@south_korea_ln asked me about my opinion on the Saifedean Ammous recent slander on Milei, featured on this post. So, here we go!
Context: this type of articles are very well known strategies of slander, in which a barrage of misinformation and fabrications are delivered in an attempt to overload the unsuspecting, ill informed average public, who (they know) is unable to defend against, for they lack the information, even the understanding in front of the information, and even more the time to overcome both, so the average public will just receive the hit, see stuff that "looks like something", and be left with a bad impression on whatever as been attacked. The strategy is even more robust since fabrications can be delivered fast, thus can always hit first and leave a first impression, to which explanations will always arrive late, if they are even effective.
Advice: in political matters, distrust everything you can not check by yourself, or at least have someone you trust to fact-check. At the very least, try to learn to recognize the slander patterns: lack of sources on key details, sources that don't have a source, sources that are known to be paid pasquinades, mere opinion, old sources for facts cited as current, etc etc etc...
1st Paragraph:
Last week Argentina’s Javier Milei regime tried to roll over bonds by offering investors an insane 69% interest rate, and only succeeded in rolling over 61% of them. [rest is pure slur]
- The "insane interest rate" is inherited from the previous regime obscene emission that has left a monetary base so large that it still can't be absorbed, and we have had insane rates continuously for 8 years, although now ever decreasing for the first time, since Milei got into office (They were of more than 133% when he took office in 2023, down to 50% today). Today fixed-term interest rates for a normal bank account go up to 50%, even with a monthly inflation of less than 2%. It's simple: there are still so many more pesos, which allows for said rates to be paid. All the government can do is to try to lesser their impact, that's why it tries to derive them into bonds. The insane 69% is 19 points above the 50% assured return, so those 19 points account for the risk. It's still big, and justifiably so, but it's not like the 69% rate is "risk" in it's entirety. This is debunked easily, just look to what banks pay as fixed-term rates to normal clients today.
- The recent rise in rates and the low rollover are related. The recent regulation that obliges banks to comply with their minimum reserve caused illiquidity, so the low rollover was expected, together with the rise in interest rates to try to get the necessary liquidity to operate, the reason a full rollover is expected next as noted in the previous link.
- The risk is justified but not caused by a distrust in Milei's government. It's caused (over and over) by a fear on the damage the socialists are causing and may keep causing. They still hold the majority of congress, and have been using that weight to cause as much economical damage as the can by forcing deficit-inducing measures. You can verify that by noting that the Argentinian market goes green when Milei succeeds, and goes red when the opposition succeeds. That's a risk that adds to the fact the opposition holds absolute power on all the provinces, still imposing orthodox socialism, which still hinders investment. That's why the government focuses on large investments only, which are the only ones it can protect.
- Finally you may ask: how can you pay to people an interest rate above inflation without emission? Simple: people already paid for that money in the shape of inflation. They aren't getting any "new" money, but by having interest rates above inflation (and decreasing inflation), you're simply and effectively giving people their money back, the same money the previous regime took from them in the shape of inflation (plus the money people would otherwise lose today with the remaining fading inflation). As the devolution progresses, the rates keep dropping steadily, as shown in another link above.
(Look at how long it took to dismember just two lines of slander. That's why slander strategies are so effective.)
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2nd Paragraph:
it is difficult to see how Argentina could possibly avoid default and/or very high inflation in the rest of Milei’s term
By keeping the deficit to zero. And it's already working, which is the reason the debt has been renegotiated to lower interest rates.
According to Grok, Claude, ChatGPT
I can not even...
no country has ever offered a yield higher than 30% on its bonds and avoided default, hyperinflation, or an IMF bail-out within the next three years
No country ever even reached that situation, which is the reason that to try to conform an argument with that phrase he has to cite "According to Grok, Claude, ChatGPT..." prior, to try to make it look as an argument.
Failing to sell a bond at more than double that yield means the writing is on the wall
A 60% rollout isn't 0%. And the reasons for the 60% have been explained above.
