Six more zeros are to be removed from Venezuelan currency(en.mercopress.com)
en.mercopress.com
Six more zeros are to be removed from Venezuelan currency
https://en.mercopress.com/2021/10/01/fear-reigns-among-venezuelans-as-six-more-zeros-are-to-be-removed-from-local-currency
134 comments
too bad, I was hoping to add a Bolivar alongside my 100T Zimbabwe dollar
At this point the most lucrative thing to do with Bolivars would be to sell them on eBay. I am sure plenty of economists would be interested in a stack of them in a box.
Or handbags, I thought they were picking up crypto or still not happening
Could see the technical implications, also the random price swings
Could see the technical implications, also the random price swings
"Three currency reconversions since 2008 have resulted in the elimination of 14 zeros from the local currency. Venezuela will thus become the Latin American country to have eliminated the largest number of zeros from its currency, while the country has been going through a de facto dollarization for months. Analysts believe transactions in dollars make up for at least 70% of the country's operations."
Three zeros in 2008, five in 2018, six more now.
More on what this is like for ordinary Venezuelans at https://www.huffpost.com/entry/venezuela-new-currency_n_6156...: "Under the old system, a two-liter bottle of soda pop could cost more than 8 million bolivars."
Three zeros in 2008, five in 2018, six more now.
More on what this is like for ordinary Venezuelans at https://www.huffpost.com/entry/venezuela-new-currency_n_6156...: "Under the old system, a two-liter bottle of soda pop could cost more than 8 million bolivars."
Not a fun situation to be in. We (Zimbabwe) took off something like 25 zeroes (3, 12 then 10). Dollarization was the only sensible option for anyone wanting to buy things with a currency that didn't devalue daily. Unfortunately a 2-currency system like this is ripe for exploitation, especially once the government starts trying to manipulate exchange rates.
Thanks for that article.
Did the government still bother to collect taxes, and did they accept US dollars instead?
I cycled into Zimbabwe sometime 2008 and exchanged one usd to 500.000.000 Zim dollars. One week later I left the country and it had increased to 1.2 bn. The shops were almost empty - except for large quantities of Heinz ketchup.
Were you able to repay debts with the inflated money?
as a Zimbabwean too, I wish the best of luck to Venezuelans. the hyper-inflation era, was rough. prices changing every 30 mins. people stopped counting money, it was about how thick it looked while boarding public transit. But yeah Venezuela need to get off the 2 currency system as it's prone to manipulation. I wonder, how it will work for them though, since they're under massive sanctions from the US
Venezuela's situation is just sad. Produces less than half of the food it needs to sustain the population, the vast majority of exports are oil (which has crashed in price) and some other natural resources.
A recipe for disaster. No one needs their currency, not even the pathetic internal market, they can't get foreign currency because exports are low (esp. for a country of 30 million). Wat nou?
A recipe for disaster. No one needs their currency, not even the pathetic internal market, they can't get foreign currency because exports are low (esp. for a country of 30 million). Wat nou?
If they could kick out Maduro and get a sane government things would be quite fixable. Venezuela used to be the richest country in South America. Their problems are very man made.
I believe they have the largest oil reserves in the world (over 15% of the worlds reserve). I also believe Venezuela was in dire straights long before oil crashed. Quite honestly their government is massively to blame. After a certain leader passed away they went downhill very fast.
That certain leader is the one who sent them downhill: Chavism was a recipe for disaster from the start. It’s only because the price of oil was so high in 2000-2008 that the rot wasn’t immediately apparent.
Chavez is the one who replaced competent leaders with army cronies. Chavez is the one who demolished democracy
Chavez is the one who replaced competent leaders with army cronies. Chavez is the one who demolished democracy
And Chavez was the one who nationalized the oil companies and then was shocked when he couldn’t find competent people to keep the refineries going.
Literally killed the goose that lays the golden eggs.
Literally killed the goose that lays the golden eggs.
How is it possible that the HackerNews crowd isn’t aware of US sanctions?
That would ruin the "government incompetence caused hyperinflation" narrative because people want to laugh, be smug and feel superior. If people knew that e.g. the Weimar Republik hyperinflation was caused by external factors like war reparations then they would have to understand that hyperinflation is more than just "printing money".
There have been major sanctions since 2017 while "Inflation rates became the highest in the world in 2014 under Nicolás Maduro, and continued to increase in the following years"
Crashed... in... price...? I guess I should investigate the $5/gal gas prices I’m seeing in CA.
You should investigate. At least $1.21/gal of that is going to the government. State/Federal gas tax + sales tax + regulatory fees and other regulatory fees. Also California mandates specific formulations which adds to the costs compared to other locations, and add to that the general increased cost of any operations in the state, including higher wages. That extra cost you pay is not going to the ones pulling crude out of the ground. Not saying that Venezuela isn't mismanaging its natural resource revenue, but your high prices are not a contradiction of the fact that their revenue is impacted by an historically low crude price.
California has a special summer blend of gas that has an unusual vapor pressure due to somewhat unique additives. The only people that make CA blend gas is, surprise surprise, in the high cost of business state, California. California effectively has a closed petroleum economy which has a dramatic impact on fuel prices. It's completely disconnected from Venezuela.
Why don't the gas stations just sell regular gas and not this special sauce that's inflating the price?
I would guess laws and regulations.
I am assuming most of the local economy as it stands now must be working on barter
It’s working on more stable foreign currencies, mainly the US dollar.
My guess would be that bartering works on a smaller inventory but once you have too many products you need a universal currency
It works on a large scale too but it requires centralization and a unit of account:
https://www.thebalancesmb.com/what-is-barter-exchange-398141
The account balance is similar to having money but you can't take money out of the exchange. It's tracking "debt" or IOUs (I owe you).
https://www.thebalancesmb.com/what-is-barter-exchange-398141
The account balance is similar to having money but you can't take money out of the exchange. It's tracking "debt" or IOUs (I owe you).
This is horrible and it is even more horrible how people consider it a joke. For millions of people this means poverty, uncertainty, and suffering. Sitting smirking on the outside and feeling good that you are not there is morally rotten. At least have some respect for the tragedy this is. And honestly, the first who blames it on the victim better never know how much they are wrong.
> the first who blames it on the victim better never know how much they are wrong
Mocking the situation helps nobody. But Venezuelans had fair and free elections not that long ago. The precursors to these policies were wilfully elected into office by the populace. That confers at least some responsibility; more than in the cases of kings, colonisers, invaders or revolutionaries.
Mocking the situation helps nobody. But Venezuelans had fair and free elections not that long ago. The precursors to these policies were wilfully elected into office by the populace. That confers at least some responsibility; more than in the cases of kings, colonisers, invaders or revolutionaries.
