mollwollfumble said:
Thanks for the summary dv.
> Is there some reason that petrol, of all commodities, needs to be kept flat …
Well, there is of course. Transport relies on it. And everything relies on transport.
But I suppose there’s a good reason for governments in other countries to tax the life out of petrol – because they can.
> Chavez put people in important positions who were not suited to the positions, and/or used the positions to enrich themselves.
Nasty mistake.
But how can an economy work at all with hyperinflation? Savings are worth zero, obviously. Ditto loans.
And what can Venezuela do to overcome the problem in the near future?
https://www.theguardian.com/world/2019/mar/13/venezuela-hyperinflation-bolivar-banknotes-dollars
“The government’s mint no longer works … Venezuelans are using barter, dollars and – when the power supply allows – online transfers, debit cards and even cryptocurrencies to scrape together what they need to survive. … Before the power cut, most people in urban areas relied on online transfers and debit cards to make payments, leaving anyone without a card or internet banking dangerously vulnerable. Gindel Delgado spent two months excluded from the system, spending all his spare time on Kafkaesque efforts to be able to use money again. He needed a new bank card to access his account, but a shortage of plastic meant his bank refused to issue one. … bulk purchases by Venezuelans abroad supporting family back home”.
The damn US is really out to kill Venezuela. “US officials told reporters that Washington is considering fresh financial sanctions which could prohibit Visa, Mastercard and other financial institutions from processing transactions in Venezuela.”
“Steve Hanke has logged 58 historical episodes of hyperinflation around the world, and says Venezuela’s is the fourth longest, though nearer the median for rate of price rises. That does not mean an end is in sight. The longest episode Hanke has recorded, in Nicaragua about three decades ago, lasted nearly five years.”
So, how did Nicaragua end theirs?
“The measuring rod has already been changed to the US dollar. The only way out for Venezuela, whether under the government of Nicolás Maduro or his challenger Juan Guaidó, will be making that unofficial measuring rod official … There usually is some end point to hyperinflation because one of two things happens. You get a political change, and then you get a currency reform. Or you get the same guy in power and you get a currency reform.”
In Nicaragua, after 1985 the government chose to fill the gap between decreasing revenues and mushrooming military expenditures by printing large amounts of paper money. Inflation skyrocketed. Now that was stupid. … Hurricane Joan cut a devastating path directly across the center of the country. Damage was extensive, and the government’s program of massive spending to repair the infrastructure destroyed its anti-inflation measures. … the United States trade embargo. The US playing a big role in killing Nicaragua, then?
The Chamorro government’s initial economic package embraced a standard International Monetary Fund and World Bank set of policy prescriptions. The IMF demands included instituting measures aimed at halting spiraling inflation; lowering the fiscal deficit by downsizing the public sector work force and the military, and reducing spending for social programs. … Inspired by the IMF, Minister of Finance Francisco Mayoraga quickly put together an economic “Plan of 100 Days.” This plan, also called the “Mayoraga Plan,” cut the deficit and helped to lower inflation. Loss of jobs and higher prices under the plan, however, also resulted in crippling public and private-sector strikes throughout the country. Mayoraga’s tenure in office barely exceeded the 100 days of his economic plan. By the end of 1990, the government was forced to abandon most of its freemarket reforms.
Nothing on Wikipedia about how Nicaragua succeeded in getting out of trouble. According to wikipedia, Nicaragua hasn’t had an economy since 1996.