Jeff Deist, Daniel Lacalle, and the expert panel focus on the rise of Javier Milei, a libertarian economist, running for president in Argentina. Milei is portrayed as a figure who understands the complexities of Argentina's economic challenges and advocates for drastic measures such as dollarization and fiscal adjustments.
Is Argentina about to have a Milei Moment?
Connect with Jeff and Monetary Metals on Twitter: @JeffDeist @Monetary_Metals
Additional Resources
The Dollar Cancer and Gold Cure
Did Argentina Just De-Dollarize?
Podcast Chapters
[00:00:00]: Introduction
[00:01:28]: Background on the Argentine Crisis
[00:07:06]: Monetary Policies and Inflation in Argentina
[00:10:47]: The Logical Policies of Javier Milei
[00:16:22]: The Need for Drastic Measures and Dollarization
[00:17:42]: Introduction to Milei’s ideology
[00:21:29]: Realistic solutions for economic crisis
[00:27:52]: Media bias against Milei and the populist movement
[00:36:45]: The next Ron Paul?
[00:44:36]: Monetary Policy and CBDCs
[00:54:52]: Milei’s fight against modern monetary theory
[00:59:04]: Bitcoin’s role in the campaign
[01:01:36]: Comparison with Bukele
[01:04:17]: The luxury and stability of the US dollar
[01:09:56]: The US government’s approach to international relations
[01:13:25]: Assessment of Milei chances of winning the election
[01:14:20]: Potential pressures and privileges [01:17:13]: Subscribe!
Transcript:
Jeff Deist:
Good afternoon, everybody. Good evening. Great to be with all of you on a Friday afternoon or evening. Hope everybody's doing great. My name is Jeff Deist from Monetary Metals. We do a Twitter space every Friday at 2:00 PM Eastern. I'm sure that this audience is fully aware that Javier Milei down in Argentina has caused quite at least a Twitter kerfuffle, if not a broader geopolitical kerfuffle, at least as far as Latin America goes. We got some great guests to talk about this today. I'll introduce them as they come on. But as we're waiting for people to arrive, I had a bunch of signups beforehand and waiting perhaps for a few of our additional speakers to arrive. I just wanted to give a little bit of background from my perspective. Obviously, people on this call are probably fairly like-minded about libertarian populist uprisings, and especially as those uprisings relate to central banking and inflation, which are two enormous factors in Latin America and are starting to feel like an enormous factor here in the United States where we've been far more fortunate to be somewhat immune from the bufferings of bad inflationary and debt crises.
We've had a relatively strong dollar and obviously we have had here in the US, anywhere, anywhere and in Western Europe, more material prosperity than Argentina, perhaps over the past several decades. But as we examine what the Milei phenomenon represents, whether it's real, whether it's Astro turfed, whether he's really a neocon, I mean, there's all kinds of ways we could look at it. But as we think about it, first of all, I think we need to go into this discussion, understanding that background of just what the Argentines have been through. Not only are they experiencing difficult times at present, but those of us of a certain age who remember the heyday of blogs, let's say the late '90s and early 2000s, will remember, especially the 2001, Argentine crisis, where they had both a debt default by their federal government, but also a currency crisis. And there was a famous blogger at the time. Some of you may remember... I don't remember his name. His name was Fernando Aguire, and he went by Firstfall. And his blog, he's still active, it blew up simply because he was talking and writing about the day-to-day depredations, the security, the crime, the lawlessness, the having to go to a mall that was protected by security, answering your front door by opening a second-store window and seeing who was there, the unemployment, the ATM shutdowns, all these things that occurred in Argentina during what was really a depression from about 1998 to the early 2000s there, we haven't experienced anything like that, where the economy actually shrank about 28% over a period of three or four years.
We haven't experienced anything like that across the northern hemisphere West. When the Western media, and particularly the US media, want to pooh-pah or be dismissive towards a populist revolution or uprising in El Salvador or Brazil, as we had with Bolsonaro or, I think we should take that with a grain of salt. And also we don't have the best understanding in the US of the political system in Argentina. I mean, it is a federal system. They do have a separation between the same three branches as us. They do have a four year term for the President. Of course, all Javier Milei has done, which is a lot, but all he's done so far is win a primary, which places him perhaps as the front runner in the general presidential election in October. And under Argentine rules, in federal elections, you have to get at least 50 % or face a runoff. So I don't know, maybe the the more milk toast people on the right would vote for him, maybe they wouldn't. But what really annoys me perhaps more than anything is this idea that the Western media can immediately label this gentleman as far-right. That's irritating.
But he said some great things. He's had some truly incredible, libertarian, populist rhetoric about socialism, about central bankers, about government agencies. There's a lot to take in with this guy. He's got a brunette version of Boris Johnson or something going. He's got this incredible, eccentric haircut, which I think adds to the story in a way. But I know our friend Daniel Lacalle, the great economist from Spain. He's the chief economist of Tresis. I know many of you follow him. He recently spent a fair bit of time in Argentina. He probably has his finger on the pulse of how bad the economy is and also knows Javier Milei. I thought maybe we'd open it up to Daniel and just ask, Kim, first of all, Dan, to thank you. Can you tell us what economic conditions are like down there and how Javier managed to arise, perhaps as a result?
Daniel Lacalle:
Hi. Thank you so much, Jeff. Thank you for inviting me to this panel. I was very, very recently in Argentina. I travel quite frequently, and I'm a good friend of Javier Milei. And the situation in Argentina is absolutely atrocious. For any developed economy, it is an aberration, a monetary aberration. There are more than 10 official exchange rates to the dollar, which means basically that the government steals the dollars that exporters generate or anybody generates with an exchange rate that obviously makes absolutely no sense. Furthermore, the level of inflation is so insane that you go to a restaurant and you try to pay with a credit card and the people at the restaurant will give you a 20 to 40 % discount if you're paying cash because they lose so much money just waiting a month to receive the same money. So it is truly dire. A hundred % inflation, 39 % poverty. And what has happened in Argentina is literally the implementation to the T of all of those policies that we hear all the time under the umbrella of so-called progressiveness. It's intervention in the economy, it's price controls, it is expropriation and nationalization of industries, and it is the printing money for the people policy.