Elections in Venezuela have been fraudulent for decades now.
Not extremely fraudulent, the gov still has a very large base . In 2017 70% of the population supported socialism: https://venezuelanalysis.com/news/13251
You seem to have confused several different things: Support for socialism, support for the ruling party, and legitimate elections.
Venezuelan elections have been widely critized as shams and have been largely boycotted by opposition parties in Venezuela.
Venezuela has significant oil wealth but has been ruled by a corrupt and autocratic single party for decades that has squandered and embezzled that wealth.
Venezuelan elections have been widely critized as shams and have been largely boycotted by opposition parties in Venezuela.
Venezuela has significant oil wealth but has been ruled by a corrupt and autocratic single party for decades that has squandered and embezzled that wealth.
Fun fact: it was only in 2012, when they took away private ownership and commercial sale of firearms and ammunition under the guise of “security and safety”:
https://www.bbc.com/news/world-latin-america-18288430
Never give up your right to bear arms Americans!
https://www.bbc.com/news/world-latin-america-18288430
Never give up your right to bear arms Americans!
Not sure how firearms would help the average Venezuelan in this case. Maybe they could use them to steal food?
Its a lot harder for your government to become authoritarian when your citizens can shoot back
I think the fact that Venezuelans had guns in 2012 but still had issues show that it's not foolproof.
Plus it seems like folks are willing to vote in the authoritarians on purpose, as long as they are my authoritarians and not your authoritarians.
Were those secret ballot elections? If so, then you literally cannot possibly know who to blame, because you don’t know how anyone voted, and you certainly couldn’t blame anyone who voted for candidates who lost.
Secret ballot elections are the only ones you can trust which is why they are a stable of many democracies from the beginning.
You can trust it because you have enough observers, whom are indeed important to select well (covering all the biases). They monitor the voting and counting to make cheating on a large scale a large conspiracy, which by definition must have large public support.
You can trust it because you have enough observers, whom are indeed important to select well (covering all the biases). They monitor the voting and counting to make cheating on a large scale a large conspiracy, which by definition must have large public support.
Six zeros removed from nothing is still nothing.
I doubt that there are many people that will be really hit by it, because it is like rain in a tsunami.
I doubt that there are many people that will be really hit by it, because it is like rain in a tsunami.
A sad reality is how true this is. Anyone who had built up savings 10+ years ago was already completely wiped out. The situation will not significantly change with this adjustment. The day to day for the common citizen of Venezuela is the same: work as much as you can, and immediately convert your money into tangibles: food, sundries, tools if one can be lucky enough to afford them. These things will continue to increase in cost, wages will continue to increase at comparable rates. It's a trap where one has no choice but to continue producing and consuming, and the money is nothing more than a temporary stopover.
>It's a trap where one has no choice but to continue producing and consuming, and the money is nothing more than a temporary stopover.
You can always save in real assets. Why does everyone want to save in a promise that someone else will work for you?
You can always save in real assets. Why does everyone want to save in a promise that someone else will work for you?
I don’t know but my other comment about a certain hard asset I save in got a couple downvotes. I chalk it up to ignorance being bliss. Nobody wants to think about how easily they can lose it all
Yep, there is no blame to go around, this entire situation is no different than a tragedy like a natural disaster... Or maybe the rest of us can learn something about socialism from this.
It doesn’t require socialism to hyperinflate your currency. Anybody can do it.
> it is even more horrible how people consider it a joke
It is a joke. The world we live in is absurd. Government inflates its own currency so bad it wipes out the entire economy. Citizens are left holding worthless paper. That happened in my country too. It could happen in yours. Actually it's only a matter of time before it happens to every currency in the world: they're all inflationary. The solution? More of the same. Start from scratch by creating a new currency to inflate. This is exactly what they did. Multiple times.
We either laugh at this insanity or we cry.
It is a joke. The world we live in is absurd. Government inflates its own currency so bad it wipes out the entire economy. Citizens are left holding worthless paper. That happened in my country too. It could happen in yours. Actually it's only a matter of time before it happens to every currency in the world: they're all inflationary. The solution? More of the same. Start from scratch by creating a new currency to inflate. This is exactly what they did. Multiple times.
We either laugh at this insanity or we cry.
There is obviously a solution, which is Bitcoin. It'll end this madness that has destroyed societies from the beginning of time.
The more obvious solution is a sanely run conventional currency like the Euro, SFR, USD etc. Bitcoin would be fairly rubbish for everyday transactions like paying wages and taking our a mortgage to buy a house. Aside from transaction costs, when bitcoin doubled, companies wouldn't be able to afford their wage bill and homeowners their mortgages.
The problem is a sanely run conventional currency is sanely run until it's not. For EUR, USD, etc., that could be a very long time, but at some point, they may face the same structural forces that causes other currencies to overly inflate, e.g., economic conditions change, political winds change, and suddenly you have elected leaders making disastrous choices. Your solution is akin to saying that dictatorship is the best form of government, just make sure the dictator is a good and competent person! This is true, but ignores the precise issue, which is that you can never actually assure the critical qualifier.
By contrast, BTC, with an algorithmically determined monetary policy, does actually solve the issue. And the other issues that you raise, i.e. that a highly volatile asset is a poor unit of account, are not actually issues -- you can simply transact in USD (or a stablecoin) for most day to day matters, while having the ability to always revert to BTC or other assets as an uninflatable store of wealth when desired.
By contrast, BTC, with an algorithmically determined monetary policy, does actually solve the issue. And the other issues that you raise, i.e. that a highly volatile asset is a poor unit of account, are not actually issues -- you can simply transact in USD (or a stablecoin) for most day to day matters, while having the ability to always revert to BTC or other assets as an uninflatable store of wealth when desired.
Cryptocurrency? Perhaps. Technologically, bitcoin is a failure and not a solution to anything. Monero is a much better project.
Also, it's perfectly possible to inflate bitcoin despite its fixed supply. It's possible to inflate any currency. Implement fractional reserve banking on top of it. New coins will be created through loans, inflating the currencies.
Also, it's perfectly possible to inflate bitcoin despite its fixed supply. It's possible to inflate any currency. Implement fractional reserve banking on top of it. New coins will be created through loans, inflating the currencies.
Why do you say that? Do you think that Bitcoin is too easy to stop for governments?
Bitcoin is already used in lots of countries which suffer from inflation. It doesn't seem to be a failure. In El Salvador, there are more people with a bitcoin wallet than people with a bank account. More than 30% of people in Nigeria have used bitcoin. It's also popular in Venezuela.
