The most exciting thing in the world of money and politics, right now, is the remarkable story of Javier Milei in Argentina. He brandished a chainsaw at campaign events, pledging to use it on the government. Now, against all odds, he is El Presidente…and he’s cutting the deadwood.
As my colleague Joel Bowman points out, within the first 48 hours in office, Milei has cut the number of “undersecretaries” from 182 to 140; cut the number of department chiefs from 106 to 54; cut the number of ministries from 18 to 9; and cut all superfluous ministerial expenses (staff cell phones, drivers, travel accounts, etc).
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Yet more wood chips are flying, according to Bloomberg. He has devalued the peso by 54% and introduced a “crawling peg” that weakens by 2% per month, and slashed subsidies and welfare payments. Milei needs to move fast. Argentina has run out of money.
He’s something else altogether. He’s actually trying to reduce the power of a bankrupt government. Is it possible? With so many powerful special interests against him? We will see.
What went wrong? How come the richest people in the world, in what should have been the richest period in their history – 1980-2020 – made so little progress, and actually slipped backwards by most measures?
The US is $34trn in debt, each dollar a mark of shame.
In our businesses and our private lives, pruning goes on all the time. Businesses go belly up. Investments fail. People are fired. Wives file for divorce. Customers go over to the competitor. People die. The sound of chainsaws is never far away.
In a sense, the whole idea behind Fed policies of the last 20+ years was to keep the chainsaws off the job. The dead wood was propped up by ultra-low interest rates; bad ideas were financed with below-inflation loans; no-hope “investments” drew in billions in EZ money. There was no discipline, no corrections. With phoney prices, often there was no way to tell what was a good use of money and what wasn’t.
The most telling artefact of the period 1980-2020 is the nation’s $34trn in debt. Each dollar is a mark of shame.
Baby boomers wanted “something for nothing”. They got it by leaving their sons and daughters the bill – giving them nothing for something. Younger generations will pay, probably for their entire lives, and probably in the form of financial chaos and higher prices, for goods and services delivered to their elders. Could not the richest people ever in the history of the world pay their own way? Did they think their own plans, goals and Christmas lists were so important that other people and their own children should pay for them?
The US needs a good chainsaw too.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
-
Redundancy on the rise – how to manage a sudden drop in incomeUnemployment and redundancies are higher than a year ago, new figures show. We look at how to protect your finances if you face a sudden loss of income.
-
What is the ideal time to spend on the property market? How you could risk losing thousandsTime on the housing market matters – get an offer too quickly or too slowly and you’ll often find you have to settle for less than the asking price. What is the ideal time for a property to spend on the market?
-
Nobel laureate Philippe Aghion reveals the key to GDP growthInterview According to Nobel laureate Philippe Aghion, competition is the key to innovation, productivity and growth – here's what this implies for Europe and Britain
-
'Investors should brace for Trump’s great inflation'Opinion Donald Trump's actions against Federal Reserve chair Jerome Powell will likely stoke rising prices. Investors should prepare for the worst, says Matthew Lynn
-
The state of Iran’s collapsing economy – and why people are protestingIran has long been mired in an economic crisis that is part of a wider systemic failure. Do the protests show a way out?
-
Hiring new staff for your business? Help is availableHiring more employees is a costly business, but help is available from the government, says David Prosser
-
'Expect more policy U-turns from Keir Starmer'Opinion Keir Starmer’s government quickly changes its mind as soon as it runs into any opposition. It isn't hard to work out where the next U-turns will come from
-
Why does Donald Trump want Venezuela's oil?The US has seized control of Venezuelan oil. Why and to what end?
-
Britain heads for disaster – what can be done to fix our economy?Opinion The answers to Britain's woes are simple, but no one’s listening, says Max King
-
Vietnamese stocks are charging ahead – what to buyVietnam has been upgraded from a frontier to an emerging market. It remains a promising pick, says David Prosser