The Central Bank of Argentina monetizes the entire deficit of the country. And on top of that, which is the big issue that Javier Milei or anybody that wins the elections will face. On top of that, it includes in its balance sheet a massive amount of remunerated debt that, in essence, becomes more monetary printing in the future. Hence it is, let's say, an inflation bomb that each subsequent President leads to the next. This is basically what hurt the previous conservative or center-right President, Mr. Macry. He received this monetary bombshell in these bonds that are called the LALIX that accounted for more than 14% of the GDP of the country, and therefore the inflationary spiral continued. Between 2007, when the Kirzner, 21st century socialist government started to today, the accumulated money supply growth of the Central Bank of Argentina is more than 13%. Thirteen %. We're talking about a central bank that increases basic money supply by about 70 to 90 % per annum. But we must include those instruments that I just mentioned, the remunerated debt of the Central Bank of Argentina. If we do that, the money supply growth in Argentina since 2007 is similar, is actually higher than that of Venezuela.
That's why it is in a situation in which the currency is basically worthless. Nobody wants the pesos. Citizens that receive pesos in their salary try to do whatever they can to convert them to dollars or any other currency. And the country, which is a very, very rich country that today should be one of the leading growth economies in Latin America because it has everything that the world is demanding, is a country that is completely obliterated by this so-called inclusive monetary policy. What I find completely in sense is this idea now that the media are calling this far-right or a movement that goes against the system, et cetera. Now, what Mr. Milei is saying is something that is not just logical. Ending the Central Bank of Argentina perverse incentive to monetize this monster deficit is obviously logical. But what he is proposing is completely logical policies that we have in most liberal economies. The reality is that what is anti-system and far left is what the Argentines have suffered throughout all of these years. And I come back to the point, this is not a poor country that is suffering from numerous problems created throughout the years.
This is a very rich country with very high human capital that is being literally decimated by interventionist policies.
Jeff Deist:
Daniel, when you say they have everything the world wants in terms of resources, apart from human capital, explain what you mean.
Daniel Lacalle:
Well, think about this. We're in the middle of an energy crisis. We're in the middle of a food crisis. Argentina was a country that provided food and provided energy to the world for decades. Argentina is a country that has absolutely everything in terms of grain, for example. I find it amazing that in the middle of an energy crisis or the food crisis like the one that we're living because of the Ukraine invasion, we see Argentina implementing price controls and production cuts. So meat, soda, grain, oil. It's a very, very rich in resources nation. Again, this Tempo Cambiario, which is the exchange rate limitation that the government enforces, obliterates anyone that wants to export because basically what it does is that imagine that any of the exporters sell some of their products in dollars. The dollars that they receive have to be exchanged at the central bank at an exchange rate that is completely illogical and nothing to do with the reality of the market. Basically, those exporters lose their revenues. It's basically a massive inflationary tax. On top of that, they have to suffer as well because their costs, which tend to be also in dollars, they cannot even get the resources to function properly.
A country that is so rich, as I mentioned before, is seeing their industries that could be delivering the products that everybody demands, shutting down the agricultural sector is being obliterated, the energy sector is obliterated. Anyone that has invested in energy in Argentina knows that you put a dollar in exploration and you lose three in the inflationary and the fiscal tax. It is truly an extractive and confiscatory type of system in which a very wealthy political elite are constantly telling the people that they are going to give them enormous subsidies in a local currency that is constantly depreciated, therefore making the citizens that remain in the country literally hostages of the government and dependent on the government, and at the same time creating this fallacy of a social network that delivers no positives to any citizen because it only creates poor people, 18 million poor people. And when we talk about poverty, it's extreme poverty. It's not what we consider poverty in the United States on a developed economy.
Jeff Deist:
Daniel, is this as bad as late '90s, early 2000s?
Daniel Lacalle:
It is worse, and I'll tell you why. In the late '90s, the late '90s and early 2000s, it was a situation that required a drastic solution but had a drastic solution and a quick recovery end game. The problem here is that this monster hidden inflation machine that is the le leaks and the lebacks, these bonds that I mentioned that are hidden in the balance sheet of the central bank, is that the next government is going to have to make first a monster devaluation, the difference between the official exchange rate in Argentina versus the real exchange rate, which is called the dollar blue or the closest to the exchange rate is so wide that it's going to require a very significant long-term plan. That's where gradualism, which was the mistake of the macro administration, doesn't work because the problem is so huge that you need to really take drastic measures. The drastic measures that Javier is proposing, I imagine that most of the people that are listening today find them completely logical. The first one, obviously, is to dollarize. Many people say that dollarizing would make people lose rights, but that makes no sense because they have no right whatsoever then to be poor.
But the most important thing is that dollarization is not just inevitable, is that it's the only option because they don't have a viable currency. You go to Argentina, nobody wants pesos. They don't have. It's a completely failed currency. It's much worse than them in that sense. That's why the Argentines have voted for somebody that for the first time has not sugarcoated the problem to the citizens. The problem in the last, and I've been going to Argentina for, gosh, 35 years, the problem has always been that the Argentines have been told that everything can be done gradually, but obviously it just got worse and worse and worse. So what Javier Milei has done for the first time is to tell people. It's the first time that they've heard a politician say what they see every day in their day-to-day life.
Jeff Deist:
So how do you know Milei? How did you meet him? What's he like? Has he read Austrian economics?