FRB is not a problem, because bitcoin can and should be owned non-custodially. Paper bitcoins created by a bank wouldn't be compatible with actual bitcoins, and wouldn't expand its supply.
Bitcoin is already used in lots of countries which suffer from inflation. It doesn't seem to be a failure. In El Salvador, there are more people with a bitcoin wallet than people with a bank account. More than 30% of people in Nigeria have used bitcoin. It's also popular in Venezuela.
FRB is not a problem, because bitcoin can and should be owned non-custodially. Paper bitcoins created by a bank wouldn't be compatible with actual bitcoins, and wouldn't expand its supply.
> Why do you say that?
Because its technology is obsolete. Monero is everything bitcoin set out to be and more.
> Do you think that Bitcoin is too easy to stop for governments?
Absolutely. The public blockchain is actually more transparent than the banking system. To stop bitcoin transactions they don't even need to attack nodes or whatever. Bitcoins aren't fungible. Governments can just remove them from circulation at any time by making it illegal to accept them. Exchanges already refuse tainted coins. Some even refuse to deal with private wallets at all.
> Bitcoin is already used in lots of countries which suffer from inflation.
I don't disagree with this. It seems to work well as protection against inflation. Got to the point some governments got pissed about it because nobody was using their worthless currencies anymore and that took away their power to set monetary policy.
> FRB is not a problem, because bitcoin can and should be owned non-custodially.
Very few people actually do this. Huge fees, inherent risks. Most people keep their coins in exchanges. They're the new banks.
> Paper bitcoins created by a bank wouldn't be compatible with actual bitcoins, and wouldn't expand its supply.
There are no paper bitcoins. It's already happening at the exchanges. The coins sitting in people's accounts are undoubtedly being loaned out. Users even receive interest.
Because its technology is obsolete. Monero is everything bitcoin set out to be and more.
> Do you think that Bitcoin is too easy to stop for governments?
Absolutely. The public blockchain is actually more transparent than the banking system. To stop bitcoin transactions they don't even need to attack nodes or whatever. Bitcoins aren't fungible. Governments can just remove them from circulation at any time by making it illegal to accept them. Exchanges already refuse tainted coins. Some even refuse to deal with private wallets at all.
> Bitcoin is already used in lots of countries which suffer from inflation.
I don't disagree with this. It seems to work well as protection against inflation. Got to the point some governments got pissed about it because nobody was using their worthless currencies anymore and that took away their power to set monetary policy.
> FRB is not a problem, because bitcoin can and should be owned non-custodially.
Very few people actually do this. Huge fees, inherent risks. Most people keep their coins in exchanges. They're the new banks.
> Paper bitcoins created by a bank wouldn't be compatible with actual bitcoins, and wouldn't expand its supply.
There are no paper bitcoins. It's already happening at the exchanges. The coins sitting in people's accounts are undoubtedly being loaned out. Users even receive interest.
Money has strong network effects, so it's not possible for Monero to win even if it was marginally better. It's a game of winner takes all. I agree that lack of privacy can be a threat to decentralization and censorship resistance. However, Lightning Network makes bitcoin more fungible and private, so I'm not worried about that.
Goverments, especially in poor countries, are starting to advocate for Bitcoin, so it seems that 'government banning' is not an actual threat. For some governments it is, but people can move out. They couldn't use Monero either if it's illegal to accept.
Goverments, especially in poor countries, are starting to advocate for Bitcoin, so it seems that 'government banning' is not an actual threat. For some governments it is, but people can move out. They couldn't use Monero either if it's illegal to accept.
> Money has strong network effects, so it's not possible for Monero to win even if it was marginally better. It's a game of winner takes all.
Yeah and it sucks. I hate how popular bitcoin is despite being the worst cryptocurrency in existence. Meanwhile, monero can actually be used as private digital cash right now but nobody knows about it.
> However, Lightning Network makes bitcoin more fungible and private, so I'm not worried about that.
It also makes it less decentralized. What's the point of the blockchain if you need this high level stuff?
Yeah and it sucks. I hate how popular bitcoin is despite being the worst cryptocurrency in existence. Meanwhile, monero can actually be used as private digital cash right now but nobody knows about it.
> However, Lightning Network makes bitcoin more fungible and private, so I'm not worried about that.
It also makes it less decentralized. What's the point of the blockchain if you need this high level stuff?
>Paper bitcoins created by a bank wouldn't be compatible with actual bitcoins, and wouldn't expand its supply.
Bank dollars (your account balance) aren't compatible with coin machines and yet we still use them as if they are the same thing.
Bank dollars (your account balance) aren't compatible with coin machines and yet we still use them as if they are the same thing.
That's because we don't have anything better currently. With bitcoin it's possible to pay without custodians, and people can easily choose not to accept fake bitcoin.
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You seem to take it as a given that a better way exists. Why are you so sure of that? Plenty of inflationary currencies never came even close to hyperinflation, and an additional zero or two within the span of a lifetime is not a problem waiting to be solved.
You seem to imply that all inflation is inevitably a buildup for hyperinflation, but there is no mechanism for that.
You seem to imply that all inflation is inevitably a buildup for hyperinflation, but there is no mechanism for that.
> You seem to take it as a given that a better way exists.
Why not deflation? Can't be worse than governments that mint trillions out of nowhere.
> Why are you so sure of that?
I'm not. Is anyone? These governments don't seem to be sure either. We wouldn't have these problems if they were.
> an additional zero or two within the span of a lifetime is not a problem waiting to be solved
The loss of purchasing power implied by those extra zeroes is a huge problem. Inflation is basically a constant unconditional tax on everyone holding the currency. This is absolutely a problem that needs to be solved. People solve it by spending or investing their money. Anything's better than holding the inflationary currency.
> You seem to imply that all inflation is inevitably a buildup for hyperinflation
Not really. All government currencies inflate. There's absolutely no doubt their value will approach zero given enough time. The only question is how quickly it will happen. Hyperinflation just means the government screwed up so bad the inflation started accelerating out of control.
Why not deflation? Can't be worse than governments that mint trillions out of nowhere.
> Why are you so sure of that?
I'm not. Is anyone? These governments don't seem to be sure either. We wouldn't have these problems if they were.
> an additional zero or two within the span of a lifetime is not a problem waiting to be solved
The loss of purchasing power implied by those extra zeroes is a huge problem. Inflation is basically a constant unconditional tax on everyone holding the currency. This is absolutely a problem that needs to be solved. People solve it by spending or investing their money. Anything's better than holding the inflationary currency.
> You seem to imply that all inflation is inevitably a buildup for hyperinflation
Not really. All government currencies inflate. There's absolutely no doubt their value will approach zero given enough time. The only question is how quickly it will happen. Hyperinflation just means the government screwed up so bad the inflation started accelerating out of control.
