Argentina’s ‘Methuselah’ and his ‘anarcho-capitalist’ dollar dream
MASSIVE PROTESTS are taking place i n Argentina against newly elected President Javier Milei who says his goal is to abolish the state sector. The new president says he intends to pursue unbridled capitalism in Argentina.
Mr Milei has not been the first person in the world with such extremist ideas and we can be sure that he may not be the last.
Political realities are, however, facing ‘the rhetoric drunk electorate’ that put him in office. The mass demonstrations he is facing are a clear sign of this wakeup call.
Since taking office on December 10, 2023, President Milei has already made some very extreme radical moves.
SHOCK THERAPY
Javier Milei call himself is an extreme right-wing politician who call himself an “anarcho-capitalist”. He believes that the state sector is a hindrance to economic growth. He has therefore announced a new “shock therapy strategy” that he thinks will allow him to achieve his objectives.
They are three key ideas in this “anarcho-capitalist plan” that Mr Milei profess.
• First. The Argentinian central bank will be abolished “because it is the mechanism through which money is stolen from the people”.
• Second. Argentina will“adopt the US dollar as the national currency”.
• Third. The state sector will be abolished to free up the capitalist market.
It was these populist, radical, populist ideas got him elected but now Argentinians are waking up and wondering what did they really do?
Milei have already started to act upon his dream plan. He has fired thousands of public sector workers. The sell-off of state corporations are part of his radical plan to save money by trimming the state sector.
Argentina is one of the largest economies in Latin America, but 40 per cent of the population are living in extreme poverty. The new government has, however, devalued the Argentina peso by roughly 50 per cent.
It is the Argentinian poor people who are going to suffer the most, in my opinion, under these extreme measures.
Price controls, and government subsidies on fuel and transport have been cut. This again are additional measures that will increase the burden on poor people.
And again, given the extremely high inflation rate of over 211 per cent, life is certainly going to get worse and once Argentinians have got over the Milei magic and – it appears that this has already started – therefore now realise that worst is to come.
FOREIGN POLICY SHIFT
This type of unbridled free market policies clearly shows an obvious subservience to international capitalism. This is demonstrated, not just by his rhetoric and actions, but the extreme haste in which the International Money Fund moved to quickly to free up US$4.7 billion of a long-term US$44-billion debt deal that had been suspended under the previous government.
Argentina have, however, begun to pay a price for Milei’s radical shift. Milei has cancelled Argentina’s acceptance to BRICS in a move that angered China.
China has since suspended a US$6.5-billion “currency-swap” deal that had been an economic lifeline for the government.
This line of credit was used by Argentina to avoid a default on its debt by freeing American dollars that would have been used to buy imported good from China.
After China cancelled Argentina’s financial lifeline Milei’s bravado balloon burst. He quickly did a ‘song and dance’ indicating that he wanted to mend ties with China, the truly real economic world power!
China has been one of Argentine’s largest trading partners. There is massive Chinese investment in infrastructure projects such as solar wind farms, railways, ports.
Argentina has large deposits of lithium which makes it appealing to many of the world’s big powers.
PRAGMATIC REALITIES
The lesson here, my friends, is that sometimes pragmatic economic realities trump ideological persuasion.
Nobody told President Milei that.
American national debt is now US$32 trillion. Countries are no longer interested in buying the American debt – in the form of treasury and bonds.
The Petrodollar which was America’s financial lifeline is virtually dead. It was the petrodollar that rescued America out of the 1970s financial crisis. Thereafter, it has acted as the fiat currency of America using, in my opinion, the oil-producing countries as de facto American reserve banks.
The financial weakness of the American dollar and the American economy has been the major drag on all countries that are tied to the international capitalist system.
Debt slavery, through the IMF and the international bankers are the economic chains that maintain this link. China, Russia, India, Saudi Arabia, Qatar and other countries are now trading oil in the ‘Petroyuan’.
Argentina therefore appears to make itself worst off, in terms of general economic welfare, by cutting ties to this strong, newly emergent BRICS economic bloc.
Also, by antagonising and seeking to marginalise China, he is clearly burnishing his extreme right-wing credentials?
But what exactly does Argentina stand to gain by reducing economic ties with China and the BRICS bloc. This certainly does not make any sense to me.
What of the future?
METHUSELAH’S DOLLAR DREAM
Milei came to power boasting that he was an “anarcho-capitalist” who is going to radically change Argentina for the better. Good luck with that!
Milei boast that he is going to adopt the American dollar as Argentina’s national currency. But all he will be doing is tying his currency to another sinking national currency.
There are only 11 countries in the world that have adopted the American dollar as their national currency. And they are all small island, microeconomic states.
President Milei appeared as if he has, like Methuselah, woke up from a long dream and wondered where he really is and what he needs to do; to survive in this new“anarchocapitalist” world.
Don’t get me wrong. What is sure is that if you are down in a hole, do you ask for a bigger shovel and keep digging?
Now, there is nothing wrong to be a dreamer. But it clearly appears that Methuselah Milei’s plan way well bring political and economic disaster to Argentina!
That is just the ‘bitta’ truth.