Economist and author of “The Bitcoin Standard,” Saifedean Ammous, warned that Argentina’s financial system is on the brink of collapse, calling President Javier Milei’s economic program a “debt and inflation Ponzi” propped up by unsustainable bond yields and money printing.
In a post on X, Ammous argued that Argentina’s government has created a financial system where bond speculation is the only path to financial security. “The only concrete achievement of his administration so far is that it destroyed the currency and created a shitcoin casino,” he said.
At the center of the crisis is what locals call “la bicicleta financiera,” a high-yield carry trade where investors buy short-term government bonds that offer interest rates exceeding the pace of peso devaluation. According to Ammous, this setup, which has become the country’s most lucrative industry, is a textbook Ponzi scheme.
“The bicicleta is obviously unsustainable, because as the government offers high yields on its bonds, it needs to create more pesos, which devalues the peso,” he wrote. “It is impossible for this bicicleta to run forever,” he added.
Related: Argentina’s Milei shuts down task force investigating LIBRA scandal
Ammous warns peso collapse is near
Ammous noted that the peso has already broken past its target exchange band despite $540 million in forex interventions. Bond rates have hit 88%, and Argentine stocks and bonds have plunged. Meanwhile, Milei’s administration faces corruption allegations and recent election losses.
He warned that once the peso’s devaluation overtakes bond returns, investors will dump both bonds and pesos, triggering a rush to safer assets like the US dollar or Bitcoin (BTC).
Bitcoin advocates call Bitcoin a safe haven for protecting assets. Source: Simon Dixon“The peso collapses, the bonds collapse, and the government is left having to beg the IMF for a bailout,” Ammous wrote.
According to Ammous, the scale of the carry trade now ranges between $40 billion and $80 billion in short-term debt, draining capital away from productive use. He also noted that insiders and foreign institutions like JPMorgan have profited from the scheme by timing their entry and exit.
“Random bankers from all over the world managed to outperform the vast majority of stocks and traders worldwide by simply playing this rigged game of Russian roulette.”
Ammous concluded that Milei’s refusal to shut down the central bank exposes the libertarian rhetoric as a front. “The longer it goes on, the more harmful it will be. It isn’t idealism to want the Ponzi stopped; it is practical material necessity.”
Related: Argentine lawmakers back Milei probe in Libra crypto scandal
Milei’s Libra scandal
In February, Milei shared a post on X endorsing the Libra (LIBRA) memecoin, which quickly surged to a $4 billion market cap before crashing by 94% hours later.
The move led to investor losses totaling hundreds of millions and triggered calls from opposition members for Milei’s impeachment. However, Milei claimed he had only “spread the word” about the token, not promoted it.
In June, Argentina’s Anti-Corruption Office issued a resolution stating that Milei did not violate any ethics laws. The office said Milei acted in a personal capacity and used his private account, which he’s maintained since 2015, to express his political views.
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Source: https://cointelegraph.com/news/argentina-bond-ponzi-collapse-bitcoin-saifedean-ammous?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