>Why not deflation? Can't be worse than governments that mint trillions out of nowhere.
It would require negative interest rates and it would also require people to acknowledge that we need a more flexible labor market rather than one where full time jobs pile up on fewer people. Let's consider an extreme example. Everyone adopts Bitcoin and everyone has the bare minimum expenses. They pay rent and bake their own bread. The amount of work hours needed to support this lifestyle is 8 hours per week.
Let's say that everyone wants this lifestyle but everyone still wants to work full time. That would imply that there is one full time job for every 5 people with 1 person being employed and 4 unemployed and you would now have to engage in income sharing (you know, welfare, unemployment benefits, universal basic income). If people worked according to how much they demand themselves (everyone works 8 hours), then everyone would be employed and everyone would be getting their fair share of work.
Before you say that some of them will demand more than 8 hours of work. These people should work more than 8 hours.
>The loss of purchasing power implied by those extra zeroes is a huge problem. Inflation is basically a constant unconditional tax on everyone holding the currency. This is absolutely a problem that needs to be solved. People solve it by spending or investing their money. Anything's better than holding the inflationary currency.
What function does holding onto the currency serve other than decreasing demand for labor? Why should we compensate anyone for their reduction in the demand for labor? The logic behind interest is that someone wants to invest and the lack of labor requires prioritization according the yield of the investment. If people decrease demand for labor without a corresponding desire to invest by borrowers they simply get nothing. It's actually worse, if demand for labor is lower than supply of labor then the excess labor simply decays through unemployment (labor cannot be stored) which implies a negative yield on your money which is why inflation is an approximation of negative interest rates.
So, perfect money would have 0% inflation or deflation but it would probably have negative interest to encourage people to avoid the economic loss of unemployment. If labor decayed at a rate of -2% then people would invest more into durable goods by anticipating future demand. It would be better to build solar panels and wind farms today that may only be profitable in the future. Of course the problem is that some goods are artificially durable like land. Ownership doesn't decay.
It would require negative interest rates and it would also require people to acknowledge that we need a more flexible labor market rather than one where full time jobs pile up on fewer people. Let's consider an extreme example. Everyone adopts Bitcoin and everyone has the bare minimum expenses. They pay rent and bake their own bread. The amount of work hours needed to support this lifestyle is 8 hours per week.
Let's say that everyone wants this lifestyle but everyone still wants to work full time. That would imply that there is one full time job for every 5 people with 1 person being employed and 4 unemployed and you would now have to engage in income sharing (you know, welfare, unemployment benefits, universal basic income). If people worked according to how much they demand themselves (everyone works 8 hours), then everyone would be employed and everyone would be getting their fair share of work.
Before you say that some of them will demand more than 8 hours of work. These people should work more than 8 hours.
>The loss of purchasing power implied by those extra zeroes is a huge problem. Inflation is basically a constant unconditional tax on everyone holding the currency. This is absolutely a problem that needs to be solved. People solve it by spending or investing their money. Anything's better than holding the inflationary currency.
What function does holding onto the currency serve other than decreasing demand for labor? Why should we compensate anyone for their reduction in the demand for labor? The logic behind interest is that someone wants to invest and the lack of labor requires prioritization according the yield of the investment. If people decrease demand for labor without a corresponding desire to invest by borrowers they simply get nothing. It's actually worse, if demand for labor is lower than supply of labor then the excess labor simply decays through unemployment (labor cannot be stored) which implies a negative yield on your money which is why inflation is an approximation of negative interest rates.
So, perfect money would have 0% inflation or deflation but it would probably have negative interest to encourage people to avoid the economic loss of unemployment. If labor decayed at a rate of -2% then people would invest more into durable goods by anticipating future demand. It would be better to build solar panels and wind farms today that may only be profitable in the future. Of course the problem is that some goods are artificially durable like land. Ownership doesn't decay.
> What function does holding onto the currency serve other than decreasing demand for labor?
Wealth accumulation.
> Why should we compensate anyone for their reduction in the demand for labor?
Why should we not reward people for being responsible with their money? People should be saving it, not spending it all on pointless consumerism. If our money will be more valuable tomorrow than it is today, we would need damn good reasons to part with it. Hopefully industry practices like planned obsolescence would disappear.
Wealth accumulation.
> Why should we compensate anyone for their reduction in the demand for labor?
Why should we not reward people for being responsible with their money? People should be saving it, not spending it all on pointless consumerism. If our money will be more valuable tomorrow than it is today, we would need damn good reasons to part with it. Hopefully industry practices like planned obsolescence would disappear.
>
The loss of purchasing power implied by those extra zeroes is a huge problem. Inflation is basically a constant unconditional tax on everyone holding the currency. This is absolutely a problem that needs to be solved.
No it's not. It's perfectly fine if universal "you owe me"s cannot be held back indefinitely only strike with even more force when unleashed. And I say that as someone who is hit harder by inflation than most because I enjoy liquidity far more than I should, I'm very bad at converting into assets (or even taking up a loan)
No it's not. It's perfectly fine if universal "you owe me"s cannot be held back indefinitely only strike with even more force when unleashed. And I say that as someone who is hit harder by inflation than most because I enjoy liquidity far more than I should, I'm very bad at converting into assets (or even taking up a loan)
I lived through the same extreme inflation in Yugoslavia in the 80s. It was very bad. Good luck to people in Venezuela :( Yet, I cannot ignore the fact that both Yugoslavia and Venezuela, otherwise very different countries, had the same political/economic system that lead to the inflation.
Sanctions?
Sanctions are imposed to cut access to the investment money and to markets to sell produced goods.
No need to impose sanctions if major market and investor (USSR) just collapsed.
No need to impose sanctions if major market and investor (USSR) just collapsed.
This post is full of pitch forks aimed at the socialism bogeyman. It’s a bit more nuanced. I’m not going to defend that prick Maduro, however oil prices and sanctions haven’t helped their situation.
Turns out there's a cost to guaranteeing a certain quality of life, without requiring the productivity that was previously needed to secure it. Capitalism has its faults, but for the day to day management of a population, rewarding those who produce goods is a pretty logical baseline for economics
I’m not arguing socialism or capitalism is great. I’m saying their crisis isn’t socialism in a vacuum, and lack of nuanced discussion in favour of capitalism vs socialism is getting kind of old.
It’s like thinking a program you wrote only has one bug.
It’s like thinking a program you wrote only has one bug.