As I discussed last year,[1] Milei is just another inflationist president, and the inevitable consequences are rearing their ugly head
The reference is a twit of himself pointing out the monetary expansion. The question should be, how's that possible, if no more money is being emitted, and inflation is currently below 2% and decreasing? how such a brutal increment didn't cause an instant increment in inflation?... oh yes! Debt payoffs! There's indeed no new money nor new debt, the "monetary expansion" simply being the result of operations that cause existing money to be accounted for, as in this case, existing debt monetization. In order to ensure the reintegration of the country into the international credit system (and the finance ecosystem overall), Milei has stated it's paramount to honor the debts and not to incur in new ones, and so far this has been respected strictly.
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3rd Paragraph:
reneged on his campaign promise to shut down the central bank, and instead went about attempting to save it by adding its debt to the government’s debt
I can't believe I have to explain this but... in Argentina, the central bank debt IS government debt, by definition. No debt the central bank took that wasn't aimed at government spending. As such, Milei never said he would end the central bank on day one because it obviously has legal contracts (debts) that it must honor. Had Milei ignored this, the country would have defaulted instantly by definition, and people's money would have evaporated by deleting the peso support system: the central bank dollar reserves. I don't think I have to explain what would have happened next.
reneged on his promise to fight inflation by doubling or tripling money supply measures
Inflation has been consistently going down since Javier took office and it's expected to be zero by next year.
reneged on his promise to not raise taxes
National taxes, the only one's under MIlei's control, have been decreasing. What have been rising brutally are the provincial taxes, imposed by the socialists governors, all of whom oppose Milei. To revert that will imply to win governmental positions in the provinces, something that will take a lot of time.
sought an IMF bail-out
We already had a debt with the IMF, and the renegotiated debt was made at a lower rate than the one given to the previous regime, precisely because they trust Milei more. What did Saifedean would have done? Just ignore the debt? We would have defaulted, again, and become isolated from the international financial system, again.
and hired the same J.P. Morgan bankers, who had entrapped Argentina into tens of billions of dollars of debt
I'm unsure how Saifedean thinks this works but no banker, ever, could nor can take national debt. It's strictly commanded by the government. And no government that took any debt to keep the deficit party was an innocent victim.
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4th Paragraph:
In his second year, as the peso continued to decline and his international reserves refused to recover
- The peso was the currency that experienced the strongest recovery on the planet during the last year. And still stands so strong that people is saving in pesos back again instead of dollars, one of the reasons the dollar price stabilized.
- Reserves did recover, they just fall back each time because of debt obligations (I'm sensing Saifedean is simply blind to anything related to debt).
Milei cried and begged and brown-nosed his way to getting an IMF bail-out, as his talk of pivoting away from China and hysterically crying in Netanyahu’s arms seem to have succeeded in getting the IMF to unreasonably accommodate him
- I already explained the "IMF bailout" above.
- Milei isn't "pivoting away from China". In fact relationships have kept improving.
In all the history of the IMF, its loans have always been the last resort of failed governments, an admission of economic failure, and a pawning of national sovereignty and future generations’ wealth in search of a few quick bucks to help failed leaders stay in power.
- Agree, that's why previous regimes took that debt.
But Milei and his bankster buddies have hilariously and shamelessly treated the new IMF loan like a triumph
- As it was, for the debt taken by the previous regimes was renegotiated at a lower rate, as explained above, saving us thousands of millions.
So this is not even 1/5 of the article and it has already taken this long to properly debunk each line as the absolute bs they are. I don't have the time to go through everything, but that's their strategy. This people is paid to produce this overloads of lies and misinformation in order to cause an impact way before a proper response can be given, and they know any proper response will be too extensive and time consuming. The lie is much faster and short, so it will always win the energy balance battle. The only way to counter that is for people to form a criteria and to learn to distrust this kind of publications. Once you detect a liar, just ignore him, don't fall over and over for the same trickster.
Kindly, a Knight of Liberty at your service.