Daniel Lacalle:
He is what we would call what we would consider a free market libertarian, somebody that has been very, very vocal in television and in media, seeing that the state is the problem, not the solution. He is very well-versed and he's very knowledgeable about economics and he's always mentioning Rothbard and Austrian economists as his key drivers of what the economic policy he has created. The thing about him is that he has created a persona, the hair that you just mentioned, the very vehement and very aggressive media personality that talks with no type of diplomacy whatsoever, et cetera. But he is first and foremost, an intellectual, second, a realist. He knows that the situation in Argentina is extremely complicated and it needs to come from a long-term plan. He knows that the people in the centre-right or in the more moderate parties that agree with him need to wake up to the reality of the monetary and fiscal disaster that Argentina is facing. I think that when did I meet him first? I met him first through different conferences in which we participated. He was at the time an economist that was extremely popular in the media and didn't have any political inclinations, but was extremely popular in the media because he popularized two terms.
Now, the first one is the idea that the Central Bank of Argentina needs to be shut down. The second one is this concept of the politicos churros, he says, the imbecile politicians. I think that all of that has… He has a big following among the people that have found that the situation is impossible to solve with gradual or small measures. Maintaining the status quo is not an option. What I find atrocious is that the media is considering this as radical and has not mentioned ever the monstrosity and the real radical policies that have been implemented in Argentina under the disguise of the socialism of the 21st century. That's why it's so important to differentiate it from the bad times of the early 2000s, because the bad times of the early 2000s were wake-up calls about a monetary imbalance. This is not a wake-up call. This is a tsunami that is currently more than 14% of GDP in this bombshell hidden in the balance sheet of the Central Bank of Argentina.
Jeff Deist:
You say he's an intellectual. I mean, realistically, what could he do? Were he to win? And when you said they need to dollarize, yeah, using the dollar, just like some other countries have just adopted the dollar when their own central banks were that far gone. What could he realistically do?
Daniel Lacalle:
Well, the dollarization process would not be too complicated. Ecuador, El Salvador, Panama have done it. They would do it as well. But obviously, dollarizing without the reason why they have such monster monetary issue is because obviously there's a monster fiscal problem. The Argentine government is spending not just more than they earn in taxes, is that they spend more than the increase in inflation. He needs to implement a very drastic fiscal program of adjustment, a big adjustment in spending. Think about this. In Argentina, 57% of the provinces have not just more, but massively more public workforce than private workforce. The public workforce in Argentina has increased 10 times faster than the private workforce in the last in 2007 to 2022 period. He needs to implement A, an austerity program, B, and the Cepo Cambiario, this exchange rate clasp that they have implemented. He needs to make a big adjustment that allows the country to export and open its economy instead of closing it, which has happened in the last years. It's going to require the agreement of the centre-right and even probably part of the centre-left. Is it going to be easy? It is not going to be easy, but to be fairly honest, there was some...
I remember when I was in Buenos Aires the last time, one hour away by plane, they have a country that is growing, that has much less unemployment, that doesn't have that level of poverty even close to that level, and that has 10 times less inflation, which is in a way. They know that the problem is that the elephant in the room is the monetary system in Argentina. I think that the difference now from the early 2000s is that there is a widespread understanding that this cannot be sugarcoated. 100% inflation is going to go to 300% when the leaks, the lebacks, and the passes start to mature. I think that the difference right now is that the population sees that the… I remember that historically, when I used to go to Argentina, there was always a debate. You would talk with somebody in the car, in a taxi, in a restaurant, will you talk with people, and some people would say, Well, we have 30% inflation, but it's going to come down because the government is doing the right thing, blah, blah, blah, blah. But now it's not 30%. Now it's 100%. And 100% inflation in CPI.
And remember, as you all know here in this chat, I'm sure that CPI tends to underestimate inflation because when you go to a restaurant where you used to pay 6,000 pence for a steak, and now you pay 12,000, and it's only been a few months, you know that inflation is not.
Jeff Deist:
100 %. So just so people understand, when governments try to mandate an exchange rate between their currency and any other, but often the US dollar, markets just come up with a bunch of different exchange rates depending on the actual good or service being transacted in the real world? Is that basically what happens?
Daniel Lacalle:
Well, no. What happens is that the government sets an exchange rate, an official exchange rate at which the producers of a certain good have to exchange. It's an inflationary tax. It's an exchange rate tax, basically. They allow soldier, exporters, to exchange the dollars that they receive from their exports at an exchange rate that is slightly better than the official rate, etc, They even have what they call a dollar cold play, like the band. It's such an insanity that, for example, there's a different exchange rate for Argentine citizens that exchange their dollars for pesos and for foreign citizens that do the same. There's more than 10 exchange rates. All of those exchange rates are not exchange rates set up by the market. They are simply that the government does not let you keep the dollars that you have generated, forces you to convert them at a rate depending on the industry or the sector that you're working, and gives you pesos. Basically, what the government is literally doing is stealing the dollars generated by the exporting and producing part of the economy to increase their reserves as much as they can at the expense of making everybody poorer.
Jeff Deist:
Well, we've probably asked enough of Daniel already. Let's let's ask my favorite cynic, St. Onge, Peter St. Onge from Heritage, I know you've been following it this week. Give us maybe the US spin on whether they're going to, whether the Western media are going to try this guy in the court of public opinion before he even wins. Right. Yeah.
Peter St Onge:
I think there's absolutely no doubt of that. There was a story recently about a lesbian speed dating service that wasn't letting men in, and they're calling them far-right. So pretty much anybody who differs in any way from the official narrative is far-right at this point. But, I mean, of course, nobody in Argentina cares what the American media says, thankfully. And the bigger issue here, of course, is that as in America, most people's response to corruption and incompetence is to fire the bastard and hire the other bastard and the other party. And so, as Danielle was saying, there are still probably a lot of people in Argentina who live in la la land to imagine that government is going to pull a rabbit out of their hat. And the question is, at what point do they give up and actually go for an outsider? I'm shocked that Argentinians have been putting up with it as long as they have, but that seems to be the big question. Jeff, you're there?