Your highest level reply did not imply you were willing to consider socialism as a factor. Socialism is a very large factor in this. Not in principle, but in practice. Is it possible for a fair, balanced, stable form of socialism to be designed? Possibly, I don't know. Can a group of greedy, selfish, arrogant Great Apes manage it? Absolutely not.
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The sanctions are the biggest factor and it's often external influences that force politicians to enact populistic policies as a massive bandaid that are then interpreted as socialism. The bandaid isn't the problem, it's the wound.
Yugoslavia did not have sanctions in the 80s, that was before the war. You are thinking about the sanctions that were imposed to the remainder of Yugoslavia (Serbia, Montenegro and Kosovo) in the mid and late 90s.
I assumed 80s was a typo and you were referring to https://en.m.wikipedia.org/wiki/Hyperinflation_in_the_Federa...
That inflation was even worse - but I did not experience it. Of course, sanctions, war, etc. greatly contributed to the hyperinflation in the 90s.
My mistake. You know what they say about assumptions…
"They're a great time-saving measure in most situations."?
"You make an ass out of you and umption."
https://www.youtube.com/watch?v=YS3i-irQ0L0
https://www.youtube.com/watch?v=YS3i-irQ0L0
Guys, maybe socialism failed, and maybe you can laugh because you knew, or we all knew.
But the fact is millions are starving and suffering. This is no time for 'i told you so.' The suffering people didn't choose this.
But the fact is millions are starving and suffering. This is no time for 'i told you so.' The suffering people didn't choose this.
What? Chavez and Maduro were democratically elected. The people absolutely chose this. Elections have consequences.
Does socialism preclude having democratic elections? I thought socialism was at its core more about how to shape policies than the method of statecraft.
If Trump had gotten the US into nuclear war or some other devastation, would you still feel the same if other countries laughed and said we deserve it? Even if less than half than less than half of the people elected such a leader?
There's still a large amount of people who didn't vote for these people affected.
And even if all 100% signed up and voted for these people, I still don't feel it helps to rub their suffering in their face.
There's still a large amount of people who didn't vote for these people affected.
And even if all 100% signed up and voted for these people, I still don't feel it helps to rub their suffering in their face.
Their suffering can definitely (and usefully) be used as a defense against those in other countries that want to try the same thing.
> The suffering people didn't choose this.
They 100% did, an article from 2011/2013 about the government distributing low cost appliances[1] and free houses[2]. They were getting tons of free and cheap stuff and the people were celebrating it.
[1] https://venezuelanalysis.com/news/6189
[2] https://venezuelanalysis.com/news/10258
They 100% did, an article from 2011/2013 about the government distributing low cost appliances[1] and free houses[2]. They were getting tons of free and cheap stuff and the people were celebrating it.
[1] https://venezuelanalysis.com/news/6189
[2] https://venezuelanalysis.com/news/10258
According to modern monetary theory, money is just a means for the government to incentivize behavior.
The government prints as much of it as it wants, and:
1: Gives it to people who need it (Say to pay rent for their shop so the shop does not go out of business).
2: Takes it from rich people who otherwise would just sit on their ass and let others work for them.
Why does this system of subventions and taxes not work in Venezuela? Why is inflation a problem when money is just a number. Why does it matter how many zeros a price has?
The government prints as much of it as it wants, and:
1: Gives it to people who need it (Say to pay rent for their shop so the shop does not go out of business).
2: Takes it from rich people who otherwise would just sit on their ass and let others work for them.
Why does this system of subventions and taxes not work in Venezuela? Why is inflation a problem when money is just a number. Why does it matter how many zeros a price has?
I'm not sure your understanding of MMT is quite right but aside from that the basic process of creating hyper inflation in Zim, Venez etc is roughly:
Government destroys production by confiscating farms etc from the rich/ the white and giving them to poor locals.
The farm which used to produce hundreds of tons of food for everyone now has has few subsistence farmers feeding themselves.
The people who used to get the food say we're hungry.
a: The govt prints money and gives it to them to buy food.
But more money chasing not enough food causes food prices to go up. People say they are hungry.
GOTO a:
The whole process is fairly dumb which is why you only get it in a few places with dictators like Mugabe or Maduro who threaten to shoot anyone who tries to stop them.
Government destroys production by confiscating farms etc from the rich/ the white and giving them to poor locals.
The farm which used to produce hundreds of tons of food for everyone now has has few subsistence farmers feeding themselves.
The people who used to get the food say we're hungry.
a: The govt prints money and gives it to them to buy food.
But more money chasing not enough food causes food prices to go up. People say they are hungry.
GOTO a:
The whole process is fairly dumb which is why you only get it in a few places with dictators like Mugabe or Maduro who threaten to shoot anyone who tries to stop them.
I'm not sure how true this is but I have read that Venezuela (or Zimbabwe, can't remember) not only had hyperinflation, they also have price controls to pretend that hyperinflation doesn't exist.
In fact, the government blames the businesses for causing the hyperinflation through price gouging.
What happens is that first, the shelves are emptied very quickly because the price is too low, second the shelves aren't refilled because there is no profit to be made, finally businesses shut down because fixed expenses can't be paid.
It's clear that the government should have instated a very very high VAT or sales tax to counteract the inflation. Maybe a VAT as high as 50%.
What happens is that first, the shelves are emptied very quickly because the price is too low, second the shelves aren't refilled because there is no profit to be made, finally businesses shut down because fixed expenses can't be paid.
It's clear that the government should have instated a very very high VAT or sales tax to counteract the inflation. Maybe a VAT as high as 50%.
Economics only holds if the assumption of economics hold enough to be a reasonable approximation of reality. They most certainly don't if you're printing 1000x more fiat every year.
The weakest assumption of MMT and the reason it isn't considered a school or economics is that issuing government debt won't affect private sector debt.
>The government prints as much of it as it wants
This don't think it's quite fair. MMT thinks that the amount of money it would take to reach full employment is the maximum limit of which you can issue debt. I don't really see how that's much different from just issuing infinite debt though, especially for a case like Venezuela.
The weakest assumption of MMT and the reason it isn't considered a school or economics is that issuing government debt won't affect private sector debt.
>The government prints as much of it as it wants
This don't think it's quite fair. MMT thinks that the amount of money it would take to reach full employment is the maximum limit of which you can issue debt. I don't really see how that's much different from just issuing infinite debt though, especially for a case like Venezuela.
Modern Monetary Theory needs the "Modern" part to actually work. It is a description of an economy with a well-developed (hence "modern") financial system that is plagued by overproduction and demand shortfalls rather than underproduction.
