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- Argentina president, Javier Milei, faces a daunting task in correcting an economy that has suffered from many years of mismanagement.
- An anti-central bank advocate, Milei promoted Bitcoin as a means to solve the nation’s fiscal mismanagement during his candidacy.
- The odds are stacked against the new president, who has to fight many years of poor management and failures of other politicians.
Argentina swore in libertarian capitalist Javier Milei as its new president yesterday.
Hailing from the Austrian School of Economics, Milei once voiced support for Bitcoin as a solution to years of mismanagement in Argentina’s economy that could see inflation exceed 200% this year.
”#Bitcoin is only at an ATH in Argentina because of the hyperinflating Argentine Peso.”
❌Wrong.❌
🔥2023 official inflation in Argentina = 143%
🔥2023 Black market inflation in Argentina = 252%
🔥2023 #Bitcoin performance in Argentina = +453%The price of #Bitcoin is going… pic.twitter.com/mce4VB6wAt
— Luke Mikic⚡️🇸🇻🇦🇺 9-5 Escape Artist (@LukeMikic21) December 10, 2023
Milei now faces fiscal and social challenges that have seen many young citizens leave the country.
He plans to cut government spending by 5% and signed a presidential decree to half the number of government ministries.
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Javier Milei Faces Daunting Odds to Fix Argentina’s Economy
Inflation stemmed in part from a devaluation of the Argentinian peso caused a significant supply of bank notes circulating in the country.
The country fired up its money printers after its ninth sovereign default prevented it from borrowing on capital markets.
Now, JPMorgan predicts the nation’s inflation could soon reach parity with Zimbabwe and Sudan.
Alberto Ramos, an economist at Goldman Sachs, said that Argentina could be an emerging market success if Milei can pull off an unlikely coup.
“He may try to do the right thing but may not be able to. You are dealing with nitroglycerine. It can ignite overnight. Once you start the economic adjustment, you can lose control,” Ramos said.
According to Guido Moscoso, Public Opinion Manager at Opinaia, there have been only two liberal, pro-market reforms in Argentina in the last 50 years.
To control the hyperinflation and potentially adopt Bitcoin, Milei will have to change the economy. But doing so and keeping his popularity is a feat that will require him to be “clever and pragmatic.”
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But, just like other politicians who have promoted Bitcoin in the US and elsewhere, it is difficult to tell how successful Milei will be.
Miami mayor Francis Suarez set news agencies abuzz by accepting a paycheck in Bitcoin but dashed hopes of White House support by pulling out of the 2024 presidential candidate race.
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