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James Hickman
James Hickman (aka Simon Black) is an international investor, entrepreneur, and founder of Sovereign Man.
In 1913, Argentina was one of the wealthiest countries on Earth. Its GDP per capita rivaled that of Western Europe. The port of Buenos Aires bustled with international commerce. Immigrants flooded in from Italy and Spain, chasing the same promise that drew millions to US shores.
Then came the Peronists.
Juan Perón rose to power in the 1940s and built a political machine fueled by populist spending, nationalization, and currency manipulation. The country rotted – yet somehow the Peronists stayed in power for decades.
By the 2000s, Argentina had become a cautionary tale. The peso collapsed in 2001. The country defaulted on over $100 billion in sovereign debt. Unemployment soared past 20 per cent. Banks froze accounts. Savings evaporated overnight.
Yet, bizarrely, Argentines continued electing the same corrupt Peronists that had created the mess.
For nearly two more decades, they suffered through chronic inflation and social decline. By late 2023, annual inflation had hit 211 per cent. Monthly inflation was running at double digits.
Only then did Argentines finally decide to go in a different direction.
They elected Javier Milei, the chainsaw-wielding libertarian economist who promised to abolish the central bank and slash government spending. Voters were desperate enough to try something totally new after over two decades at rock bottom.
And it took being at rock bottom for voters in Argentina to finally wake up and prioritize their own prosperity.
The US is not in such a dire situation. Not yet. But it’s clear that America’s fiscal trajectory is really bad. The national debt is $38.4 trillion as of this morning – an increase of $2.3 trillion in the last 12 months.
Remaining on this path will almost certainly result in higher long-term inflation and reduced prosperity across the board. So you’d think that improving this imbalance would be a top priority in Congress.
It’s also, conceptually, quite easy. Fraud, waste, and legal graft are blatant. According to the Treasury Secretary, just eliminating criminal fraud would cut 10 per cent of the budget, or around $600 billion per year.
But there’s just almost no political will in Congress to do this – to even reduce criminal fraud.
Furthermore, politicians and economists believe that just two per cent economic growth in the US is good enough.
This is absurd. The US economy should be growing at four per cent or more with everything going for it – the world’s reserve currency, abundant natural resources, and the most innovative companies on Earth.
Tackling bureaucratic bloat would also fix a lot of problems. There are simply WAY too many laws and regulations on the books that make it more difficult to produce.
And that’s the key: more prosperity requires higher productivity, especially given the massive federal debt. It’s not rocket science.
Together, modest budget cuts and regulatory reform would power enough productivity growth to bring the debt into line, reduce inflation, and protect the dollar’s reserve status.
The solution is so obvious… so why aren’t they doing it?
Well, for starters, anytime the executive branch tries to do anything – unwind regulations, eliminate fraud, etc – they get sued in federal court.
Then some activist masquerading as a judge issues an injunction or overturns the executive order.
Just days ago, for example, a federal judge blocked the administration’s attempts to cut $10 billion in government funds to fraudulent daycare and healthcare facilities.
Ultimately if spending and regulatory cuts are going to be able to survive activist judges, then Congress will need to make the changes legislatively. That’s what the Constitution requires.
Yet there’s hardly anyone in Congress who takes these problems seriously… and at the moment, voters don’t seem to care enough to vote for candidates who will tackle these challenges in good faith.
Not to mention, huge blocs of American voters have proven themselves to be masochists.
Look at cities like Chicago and New York City or states like California: these places have been making residents’ lives worse for decades. Yet voters keep electing the same people who created the problems. Either the elections are rigged, or the voters are braindead – or some combination of both.
This would suggest that the US, at least for the time being, will remain on its unsustainable path.
Argentina suffered under the same failed party, year after year, watching things get worse until they finally said ‘enough.’ But the US has something Argentina didn’t: the ability to blame the other side.
When you flip-flop between two parties every four to eight years, each side can point fingers at the opposition. The pendulum always provides a convenient scapegoat for each side to blame.
There’s never a moment of collective accountability. The debt just keeps growing.
So I just don’t see American voters having their Argentina moment.
But given that, in just seven years, Social Security’s trust funds will be out of money and the national debt will exceed $50 trillion. At that point, the window for relatively easy and painless solutions will likely be closed.
By the time voters demand real change, it will almost certainly be too late to avoid serious financial consequences.
This article was originally published by Sovereign Man.
