‘We are not makers of history. We are made by history.’
—Martin Luther King Jr.
“This can’t go on much longer.”
This was the judgement of a local rancher. Like so many other Argentines, he was ready for a change and voted for the chainsaw wielding, genuine kook — Javier Milei.
Milei’s approach to Argentina’s addiction to deficits and inflation is to go cold turkey. Cut spending. Balance the budget. Fire government employees. Reduce giveaways and handouts. Liberate the economy.
It may be the only thing that works. John Dienner:
Milei quickly eliminated a raft of government departments, terminated tens of thousands of government workers, produced the first budget surplus in many decades and reduced the inflation rate by over 80% – all in the first year of his presidency.
Of course, the entrenched government bureaucracy and its many beneficiaries opposed his every move… Despite their resistance, he proved that reform of a deeply corrupt and inefficient government is, in fact, possible.
But it’s not easy. And it’s not over.
“Buenos Aires is as expensive as New York,” continued our informant. “But our salaries are much, much lower. I don’t know how much longer the people will put up with it.”
Prices can rise quickly to international levels. But wages take more time. Capital needs to be accumulated…then, put to work in new businesses, new ventures… people hired, etc. Sales increase. GDP goes up. Wages rise.
Eventually, Milei’s program should create a freer, richer economy. But it doesn’t happen overnight. And in the meantime, the activists and something-for-nothing politicians regain their footing. They organize. They whine. They undermine. They appeal to the masses with promises of relief.
Most likely, before long, there will be mass demonstrations in the city streets of the capitol. The widespread support, now enjoyed by the Milei government (his party won by solid margins in Monday’s midterms), could soon disappear. And the liberation of the Argentine economy may not survive infancy.
History gives people what they need. Argentina, near rock bottom and facing a Venezuela-style blow-up, needed a real reformer. America, meanwhile, still near the top and beginning a long decline, needed someone who would stay the course.
So, don’t expect marches down Pennsylvania avenue, protesting as the free stuff is taken away. Because it’s still coming.
How much has federal spending been cut since the Great Disruptor took office? Not a single penny. And now, the Big, Beautiful Bill cuts some domestic budgets…increases ‘security’ spending…and leaves the country going in the same direction — with Bigger Deficits… and a Big, Bulging, Bombola of Debt!
CBS News:
The Republican-backed tax and spending bill that’s now moving forward in the House is getting a reality check from Wall Street. That’s because the proposed tax breaks are projected to far outstrip any savings in the bill, potentially leading to mounting U.S. debt and a worsening fiscal outlook, according to economists and policy experts. Over the next decade, the GOP bill could cost the U.S. $3.8 trillion, according to a report earlier this month by the Joint Committee on Taxation that examined the impact of the tax measures versus spending cuts.
The new bill could “add $4 trillion to the federal primary deficit” said Moody’s, the last major rating agency to downgrade US debt.
But “add to the federal deficit” needs clarification. What this means is that these amounts are in addition to the $22 trillion in deficits already loaded on the train, more than $2 trillion per year scheduled to be added to federal debt over the next ten years.
We now have $37 trillion in federal debt. If this budget is passed, we will not have $3.8 trillion more…or just $40.8 trillion total. Instead, we will have a total of around $60 trillion. Or maybe $70 trillion.
Rep. Thomas Massie, one of the very few honest and intelligent members of Congress:
There’s another huge problem: it will increase the price of the $36 trillion of debt we already have, as bond buyers realize we aren’t fiscally responsible.
We’re approaching $1.5 trillion of annual interest payments…over $4,000 per US citizen per year.
Perspective: the part of the Big Beautiful Bill that renews the TCJA (Trump tax cuts) will benefit each family on average by $1600, but the policies changed or left in place by the BBB will be obligate [sic] each family of 4 to $16,000 of interest payments on behalf of the federal government.
And so, the march to bankruptcy continues. The Great Disruptor has done nothing to disrupt it…and nothing to prevent the obvious and inevitable consequences — inflation, chaos and crisis.
Historically, we believe the US is still in the early stages of a huge decline — one that began around 2000. It will take many years of misery before it hits bottom. Trump is merely helping the inevitable to happen.
And today, we pause…with a sigh…and think about how nice it would be if we had a real disruptor in the White House, someone like Javier Milei. No, he need not take up Milei’s eccentricities — tantric sex…and taking advice from dead dogs…but perhaps he could pay more attention to the basics.
“Look,” he might have said on inauguration day. “This is a beautiful country. The people are beautiful. Beautiful people. We love them. And we’re doing beautiful things for them. Wonderful things. Incredible things. Things like nobody ever did for them.
“But when you’re in the hole, the first thing you have to do is stop digging. And today, we’re taking away the shovels.
“I’ve just signed an Executive Order. I don’t know if it is legal or constitutional, but what it says is that I’m not going along with anything that involves spending more money until the budget is balanced.
“We’ll worry about deporting the rapists, murderers….really bad people, who’ve been eating our pets…later.”
If only.
Regards,
 |
Bill Bonner,
For The Daily Reckoning Australia
