Latin America is a messy, culturally-rich, and prickly place.
Though it is blessed with bountiful resources in its sprawling jungles, deserts, and jagged mountains, it has for most of its history been caught in the oscillating winds of colonial powers and external forces.
While the 19th century saw the withering influence of Spanish colonialism against the rise of independence movements, the first part of the 20th century was defined by constant overt and clandestine interventionism on behalf of the Anglo powers, namely Britain and certainly the United States.
From the 1950s onwards, those interventions multiplied, as foreign intelligence services and corporations supported factions and political leaders who swung voraciously between socialist and fascist iterations of violence and strength.
Populist-led left-wing movements led to mass nationalization of properties and businesses, only to be countered by strong-fisted military juntas who carried out mass persecutions. Political violence was the norm, practiced brutally by the right and harshly by the left.
In the second decade of the 21st century, that naked political violence is isolated to regional narco-gangs, but interventionism is now practiced enthusiastically by economically left-leaning political governments with broad social agendas.
Nowhere has that been the case more than Argentina, once the crown jewel of the Spanish-speaking world.
Though it was a booming economy in the late 1800s, at a various points of the 1900s, its last two decades have proven to be a catastrophic economic failure. Kirchnerism, Argentina’s version of left-wing populism, has scarred its citizens with years of bank runs, currency devaluation, and eye-watering inflation.
The “Argentina paradox” continues to befuddle us.
ENTER THE HAIRDO
Skipping over plenty of historical and political history, Argentina today remains a basket case. Inflation has reached an abysmal 113%, its working population is far outnumbered by pensioners and those who live on government aid, and its debts are long past sustainable.
Rather than continue to shackle Argentines to the doomed Kirchnerism, economist and political upstart Javier Milei is promising something different.
The leader of the La Libertad Avanza coalition, Milei is an iconoclast.
With his wild hairdo (which he claims he never combs), sideburns, and salty tongue, he takes his inspiration from the Austrian School of Economics, professing daily his hatred of central banks, central planners, and the central political elite who have “looted” Argentinian prosperity through taxation and subsidies. Did I mention he loves Bitcoin?
In the usual lazy journalistic trope, coverage of Milei’s presidential aspirations in the Anglosphere pin him ideologically to Donald Trump or Brazil’s Jair Bolsonaro. They call him “far-right” and the new populist of the right.
And while he may throw bombs in his rhetoric, Milei is no slouch.
He’s written over 50 academic papers, 9 books, and has had an impressive career as both a university and private sector economist.
He identifies as an anarcho-capitalist, and regularly claims “taxation is theft”. For him, China is a communist dictatorship and most global trade deals are “managed” to benefit the politically connected. Free trade and free exchange are the saviors, not state control.
For those of us familiar with the Austrian tradition and a healthy skepticism of both centralized power and central banking, Milei proves interesting. For Bitcoiners, he’s an all-out star.
On top of that, he just won the first round of the presidential primary with over 30% of the vote. He’s not just a phenomenon among Bitcoiners and libertarians, but it seems his message is popular with a large slice of the Argentinian population.
THE MILEI PLAN
Unique to the moment, Milei focuses almost exclusively on economic policy in his speeches and interviews. He’s left most foreign policy and non-economic domestic issues to his running mate, Victoria Villarruel, who is a hawkish right-leaning lawyer (much more could be written about her).
Rather than choose between the “socialists with good manners and those with bad manners,” Milei posits that the people of Argentina want a return to fiscal sanity, and he is the man to make it happen.
How will this be achieved?
A radical dollarization plan, an end to the Central Bank, record slashing of public spending, and a healthy bout of privatizations of public institutions.
He describes his economic plank on four different axioms:
- Moral: the current system perpetuates robbery of the people by the elite through inflation and high taxes
- Technical: there is no natural demand for the Argentinian peso, and thus its real value is zero
- Instrumental: there are existing plans for adopting the US dollar that he would endorse (including research by economist Emilio Ocampo)
- Political: politicians who benefit from the system will fight tooth and nail to defend it, and thus the goal should be to disempower them by reducing the size of the state
For Bitcoiners, his best moments have come from his disparaging of the government’s monopoly on money creation, which he believes have been pivotal to Argentina’s failures. Money should be a “creation of the private sector,” he claims, hence why he is fascinated by Satoshi’s innovation of Bitcoin.
BEYOND THE PESO AND DOLLAR
Though many in the United States deplore the role of fiat money and the US dollar, Milei is steadfast in his commitment to get his country on the US dollar standard.
Many Bitcoiners may balk at this, but it makes sense for Argentina.
Stripping control of the money supply from the politicians and central bankers — who have ushered in decades of low growth and inflation — is about as radical as you can go in Latin America, and it would be a paradigm shift for an economy as large as Argentina’s.
Milei has flirted with free banking and welcomes currency competition, so it’s no surprise that Bitcoin may play a part in his success if he’s elected this fall.
Until then however, Milei will have many enemies to slay. Apart from political attacks from his opponents, we can expect that a hostile media will aim to counter each point he presents to the public. Central bankers and those connected to them will use all means possible to dissuade the people from choosing Milei as their man (which we saw in the dumping of bonds in the market this week).
Milei’s path will not be easy and many taboos will be broken.
His attacks on the “parasitic political caste” and more conservative social views have been enough to warn off many liberals and libertarians who would otherwise be favorable to his economic agenda.
But in a time of festering bad ideas on economics, trade, and how to make our societies more well off, Milei is a welcome distraction.
“What’s the difference between a genius and a madman?” he asked in an interview this week. “Success. And that we shall see that on October 22.”
This was originally published Fix The Money.