Jeff Deist:
Yeah, Americans have put up with a lot as well. And at some point, that bubbles up into Trump. And this pasty guy singing Richmond, north of Richmond, so I like that. But it seems like there's the same animating impulse that's really breaking out all over the world and people small around. I wanted to ask Jordan real quick. He's with us. I see Jordan Schachtel l. If you don't know him, he's got the dossier, which is his substack. Jordan, when I'm looking at this guy, I think, first of all, everything's far-right, everything that the Western media folks don't like. Then they're going to try to throw in with Bolsonaro, with Georgia, Melloni in Italy, with Nigel Faraj in the UK, with Buccaley guy, if I'm saying that correctly, in El Salvador. In other words, we have to be told that this guy's bad before we get any further.
Jordan Schachtel:
Hey, Jeff, thanks for having me. It's been a great panel so far. Yeah, I think that the corporate media is completely out to get him. You could look no further. I published at the dossier on Substack, and I compiled a bunch of these media headlines, and they're all using the same far-right label. When they mean far-right, they want you to think of basically the second coming of Hitler. They don't want you to think of a libertarian. They're clearly trying to smear this guy because he's setting the tone in this populist anti-establishment movement that's definitely building throughout Latin America. You talked about Bukele and Bolsonaro. Bukele now has over 90 % approval rating in El Salvador. I think that what they're most terrified about is that people will actually like him and he will... We speak about, I think in America, we speak about wealth inequality, or at least the traditional Republican right speaks about wealth inequality as if it's a taboo topic because they don't want to talk about the money printer and central banking and how the wealth distribution is all messed up and how we don't really live in a capitalist system. But once you open that Pandora's box, Milei.
It's very true that we live in an unequal and unjust system. I think that's what Milei has really exposed, especially in South America. It's incredible for me to see these headlines just viciously targeting him. Now he's responsible for the Payso going up exponentially after declaring that he's going to try to shift at least dollarize temporarily. They're trying to similar to what they did to Donald Trump, what they did to Bukali, what they did successfully, unfortunately, to Bolsonaro. If you look at the Wikipedia entry for this guy, it's just one label after another. They're just going all out. We speak about a uniparty in the United States and the broader Western world. The institutions that are labeling Milei far-right go from the New York Times all the way to The Wall Street Journal. There's very much a consensus in the corporate media that they think this is a bad guy that they do not want to have the seat of power in Argentina
Jeff Deist:
That's unbelievable. I know we've got a fair number of Argentines in the space. Can we ask Ignacio to join us you there? Ignacio, well, I invited him to speak.
Ignacio:
Hi, Jeff. I just wanted to reach you out to mention that many people here in the space are part of La Libertad de Avanza, which is the Mileis party, especially here, Augustine Romo is present. He will be most likely an official legislator for Argentina's promise of Buenos Aires. So I think there's a lot of value in hearing what he may have to say. And of course, all the things that all the people that are here from the which are many. We have many things to say. We can also clarify a lot of stuff about Milei, about his history. Okay, well, how do I start?
Jeff Deist:
What do you average, people think of him? Do they think he's crazy? Like a lot of Americans thought about Trump? Or do they actually listen to what he says about central banks and inflation?
Ignacio:
Well, he started out as a crazy guy speaking on television. With the continuous flow of things here in Argentina, rampant inflation above 100%, people started listening. People started shifting their perspectives. Well, it was a surprise. I think that not even Milei expected the result from last Sunday. I guess it was a surprise for all of us who are part of Libertad de Can. I think we were not prepared. And even if it's probable that he will win, the truth is that the teams, the core teams are not really prepared because, again, the result was unexpected. So there are many things to do in order to govern.
Jeff Deist:
Yeah, I'm sure there are. So stay with us. We might come back to you. I appreciate you joining. I want to get my my good friend, Daniel McAdams, Ron Paul Institute, Daniel. We love it. When politicians say something libertarian, especially this guy who goes Scourged Earth. That is assuming that the the subtitles that we get, which are translated into English, are reasonably correct about some of the things he said. But then again, we tend to get ahead of ourselves. Oftentimes we fall for the latest, greatest flavor of Libertarian AstroTurf, whether that's in the US or whether that's abroad. We'll go back to some of the Argentines. We might have to go more than an hour today, folks, because we got so many people who want to say something, and this is such a great topic. But, Daniel, I don't know where this guy came from. Obviously, most of us in America, we are woefully uneducated about politics in other countries. So just give us your thoughts and maybe some skepticism. Daniel McAdams, are you there, buddy? I see him listed as a speaker.
Daniel McAdams:
I'm going to keep it short because you do have a lot of speakers. And I just want to preface it by saying it's not my place to decide what's good for Argentina, as you point out. We know very little about it. And I'm sure Danielle knows quite a bit more than I do, but even those of us who travel there know less about it. I know very little about it. So it's not my position to say whether he will be good for the country or not. In fact, I have absolutely no idea, which is why my position has always been to stay away from telling other countries who's good and who's bad for them. But I will say because I've seen several headlines saying, is Mille the new Ron Paul? Is this the Ron Paul Revolution? And the answer is a categoric no. The positions that he takes are categorically opposed to Ron Paul's positions, particularly when you look at his foreign policy, which interestingly enough tracks identically with the foreign policy of the US foreign policy blob, the regime that runs Washington, whether you elect Democrats or Republicans. He's absolutely on message when it comes to Ukraine and Russia.
He's absolutely on message when it comes to China. He calls China Assassin's. He says, I would never promote relations with Cuba, Venezuela, North Korea, Nicaragua, or China, and et cetera. So certainly when it comes to these areas, he's no Ron Paul. Ron Paul would never say this. I do not claim to be an economist. I do know that there's a lot of concern in Washington about de-dollarization. And it seems to me that Argentina embracing re-dollarization or dollarization would give some people in DC who are nervous about this, about the global south increasingly disconnecting from the dollar to be concerned. A couple of other things. He certainly does not hate the US Federal Reserve. In fact, Ben Bernanke, he said, is his favorite Fed chair, not Volker. And he was hoping that Larry Summers would take over for Bernanke when he was gone. And I'm not trying to trash the man again. If he does a good job in Argentina, hats off to him. I just don't like this idea that we have to go looking for libertarian heroes. We've been through that with people like Boris Johnson, with the Bosnaro over and over again. There is no Ron Paul moment overseas.
