Argentina’s libertarian president, Javier Milei, is the lucky winner of $40 billion that Donald Trump managed to conjure from thin air. Less lucky are the Americans who rely on the government programs Trump has gutted to be able to “save” that sum.
Argentina’s libertarian president, Javier Milei, is the lucky winner of $40 billion that Donald Trump managed to conjure from thin air. Less lucky are the Americans who rely on the government programs Trump has gutted to be able to “save” that sum.
Can somebody please clarify the actual transaction here? We’re not simply giving Argentina this money. It’s a swap or a loan, right? Who know if/when they’ll pay it back, but I think it should be clarified.
Hell we don’t even know where the money is coming from (our Government is shut down right now, remember?) let alone what form the transfer will take.
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Thanks for the details but as I understand it it’s swapping US for Argentinian currency that then needs to be paid back? So I guess it’s technically giving money in the sense that Argentinian currency is trash?
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It’s a currency swap. Basically, we give them dollars and they give us pesos. Eventually, they could theoretically be swapped back.
Holding dollars is good for them because it shows foreign investors’ confidence in their economy, and allows them to shore up the peso if necessary by using dollars to prop it up through central bank buybacks.
Holding pesos is a high risk for us because the inflation rate has historically been extremely high. $1 US was like 300 pesos five years ago, and it’s more like 1500 today. So if we swap them back down the road, we will probably lose money, since we swapped dollars at $1 = 1500 pesos, but may swap back later at $1 = 2000+ pesos.
In a way it’s like we gave them an interest free loan. Or actually: more like we gave them a loan with a negative interest rate. Because we likely lose money the longer they hold it.
Why would we do this? Because Milei says lots of nice things about the orange man on TV.
No interest paid to US when swapping back?
People are saying there’s some billionaire that Trump is bailing out.
Since it’s Trump, I’m guessing it’s buying support. Or Argentina got a copy of that Russian video where Trump is urinating on a child in a hotel room and they decided to blackmail him.