Milei’s Moment of Truth

What will become of Milei? Argentina will hold midterm elections this Sunday, which will determine the composition of the legislature and what type of support he has for the next two years that remain of his term. If his party performs too poorly, he will no longer have the power to get much of anything through Congress. And though Milei’s successes have been numerous, he’s relied on a strong peso that has come at great cost and might not work for him much longer.

Under Milei, inflation has dropped massively. The poverty rate has gone down. Public spending has plummeted, and budget surpluses have appeared. Housing supply in Buenos Aires has totally turned around following the repeal of rent control laws. And Peronist tears taste so good.

But “the policy of managing the currency has become a trap,” adds The Economist. “Even after he partially floated the peso in April alongside an IMF [International Monetary Fund] bailout, he has sought to maintain its level artificially high. Defending the exchange rate has cost Argentina billions of dollars in scarce foreign-currency reserves and has pushed interest rates sky-high, creating a drag on growth. Jobs, rather than inflation, are what now worry voters the most.”

Milei had to get a credit swap from the U.S., to the tune of $20 billion (which he must pay back, though the terms of the deal have not been made clear to the public). He secured a similarly massive IMF bailout back in April. He keeps needing emergency credit lines to keep the peso strong, but it’s not clear that this policy is totally working. It makes sense why he would pursue it in the first place: Prices have historically spiraled out of control, and the central bank is not trusted by the people. In order for some of Milei’s less-popular social safety net cuts to be palatable, the people needed to feel like there was some legitimate stability and predictability in their monetary system, lest they revert to favoring Peronism.

Of course, it is possible that Milei’s party will perform well, that Milei will have continued legislative support to pass his agenda, and that he will choose to float the peso—the best possible set of outcomes that would allow him to stay the course and stabilize the country in a more enduring way.

“Argentina has tried something like this many times before,” notes The Economist, “but alongside Mr Milei’s revolutionary fiscal discipline it could be enough to ride out a temporary inflation spike.”

“Under the exchange rate system that Milei implemented earlier this year, the peso floats freely within a band,” writes Lorenzo Bernaldo de Quirós for the Cato Institute. “When a government tries to maintain a fixed but adjustable exchange rate, it creates perverse incentives. If markets perceive that the currency is overvalued, expectations of devaluation are created, prompting speculators and citizens themselves to take their capital out of the country to avoid losses. To defend the exchange rate, the central bank must use its international reserves, but these are finite.” Reserves are limited; speculators can easily take advantage.

The peso should be allowed to float, serving as “an automatic buffer against external shocks or changes in domestic economic conditions,” allowing corrections to easily and quickly occur and serving as a bulwark against possible speculators.

“Letting the peso float would be the clearest signal that the government is confident that its fiscal and monetary consolidation plan is sustainable in the long term,” concludes de Quirós. “It would show investors and citizens that the macroeconomic stability achieved is genuine and that the exchange rate does not need to be artificially sustained.”

Update on the possible innocents killed: The fisherman, Alejandro Carranza Medina, (whom Colombian President Gustavo Petro claims was extrajudicially killed via a U.S. strike on a boat) actually served prison time for conspiracy, theft, embezzlement, and falsifying documents in a 2015 weapons-trafficking case, according to the paper Semana. 

In Monday’s Roundup, I covered the allegations that the U.S. had been killing possibly innocent fishermen in the Caribbean as part of Trump’s strikes on narcotraffickers linked to Colombia and Venezuela, writing: “A few scenarios are possible. One is that the U.S. really is striking narcotraffickers, and that either their families don’t know their dead relatives are narcotraffickers or are obfuscating. Another possibility is that the U.S. is striking innocent fishermen and calling them narcotraffickers. There could, of course, be a mix of smugglers and fishermen.” We still don’t totally know, and the people who have already been killed will never be able to be proven guilty in a court of law (not that the U.S. tends to be especially bothered by that when conducting strikes). But the criminal record of Medina that has now emerged, that indicates likely ties to crime syndicates, should give one pause when accepting stories about “innocent” fishermen hanging out far off the coast in these waters, and the degree to which these stories are in fact used by Petro—who, like Venezuelan dictator Nicolas Maduro, profits off the continued drug trade—to try to foment opposition to the boat strikes.