It was a very unique moment that happened in the United States. Conditions are very different. History is very different, and we can't expect to find it. And there are a lot of libertarian trolls here. I still believe we can export libertarianism as some people understand it here in the US. And I just absolutely reject that idea. And if I can say one more thing, Jeff, I'm sorry. I appreciate the accommodation of your time. And I have enormous respect for Jordan Schactel, who I think is a great analyst. But I happen to also disagree about the press coverage from what I've seen of Millee. Yes, there are catchwords that are repeated every time. That's how the media works. He has to always be considered far-right. You've got to put that in your article if you're going to publish it. But for example, if you look at a piece recently in The Washington Post who is Javier Milei, Argentina's right-wing presidential front runner. And then you actually read the article, I would put forth that this is a very sympathetic piece considering that they are describing someone who normally The Washington Post, if you were an enemy of the US regime, if you were an enemy of the central bankers and the neocons, he would be presented in far different terms.
Anyone who disagrees with that should go and look for any portrayal of someone like Putin or Lukashenko or she even or anyone else who was not in favor of the US regime. The final thing I will say is that, yes, he is a populist, and that is great. And they call him a far-right populist. But don't forget that people in DC and the regime, they embrace very strongly the dialectical materialism. And if you find that a populist, populism is inevitable, you better jump on that horse and make sure that you guide it in the right way. So sorry for taking a lot of your time, but those are just my two cents on the issue.
Jeff Deist:
No, I appreciate all that. And I'm looking for that gloss because I wanted to think of Milei in terms of obviously this is a somewhat US-centric audience. And so we need to be checking our own premises, our own media, our own government. And how ironic, why does the guy whose country is in the midst of what Daniel O'Tai says is a worse crisis than 2,000, who's got runaway inflation, food prices? Why does he have to talk about China and Ukraine at all? Why does he have to opine this to his favorite US Fed chair? I mean, it just goes to show you that politicians around the world, it's the carrot and the stick. Uncle Sam is either going to bless you or he's going to oppose you. No matter how legit Milei might be, it's interesting that he feels the need to say those kinds of things to apparently appease the great Uncle Sam up to his north. We're going to get back to Daniel and some other people if they can hang around. But let's get E. J. And Tony from Heritage because there's just a lot going on here, E. J. So give us your thoughts, please.
Peter St Onge:
Certainly. I will say, first of all, it's a breath of fresh air to get someone in there who, despite all of his faults, as some people have already pointed them out, is not simply parating. That is all of the previous lines from previous leaders in Argentina about restructuring debt, for example. Essentially, what the country has gone through to date has been a series of manoeuvers that have only kicked the can down the road, put it further and further in shock to other nations, including Uncle Sam, as you were just saying. Maybe the reason why so many of these countries around the world are constantly trying to bend the knee to Uncle Sam is that they owe him so much money, which they can never repay, and then their only hope is to constantly roll over that debt and to hopefully get some of it forgiven either by the US or maybe the IMF, whatever the case may be. I think we're at a point, not just in Argentina, but around the world, where the status quo simply cannot be maintained. That's true in a lot of ways socially on social policy. It's true certainly in terms of fiscal policy, and it is 100% true in terms of monetary policy.
As far as monetary policy specifically is concerned, I think the question is if the current course is not sustainable, then where do we go? It's either further off the deep end to things like CBDC or it's back to sound money. Hopefully, again, hopefully, the new regime in Argentina is going to take us more towards sound money and less away from the current course, which is not only one of things like hyperinflation, but also something that will eventually lead to a CBDC, which, as I'm sure all the listeners know, is essentially that Orwellian step from which you likely can never come back.
Jeff Deist:
Yeah, it's interesting. We've all been beaten down so badly by politics. And of course, that's even worse in countries that are less material well-off, that have suffered more than us. We're so beaten down by politics. We're so eager to hear what we want to hear. We jump at the opportunity when someone comes along and says things. I mean, Trump, back in 2015, 2016, I don't think he was Astro-Turfed or deep-stated. I think he was really just some crazy talk show, TV reality star who came along and surprised the establishment with this populist groundswell. And then the Clinton regime thought that she would beat him easily, and so they wanted him versus Scott Walker and Jeb Bush and all the other candidates. And then they were just surprised. I mean, that's my opinion. Some people think Trump is all Astro-Turfed. I mean, who knows? But nonetheless, it turned out to be a huge disappointment when it came to draining the swamp, doing all kinds of things in any meaningful way. Let's go to David from CoinBits app. I want to get back to Daniel Laquai if he could stay. But David, I know I invited you to speak and I want to hear your thoughts.
Peter St Onge:
Yeah, absolutely. Thanks for having me, Jeff. I really appreciate the context that Daniel added about the latest foreign policy takes. What I'd like to add is just a little bit more context surrounding how the media is treating Milei. It's not just far-right that label that they've slapped him with. It's also accusing him of disturbing markets. A headline from Bloomberg was why Argentina's Trump-like candidate is disturbing markets. What? Yeah, they did the same thing with Bukele. It's the playbook, right? It's not just far-right. It's that these are destabilizing things, right? And they did the same thing with Bukele last year when he rejected the IMF. And now El Salvador's global bonds.
Jeff Deist:
Have returned seven %. How dare the Argentines consider electing a guy who impacts my 401(k) by two %?
Peter St Onge:
Yeah, exactly. And I think that that's just another thing that I'm hopeful about what he's proposed from an economic perspective. I think that eliminating the central bank and dollarizing, that's really interesting. But also, he's promised to take the financial system from fractional reserve to one that separates fully-reserved demand deposits and then other investment banks and investment banking and time deposits. That'll be really interesting to see in addition to aggressively tackling runaway fiscal policies and tackling the fiscal issues as well as the monetary ones. From foreign policy aside, I think that what he's proposed from an economic perspective is obviously deeply offensive to media elites and others, but will be really interesting to see.
