tab.
Readers may also recall that one of Milei’s campaign pledges was that he would do away with Argentina’s political caste, just as Trump pledged to drain the swamp in Washington. It would be the elite, Milei said, not ordinary working people, who would bear the brunt of the structural adjustments needed to transform Argentina into a viable, flourishing economy.
It was a lie, of course. Many of Argentina’s political elite ended up filling senior government roles in Milei’s government, including Luis Caputo, the former JP Morgan Chase banker who helped create the conditions for Argentina’s 2018 default.
As always, it is the poor and middle classes, particularly those of pension age, that have borne the brunt of the economic pain, all of it applauded by the IMF and Western media. It is the poor and middle classes who have seen their incomes frozen, their benefits squeezed, and their energy, transport and medical subsidies scrapped while inflation has continued to rage, albeit somewhat more quietly.
Making Out Like Bandits
Argentina’s financial elite and international financiers, by contrast, have made out like bandits. A year ago, Milei told a meeting of industrial lobbyists: “we shrank the state in order to fill your pockets”. Yet Argentina’s industry is also shrinking as a result of Milei’s austerity program, the real beneficiaries of which are the financial speculators who made bank on the peso-dollar carry trade facilitated by the policies of Economy Minister (and former JPM banker) Luis Caputo.
As happened in 2001 and 2018, the speculators are once again moving their money overseas before the trade collapses, all made possible, once again, by the IMF. Meanwhile, Milei’s sister — whom he refers to as “La Jefa” (The Boss) given she essentially manages his agenda and his finances — is allegedly feathering her nest with kickbacks alongside Menem’s nephews.
The company that is allegedly paying the kickbacks, Suizo Argentina, saw its contracts with the Milei government balloon by 2678% between 2024 and 2025 alone.
To make matters even more unsavoury, the recording was leaked just weeks after Milei vetoed three bills that would have increased pension and disability benefits. In other words, the government is robbing from the disabled while at the same time vetoing a law that would give the disabled extra funds at a time of endlessly surging prices.
Of course, this is not the first time Milei’s inner circle has been accused of taking bribes and kickbacks. Just five months ago, Milei promoted an unknown shit-coin called $LIBRA that rocketed in value after his endorsement and then quickly cratered. In both cases, Karina Milei appears to have played the role of bagwoman.
The difference this time round is that it is much easier for voters to understand the nature of the crime. Also, the victims are not crypto-freaks and Milei fanboys but hundreds of thousands of recipients of disability benefits. From Associated Press:
This latest firestorm saw Milei’s government dismiss Spagnuolo from his post Thursday over the released recordings in which he can be heard complaining about how pharmaceutical companies pay bribes to Karina Milei, the president’s chief of staff and top adviser, to secure government drug purchases for disabled people.
Milei is going to run Argentina into the ground and then seek to flee to Israel with his ill-gotten wealth before the authorities can catch up to him to charge him with corruption. There will be no problem doing that as he has probably left a paper and digital trail a mile wide. But a prediction. Suppose that the police board his plane after blocking it with police cars and haul him off to prison, then at that point Trump will get involved. He will claim that Milei is unfairly persecuted and he will punish Argentina unless they let him go. Based on what happened with Bolsanaro and Brazil, this was an easy prediction to make. But this idea was confirmed by what I heard earlier. Trump is now threatening South Korean business ties saying-
‘WHAT IS GOING ON IN SOUTH KOREA? Seems like a Purge or Revolution. We can’t have that and do business there.’
South Koreans took it to mean that he was talking about former President Yoon Suk-yeol and his wife who are being tried for attempting an insurrection several months ago-
https://www3.nhk.or.jp/nhkworld/en/news/20250826_07/
Trump will try to give the same sort of protection to Milei.
From what I have read, Hope ( from Mises Univ.) is a complete purist. I.e. nothing less than perfection in terms of adherence to the libertarian principles is acceptable to him. And yes, Milei is not a pure libertarian, e g. his external policy. I am still of the opinion that Hoppe should have been glad to see even an approximation of the libertarian views. I doubt it that there will ever be another chance to implement such policies after Milei anywhere in the world. The task in front of Milei is gigantic. I am even surprised that he was allowed to get this far. To close the central bank? Who will ever allow him to do that? No political or societal support whatsoever. It is more likely for him to be assassinated if he even tried. The author conveniently forgets that inflation is down and decelerating. And this is not a huge achievement? What would have the author done better? And how particularly? BTW, I myself am not optimistic that Milei will succeed, but I wish him luck.
“And yes, Milei is not a pure libertarian”.