In such an economy, there is little difference between the government "printing" a bond and the government "printing" a reserve -- especially as modern economies pay interest on reserves. These are both perfectly liquid instruments, with the government bond being a cash-equivalent. What makes it a cash equivalent is that a modern financial sector is able to convert the liabilities that people want to hold into the liabilities present in the economy, thus in such a modern economy if the government issued a mix of 10% reserves and 90% bonds, but people wanted to hold 50% deposits and 50% debt, then the banking system would step in and convert one into the other (for a small fee).
This is as opposed to most mainstream economies which assume that the liabilities that people hold are the ones the government issues and there is no financial sector to intermediate between the two.
So in the modern economy, it's silly to obsess about the number of reserves but ignore the number of bonds, bonds and reserves are all the same and as there is no difference you might as well only issue reserves that pay whatever the policy interest rate happens to be and stop bothering with bonds altogether. Then there are other parts of MMT that are a bit zany -- for example the belief that savings demands are inelastic and thus the policy rate can always be at zero, but that has nothing to do with reserves/bond distinction.
That is not the situation in Venezuela, which does not even have a functioning market economy let alone a modern financial system. Venezuela is closer to the situation in Zimbabwe where the banking system has collapsed, the economy has collapsed, and people have lost faith in the currency.
So let's say that the private workers need to eat 100 units of food, and the government workers need to eat 100 units of food, but only 100 units of food is produced. In a well organized economy you admit there is a food shortage and issue rations so everyone gets a coupon for 1/2 a unit of food. In that ration system, it doesn't matter how much money you have -- money is a bit worthless for buying food -- but the hope is that the situation is temporary and prices go back to normal, so people don't rush to try to unload their paper money for food they just leave their paper money alone and the government doesn't fire up any printing presses. In effect those ration cards are a new currency that is temporarily introduced to prevent the old currency from going haywire. That's what the US did in WW2.
But what if there is no public admission of shortages and the government isn't competent enough to create an effective rationing system? Then it prints up enough money to buy 100 units of food and gets into a bidding war with the private sector. So now the price of food goes way up, and the people in the private sector have lots of money but not much food, and the people in the government sector have the printing press and more food. Then day 2 happens, and the government has to print up even more money to buy 100 units of food, because they are bidding against the same people who were overpayed with printed money in period 1. So the price of food goes up even more. Then day 3 happens, and the government must print even more money to buy up the food. Thus you have this spiralling inflation where the ability of the people to outbid the government in period n is the sum of all the overpayments that happened in the previous periods. Thus, mathematically this is an exponential function. Ultimtely farmers refuse to sell their food for any amount of government money at all and the currency becomes completely worthless.
That was the situation when Zimbabwe kicked out the white farmers, and it is the situation of Venezuela in which the non-productive sector eventually exceeded the productive sector. It is also what happened in Weimar when there was a perfect storm of economic collapse from the Depression, a promise to pay massive war debts (with printed money), and massive social unrest due to worker strikes (whose higher wages were also provided by printing money).
Note that Modern Monetary Theory, as it is purely about the financial side of things, has no magic when there are too many people and not enough to eat. MMT deals with modern economies that face problems of overproduction rather than underproduction, and demand shortfalls are the cause of recessions rather than supply shortfalls. It is also about finally shredding the distinction between bonds and reserves in an economy in which both are perfectly liquid cash equivalents.
[1] https://www.investopedia.com/terms/r/repurchaseagreement.asp
In such an economy, there is little difference between the government "printing" a bond and the government "printing" a reserve -- especially as modern economies pay interest on reserves. These are both perfectly liquid instruments, with the government bond being a cash-equivalent. What makes it a cash equivalent is that a modern financial sector is able to convert the liabilities that people want to hold into the liabilities present in the economy, thus in such a modern economy if the government issued a mix of 10% reserves and 90% bonds, but people wanted to hold 50% deposits and 50% debt, then the banking system would step in and convert one into the other (for a small fee).
This is as opposed to most mainstream economies which assume that the liabilities that people hold are the ones the government issues and there is no financial sector to intermediate between the two.
So in the modern economy, it's silly to obsess about the number of reserves but ignore the number of bonds, bonds and reserves are all the same and as there is no difference you might as well only issue reserves that pay whatever the policy interest rate happens to be and stop bothering with bonds altogether. Then there are other parts of MMT that are a bit zany -- for example the belief that savings demands are inelastic and thus the policy rate can always be at zero, but that has nothing to do with reserves/bond distinction.
That is not the situation in Venezuela, which does not even have a functioning market economy let alone a modern financial system. Venezuela is closer to the situation in Zimbabwe where the banking system has collapsed, the economy has collapsed, and people have lost faith in the currency.
So let's say that the private workers need to eat 100 units of food, and the government workers need to eat 100 units of food, but only 100 units of food is produced. In a well organized economy you admit there is a food shortage and issue rations so everyone gets a coupon for 1/2 a unit of food. In that ration system, it doesn't matter how much money you have -- money is a bit worthless for buying food -- but the hope is that the situation is temporary and prices go back to normal, so people don't rush to try to unload their paper money for food they just leave their paper money alone and the government doesn't fire up any printing presses. In effect those ration cards are a new currency that is temporarily introduced to prevent the old currency from going haywire. That's what the US did in WW2.
But what if there is no public admission of shortages and the government isn't competent enough to create an effective rationing system? Then it prints up enough money to buy 100 units of food and gets into a bidding war with the private sector. So now the price of food goes way up, and the people in the private sector have lots of money but not much food, and the people in the government sector have the printing press and more food. Then day 2 happens, and the government has to print up even more money to buy 100 units of food, because they are bidding against the same people who were overpayed with printed money in period 1. So the price of food goes up even more. Then day 3 happens, and the government must print even more money to buy up the food. Thus you have this spiralling inflation where the ability of the people to outbid the government in period n is the sum of all the overpayments that happened in the previous periods. Thus, mathematically this is an exponential function. Ultimtely farmers refuse to sell their food for any amount of government money at all and the currency becomes completely worthless.
That was the situation when Zimbabwe kicked out the white farmers, and it is the situation of Venezuela in which the non-productive sector eventually exceeded the productive sector. It is also what happened in Weimar when there was a perfect storm of economic collapse from the Depression, a promise to pay massive war debts (with printed money), and massive social unrest due to worker strikes (whose higher wages were also provided by printing money).
Note that Modern Monetary Theory, as it is purely about the financial side of things, has no magic when there are too many people and not enough to eat. MMT deals with modern economies that face problems of overproduction rather than underproduction, and demand shortfalls are the cause of recessions rather than supply shortfalls. It is also about finally shredding the distinction between bonds and reserves in an economy in which both are perfectly liquid cash equivalents.