Jeff Deist:
If we could go back to Ignacio, Emmanuel, could you just give us your thoughts? Is this guy AstroTurf? Is he legit? Where did he come from? I don't know, as a politician, how is he funded?
Ignacio:
Well, the guy is legit. He's not even funded here in Argentina. I mean, all the money that came to the campaign was basically raised by people who wanted to be part of it. He's not a guy, he's not a corporal guy. His origins... He had like, I guess three or four years ago, a photo in the World Economic Forum, which one might think that it's a place where you wouldn't be if you weren't part of that establishment. But it is also true that he stepped out of it. He stepped out of the previous jobs that he had that were connected to or that might have been connected to the World Economic Forum, such as Aroportos Argentina-2min, which is a major company, a major player here in the country. This is my opinion, okay? The guy is... The guy is legit. He is also an Atlantist.
Okay, his friendships all over the world are basically, if you take a look at the friends he has in international terms, the group where he finds himself better is ECR, the European Union, conservative and reformists. Those are his friends. He was invited to a conference with Box, thethe Spanish party. Daniel here won't let me lie about it. He was invited. He was also invited by or had a chat, at least with Fratelli d'Italia. Of course, he's a great friend of Bolsonaro. I guess my best guess is he's basically a classical conservative in international terms, in foreign affairs. And he has also... I mean, he's a very Argentinean guy. He's not that into the international flows of influence.
He's brand new.
Jeff Deist:
He's personally wealthy enough to withstand all this?
Ignacio:
No, not at all. Basically, he gives conferences, but of course, no, he's not the type of guy that has a million dollars in his bank account. Not at all.
Jeff Deist:
Okay, well, Well, I mean, there's some interesting points here. Thank you, Ignacio. I mean, Trump was friends with the Clintons. Trump had his picture taken with all kinds of globalists before he got elected, and then all of a sudden, he's going to drain the swamp. So we can understand that. But also, I think one of the best measures of whether Trump was real or Astro turf is very simple. His life and personal finances were made worse by having been President. I mean, we haven't had a President since Truman, maybe Eisenhower, who was made worse off by being president. I mean, Truman had to go home and live with his mother-in-law because he was so damn broke, and the Congress was embarrassed, so they had to pass a pension for ex-president so he wouldn't be broke. Harding was the only, I forget who was the only other president alive at the time, but Hoover, I'm sorry, Herbert Hoover, who was wealthy. The fact that if a good measure over the coming months or years of whether Milei is legit might be whether he's made worse off personally, professionally, financially. In other words, he's sticking his neck out.
Let's go back to Daniel Lacalle, because I know he's probably been listening to a lot of this, and he's with us tonight in Madrid. So Daniel, why don't you give us some more thoughts?
Daniel Lacalle:
Well, thank you so much. I would like to start by saying that international policy is not what Javier Milei is about in these elections. Those comments that have been compiled by the media come from, I don't know, years of different media appearances. As someone who's all the time on TV, if I was to go on politics and you wanted to bring headlines from things that I have said in the past 10 years, I don't even want to know. I think that that is an important thing. International policy is not what defines Hamir Milei.
Jeff Deist:
Is he a globalist?
Daniel Lacalle:
No, I wouldn't call him a globalist. I wouldn't call him a… In the census that we are used to in the United States. I think that this is extremely important. Hamir Milei is all about economics. Then he has added other things once he's gone into politics, but it's all about economics. It's about providing school and health checks instead of a publicly managed and publicly controlled system. He's about the fiscal policy, he's about the monetary policy, and particularly monetary policy. I think that it's important to understand that. I find it exceedingly hilarious to hear that he is blamed for the weakness of the Pesa, a currency that has lost 40% of its value every three months in the past 10 years. I think that ultimately, what we need to understand about the phenomenon that Javier Milei is, is that if you strip out all of the different objectives and the different messages and labels that have been provided or placed on him, the reality of what we're seeing is that he is leading a movement that is destroying what, on the other side of the world, in the developed economies, is unfortunately rising, which is the modern monetary theory.
This is somebody that is explained to the people in his country that the elephant in the is not the supermarket, is not the gas station, is not the restaurant. Those are not the ones that rise prices, but the monster monetary policy. Now people understand it, and this is something that is a huge leap forward for the defenders of freedom because it is so difficult to get citizens all over the world to understand that what is making them poorer is not the supermarket, the shop, or the gas station, but the issuer of the currency and why, and this is the key, and the Argentines understand why because they see to the point that you just mentioned, Jeff, Cristina Fernandep de Kirstner is a multimillionaire. Mr. Fernandes is a multimillionaire. In Argentina, presidents become multimillionaires in US or European ways. I find it almost candid to hear Mr. Ignatio say a million dollars in a bank account. We're talking about billions. The interesting thing here is that he has been able to connect for the people the understanding that the central bank is an arm of a government that is making you, the citizen, poorer in order to make the very small political elite immensely rich.
That element is a huge difference that is also very important in El Salvador, which obviously doesn't have the problem of the local currency currently, but that is also going to be very important in Colombia and Chile, which unfortunately have just embraced politicians that are trying to convince people that the Venezuela and Argentine monetary policy would work if they implemented them. Those are the things that I would highlight. I think it's very easy to put labels on Javier Milei because, and I know that personally as a relatively well-known media personality, because his public and media persona have overshadowed what would have been something that most of us would have certainly embraced. I think that he is a breath of pressure. He may not win, but the most important thing about the Milan situation is that what he has opened cannot be closed. He has opened Pandora's box of making people understand that what makes them poorer is not capitalism, is not free markets, is not supermarkets, is extractive and confiscatory monetary policy. Obviously, he is running for president. Once you run for president, they're going to ask you about numerous things. But I think that what is important is that we understand that this is in this era of Central Bank Digital Currency experiments, in this era of trying to tell us that it's progressive to do what the Heronest government have done in Argentina, whilst calling far-right a libertarian, I think it's very important that this phenomenon becomes, let's say, a stepping point in a much wider revolution of making people understand money.
