Big news last week was the Presidential Election in Argentina which was won by self-proclaimed Anarcho-Capitalist Javier Milei. It’s the sort of election result that sends shockwaves around the world because his policy platform is extremely anti-establishment and his rise could easily be a precursor to similar political earthquakes elsewhere around the world.
A few months ago I asked the question Could Argentina Abolish its Central Bank? because the Argentine Peso has been in a state of Hyperinflation and the incoming President was campaigning on a promise of abolishing the Central Bank of Argentina. So the first question I have is whether he can actually DO this, and it is yet to be seen if he can. However, the next question that I would ask is WHY?
That might seem like a simpletons question, but if we delve into the new Presidents campaign he was wanting to abolish the Central Bank and the Argentine Peso….to replace it with the US Dollar. Wait, WHAT? When you think about it, that’s really just swapping one Central Bank with a Fiat Currency….for another one. This is at a point in history where the US itself has fiscally irresponsible Leftists in power and has been playing shenanigans with printing it’s OWN currency. I know that the US Dollar is supposed to be the Worlds Reserve Currency, but why would the new Argentine President do this when there might be a better option?
Why not KEEP the Central Bank and back the local currency (or a new one) with Gold in a true return to Sound Money? Yes, that sounds pretty difficult and if the Central Bank is currently insolvent – with no Gold in the vaults – then how does one go about introducing a Gold Standard? Is it really that different though to adopting a foreign countries currency where undoubtedly there isn’t much in the way of reserves of US Dollars in the vault either?
Seems to me that the election of Javier Milei is an interesting, disruptive and potentially positive development globally. He has the capacity to really shake up the Failed Financial System to force some much needed reform and a lot of people around the world are taking notice. We will have to see how it plays out, but I can’t help but wonder that by adopting the US Dollar instead of a New Gold Standard that Argentina might be just jumping from the frying pan into the fire….