[1] https://www.investopedia.com/terms/r/repurchaseagreement.asp
I'm not really an MMT guy, I have completely different answers to the same problem though.
Well, one basic assumption that MMT makes is that the real economy sets the constraints for money creation and that is actually such a boring observation it's surprising that so many people don't understand it.
In the case of Venezuela, the real economy is massively constrained, which means that according to MMT governments should stop creating money and just let the existing money circulate and be taxed. This will solve the hyperinflation problem but there will still be a huge rate of inflation, perhaps as high as 50% per year. The next step would be to raise the interest rate and subsidize agriculture with a slightly lower interest rate. It may take a long time but it would would eventually.
Well, here is my proposal. Introduce a land value tax and -30% negative interest rates on cash. People will run to their bank hoping the bank offers higher interest rates. Well, what is the first thing borrowers would do? They would spend their money on durable goods that decay less than 30% per year. If they use the borrowed money to buy stable currencies, the interest rate on bank accounts would shoot up and only be slightly negative like -3% to act as compensation. There is still room for even higher interest rates. If a business earns a return it can pay positive interest rates. Since future income is not affected by interest rates, the businesses that earn the most money and therefore be the most valuable will be long lasting businesses. It takes 35 2021 dollars to get 1 2031 dollar in this system.
Well I would suggest this idea with -5% interest but since Venezuela has hyperinflation it would be realistic to have excessively high negative interest rates on cash to fund the government. The benefit is that it doesn't ruin the unit of account function of the local currency.
Well, one basic assumption that MMT makes is that the real economy sets the constraints for money creation and that is actually such a boring observation it's surprising that so many people don't understand it.
In the case of Venezuela, the real economy is massively constrained, which means that according to MMT governments should stop creating money and just let the existing money circulate and be taxed. This will solve the hyperinflation problem but there will still be a huge rate of inflation, perhaps as high as 50% per year. The next step would be to raise the interest rate and subsidize agriculture with a slightly lower interest rate. It may take a long time but it would would eventually.
Well, here is my proposal. Introduce a land value tax and -30% negative interest rates on cash. People will run to their bank hoping the bank offers higher interest rates. Well, what is the first thing borrowers would do? They would spend their money on durable goods that decay less than 30% per year. If they use the borrowed money to buy stable currencies, the interest rate on bank accounts would shoot up and only be slightly negative like -3% to act as compensation. There is still room for even higher interest rates. If a business earns a return it can pay positive interest rates. Since future income is not affected by interest rates, the businesses that earn the most money and therefore be the most valuable will be long lasting businesses. It takes 35 2021 dollars to get 1 2031 dollar in this system.
Well I would suggest this idea with -5% interest but since Venezuela has hyperinflation it would be realistic to have excessively high negative interest rates on cash to fund the government. The benefit is that it doesn't ruin the unit of account function of the local currency.
Inflation is a negative interest rate on cash. But you can't control it by making decrees, that's silly. Of course you can say "banks should confiscate a share of deposits" but all that means is that people stop using banks. Yes, there is a convenience factor for using banks, but it's not 30%.
The result of making the currency less desirable is that people stop using the currency and transact in something else. That already happened -- both the Venezuelan government and the Venezuelan currency are doomed, the later already abandoned and the former kept in power only by Cuban mercenaries sent to Venezuela in exchange for oil. When Venezuela can no longer send enough oil to Cuba, the government will fall. The question is how many people need to starve before that happens and how many times will they need to keep removing zeroes from their bills. Soon they wont have the capacity to even print new bills, so that, too, will stop.
The result of making the currency less desirable is that people stop using the currency and transact in something else. That already happened -- both the Venezuelan government and the Venezuelan currency are doomed, the later already abandoned and the former kept in power only by Cuban mercenaries sent to Venezuela in exchange for oil. When Venezuela can no longer send enough oil to Cuba, the government will fall. The question is how many people need to starve before that happens and how many times will they need to keep removing zeroes from their bills. Soon they wont have the capacity to even print new bills, so that, too, will stop.
Because they issue a lot of debt in USD. They can't print their way out of debt the way the US can and does.
Who issues it? The government? If so, who lends those Dollars to the government?
My understanding is the government would sell debt and get USD in return. When the debt matured, the bond owner would get USD in return.
USD bonds are more attractive since they remove the exchange rate risk, but as happened, the government could t repay the debt in USD.
USD bonds are more attractive since they remove the exchange rate risk, but as happened, the government could t repay the debt in USD.
> they issue a lot of debt in USD
Nobody wants bolivar-denominated debt. Because Caracas keep printing. The U.S. dollar has no divine right to being infinitely valuable.
Nobody wants bolivar-denominated debt. Because Caracas keep printing. The U.S. dollar has no divine right to being infinitely valuable.
>The U.S. dollar has no divine right to being infinitely valuable.
The U.S. dollar is often the least silly of many options.
The U.S. dollar is often the least silly of many options.
Only as long as people believe in it.
With a national debt of over 30 trillion, it's amazing that some people can still believe that the US will pay all that debt back.
The USD will crash sooner rather than later.
With a national debt of over 30 trillion, it's amazing that some people can still believe that the US will pay all that debt back.
The USD will crash sooner rather than later.
While comparatively stable, the US Dollar is able to fall to the same faults that many other currencies have in history.
There's only one form of money that's retained value for over 6000 years of human civilizatoin.
There's only one form of money that's retained value for over 6000 years of human civilizatoin.
It's a combination of debt, sanctions and a corrupt authoritarian government that has severely mis-managed its economy and currency.
That's not how modern monetary theory works, but ok
[deleted]
Uncomfortable possibility: maybe the rich people are not just sitting on their ass, and are performing an important economic function even if it's not obvious what it is.
Disincentivize this function and the few producers still left in the market have less competition, and hence more ability to raise prices. Eliminate the private sector altogether (as the Soviet Union did) and you don't have inflation, you have shortages.
Disincentivize this function and the few producers still left in the market have less competition, and hence more ability to raise prices. Eliminate the private sector altogether (as the Soviet Union did) and you don't have inflation, you have shortages.
That's just plain wrong. Cryptocurrency has nothing to do with the government, for example. So no, money is not just "a way for government to incentivise behaviour". Who told you this?
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A good read to make sure you get heard here is to read this essay by HNs founder:
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A good read to make sure you get heard here is to read this essay by HNs founder:
http://www.paulgraham.com/disagree.html
Inflation des not necessarily target rich people. In some cases the wealthy will have significant land holdings. These act as a store of wealth.
Inflation is damaging to ants who keep money aside in case of medical emergency or unemployment or retirement. It also eliminates short term debt interactions, such as where a business buys goods with 30 days to pay. This adds friction across the economy.
