"Where will that kind of money come from? Secretary Bessent will dip into the seldom-used Exchange Stabilization Fund at the U.S. Treasury. He will do so without Congressional approval. Why? Because President Trump has bet on President Milei. Trump sees Milei as Uncle Sam's man in Latin America-the man who will lead the charge against the " pink tide " of leftist Latin American governments and counter the commercial and geopolitical inroads made by China in the region."
"Indeed, inflation remains a noose around Milei's neck. When President Milei took office in December 2023, the money supply (M3) was growing at 130% per year and inflation stood at 211% per year. Now, the money supply is still growing at 67% a year. That's far above what I dub as "Hanke's Golden Growth Rate" of 9.8% a year, a rate consistent with Argentina hitting its inflation target of 5%. As a result, it's no surprise that inflation remains out of control at 33.6% a year."
The U.S. Treasury plans to provide a $20 billion swap line to Argentina using the Exchange Stabilization Fund without Congressional approval. The intervention aligns with a U.S. political bet on President Javier Milei as a regional counterweight to leftist governments and Chinese influence. Argentina has experienced repeated economic crises, including hyperinflation, multiple banking crises, balance-of-payments crises, external and local debt defaults, currency devaluations, and persistent inflation. Money supply growth remains far above the 9.8% M3 rate described as consistent with a 5% inflation target, and current inflation is reported at 33.6% per year. Argentina is operating under its 23rd IMF program.
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