It’s perfectly defensible to oppose the boat strikes on the grounds that interdiction would be more humane; that strikes like these have not been authorized by Congress; that an unchecked executive unilaterally choosing to sink boats is a geopolitically risky and imprudent and illegal thing to do. But it’s also possible that the people being targeted really are narcotraffickers, and that this is part of a grander Trump administration strategy to exert pressure on Maduro and induce the fall of his regime.

Another boat strike, on the Pacific side: On Tuesday night and early Wednesday morning, the U.S. military struck two boats on Colombia’s Pacific side—a prime cocaine trafficking route—killing five additional people, bringing the total boat strike death toll to 37.

“Every boat that we knock out we save 25,000 American lives so every time you see a boat and you feel badly you say, ‘Wow, that’s rough’…It is rough, but if you lose three people and save 25,000 people,” said President Donald Trump last week in a press conference. “Just as al Qaeda waged war on our homeland, these cartels are waging war on our border and our people,” Defense Secretary (War Secretary?) Pete Hegseth said, adding that “there will be no refuge or forgiveness—only justice.”

“The attack on another boat in the Pacific…killed people. It is murder,” responded Colombian President Gustavo Petro. “Whether in the Caribbean or Pacific, the US government strategy breaks the norms of international law.”

Trump’s creative accounting is totally unmoored from reality, and doesn’t make his strikes legal. That said, Petro is attempting to once again play the media game. He’s a major Maduro ally, and served prison time for his involvement with the guerilla group M-19. He has, for many years, remained a Hugo Chávez fanboy, and was friends with Chávez back when he was still alive. Petro is not a good dude, and yet the erosion of any sort of diplomatic ties between the U.S. and Colombia is probably not a good thing. Venezuela (along with Colombia) and the U.S. seem to be angling for some sort of confrontation. Case in point: the Night Stalkers that keep being spotted off the coast.

Scenes from New York: Delighted that Curtis Sliwa’s mayoral run is resulting in people realizing what national treasure has been hiding in plain sight all along.

these photos are insane pic.twitter.com/v1IETz4cAt

— alex lei (@alexL_E_I) October 21, 2025

QUICK HITS

• Graham Platner, a Democrat running for a U.S. Senate seat to represent Maine, says he was unaware that the skull-and-crossbones image he got tattooed on his chest while drunk in Croatia as a young Marine was a Nazi symbol. “I am not a secret Nazi,” he said on a Pod Save America appearance.
• “Can anyone stop [President Donald] Trump’s teardown of the East Wing?” asks The Washington Post. Does anyone actually care? And would anyone, in fact, care if the president were considered a normie vs. a norms-flouter? It feels like anything Trump does is met with apoplectic coverage, but this is just…an architectural decision. I care about executive power run amok in a lot of areas, but this ain’t one of them.
• Inside the Aurora, Colorado, physician-run family medicine facility that only sees Medicaid patients—serving mostly immigrants and refugees—and runs on radical simplicity.
• New York City mayoral candidate Andrew Cuomo tries a last-ditch effort to curry favor with Curtis Sliwa voters: “In recent days, Cuomo has appeared three times on Fox News in recent weeks to talk up his public safety plan. He dipped his toe into the ‘manosphere’ podcast world popular with right-leaning young men by appearing on Logan Paul’s show,” reports Politico (which doesn’t seem to know what “manosphere” means). “He said President Donald Trump slowed the flow of migrants and criticized former President Joe Biden’s handling of the crisis.” Cuomo seems to think you can run the lowest-effort campaign of all time, having left office due to scandal, and then all you need to do to curry favor with Republicans is…go on Fox and a few podcasts. Ridiculous.
• I’m somewhat torn on this, persuaded by libertarian takes of “why are agents of the state harassing unlicensed street vendors” but also…this. There’s a symbolic value that people aren’t totally grasping, that it’s crazy to let a two-tiered system operate in plain sight where some business owners are subject to the rules, and others operate in plain sight, given a free pass to evade those rules:

Migrant street vendors are the perfect synecdoche for the larger issue because the crime syndicates that run these businesses are functionally exempt from the rules that the rest of us have to live by: they have no inspections or regulations to worry about, don’t have to pay… https://t.co/0JHpKLjzWK

— Seasonal Clickfarm Worker (@ClickingSeason) October 22, 2025