Jeff Deist:
Well, I have to say, some of his public appearances have been incredible. I mean, the guy can absolutely explain the history of money from basically an Austrian perspective and how money today is a scam and attacked the central bank in ways wildly beyond what any viable candidate in the United States, other than Ron Paul, has ever even attempted. And of course, his came out not only with support for Bitcoin, but an explanation of why people in Argentina might be hungry for an alternative. So I guess I'll open up the panel.
What about Bitcoin? What role does that play in this campaign potentially?
Jordan Schachtel:
I think that there are some Bitcoiners who don't like the fact that he wants to dollarize, but the reality of facing hyperinflation and trying to educate an entire population on the merits of Bitcoin, it will take some time. I think what he's doing is fine in prioritizing getting rid of the current national currency or at least departing from it a little bit. I'mtotally, again, super enthusiastic about a guy that actually understands Austrian economics. That separates him from basically 100% of the elected federal politicians in the United States. To me, that's super encouraging. I think the upsides are so much bigger than the downsides. You can't be a master of all crafts. There's so many different issues that a politician needs to be able to discuss. But I think the most important thing is understanding monetary policy, especially in this global Fiat environment. Who else in a national level is burning the central bank in effigy? He very much understands economics, and I'm so encouraged as a Bitcoiner that he's very enthusiastic about Bitcoin too.
Peter St Onge:
I'd want to add, and maybe Ignacio can speak to this, but I don't know to what degree Bukale in El Salvador has been influential. I think he's quite popular across Latin America among populist-minded voters. And of course, he's put Bitcoin really front and center at the center of the anti-inflation, monetary populist movement. Maybe Ignacio has thoughts on that though.
Ignacio:
Well, yes, Bukele is basically well-known here in Argentina too. He's not a superhero, as Javier Milei might be. We tend to follow international trends just as any other country. There's a candidate here, a minor candidate called Kuneo, which run a campaign only on the fact to be like Bukele. He wants to be compared to Bukele. So basically run a campaign just with that message. And it was pretty hilarious because, of course, most of the people in Argentina are not well educated in terms of international policy. So it's more like a whistle for a few people. But yes, Bitcoin in Argentina has been really influential in the last, I guess, four or five years because of this rampant inflation above 100 %. And we are among the top 10 countries that have adopted Bitcoin. Even the, I guess if I had to say a number I would say that three in 10 Argentinians have adopted some type of cryptocurrency or at least have a wallet. Three out of 10, it's a lot. Really?
Jeff Deist:
Are you talking about the country as a whole or are you talking about the laptop class?
Ignacio:
Yes, I'm talking about the country as a whole because the wallet industry here in Argentina is really well developed. We have major players, and you can look them out on Google like Velo, Lemon, among others. So yes, I would say that three out of ten. If I had to say a number in the higher classes or in the middle class, I would say that that number would go up even half of the population.
Jeff Deist:
Americans don't realize the luxury we have or had, perhaps until recently with our dollar.
Peter St Onge:
I was just going to add that in addition to Bitcoin, how it's really been interesting and beneficial that I think, as most people know on this call, Tether and USDT has been a really helpful thing for Argentinians to be able to access dollars. Then also Tether is very pro-Bitcoin as a company. As a potential gateway, I think that it's very promising. And just another thing that I'd like to add that I thought it's silly, but it's also worth mentioning is that Milei has five mastiff dogs. They're all clones of the same dog. And one is named Friedmann, which we'll forgive him for. One is named Rothcard. Two, named Robert Lucas, which again, he gets a pass. And then one named Conan, presumably after Conan, the Barbarian. So when I see that, I think he's got to be legit. It's just the take away from that fun fact.
Jeff Deist:
Well, I'm embarrassed to say, I don't know, does he have a wife and kids? Five mastiffs is great. Does he have a wife and kids? The future?
Ignacio:
No, he hasn't.
Jeff Deist:
I'm sorry. That's all right. That's all right. Well, look, we're counting on these Catholic countries to help us out here. Americans are falling down on the job. So let's go back to Jordan if we can. It seems to me that there's so many parallels here, not just politically, not otherwise, to the Trump phenomenon. Is this guy going to get the same treatment as Trump?
Jordan Schachtel:
Yeah, I think that it seems to be the case right now, especially the political establishment. I think I am no Argentina expert, but the way that the system is described in which they're basically using the money printer and the dollar exchange system to enrich the elites and you have this guy coming in speaking to this problem in an eloquent manner and in a correct manner, he certainly poses a threat to at least the domestic ruling class. As we've seen with Bukele, they tried to destroy Bukele because he had very similar issues, more so with the broader Fiat system. But I think that's the next step. The question really is, can these elites who form much of an ideocracy in the same way, do they actually even understand what Milei’s critique is about the system? I think in Argentina, they probably do. But it would be very interesting to see how they chart that course moving forward because Donald Trump is much more blunt in his language about taking on the administrative state, naming individuals by name. I think Milei's strategy is a little different because he's talking about institutions and ideas. But it does seem like they're starting to get everything in order to wage this false.
I wouldn't at all be surprised to see a massive media and even foreign intelligence agencies starting to not be so happy with him.
Jeff Deist:
Yeah, if you look at his rhetoric, this will be a full-scale war to blunt his power. I believe the Argentine presidency is already perhaps not as powerful as the US, at least in terms of media access and bully pulpit. That's interesting. People need to understand. When Ignacio Manuel talks about 30% of Argentinians may be having wallets or having at least familiarity with how Bitcoin works mechanically. I'm going to look more into that. Pricing. But again, just 20 years ago, a little more than 20 years ago, they literally... The government stopped paying bonds, stopped paying on bonds. They negotiated ultimately a 70% haircut on Argentinean bonds. You think that can't happen here? Well, Argentina is a big country, a wealthy country, as Daniel Kai said. Argentina has had real crises within the very recent memory of people who were on this call and otherwise. So this isn't some far-fetched thing. And I think Westerners ought to be looking at this and learning from this and treating it as a cautionary tale. Let's get back to St. Onge, Peter, Professor St. Onge, because I know he's always got something to say. That's a compliment, Peter.
