Prelude To Rothschild-Financed Invasion?
...By Francisco Toro January 17 at 5:45 PM
The Washington Post
Empty meat counters in a supermarket in Caracas, Venezuela,
on Jan. 9. (Marco Bello/Reuters)
- Jewish Economics
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A friend recently sent me a photograph that tells a powerful
story about the situation Venezuelans find themselves in now.
It’s not a very good picture, really, just a blurry cellphone
shot of trash: some wrapping material, an old CD — the detritus
left behind after a store was looted last week in San Felix,
a city in the country’s southeast. And yet I can’t stop thinking
about it, because strewn about in the trash are at least a dozen
20-bolivar bills, small-denomination currency now so worthless
even looters didn’t think it was worth their time to stop and
pick them up. The photo stopped me dead in my tracks. In theory,
according to the “official” exchange rate, which long ago lost
even a hint of connection with reality, each of those bills is
worth $2. In fact, as Venezuela sinks deeper and deeper into the
first hyperinflation the Western Hemisphere has seen in a generation,
bolivar banknotes have come to be worth basically nothing: Each
bill is worth about $0.0001 at the current exchange rate, meaning
you need to have 100 of them to equal one penny.
- Helping Hand
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It’s easy to see why the thieves left them behind. Hyperinflation
is disorienting. Five or six years ago, the 500 bolivars on the
floor would’ve bought you a meal for two with wine at the best
restaurant in Caracas. As late as early last year, they would’ve
bought you at least a cup of coffee. At the end of 2016, they
still bought you a cup of café con leche, at least. Today, they
buy you essentially nothing … well, except for 132 gallons of the
world’s most extravagantly subsidized gasoline. Prices are now
rising more than 80 percent per month, according to the opposition -
led National Assembly’s Finance Committee. (The government itself
stopped publishing official inflation data long ago.) At that rate,
prices double every 34 days or so. Salaries lag far behind, leaving
more and more of the country to face outright hunger. Thus, the looting.
- Still Useful
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Rule No. 1 of surviving hyperinflation is simple: Get rid of your money.
Given the speed with which money is shedding its value, holding on to
it means you’re losing out. The second you’re paid you run out as fast
as you can to buy something – anything – while you can still afford it.
It’s better to hold almost any asset than money, because assets hold
their value and money doesn’t. Find a can of tuna? Buy it. Even if you
hate tuna. Even if you have no intention of eating tuna. You can always
trade it for something else later. Tuna holds its value. Money doesn’t.
I think this is what’s so hard to wrap your mind around if you’ve never
experienced hyperinflation. It sounds like it’s about prices rising fast,
but it really isn’t. It’s about money breaking down. Under hyperinflation,
money no longer works. It doesn’t store value. It just stops doing the
basic things people expect money to do. It stops being something you want
to have and turns into something you’ll do anything to avoid having:
something so worthless you won’t even bend down and scoop it up off the
floor while you’re looting. And that’s what it’s come to, widespread,
state - aided looting. The final frontier in the collapse of Venezuela’s
economy and civic culture. How did we get here? Not so long ago, in 2015
and 2016, you probably remember reading about the long lines outside
virtually every supermarket for basic goods. Lines formed because the
government put price ceilings on all staple goods, and as you learn in
the first week of any introductory economics course, price controls breed
shortages.
And yet, paradoxically, the fact that those lines did form was a signal
that at least people expected they would find price - controlled goods
inside if they had the patience to brave the wait. So when lines began
to vanish late last year, it wasn’t a sign of improvement — shortages
had grown so bad that people gave up. Affordable staples just disappeared
from the shelves for good, leaving only luxury products at international
prices that only a minuscule elite could afford. Instead, the government
improvised a clumsy new system to deliver a package of staple goods to
people’s homes each month. Unsurprisingly, given the dire state of state
finances, that system soon broke down. Too few packages were reaching
too few homes, leaving a gap that could be filled only by looting stores
still selling expensive goods at international prices. Of course, few
stores will think of restocking after they’ve been looted, and virtually
none can find the capital to do so. So it looks as though we’re coming
to the end of the line: Every last avenue for people to put a meal on
the table has been exhausted. A video that went viral recently showed
Venezuelans literally running into a cow pasture to stone a calf to
death to try to get a meal.
How can Venezuelans go on? One thing is clear: No one in power much cares.