The Economist Bitcoin Standard Saifedean AMmous, an author and economist from Argentina has said that the country’s financial system was on the verge of collapse. He called President Javier Milei’s economic plan a “debt and inflation Ponzi” The economy is being propped up with unsustainable bond rates and printing of money.
The u. post Ammous argued on X that Argentina has created a system of finance where the only way to achieve financial stability is through bond speculation. “The only concrete achievement of his administration so far is that it destroyed the currency and created a shitcoin casino,” “He said”
The locals’ term for the core of the crisis “la bicicleta financiera,” A high-yielding carry trade is where investors purchase short-term bonds from the government that have interest rates higher than peso’s devaluation. Ammous says that this industry has grown to be the most profitable in the country. It is also a classic Ponzi scheme.
“The bicicleta is obviously unsustainable, because as the government offers high yields on its bonds, it needs to create more pesos, which devalues the peso,” He wrote. “It is impossible for this bicicleta to run forever,” He also added.
Related: Argentina’s Milei shuts down task force investigating LIBRA scandal
Ammous warns of imminent collapse in the peso
Ammous stated that the peso had already surpassed its target range despite 540 million dollars in forex intervention. Bond rates in Argentina have reached 88%. Stocks and bonds are also down. Milei’s administration is facing corruption accusations. recent election losses.
Investors will sell both pesos and bonds once bond returns are overtaken by the devaluation of the peso. This could lead to a move towards safer assets such as the US dollar (or Bitcoin).BTC).
“The peso collapses, the bonds collapse, and the government is left having to beg the IMF for a bailout,” Ammous wrote.
Ammous claims that the amount of short-term debt in the carry trade ranges from $40 to $80 billion, causing capital to be diverted away from its productive uses. Ammous also pointed out that foreign institutions and insiders like JPMorgan profited by time-tabling their entries and exits.
“Random bankers from all over the world managed to outperform the vast majority of stocks and traders worldwide by simply playing this rigged game of Russian roulette.”
Ammous concluded Milei’s unwillingness to close the central bank exposed the libertarian rhetoric. “The longer it goes on, the more harmful it will be. It isn’t idealism to want the Ponzi stopped; it is practical material necessity.”
Related: Argentine lawmakers back Milei probe in Libra crypto scandal
Milei’s Libra Scam
Milei, a user on X, shared a tweet in February promoting the Libra memecoin (LIBRA), which quickly grew to a valuation of $4 billion. crashing by 94% hours later.
Milei faced calls for his impeachment from the opposition after this move resulted in investor losses amounting to hundreds of million dollars. Milei, however, claimed that he only had a small amount of money. “spread the word” About the Token not promoted it.
The Anti-Corruption Office of Argentina issued a statement in June stating that Milei did not violate any ethics laws. Milei, according to the office, acted on a personal level and expressed his political opinions through his private account that he had maintained since 2015.
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Source: cointelegraph.com