That is putting it kindly. Someone who believes in pre-crime, has reversed the decriminalisation of marijuana, attacks people for their sexual orientation, constantly incites hatred towards anyone with left-leaning views, wants to build mega-cartels just like Bukele, and supports Israel’s genocide in Gaza as passionately as Milei is an outright enemy of liberty. Those who have his ear are Argentina’s richest businessmen, oligarchs and monopolists, including Paolo Rocca (owner of Ternium), Marcos Galperín (owner of Mercado Libre) Eduardo Elsztain (the largest urban landowner in Buenos Aires) and, last but not least, Eduardo Eurnekian (one of Argentina’s largest state-created monopolists whose Corporación América controls all of Argentina’s airports — oh, and by the way, he’s Milei’s former employer). It is they whose interests he serves, just as Macri did before him.
And you’re right, inflation is down, which one could argue is an achievement, and I have mentioned this fact in many of my articles on Milei. But let’s face it, anyone can bring inflation down by strangling the life out of the economy (Fujimori did it in 1990 with his Fujishock) and burning through tens of billions of dollars of foreign reserves to artificially prop up the peso. And that’s the problem with Milei’s anti-inflationary program: not only does it come at the cost of reduced economic activity; it is totally unsustainable. THE BCRA’s foreign currency reserves became so scarce that they needed to be replenished by the IMF, an institution that Milei described as perverse before becoming president. Why did he call it perverse? Because it allows over-indebted governments to kick the can down the road, which is precisely what Milei is doing.
What would I have done differently?
For starters, I would have refused to take any more debt from the IMF, partly because it puts you under Washington’s heel. But that is precisely where Milei likes to be.
I am not qualified enough to comment about Milei’s views outside the economy. Suffice it to say that I am appalled by his support for Israel’s politic. About his economic views however: You say that anyone can bring down inflation? This requires guts very few possess. From a political viewpoint it is easier simply to continue printing money into oblivion. And you accuse him of strangling the economy, because he stopped (yes, not abruptly, as he should have) printing money? I wonder how you imagine one fights hyperinflation, by printing more? The BCRA dollar reserves are down exactly because Milei refuses to print money, buy dollars with it, and fan out inflation again. He prefers the lesser evil: to borrow USD. I may not agree with all he had done, but I do not pretend to know Argentina’s economic situation well. What would you have done if, e g. you devalue the peso, but in the meantime all banks get bust? Anyway, my hope is that Milei will somehow manage and bring the economy to the “impossible” deflationary growth (which was prevalent during the 19th century). As I said I am very pessimistic about his chances for success. One cannot win against the convictions of most of the population. It is not coincidence that the recent history of Argentina consists of one default after another.
And there will probably be another one just round the corner. I hope I’m wrong — I have lots of friends in Argentina and it’s about time the country finally sorted out its deep-seated economic problems. But Milei, I fear, is not the answer. His gutting of the country’s universities and research institutes and the harm he has done to what little local industry Argentina has are testament to the fact that he can only think of the economy in a purely short-term, financialist way.
It will be interesting to see what the IMF does when it all comes crashing down again given Argentina is far and away its biggest borrower today, accounting for a whopping 40% of its total loan portfolio. Perhaps the US will just take over the country, lock, stock and barrel. That would certainly be one way of dollarising the economy.
Milei, as most of the libertarians, thinks that it is not a task of the government to sponsor universities and conduct research. He is of the opinion that the free market can do that more efficiently. He believes in free competition if I get him correctly.
When it suits him ;-)
Milei believes in free competition but has no problems with monopolies — again, when it suits him. He’s made multiple statements to that effect, which goes completely against the basic principles of the Austrian School (of which I personally am not an adherent). He worked for one of Argentina’s biggest monopolists for many years, to whom he essentially owes his career in politics. Eduardo Eurnekian, who has a virtual monopoly over Argentina’s airport sector thanks exclusively to government regulation, gave Milei his start as a TV pundit on one of his news channels. That served as a launch pad for Milei’s rise into politics.
Put simply, Milei believes in free competition when it suits him. He is the walking, talking embodiment of Groucho Marx’s adage, “Those are my principles, and if you don’t like them… well, I have others.”
I can explain his view on monopolies to you, but it is up to you to judge. In short: If a monopoly is formed under the rules of the free market, i.e. if the competition is not limited in any way, then this winning company has offered the lowest price and/or the best quality product possible. So, why protest? In contrast: when there is no free competition the particular monopolist can raise prizes almost as high as he wishes, without caring about the interest of its customers. Even shorter description: free-market monopoly – good, non free-market monopoly -bad!
Then how do you explain Corporación America, which only exists as a consequence of government regulation? It is the epitome of a non-free market monopoly. There is no free competition whatsoever in Argentina’s airport sector. If Milei had such strong, clear views about monopolies, why would he end up working for one of the country’s biggest non-free market monopolies and then accept his boss’ help to become a star TV pundit. Milei’s monopolist boss essentially made Milei, the politician.