Jordan Schachtel:
Oh, what?
Peter St Onge:
Wait a minute. On that topic. Yeah, I think absolutely. They're going to go after him. There are a lot of people who were concerned that there will be some three-letter agency-type thing. I don't really expect that, partly just because I think they've gotten a lot stupider at the top. If we look at what Biden did to the dollar over the past year, sanctioning the Russian Central Bank, I don't think this is quite the three-letter agency that our grandparents were dealing with. They've done a lot of own goals. I think honestly at this point that if you look at the kinds of goals that the US government pursues, they tend to be catering a lot more towards radical activists. If you look at Uganda, for example, they were sanctioning Uganda over their gay laws. I think they've lost the plot in that classic hypothesis that the US is this puppet master over the entire world economy. I think at this point, they're just short sighted, living for the day, the roving bandits, getting what they can for the next opinion poll. I imagine that the US government is not thrilled or wouldn't be thrilled with Milei as President.
They have harassed and given Bukele some trouble in El Salvador. But in terms of mounting some grand operation to give them an exploding cigar or something, I don't think that's on the cards.
Jeff Deist:
We're in a brave new world where it seems like pushing on the string doesn't produce the same results. I got to think that the Brazilians are looking at this. I mean, Lula, it seems like the other direction, obviously that's a bigger country, but these earthquakes around Latin America are these at least tremors. We've got the DC foreign policy establishment fixated on Ukraine, China, Taiwan. We've got the treasury/central banker types basically pushing on a string with respect to raising interest rates and trying to quell inflation, which I don't think they're going to be able to do simultaneously. Now we've got Latin America heating up, presumably, at least politically. That strikes me as another front that we are too tired to deal with. Maybe there's an opportunity here for some things to happen without Uncle Sam having the bandwidth to try to step in and do the machinations we're used to.
Peter St Onge:
There is. And one of the things that changed the chessboard recently is China now going through all this trouble. So Chinese financial markets, manufacturing, their home builders, they are absolutely collapsing. China has hit the panic button. So I think if we had this conversation three weeks ago, we'd be talking about how China is going to take advantage of this and keep trying to divide the US from its traditional clients. I think we're in a much messier world at this point.
Jeff Deist:
All right, can we go back to Ignacio? Looks like he's still with us. I mean, let me just ask you, and I'm sorry to put so much on you, but first of all, can he win? Is he going to win? What are the reasonable chances?
Ignacio:
Well, the consensus right now is that he is the candidate with the most chances of winning of an election, of an electoral victory. Wells Fargo, the bank, the American bank, said that these chances were 65 %. I don't really know. I do believe that he's the favorite right now. But I also believe that there will be a lot of pressures, basically because he's not the establishment guy. And there's a campaign ongoing right now that's trying to push people into not voting for Javier Miré because he might cause basically a major chaos in the country. There are many people who will lose a lot of privileges in terms of the unions here in Argentina. Unions are very powerful. The industry, national industries, which are being protected and consumers are paying a lot more for goods and services that they should pay much less if imports were open. So there are a lot of privileges.
Milei is trying to take away the United States, the embassy here, has stated that MLA is a legit competitor, but they are really concerned about the diplomatic ties because MLA is a friend of Bolsonaro, is a friend of, or might be a friend of Trump. And again, it's a friend of the conservative of Europe. So it's not the type of diplomatic ties that a Democrat embassy here wants to have. So they are concerned and markets have failed basically because there are reasons to believe that Javier Milei might not be prepared in terms of the teams that he actually has at this moment, at least, because, again, this was unexpected. So there's a problem of governmental affairs. The possibility of winning is not the same as the possibility of actually carrying out public policy. If he's elected, he would have the third minority of the Congress. So he will have to negotiate. He will have to parlay a lot. So it's not straightforward that he will have the power to carry out all of these changes.
Jeff Deist:
Thanks for that. Everything you just said reminds me so much of Trump going into 2017 and when he was inaugurated. He's never been a politician. He's not prepared. He doesn't have the cabinet ready. It's not this and that. The markets are going to fall. And you know what? If you've got 100 % inflation, what do you get to lose? Try something different. My gosh, this is just unbelievable. It's a great story. Exactly.
Ignacio:
I totally agree. I totally agree. And that's why I'm part of Libertad de Canza, as many of these, of the people in the space here are. There are many Argentinians here listening.
Jeff Deist:
Well, I think we got to wrap it up, unfortunately. I want to thank all of our speakers. Had some great speakers today. Please follow them. Jordan Shackles has got a great substack, which I read. Peter St. Onge is doing the best short take videos on the E-Con of the day. Ej's articles at Heritage, EJ and Tony, he really gets into the nitty gritty of economic data that's happening right now and then framing it. He writes great articles. Daniel, I think, left. Daniel's over at Ron Paul Institute. Do a YouTube show every day at 11:00 Central, which is always good. David, our friend used to be at AIER, and he's now at the CoinBits app. He's really in the Bitcoin world and straddling, as I am, the Bitcoin-Austrian-gold world. Please give all these people a follow. Alejandro Schofen was with us earlier. Unfortunately, he had to go. Many of you know his name. He's been around free market policy, free market think tanks, and Latin American policy for a long time, so I'm going to try to connect with him with the recording. We always turn these into YouTube, which will go live in a few days.
Oftentimes, Zero Hedge runs with that YouTube, so you might find it there as well. Thanks to everybody, we'll be back with the space next Friday at 2:00 PM Eastern. Really appreciate everybody. Thank you so much, Ignacio, for joining. Great to talk to all of you. All of our thoughts and prayers are ready to people in Argentina. Thank you, too. Have a great weekend. Bye now.
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