In a bold move made necessary due to years of irresponsible socialist policies, Argentina has announced a substantial devaluation of its peso and sweeping cuts to subsidies, signaling a new era under President Javier Milei’s leadership. Faced with a staggering 143% annual inflation and a national poverty rate of nearly 40%, the situation Milei has walked into is nothing short of dire.
The devaluation target is a 50% decrease from 400 to 800 pesos for one U.S. dollar. According to Milei’s Economy Minister Luis Caputo, the new government’s top priority is to address the country’s staggering spending deficits that have been the root cause of Argentina’s current economic calamity.
Argentina Announces 50% Devaluation Of Their Peso As Part Of Shock Economic Measures
https://t.co/HRhjGkJ1Az— Angelo Guarino (@AngeloG_016259) December 13, 2023
The devaluation is being implemented in conjunction with large-scale cuts in government spending. The most significant targets for the cuts are in energy and transportation subsidies and include a massive reduction in the size of the national government.
The announced measures are welcomed by many of Argentina’s creditors, notably including the International Monetary Fund (IMF).
Establishment leftist politicians and corporate media have predictably expressed disappointment that the new Argentine government would dare to move away from the reckless print-and-spend strategy that has impoverished working citizens. Critics are describing Milei as a “radical” and use the descriptor “anarcho-capitalist” as a pejorative. The new president instead uses the label to describe his philosophy of small government and sound currency in promoting a stable and growing economy.
Milei’s longer-term goal of dollarizing the Argentine economy — making the USD legal tender for all transactions — is a highly logical response to the hyperinflation and destruction of the local peso by years of government mismanagement. Even though his detractors argue such a move would be “giving up” on the already moribund national currency, there is likely no other way in the long term to fight excessive political graft and corruption, high taxation, and increasingly worthless money robbing the life savings and productivity of ordinary citizens.
Javier Milei Is Not a Problem for Argentina. Socialism Is. | Mises Wire https://t.co/axJvettUzh
— Allen Mendenhall (@allenmendenhall) August 31, 2023
Milei is not the proper target of the financial and political media. Rather, it should be the former leftist Peronist government that depleted virtually all of the nation’s central bank reserves while attempting to micromanage all aspects of daily life through the “work” of unproductive bureaucrats.
The new president’s approach to seeking fiscal sanity and a stable currency could save the Argentine economy. The South American nation is rich in natural resources. It has an educated and hard-working population that could easily flourish if protected from the grip of exploitative politicians and its version of “the Swamp.”
Moreover, as the 2024 election approaches, Argentina’s situation is a significant reminder for Americans of the disastrous consequences of uncontrolled government spending, high taxation, and currency destruction. Meanwhile, the U.S. has time to turn the ship around for its economy and the world’s. However, the current path has led to only one conclusion throughout human history — collapsed empires consumed from within by those who live as parasites feeding on national production and resources.
In the meantime, America and the larger West eagerly watch the situation in Argentina and hope for serious, thoughtful action to result in positive outcomes.
