Filenews 31 October 2025 - by Steve Forbes
President Javier Millei's stunning and unexpected victory in Argentina's parliamentary elections will be a crucial test: Can policymakers in the US, Japan and Europe finally understand inflation before disaster strikes?
Inflation has existed for thousands of years and, nevertheless, remains extremely resilient, despite its devastating effects on the economy and social fabric of a country. Even governments, such as that of the USA, which declare themselves opponents of it, allow it to exist.
The catastrophic phenomenon certainly has a historical background. It took thousands of years to make the connection between mosquitoes and malaria, one of the deadliest diseases in human history.
Today, I think there is no other country that destroys its currency through inflation more systematically than Argentina. Until World War II, Argentina was one of the richest countries in the world. Then, the political personnel succumbed to excessive spending on vote-buying and inflation, which turned Argentina into a corrupt state with its economy heading from bad to worse and its citizens facing living problems.
Javier Milei was the underdog who won Argentina's presidency in November 2023, promising to significantly reduce government spending, shrink the size of the government, and replace the peso with the dollar. Within a few months, he shrunk the government and balanced the budget that had previously been hopelessly in deficit. Inflation fell significantly.
However, Milei did not keep his promise to abolish the peso and replace it with the dollar. It fell into the hands of the IMF, which systematically commits financial misdeeds. A particularly serious offense is the IMF's addiction to currency devaluations. The decrease in the value of a currency is the definition of inflation.
The non-abolition of the peso put Milei in trouble. In August, it recorded a major defeat in the country's largest province.
Inflation has fallen from the dizzying levels it hovered at when Milei took office, but remains high. The value of the peso has fallen in the foreign exchange markets: a sign that the problems are still ahead. Fortunately for Milei, voters in the parliamentary elections decided that, despite all their doubts, they would support their president.
For its part, the Trump administration, in order to support the peso and, by extension, the advocate of the free market and the US, Javier Milei, is preparing an aid package of $20 billion for Buenos Aires, while pressuring private lenders to contribute an additional $20 billion dollars.
Rescuing the peso is a desperate move. It may stabilize for a while, but no one thinks it will last. Stability never lasts in Argentina.
The crazy thing is that these 40 billion dollars are enough to buy the entire monetary base of the peso in Argentina. Therefore, there is no excuse for not doing what Miley promised: to put the peso in the dustbin of history and to dollarize the Argentine economy.
By the way, Ecuador and El Salvador adopted the dollar as their currency years ago, a project that was also viewed positively by the peoples of the two countries. Even the left-wing governments that were elected did not try to restore domestic currencies.
By dollarizing his economy, Milei can get rid of destructive capital controls and counterproductive taxes on exports. At the same time, he should politely tell the IMF to leave his country and reduce tax rates for individuals and businesses à la Switzerland, in order to make Argentina what it has not been for a century: a dynamic, regionally and globally leading economy.
Unfortunately, the U.S. proposal for Argentina reflects the bad monetary thinking that prevails in much of the world, which emphasizes strong and stable currencies.
Currently, the value of currencies in the US, Japan and Europe is falling. If this trend is not stopped, we will be faced with another cycle of inflation and all the catastrophic economic and geopolitical consequences that will follow.
