U.S. Treasury Secretary Scott Bessent recently announced that the United States would make a $20 billion swap line available to Argentina to help stabilize the country’s financial markets and the value of the peso. Argentine President Javier Milei took office two years ago promising to fix Argentina’s economic problems through libertarian reforms. The U.S. financial intervention suggests that those reforms haven’t worked according to plan.

How exactly has Milei’s presidency gotten to this point? What sort of historical precedents are there for the U.S. swap line? And what are the risks involved for the United States?

U.S. Treasury Secretary Scott Bessent recently announced that the United States would make a $20 billion swap line available to Argentina to help stabilize the country’s financial markets and the value of the peso. Argentine President Javier Milei took office two years ago promising to fix Argentina’s economic problems through libertarian reforms. The U.S. financial intervention suggests that those reforms haven’t worked according to plan.

How exactly has Milei’s presidency gotten to this point? What sort of historical precedents are there for the U.S. swap line? And what are the risks involved for the United States?

Those are just a few of the questions that came up in my recent conversation with FP economics columnist Adam Tooze on the podcast we co-host, Ones and Tooze. What follows is an excerpt, edited for length and clarity. For the full conversation, look for Ones and Tooze wherever you get your podcasts. And check out Adam’s Substack newsletter.

Cameron Abadi: How exactly has Milei’s presidency gotten to this point? Why is Argentina again facing a financial crisis?

Adam Tooze: If anything, Milei’s program has been about trying to stop inflation. The numbers commonly being cited right now are that annualized inflation in Argentina in April 2024 was 289 percent, almost 300 percent—so prices triple every year. And then the inflation rate is now down to 34 percent, which is still unthinkably high by the standards of Europe or the United States, but obviously one-tenth of what it was heading........

© Foreign Policy