Argentina's Milei Borrows Warren Buffett's Idea To Punish Deficit-Spending Politicians

More than two years after campaigning to "blow up" Argentina's central bank, President Javier Milei has announced his "Fiscal Shackle" bill - a permanent rule aimed at preventing Argentina from approving or maintaining budgets with fiscal deficits that could have consequences for politicians.

On Thursday, in a speech recorded at the Casa Rosada and broadcast nationwide, Milei proposed an overhaul that would restore the Central Bank of Argentina's sole mandate of preserving the currency's value, stop direct and indirect financing of the Treasury, provinces, and municipalities, and expose officials who violate the rules to criminal charges. "It will be considered fraud and illicit association," he explained.

Milei said this is the "most important set of structural reforms in the last 91 years," taking the year of the Central Bank's founding, 1935, as the starting point for that period. He argued that the central bank has functioned as "a tool for theft" and indicated that his reform proposal seeks "to put an end to the scam of counterfeiting money to finance high-level politics, whose most evident manifestation is the inflation rate."

The plan would also strengthen independence of central bank officials, making them more difficult for future administrations to remove. Milei said the reforms were an effort to end decades of deficit monetization, the primary source of Argentina's recurring inflation and currency crises.

He said the "Fiscal Shackle" bill would impose an automatic shutdown mechanism if public accounts remain in deficit and Congress fails to restore balance. Nonessential government functions would halt, while new spending, hiring, and discretionary provincial transfers would be frozen. Top political officials would stop receiving salaries, although pensions, family benefits, unemployment insurance, health care, and security services would remain protected.

"The results of the Central Bank's portfolio can only be transferred to the Treasury for debt cancellation. The scam of the Non-Transferable Letters will be eliminated... This will include the Fiscal Shackle: it will ensure that Argentina cannot sustain a deficit budget," Milei said.

Remember, the Oracle of Omaha told CNBC's Becky Quick in a 2011 interview that he "could end the deficit in five minutes."

Warren Buffett explained, "You just pass a law that says that any time there's a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election."