The U.S. government is betting big on Argentina’s free market President Javier Milei. On Thursday, U.S. Treasury Secretary Scott Bessent announced that the U.S. had “directly purchased Argentine pesos” and “finalized a $20 billion currency swap framework with Argentina’s central bank” to stabilize markets in an “acute illiquidity” crunch. The deal, which experts describe as a $20 billion loan, marks the fourth time since 1996 that the U.S. has bought another country’s currency.

The loan extends a lifeline to Milei, who has struggled politically this year after making stunning improvements in Argentina’s economic situation in his first 18 months.

In November 2023, the Argentinian peso saw 211.4% annual inflation, the national poverty rate stood at 41.7%, the socialist government had a spending deficit surpassing 4% of GDP, and economic growth was a paltry 1.5% per year. By mid-2025, Milei had cut inflation to an annual 43.5%, reduced the poverty rate to 38.1%, slashed government spending dramatically, and achieved an economic growth rate of 7.7% over the past 12 months.

This was a good start, but the economist-turned-president had lots more work to do before his country’s economy would stabilize (the inflation rate and poverty rate, for starters). Milei still needed time to implement his free-market transformation of the Argentinian economy, and time was one thing he did not have.

His administration became embroiled in scandal after his sister Karina was implicated in an influence-peddling scheme reminiscent of Hunter Biden. On September 7, the socialist Peronist party carried provincial elections in Buenos Aires, the nation’s most populous province, by a margin of 46% to the 34% of Milei’s party, a loss that Milei acknowledged as a “clear defeat.”

The mid-year electoral defeat shook investors’ confidence that Milei’s reform administration would be able to see its projects through to completion. They feared Argentina would revert to decades of Peronist mismanagement. This lack of confidence initiated a run on the peso, forcing the central bank to expend $1 million in foreign currency reserves to defend it. This, presumably, was the “acute illiquidity” to which Bessent referred.

Such financial chaos could not come at a worse time for Milei. Midterm elections on October 26 will determine half of the seats in Argentina’s lower chamber (Chamber of Deputies) and a third of the seats in its upper chamber (Senate). If Milei’s party loses control of the legislature, his political opponents would severely curtail his ability to implement economic reforms. And financial chaos is bad news for an incumbent party that campaigned on financial sanity.

Argentina’s need for financial assistance is clear. What has American analysts scratching their heads is why the Trump administration decided to intervene. Secretary Bessent suggested that the answer, on one level, comes down to speed. “The international community — including @IMFNews — is unified behind Argentina and its prudent fiscal strategy, but only the United States can act swiftly,” he wrote.

However, this explanation does answer the more fundamental question, how does the deal benefit the U.S.A.? After all, this is the administration of “America First.”

On this level, no clear answer presents itself. The best explanation seems to be that Trump views Milei as an ideological ally, who will stand shoulder-to-shoulder with him against the forces of wokeness on the world stage. Trump’s own comments suggested that ideology played a role in his decision. The bailout is “really meant to help a good financial philosophy,” he said. Milei has proven to be an ally not only against the progressives of Europe and the anti-Semites of South Africa, but even against the socialists of Venezuela. Not only is Trump loyal to his friends, but it’s usually worth saving an ally.

In a fiery speech at the World Economic Forum in 2024, Milei defended free markets against collectivism, repudiating the very concept of “social justice” as something that “is not just, and it doesn’t contribute to general well-being.” As a trained economist, Milei wholeheartedly believes that “free-enterprise capitalism is not just the only possible system to end world poverty” but the “only morally desirable” way to do so.

Milei is engaged in an epic struggle to free Argentina from the clutches of socialism, and the Trump administration’s $20 billion loan amounts to a bet that he will succeed. Yet that bet is not a guaranteed success. The electoral fate of Milei and his party has yet to be determined. Even if Milei’s party retains its hold on power, will it be able to fully rehabilitate a country long plagued by socialism? Even if Milei manages to right Argentina’s economic ship, will it have enough cargo left over to repay America’s $20 billion loan?

These questions lead up to the biggest question of all: will America ever get its money back?