Economist and author of "The Bitcoin Standard," Saifedean Ammous, warns that Argentina's financial system is on the brink of collapse, describing President Javier Milei's economic plan as a "debt and inflation Ponzi scheme" supported by unsustainable bond yields and money printing.
Ammous posted on the X platform that the Argentine government has created a financial system where bond speculation is the only way to achieve financial security. "So far, the only concrete achievement of his government has been to destroy the currency and create a junk coin casino," he said.
At the core of the crisis is a high-yield arbitrage trade known locally as "la bicicleta financiera," where investors buy short-term government bonds that offer interest rates exceeding the rate of peso depreciation. Ammous stated that this setup, which has become the most profitable industry in the country, is a typical Ponzi scheme.
"This arbitrage is clearly unsustainable because when the government offers high yields on its bonds, it needs to create more pesos, which will devalue the peso," he wrote. "This arbitrage cannot last forever," he added.
Ammous pointed out that despite a $540 million foreign exchange intervention, the peso has already broken through the target exchange rate range. Bond yields have reached 88%, and Argentine stocks and bonds have plummeted. Meanwhile, the Milei government faces corruption allegations and recent electoral defeats.
He warned that once the peso depreciates beyond bond returns, investors will sell off bonds and pesos, triggering a rush for safer assets like the dollar or Bitcoin (BTC).
"The peso collapses, bonds collapse, and the government can only beg the International Monetary Fund (IMF) for help," Ammous wrote.
According to Ammous, the scale of the arbitrage trade is now between $40 billion and $80 billion in short-term debt, siphoning capital away from productive uses. He also noted that insiders and foreign institutions like JPMorgan profit from this scheme by timing their entry and exit.
"Random bankers from around the world have successfully outperformed the vast majority of stocks and traders globally by simply playing this manipulated Russian roulette game."
Ammous concluded that Milei's refusal to close the central bank exposes the liberal rhetoric as merely a facade. "The longer it lasts, the greater the harm. Hoping to stop the Ponzi scheme is not idealism; it is a practical material need."
In February, Milei shared a post on the X platform supporting the Libra (LIBRA) meme coin, which quickly soared to a $4 billion market cap before plummeting 94% within hours.
This move resulted in investors losing hundreds of millions of dollars and sparked calls from opposition members to impeach Milei. However, Milei claimed he was merely "spreading" information about the token, not promoting it.
In June, Argentina's anti-corruption office issued a resolution stating that Milei did not violate any ethical laws. The office indicated that Milei acted in a personal capacity, using a private account he has maintained since 2015 to express his political views.
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Original: “Author of The Bitcoin Standard: Argentina's Bond 'Ponzi Scheme' Near Collapse, BTC is the Way Out”
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