Milei’s monetary meltdown: Argentine central bank intervenes as peso hits record lows

Argentina has once again reached a breaking point, and the central bank has intervened to prop up a plunging peso despite new libertarian reforms. The crisis marks a sharp turn for those who briefly saw hope in President Javier Milei’s pro-market promises.

Milei: the libertarian wave falters

When Javier Milei assumed power, he made headlines for floating the peso and pledging to end Argentina’s monetary woes through radical economic liberty.

Milei was even cheered by some Bitcoin advocates, who believed his ideals might mark a historic break from Argentina’s long pattern of inflation and monetary mismanagement. With his rhetorical attacks on central banks, Milei was a natural fit for those who see Bitcoin as the ultimate anti-inflationary tool.

But hopes of stability have dissolved. As Bitcoin advocate, Austrian economist, and author of The Bitcoin Standard, Saifedean Ammous, commented:

“The peso is down to 1510 per dollar, down from 900 on the black market or 300 official when Milei took power less than 2 years ago, in spite of central bank & government intervention with borrowed dollars. The ponzi is coming to an end.”

This week, Argentina’s central bank was forced to spend nearly $1 billion in reserves, its largest intervention since 2019, to shore up the peso, which continues to depreciate despite efforts to keep it in line with IMF-agreed trading bands.

The move comes after Milei’s government partially floated the currency back in April, only to see capital flight, legislative gridlock, and public anger escalate. Inflation, while down to 21% in August from higher peaks, remains one of the world’s worst.

Argentina crisis dynamics

Argentine assets have been hammered as parliament blocks key austerity and privatization measures, undermining Milei’s fiscal policy. The black-market peso crashed to historic lows, while reserves continue to bleed at an alarming rate, threatening the country’s ability to meet its debt and keep up even limited interventions.

Central bank interventions now directly contradict the original libertarian program and echo Argentina’s long history of failed pegs and emergency currency defense.

The IMF is concerned, as Argentina’s dollar reserves dwindle in what some analysts describe as a self-fulfilling collapse. The more the state steps in, the less confidence remains in the peso as a store of value.

Monthly inflation eased to 21% in August, but this level is still catastrophic for savers, businesses, and working Argentines, who in real terms are left with ever-diminishing purchasing power.

Argentines turn to dollars, not Bitcoin

Bitcoin advocates have repeatedly pointed to Argentina as a compelling example of why a permissionless, non-state currency could offer a lifeline. Peso holders have found their life savings destroyed over and over again, and Milei’s philosophical opposition to fiat appealed to Bitcoiners who dream of a world without centralized money printing and state-imposed capital controls.

The current unraveling exposes a harsh truth: libertarian ideology is no match for deep institutional dysfunction. Yet Argentina’s public, battered by inflation and failed reforms, has flocked to dollars on the black market, not to Bitcoin. Volume on global crypto exchanges spikes in moments of acute crisis, but day-to-day usage remains limited compared to desperate dollarization.

With reserves running low and attempts at reform stalling, Argentina faces a crossroads. Dollarization, if it comes, would mean giving up all monetary sovereignty. Continued interventions risk further depleting reserves and igniting more social unrest.

Meanwhile, the peso’s fragile value reminds Argentines (and the world) of the risks in trusting a political class or central bank, no matter how libertarian the brand.

In this desperate context, Bitcoin’s relevance as a decentralized, seizure-resistant, and inflation-proof asset takes center stage. But Argentina’s turmoil shows that adoption is a slow burn, challenged by institutional inertia, insufficient education, and the immediate pressures of daily survival.

As former Blockstream VP, Fernando Nikolic, cautioned, in times of true currency collapse, basic necessities like food, fuel, and ammunition (not digital assets) become the only things of real value.

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