Milei pounds fists against monetary populism as Argentina holds its breath

It had been a little over a year since this journalist was last in Argentina, when I stepped into a country on the brink of hyperinflation and rife with political uncertainty as a highly-watched presidential election approached. That’s why I jumped at the chance to return this month and cover a conference hosted by the Americas Society/Council of the Americas in Buenos Aires. A lot had changed, and I wanted to see the new president, Javier Milei, in person.

Speaking before a packed ballroom, the self-described “anarcho-capitalist” embodied the sweeping feeling of change that’s engulfed the country since his term began eight months ago. In what Milei acknowledged was a dense, hour-long speech in which he referenced the influential American economist Milton Friedman multiple times, he urged patience as he works to unwind capital controls and cautioned the rest of the world about the dangers of money printing to fund ever-expanding public spending.

“We’re purging the Argentine economic system of the cancer of monetary populism that has been around for decades,” he proclaimed from a stage at the opulent Alvear Palace Hotel in the city’s picturesque Recoleta district, warning other countries he said were being tempted to take on debt and devalue their currencies. “They are playing with fire, taking medicine that over the long-term is nothing more than venom.” Milei should know, with the country only narrowly avoiding a plunge into Venezuela-style hyperinflation after voters embraced his flamboyant campaign last year and sent him straight to the Casa Rosada with a mandate for iron fist reforms. 

In describing what he said were pillars of his administration’s economic agenda that include an ordered macroeconomy, cuts to public spending and an “obsessive attention” to deregulation, Milei was largely preaching to the business community choir. What was notable about the speech was not so much the content—which was largely a rehashing of his greatest hits—but the command he held over the audience. He’d appeared on stage like a rock star, dressed all in black as he took the podium before an eagerly awaiting crowd that quickly rose to its feet, jostling for a view to snap photos with phones. As he began what turned out to be a rather wonky address that felt like the first overview seminar of an advanced economics course taught by a beloved but eccentric professor, the attendees quickly quieted themselves to hang off every word. You could have heard a pin drop with a silence that’s typically reserved for a religious leader of the highest order. Just days after he’d been a topic of discussion in Elon Musk’s lengthy interview with former US president and current Republican nominee Donald Trump, Milei knows the world is attentively listening, and he gave it another earful. 

It’s the Argentines, however, who are living through what Milei himself said has been the biggest austerity package “in the history of humanity.” Since beginning his term in December, he’s taken a chainsaw to public spending and eliminated a fiscal deficit that reached 15% of gross domestic product in a matter of months. While inflation has indeed slowed to a monthly 4% from a recent high of 25%, the hunger games have been real for many people in the country. In what’s maybe been an unexpected twist, his popularity has remained intact with a recent approval rating of over 50%. The country has had to swallow a very bitter pill, and Milei is pleading with his fellow citizens to suffer through the pain for just a bit longer.

“You have to order the macro,” he said, noting that a shift to focus on growth and productivity would follow. “You have to exterminate inflation so that the pricing system can start to transmit information correctly and resources can be allocated efficiently…without a sustainable macro, everything else is ephemeral.” He acknowledged that some of the economic problems that had dogged the country, particularly related to the so-called “quasi-fiscal deficit,” were “too complicated” for the general public to even understand. Milei highlighted careful efforts to manage the foreign exchange market so that official and non-official rates would start to converge without another abrupt shock. “We’re not willing to devalue to ruin the Argentines. We’re going to work on productivity levels so that we don’t have to impoverish the Argentines.”

“Our working hypothesis is that inflation is always a monetary phenomenon, and to end the scourge you have to end money printing,” Milei continued, echoing Friedman to characterize Argentina as still being in the worst, initial phase of any recovery. “When alcoholics start to drink or when countries start to print money, the good effects come first and the bad effects arrive later. With the cure, the bad effects come first, and the good effects come later…The more you drink, the worse the hangover.” He encouraged the audience to keep their eyes on the long-term vision, and to not get caught up in the short-term. 

Milei was deliberate to characterize his reform program not just as an economic paradigm shift, but a transformation that would take on cultural, political and social aspects, too. It’s already evident on the streets of Buenos Aires, where the city now exudes a new sense of ordered calm. Gone are the days of economic chaos, full of multiple exchange rates and shady money dealers. While any such massive adjustment could have sparked disruptive unrest, the people seem to have embraced their new reality with a suspicious, yet hopeful patience. Shoppers are out and about on the city’s countless boulevards, and the restaurants are full, even if portions can seem a bit smaller. The steak is plentiful, and the Malbec still flows. If there’s any place that should be able to jump at the chance at recovery, it’s this new Argentina. Sitting in a restaurant in the city’s chic Puerto Madero district, a new mother soothes a crying baby with a cooing “Milei, Milei…” It quiets down, staring up in contemplation. 

In a stroke of political luck, the messy-haired new president has also been blessed with scandal on the other side, with former President Alberto Fernández accused of domestic violence in a social media storm that’s rocketing around the country. It’s left a bad taste in the mouths of many former supporters of the left-leaning Peronistas and Kirchneristas, and the ordeal could ultimately end up giving Milei just a little more time to continue plugging away with his program.

At the classic Zum Edelweiss hotspot in the city’s theater district that’s popular with the creative class, a group of artists waltzed in after a nearby gallery opening. Patricia, an art curator and editor, picked an omelet over a 22,000-peso (US$17) steak she said seemed “very expensive.” She had a Coca-Cola Zero instead of a glass of wine. Checking the latest update to the Fernandez scandal on Instagram, she ordered an apple pancake for dessert. 

“Here,” she said, “you have to try. Just a bite.” Her restrained, yet vibrant attitude embodied the new landscape. Argentina has swallowed its pride, and the entire country is holding its breath, eagerly waiting to see if Milei can pull off the impossible before the pain becomes too much to bear.