WHERE AUSTRIAN ECONOMICS MEETS REAL WORLD ACTION

For years, an Argentine shopkeeper couldn’t print a price list and trust it would still be right by the weekend. Prices doubled every year. Wages evaporated between paydays. Saving in pesos was a slow-motion robbery.

Then Javier Milei took a chainsaw to government spending — and inflation fell off a cliff, from 211% to around 31% in two years. It’s one of the most dramatic disinflations the modern world has seen.

And then, this year, it stalled. Understanding why is worth more to your business than any victory lap — because the answer is the whole lesson.

Since taking office in December 2023, Milei has run the most radical fiscal experiment in the developed-emerging world. He cut ministries, scrapped energy and transport subsidies, shrank the public payroll, and — the keystone — stopped the central bank from printing money to cover the government’s deficits. The result was Argentina’s first primary budget surplus in over a decade.

The inflation numbers that followed were extraordinary: from 211% in 2023, down to about 118% in 2024, and to roughly 31% by the end of 2025. For a country that had treated triple-digit inflation as a fact of life, that’s close to miraculous.

But here’s what a victory lap would skip. In 2026 the progress stalled and then reversed: annual inflation drifted back up toward 33%, and monthly prints have been stuck in the high-2s to mid-3s percent — around 3.4% in March, 2.6% in April — after accelerating for five straight months over the turn of the year. The floor turned out to be a lot higher and stickier than the chainsaw alone could clear.

And the foundation is thin. Argentina’s net reserves are only marginally positive, the central bank is under pressure to build them up under its IMF programme, and the peso still doesn’t float freely — it moves inside a managed band that the Peterson Institute has called an unnecessarily narrow path to stability. There’s even a measurement wrinkle worth flagging: the head of the official statistics agency resigned after a clash with the government, and the inflation basket is so dated it’s being rebuilt. The trend is real — but treat the precise figures with appropriate caution.

THE AUSTRIAN LENS

Strip away the politics and there’s a genuine principle being vindicated here — just be careful about which one. This isn’t the Chicago-school slogan that inflation is “just” too much money chasing too few goods. The deeper point is about who touches the new money first. When a central bank prints to fund the state, the fresh pesos don’t land on everyone evenly. They flow first to the government and the politically connected, who spend at yesterday’s prices — while the shopkeeper, the saver and the wage-earner get the same money later, after prices have already risen. Inflation isn’t just a rising number; it’s a quiet transfer from the people furthest from the printing press to those closest to it. Milei turned that press off, and the transfer slowed. That’s the win, and it’s a real one.

So why has inflation stalled at 30-odd percent instead of falling to single digits? The honest answer is the most important sentence in this issue: because the job is only half done. Milei stopped the money-printing, but he hasn’t yet restored genuinely sound, free money. The peso is still managed, the central bank still stands, the reserves propping up the currency are largely borrowed, and the remaining subsidies are still being unwound — which is exactly why the recent inflation has been led by regulated prices like utilities and transport as those old controls come off. The leftover inflation isn’t the theory failing. It’s the residue of the intervention that hasn’t been removed yet.

Two caveats keep this honest. First, Milei is no textbook Austrian: he’s leaned on a crawling peg, exchange-rate bands, partial capital controls and an IMF cheque, and the dollarisation he campaigned on hasn’t happened. The right claim isn’t “this proves the whole framework” it’s “sound-money discipline tamed a monetary disaster that decades of intervention created.” Second, the cure hurt: the economy contracted 1.7% in 2024 and hardship rose sharply before activity rebounded 4.4% in 2025. Austrians would call that the unavoidable correction of years of malinvestment — but a serious analyst names the cost rather than waving it away.

Even a stalled-at-30% Argentina is a transformed place to run a business compared with the 211% chaos. For the small and medium firms that do most of the country’s hiring, the shift shows up as:

None of this is financial advice — just things to weigh, whether you operate in Argentina or are watching it as a template for other high-inflation economies:

THE FREE-MARKET ALTERNATIVE

The lesson from Argentina isn’t that austerity is magic. It’s that you cannot fake your way out of a monetary disaster — and the only durable cure is to stop debasing the money and let voluntary exchange set prices honestly. Milei has proved the diagnosis. The cure only sticks if it’s finished.

Finishing it means stopping the printing for good, letting the peso float freely instead of inside a managed band, completing the removal of price controls and capital restrictions, and ideally binding future governments to sound money so the next populist can’t simply switch the press back on. Do that, and the disinflation stops being a fragile truce and becomes the foundation for the kind of lasting prosperity that only emerges when people — not central banks — are free to act, price, and trade.

Stay free,

Jean-Pierre

The Austrian Actor

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