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).
All people hired by the outgoing president across all divisions of the government are under review. The presidential spokesperson reiterated that “the national spending cuts have just begun”.
Subscribe to 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.
And the parasites, powers-that-be, and elite know-it-alls around the world are doing everything they can to stop him. Because he is a real reformer, not a fake. Milei is no “right-winger”, no “Trump clone”.
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.
In the meantime, Team Biden goes in the other direction and wonders why Americans don’t appreciate it. The “American Dream” costs about $3.4m to achieve over the course of a lifetime, says CBS News, from getting married to saving for retirement. Meanwhile, median lifetime earnings for the typical US worker stand at $1.7m. Another analysis, from USA Today, found that funding the American Dream costs about $130,000 a year for a family of four. Median household income stands at about $74,450, according to the Census Bureau.
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.
-
England's department stores return – but do they have a future?Opinion The great traditional retail shops of Middle England have bounced back for now. Don’t get too carried away though, says Matthew Lynn
-
Can investors stay optimistic about Russian stocks?Investors look to profit from Russia as Trump pushes for peace in Ukraine. But is it worth the risk?
-
Labour's 'Project Chainsaw' begins by abolishing NHS England – will it backfire?Keir Starmer is taking the fight to the blockers, the NIMBYs, public sector workers and the unions says Emily Hohler. What happens if Labour fails to deliver?
-
The benefits of a stock bubbleOpinion We tend to think of stock bubbles as bad things but, as the dotcom craze shows, good things can come from them, says Matthew Lynn
-
Friedrich Merz proposes 'radical' spending package for GermanyGermany's chancellor designate Friedrich Merz wants to scrap restraints on borrowing and allow for much higher defence spending
-
Walgreens Boots Alliance sold to private equity firm - will Boots get the boot?US pharmacy giant Walgreens Boots Alliance is going private. Will the new owners sell off the high-street chemist?
-
Europe prepares to stand alone as Trump turns on UkraineSupport for old military alliances is wavering in the US under Donald Trump. Europe’s leaders are rushing to fill the void. Simon Wilson reports
-
Volodymyr Zelenskyy moves to appease Donald Trump – what happens now?Ukraine’s president Volodymyr Zelenskyy is conceding ground to secure the least-worst deal possible, says Emily Hohler
