Argentina's President Slashed The Government & Now Is Reaping The Benefits
To investors, The President of Argentina, Javier Milei, is running one of the largest economic experiments in history. He assumed power with the country experiencing 300%+ inflation and a population that was quickly losing hope that the future could see improvement. Milei won the Presidency by promising radical reform that would unleash free market capitalism and bring economic prosperity back to the country. While many people liked his ideas (enough to elect him!), very few thought he could have such a large impact in a short-period of time. Argentina has seen inflation fall to 11% monthly, the Argentinian peso was the best performing currency in Q1, and the country ran a budget surplus in the first 90 days of the year for the first time since 2008. These are major milestones for a country and economy that was previously run by top-down bureaucrats who wanted to paternalistically oversee every aspect of the economy. Matthew Lynn has a great piece in The Telegraph titled “Milei is already proving the Left-wing economic establishment wrong.” In the article, Lynn explains why Milei is having so much success already:
This type of bold, ruthless approach to changing the economic situation in a country is commendable. It is not only difficult to implement, but it guarantees you won’t make many friends. Americans have historically viewed Argentina as a country that lost control of their economy. We couldn’t imagine a scenario where the leader of the West followed in Argentina’s footsteps. That may be true today, but we are cooking with a number of the same ingredients that our South American counterpart was previously. America has out of control spending. The national debt is ballooning. Our government has become a bloated bureaucratic machine that continues to hire needlessly. The central bank has created an inflation fire and is now struggling to put it back out. The average family is losing hope that they can ever achieve financial security. And the American Dream is at risk as we watch the middle class disappear. We need bold leadership to get us back on track. We need to significantly cut spending. The entitlement programs will need to be changed. We’ll have to reduce the number of employees employed by the government. Free markets will have to reign. Politicians and regulators will need to understand their important role in encouraging innovation. And GDP will have to accelerate. None of this is easy. The odds are stacked against us. But we are facing a fork-in-the-road. Continue on our path and risk becoming the Argentina from the last decade. Or return to our roots of capitalism and free markets so we can beat Argentina to the punch and continue to be the greatest economic machine ever created. Hope you all have a great day. I’ll talk to everyone tomorrow. -Anthony Pompliano Jihan Bowes-Little is the Co-Founder & Managing Partner at Bracket Capital, an investment firm focused on special situation opportunities in growth / late-stage private companies. In this conversation, we talk about the similarities and differences investing in Coinbase, SpaceX, Stripe, landscape of private markets, financialization of venture capital, investing trends & sectors, cross-over investment example, market liquidity, bitcoin, and more. Listen on iTunes: Click here Listen on Spotify: Click here Bracket Capital’s Jihan Bowes-Little on Coinbase, SpaceX, Stripe, Bitcoin, and morePodcast Sponsors
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