Inflation is damaging to ants who keep money aside in case of medical emergency or unemployment or retirement. It also eliminates short term debt interactions, such as where a business buys goods with 30 days to pay. This adds friction across the economy.
I did not mean that inflation is a means of taxing. Just as a byproduct of printing money.
If it is a problem that rich people sit on their land holdings and do not use the land to serve the public good, why not simply tax land holdings?
If it is a problem that rich people sit on their land holdings and do not use the land to serve the public good, why not simply tax land holdings?
That's the thing. When govs talk about increasing taxes to "tax the rich" they end up changing income tax at high brackets. Which effectively taxes people who are not yet rich, but trying to be.
The real rich people own land and assets, but wealth taxes are not popular - because real rich people effectively lobby against it.
The real rich people own land and assets, but wealth taxes are not popular - because real rich people effectively lobby against it.
Because that's when they'll get upset and use all their connections and money (which they also have) to fight that tax. Worst thing that can happen to them is that they need to feign defeat in some income tax hike battle as a pawn sacrifice to pull more non-owners on the "taxes are theft" side that protects them. Add to that the practical problems of land ownership tax (how do you assess something that hasn't been on the market in decades or even centuries?) which make it easy play the "why not tax something that is easier to tax" game.
Historically, the solution has been violent upheaval every couple of generations. A nonviolent alternative might be an occasional "inverse bankruptcy" lottery or poll cutting off randomly selected and/or particularly unpopular tall poppies. With the right dosage (not too often to not stifle ambition, perhaps aiming for hitting one in ten outliers in their lifetime?). The goal would be to prevent concentration approaching the infinite, not to make people equal (and the victims could still receive a very generous stipend, or wouldn't have to be hard on them at all, at least in day to day material terms)
Historically, the solution has been violent upheaval every couple of generations. A nonviolent alternative might be an occasional "inverse bankruptcy" lottery or poll cutting off randomly selected and/or particularly unpopular tall poppies. With the right dosage (not too often to not stifle ambition, perhaps aiming for hitting one in ten outliers in their lifetime?). The goal would be to prevent concentration approaching the infinite, not to make people equal (and the victims could still receive a very generous stipend, or wouldn't have to be hard on them at all, at least in day to day material terms)
[deleted]
A free market knows who needs and deserves money better than the government. Government handouts go always to the wrong people, making the problem worse. This happens because government has less information than local actors on a free market.
Rich people own assets, not money. Rich people have debt collateralized by their assets, so they get double benefit from inflation. Their debt gets wiped off, and their asset prices increase. And because they are the ones who get low interest rate debt first, they also benefit from the Cantillion effect, which means that they're not hurt by inflated prices, so much as those who try to buy assets later with their wages.
Inflation hurts workers and entrepreneurs most because their savings are wiped off, and their income or revenue lags behind inflated prices. There is no way to save and use the savings to plan and invest in a better future. The ability to save and invest later is the base of a prosperous economy. Inflation also destroys reliable price signals, which makes it very difficult for an economy to work.
Rich people own assets, not money. Rich people have debt collateralized by their assets, so they get double benefit from inflation. Their debt gets wiped off, and their asset prices increase. And because they are the ones who get low interest rate debt first, they also benefit from the Cantillion effect, which means that they're not hurt by inflated prices, so much as those who try to buy assets later with their wages.
Inflation hurts workers and entrepreneurs most because their savings are wiped off, and their income or revenue lags behind inflated prices. There is no way to save and use the savings to plan and invest in a better future. The ability to save and invest later is the base of a prosperous economy. Inflation also destroys reliable price signals, which makes it very difficult for an economy to work.
>The ability to save and invest later is the base of a prosperous economy.
I don't know who told you this but it's completely wrong. People invest first and then tell others to save. Just think about it. You build a factory and tell everyone you will produce more cars in 5 years. You pay interest because you know you can sell them more cars in the future and therefore you can pay more interest than the kebab shop down the street. This means growth of demand is the primary driver of economic growth because growth in demand also results in growth of demand for investments and investments drive demand for savings.
If people just save money without any future demand it's the same thing as choosing to be poor. You have money because you didn't buy a house. You have money because you didn't buy a car. You have money because you didn't buy clothes. You have money because you are poor in real terms.
I don't know who told you this but it's completely wrong. People invest first and then tell others to save. Just think about it. You build a factory and tell everyone you will produce more cars in 5 years. You pay interest because you know you can sell them more cars in the future and therefore you can pay more interest than the kebab shop down the street. This means growth of demand is the primary driver of economic growth because growth in demand also results in growth of demand for investments and investments drive demand for savings.
If people just save money without any future demand it's the same thing as choosing to be poor. You have money because you didn't buy a house. You have money because you didn't buy a car. You have money because you didn't buy clothes. You have money because you are poor in real terms.
The long and bloody history of American imperialism in Latin America. (https://time.com/5512005/venezuela-us-intervention-history-l...)
> ... in the International Monetary Fund's (IMF) assessment, hyperinflation will reach 5,500% by the end of 2021...
This might scare me more than the rest of the article.
This might scare me more than the rest of the article.
Venezuela’s economic woes dropped out of my regular news sources 2-3 years ago, back when the story was also hyperinflation. What happened since? Did they manage to achieve a kind of relative stability in the Bolivar’s value, which is now starting to inflate again?
Inflation in Ukraine was around 10000% in 1993, because government really liked to print local currency (taxes and fines were still nominated in ECU). Everyone just switched to $, until more or less healthy economy formed and old currency was was replaced with the current one.
"Healthy economy" are the keywords here. Most Venezuelans were too happy when army seized inventory of major retailers .
Running out of other people money is an inevitable end of socialism.
"Healthy economy" are the keywords here. Most Venezuelans were too happy when army seized inventory of major retailers .
Running out of other people money is an inevitable end of socialism.
Saw some articles that Venezuela has cheap electricity and is betting on crypto “petro”. Not sure if they can ask foreign retail investors to invest in it but I am assuming that investment in that coin is much better than worthless coins out there.
Im not an economist or anything but probably a way to help their economy rather than giving as charity?
Im not an economist or anything but probably a way to help their economy rather than giving as charity?
[deleted]
For those curious about the societal effects of hyperinflation, let me once again recommend Arthur R. G. Solmssen's A Princess in Berlin (<http://www.acamedia.info/literature/princess/A_Princess_In_B...>) (1980), which covertly offers a crash course in early-1920s German political and economic history—including many details of the societal effects of hyperinflation—amidst a very sweet love story.
Marxism Kills
Death, Starvation and Destruction
Death, Starvation and Destruction