Argentina dutifully followed the dictates of the IMF in the 1990s- and wound up with a severe banking crisis in 1995 and national bankruptcy in 2001-2002.

The government just walked away from its foreign debts and printed its own currency. The result was a remarkable flourishing of the economy.

The IMF debt totaling USD9.81 billion was later paid in full. To President Nestor Kirschner it was worth it to walk away from under the thumb of the IMF whose policies provoked poverty and pain among the Argentine people.

The banking sector in Argentina is now dominated by state-owned banks, and the government has considerable control over financial activities.

For the years 2002-2011, Argentina had real GDP growth of about 94%, 3 times the growth of the US economy and the fastest in the western hemisphere.

The benefits from this growth were not siphoned off by the wealthy but were shared with the populace. By 2011 poverty and extreme poverty were reduced by two thirds and employment increased to record levels.

In 2010 the country then under President Cristina Kirschner, wife of the late President Nestor Kirschner, took another bold step, when it subordinated the formerly independent central bank under its authority. Another lady was appointed to head the central bank, Mercedes Marco del Pont.

The Presidentas are no longer buying the central banking/neo liberal taboo against the government issuing its own currency.

They have seen in the last dozen of years what government issued pesos can do to turn a collapsed economy around.

Nor are they issuing money just to fill bank reserve accounts with ‘sterilized’ paper, as is being done with the ‘quantitative easing’ of the US and UK.

They aimed the nation’s credit power at the physical productive economy, increasing both jobs and economic output.

A number of successful economic recoveries after WW2 were based on similar policies and actions including those in South Korea, Taiwan, China and India.

Only in the Thatcher/Reagan era did central banks become “independent” working to maintain low inflation at all costs.

Low inflation became the leading goal of monetary policy, regardless of what else is happening in an economy, and any fiscal policy had to be constrained to accommodate it.

The private bankers and IMF were not happy with Argentina. A year later, work was not so plentiful and Argentines were not doing so well. Why?

According to Economist, James Petras, Argentina’s economy was being squeezed by the US and its lap dogs. The US and its lap dogs increased pressure on Argentina by excluding it from international markets, questioning its credibility, downgrading its ratings and promoting a virulent hostile mass media campaign in the financial press. President Cristina’s reelection was smothered with “spontaneous”  US sponsored riots and street protests.

President Cristina Kirchner’s government was dealt an external economic blow. A 2012 ruling by a federal appeals court in New York — a decision widely regarded as dubious and political —took more than 90 percent of Argentina’s creditors hostage to force payment to a small group of “vulture funds” that refused to join the debt restructuring of the early 2000s.

Under President Macri today, who took over in 2015, poverty has increased significantly, income per person has fallen, and unemployment has increased. Short-term interest rates have shot up to 75% today from 32%; inflation has soared to 54% from 18%. The public debt has grown to more than 86% of G.D.P. from 53%.

In 2018 President Macri turned to IMF for a USD57 billion loan— the bait is taken.

Argentina now faced a déjà vu of an IMF led national bankruptcy in 2001-2002.

Gracias IMF!

Déjà vu Venezuela déjà vu Libya. Whither Argentina heading to?

Coming soon: Arigatou gozaimasu to Japan Post Bank

An Islamic Monetary Reformist’s Take cum Edited Excerpts from Ellen Brown’s From Austerity to Prosperity- The Public Bank Solution

Islamic Monetary Reformist

Muhammad Zahid Abdul Aziz




Note: The Islamic solution will be bespoke with its required parameters.

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