Can the US Learn Something From Argentina?

For decades, Argentina has been a cautionary tale. Once upon a time, Argentina was one of the richest countries in the world. “Rich as an Argentine” was once a common phrase.

But in the latter half of the 20th century failed government policies turned Argentina into a basket case, and a poster child for the consequences of excessive government debt and government spending.

Argentina famously defaulted on its sovereign debt obligations in 2001, at the depths of a severe financial crisis, and defaulted again in 2014 and 2020. The country has struggled to maintain financial stability, with nine total debt defaults in its history.

Recently elected Argentine President Javier Milei was elected in part because of hopes that he could right the ship of state, in a country that continues to spend recklessly and whose inflation rate had soared to over 200%.

While it’s too early to judge Milei’s performance yet, in just a few months as President he has begun to take steps to decrease the inflation rate, and has delivered the Argentine government’s first budget surplus in years. Can the US government learn something from what Milei is doing in Argentina?

The US Government’s Financial Situation

As bad as Argentina’s government debt and spending situation has been, it pales in comparison to the US. Argentina’s debt to GDP ratio has been rising in recent years, and now stands at about 80-90% of GDP.

In comparison, the US debt to GDP ratio is over 120%, and is expected to rise to 192% over the next 30 years. But the advantage the US government has, at least for now, is that the US dollar is the world’s reserve currency, and US Treasury debt is considered a near risk-free asset by investors around the world.

If that ever changes, the financial situation of the US government could become just as precarious, or even worse, than the situation Argentina is in right now. And with moves potentially afoot to dethrone the dollar from its perch, the US could eventually become the next Argentina.

But is it too late to correct the United States’ financial position?

In addition to a national debt that is over $34 trillion, the US government is set to pay over $1 trillion on its national debt this year. Add to that $1.4 trillion in Social Security spending and nearly $1 trillion in Medicare spending and a similar amount of defense spending and you have a recipe for financial disaster, especially when you consider that the government only takes in about $2.6 trillion in taxes.

The national debt has skyrocketed over the past 15 years, and it doesn’t seem like there’s any way that Washington can pay it off. Even trying to pay it off over the next 100 years would require budget surpluses that don’t seem likely to happen at a time when budget deficits exceed $1 trillion annually and may be on their way to $2 trillion annually.

Yet the financial situation in Argentina likely looked dire to Argentines, and Milei has seemingly made a stunning turnaround. Translating Milei’s actions to the US would be the equivalent of eliminating our budget deficits and running multi-hundred billion dollar surpluses instead.

Remember when the fear was that the federal government would continue to run budget surpluses and pay down the national debt? That seems quaint today, yet it was only 25 years ago that that was what was predicted for the future.

Being able to at least pay down the national debt part of the way would inspire world markets that the US government was serious about getting spending under control, and might inspire confidence that the US wasn’t going to allow its national debt to spiral out of control.

Could the US government take a page from Milei’s playbook and get serious about getting its fiscal house in order? Could it turn aside from deficit spending and actually run budget surpluses?

Or will it continue doing what it always has done, and eventually turn the United States into the next Argentina?

Protecting Your Financial Future

With a poverty rate of 57% and an annual inflation rate of over 200%, most Argentines are in terrible financial shape. Even a miraculous turnaround won’t fix their financial situation overnight.

But Argentina’s financial woes didn’t happen overnight either. They were the result of decades of the government’s fiscal mismanagement.

Many people here in the US have eyed the federal government’s fiscal woes with a wary eye, aware that the trend toward growing fiscal deficits and an ever larger national debt doesn’t bode well for the future.

No one wants to live in a country that is going to hell in a hand basket, but there’s little any of us can do as individuals about that. The best we can hope for is that the eventual collapse will happen after we’re gone, and prepare ourselves for a worsening financial situation in the meantime.

Preservation of wealth would obviously be high on the list of priorities if the US government were to go the way of Argentina. And one way people are helping to preserve and protect their wealth is by buying gold and silver.

Gold and silver have served as safe haven assets, inflation hedges, and refuges from financial turmoil for centuries. And they continue to do that today.

Continued safe haven buying has helped to push gold prices to record highs, and gold could continue to gain. Whether you’re looking to buy gold and silver for gold and silver IRAs to protect your tax-advantaged retirement accounts, or looking to make a direct cash purchase of gold and silver to store at home for a breakdown of the financial system, gold and silver can play a role in safeguarding your financial security.

Goldco has helped thousands of customers benefit from owning gold and silver, and with over 5,000 5-star reviews and over $2 billion in precious metals placements, we’ve worked hard to become one of the best gold companies in the country.

If you’re worried about the direction this country is headed, and pessimistic about the federal government’s ability to return to fiscal sanity, maybe it’s time to start thinking about gold and silver. Call Goldco today to learn more about how gold and silver can help safeguard your wealth during troubled times.