Anyways, have to hit the sack. Have enjoyed the chat.
I have no knowledge of the particular situation and have to take what you say at face value. But here is what I think: Such big companies are rarely, if ever, a product of the free market. From a certain company size, it pays to play with the local politicians and limit competition one way or another. Anyway, the proper libertarian attitude towards such a company would be not to punish it/ divide it/ etc., but simply to open the market to external and internal competition, making their lives as hard as it gets. If Milei is not trying to do the above, then his particular economic policy is not libertarian. And to state again the famous libertarian view: Power corrupts and absolute power corrupts absolutely.
The – real problem – is what people call Libertarianism, especially if grounded in AET/Austrian econ is its origins are/were supported financially back in the day by the wealth set [see FEE et al]. Basically a tool by which to indoctrinate society so that no impediment would befall its benefactors in seeking extractive profits/rents would occur again like after FDR.
After that its all over the shop – see free markets – when there is no such thing, shaped from day one by governments via laws. Not that the original term was about free from economic rents. Stuff about equilibrium. Short list.
Sadly I know a few old die hard libertarians that after promoting it for a long time and worked up to the state level of its hierarchy, found out it was all a sham for the the unwashed/lower tier sorts and everyone else. Dead set told we work for these people [wealth set] and its our JOB to sell it too everyone.
Hence why back in the day some argued it was a classic case of the no true Scotsman fallacy.
I remember a case Ayn Rand quoted. According to her, there was a company in the USA by the name Alcoa. It did not wish to have competitors, so it kept its prices so low and quality so high, that no competitors were possible to exist. I cannot personally confirm this story, but this is what has been meant.
Milei is a creation of media. He arrived to government without any structure that allowed him to govern so he just picked the same old same old of the financial right wing establishment. His academic accolades are mediocre (but people often don’t know it because he likes to lie in his CV, like with the nonexistent PhD from University of Buenos Aires – UBA, that he claimed to have), he used to teach as an unpaid assistant lecturer in UBA, but managed to get himself fired/expelled (I never heard of someone been fired while working for free), his books are full of plagiarism of other books.
His picks for Central Bank head and economy/finance minister where associates/owners of a consulting firm just three days before they entered the job, when you here them in interviews now you can see them explain the measures taken by the other one instead of their one measures (as if they don’t even try to hide that treasury and central bank is now the same). The rest of the economic team are all ex JP Morgan (not sure if you can ever be ex there), and that can be seen in the incredibly well timed ins and exists of JP Morgan from Argentinian Bonds.
After increasing inflation with a huge devaluation initially he managed to bring it back down through the creation of an economic recession + controlling the exchange rate with a massive increase in debt, but inflation is now growing, the recession is also growing and the debt exploding.
Lots of professionals are emigrating (the press in not talking about it now because of the rest of the problems but this will be a big problem in next couple of years).
The supposed redirection of the economic matrix to hydrocarbons and mining is also inconsistent, he gave rights for extraction almost for free (compared with our neighbors) but he did zero infrastructure to transport any of it, so the investment continues to arrive to neighboring countries but none of significance arrives here (added to the fact that an overvalued exchange rate makes those investments expensive).
I can continue but I think there is enough here to show how bad he is doing.
I have friends, bitcoiners, who think Milei is great. I forwarded this article to them. It seems to me he is a tool of international gangsters, the most evil greedy people in the world. Trump’s sponsors.
“Milei will discredit Austrian and libertarian ideas for decades to come by associating them with their diametrical opposites: inflation, indebtedness, bond market pump-and-dumps, and genocide.”
So we now see that Mike Shedlock (Mish) didn’t know the hole in his posterior from a hole in the ground.
Good Job!
The current “Axis of Evil.”
You’re almost there, but not quite: it’s Trump, Netanyahu and Putin. Trump hates Zelenski and quite explicitly wants him to lose, so it’s ridiculous to place them both in the same camp.
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As for Milei, I’m not optimistic. “a hard-core of Argentines will continue voting for Milei’s thinly veiled neoliberal project whatever he says or does” is about right. Kinda like Trump’s “I could stand in the middle of Fifth Avenue and shoot somebody and I wouldn’t lose any voters” remark.
Making Shit Up is a violation of our written site Policies. Trump does not want Zelensky to lose. He’s not working an a coup, not having his messaging apparatus beat the drum for new elections. Trump does NOT want to be the president that lost Ukraine, hence all the machinations.
There’s a TV NZ advert going around for the latest series of “Highway Patrol”. An American tourist gets out of the car with his hands up, and the unarmed cop tells him its not needed. Afterwards the tourist gives the cops a 5 star rating because they didn’t draw guns. Genuine footage. Not staged.